A SUMMER TRAINING REPORT

ON
AUDIT PROCEDUER
AT
V.K JINDAL & COMPANY

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT

FOR THE DEGREE OF
MBA (2 YEAR COURSE)

SUBMITTED TO: SUBMITTED BY:

Prof. AJIT KUMAR SHUKLA SHIVAM KESHARI
DEAN & DIRECTOR OF IMS MBA-3rd SEMESTER
MGKVP ROLL NO. 10019527053

IMS, INSTITUTE OF MANAGEMENT STUDIES

MAHATMA GANDHI KASHI VIDYAPITH,
VARANASI
 ACKNOWLEDGMENT
With the deep sense of gratitude I express thanks to all those who
have been instrument in the development of this project report. The
internship opportunity I had with V.K JINDAL & COMPANY was
a great chance for learning and professional development. Therefore,
I consider myself as a very lucky individual as I was provided with
an opportunity to be a part of it. I am also grateful for having a
chance to meet many wonderful and experienced people who led me
through this internship period.

Bearing in mind previous I am using the opportunity to express my

deepest gratitude and special thanks to Mr. Sumit Jindal, Chartered
Accountant who in spite of being extraordinary busy with his duties,
look time out to hear, guide and keep me on the correct path and
allowing me to carry my project at their esteemed organization and
extending support during the training.
 CONTENT

Chapter 1 Study background

Chapter 2 Firm’s Profile
Chapter 3 Literature Review
Chapter 4 Learning Part
Chapter 5 Recommendations
Chapter 6 Conclusion
 Chapter 1

Stydy Background

1.1 INTRODUCTION
1.2 Origin of the Report
1.3 OBJECTIVES OF THE STUDY
1.4 SCOPE OF STUDY
1.5 METHODOLOGY OF COLLECTION
OF INFORMATION
1.6 LIMITATIONS OF THE STUDY
1.1 INTRODUCTION

In today’s world academic education is not adequate to enable a

student to compete with confidence and reach his/her goal without
having experience with the outside world. In order to have an idea
and gain experiences, we, the students of IMS MGKVP have to
undertake six weeks internship program at any organization.

As a part of my MBA Program, the six weeks internship program

gave me the opportunity to have a practical knowledge on auditing
procedure. The assignment was how a chartered accountancy firm
performs an audit and also to gain a knowledge and practical
experience on how audit work is performed in corporations,
companies and non-profit making organizations.

To face much more complex and challenging business world in the

challenging business areas, practical knowledge is essential to expand
our theoretical base. To gather this practical knowledge, we were
forwarded different organization after completing MBA Program. As
I have an intention to become a chartered accountant, I was
forwarded to V.K Jindal & Company, a prominent chartered
accountancy firm in Varanasi.

This study gave me an opportunity to observe and perform real

world knowledge about the audit procedure, which is followed by
the chartered accountancy firm. In the internship period I could
relate the theoretical knowledge of auditing to practical exposure.
1.2 Origin of the Report
The internship program is mandatory requirement for the student
who are graduating from the MBA program under theism MGKVP
Varanasi. In the internship program I was engaged in a host firm
named V.K Jindal & Company . For six weeks period. I have
learned how an audit is conducted. I also learned about the audit
procedures of chartered accountant firm and how the engagement is
done in case of an annual audit. As a result I have decided to write a
report about the audit procedures of V.K Jindal & Company from
practical knowledge that I have observed.

1.3 OBJECTIVES OF THE STUDY

To have an overall idea about the audit procedures of V.K
Jindal & Company.

To gain practical knowledge and experience on how V.K Jindal

& Company performs an audit and how audit work is
performed in corporations, companies and non-profit
making organizations.

To identify about how to accumulate and process evidences to

make an audit report.
1.4 SCOPE OF STUDY
I have been assigned in V.K Jindal & Company that gave me
tremendous scope to familiarize with the audit procedure of the
organization. Major parts of scope are point out below:

a) Background of the host organization and also their position.

b) Audit procedure, which is followed by the organization for

performing any audit.

c) Nature and importance of it has depicted in this study.

d) Audit methodology of the firm, which is followed by the

organization for performing any audit.
e) Audit administration of the firm, which is followed by the
organization for performing any audit.
1.5 METHODOLOGY OF COLLECTION
OF
INFORMATION

In order to prepare the assigned project paper I have collected

necessary information from two types of source as follows:

1) Primary sources information.

2) Secondary sources information.

Primary sources information

1. I have collected primary information by working with two audit

team.
2. Discussing with engagement partner, audit manager, audit staff
and articled student.

Secondary sources information

1. I have also collected secondary information like annual audit

report, management audit report, accounting system & audit working
papers

2. The information was obtained from various corresponding files of

the firm.
1.6 LIMITATIONS OF THE STUDY
The study is conducted with an objective to make a thorough study
of external audit procedure. I have availed many facilities and faced
some obstacles during my study. These obstacles may be termed as
limitation of the study. These limitations are as follows:

a) Scheduled time span was not sufficient to cover all information.

b) As an independent audit firm the information of the case study is

not adequate for this study.

c) To some extend the exact audit procedure is not followed due to

time and other constrains.

d) As the internship was the first practical experience, it was not

possible for me to know all and everything of audit procedure.
 Chapter 2
Firm’s Profile

2.1 BACKGROUND
2.2 OUR COMMITMENT
2.3 VISION

2.1 BACKGROUND
V.K Jindal & Company is a leading chartered accountancy firm
rendering comprehensive professional services which include audit,
management consultancy, tax consultancy, accounting services,
manpower management, V.K Jindal & Company is a professionally
managed partnership firm. The Team consists of distinguished
Chartered Accountants, corporate financial advisors and tax
consultants. The firm represents a combination of specialized skills,
which are geared to offers sound financial advice and personalized
proactive services. Those associated with the firm have regular
interaction with industry and other professionals which enables the
firm to keep pace with contemporary developments and to meet the
needs of its clients.

2.2 OUR COMMITMENT

We are committed to provide consistent, customized and workable
solutions to our clients and strive to support our services with the
highest level of professionalism, efficiency and technology.
2.3 VISION
To accomplish the assignment through the experience of firm’s
partners & professional staff and also to arrange specific technical
expertise from our associates of various streams of professions.

CHAPTER 3

LITERATURE REVIEW
3.1 AUDIT

3.2 FUNCTION OF AUDIT

3.3 OBJECTIVE OF AUDIT
3.4 SCOPE OF AUDIT
3.4 BASIC PRINCIPAL OF AUDITING
3.5 AUDIT PROCEDURE IN INDIA
3.6 AUDIT PROCEDURE FOLLOWED BY
V.K JINDAL & COMPANY
3.1 AUDIT
THE WORD “AUDIT” IS A VERY GENERIC WORD, IT
ESSENTIALLY MEANS TO EXAMINE SOMETHING
THOROUGHLY. BUT WE WILL BE LEARNING ABOUT
AUDITING AS IT RELATES TO ACCOUNTING AND
THE FINANCE WORLD. SO AUDIT MEANING IS THE
THOROUGH INSPECTION OF THE BOOKS OF
ACCOUNTS OF THE ORGANIZATION.

“An Audit is an examination of such record to establish their reliability

and responsibility of statement drawn from them.”

Definition: Audit is the examination or inspection of various books of

accounts by an auditor followed by physical checking of inventory to
make sure that all departments are following documented system of
recording transactions. It is done to ascertain the accuracy of financial
statements provided by the organisation.

3.2 FUNCTION OF AUDIT

1. Study The Accounting System :-
It is the basic function of auditing. In order to determine the nature,
timing and extent of the audit procedures auditor should study the
accounting system.

2. Internal Control System :-

It is a process which determines that management policies are carried

out according the accounting principles. This system is very useful to
safeguard the interest of the enterprise. The auditor determines the
effectiveness of this system.

3. Vouching :-

This function is essential to determine the accuracy of accounting

record. Through audit those documents can be checked which support
and prove the business transactions. All entries in books of accounts
are made on the basis of relevant vouchers.

4. Verification Of Assets :-

It is the function of auditing that it should verify the assets of the

business. It is concerned with the determination of value, ownership
and possession of business asset. The auditor can check the existence
of asset.

5. Legal Requirement :-

It is the function of auditing to verify that statements are prepared

under the legal requirements or not. There are various laws like
company and income tax ordinance which are introduced by the govt.

6. Liabilities Verification :-

The liabilities of the business can be verified from the books of

accounts. The auditor can write a letter to the creditors for the
verification of liabilities. The auditor must receive the certificate from
the management in this regard.

7. Capital And Revenue :-

Auditing should make difference between capital and revenue items.

The capital items are compared to note the financial position of the
business. The revenue items are compared to determine the income.
The income and expenses related to many years can be divided in
current and coming year.

8. Valuation Of Liabilities :-

Through auditing value of liabilities can be checked from the books of

accounts and other papers. The auditor can also confirm the value
from outside sources. The value of liabilities is given in the balance
sheet by the management but it is the function of auditing which
confirms this value.

9. Valuation Of Assets :-

The management gives the value of assets and auditor can apply the
accounting principles to assess the value of assets. The auditor
critically examines and takes help from the expert.

10. Reporting :-

Auditing important function is reporting. Auditor is an independent

person and it is his duty to submit his report in writing. If he is satisfied
he can present clean report otherwise he can give qualified report.

3.3 OBJECTIVE OF AUDIT

Basic objective of auditing is to prove true and fairness of results
presented by profit and loss account and financial position presented
by balance sheet. Its objectives are classified into two groups which are
given below:

A. Primary Objectives Of Audit

The main objectives of audit are known as primary objectives of audit.

They are as follows:

i. Examining the system of internal check.

ii. Checking arithmetical accuracy of books of accounts, verifying
posting, costing, balancing etc.
iii. Verifying the authenticity and validity of transactions.
iv. Checking the proper distinction of capital and revenue nature
of transactions.
v. Confirming the existence and value of assets and liabilities.
vi. Verifying whether all the statutory requirements are fulfilled or
not.
vii. Proving true and fairness of operating results presented by
income statement and financial position presented by balance
sheet.

B. Subsidiary Objectives Of Audit

These are such objectives which are set up to help in attaining primary
objectives. They are as follows:
i. Detection and prevention of errors

Errors are those mistakes which are committed due to carelessness or

negligence or lack of knowledge or without having vested interest.
Errors are of various types. Some of them are:
* Errors of principle
* Errors of omission
* Errors of commission
* Compensating errors

ii. Detection and prevention of frauds

Frauds are those mistakes which are committed knowingly with some
vested interest on the direction of top level management. Such frauds
are as follows:
* Misappropriation of cash
* Misappropriation of goods
* Manipulation of accounts or falsification of accounts without any
misappropriation

iii. Under or over valuation of stock

Normally such frauds are committed by the top level executives of the
business. So, the explanation given to the auditor also remains false.
So, an auditor should detect such frauds using skill, knowledge and
facts.

iv. Other objectives

* To provide information to income tax authority.
* To satisfy the provision of company Act.
* To have moral effect
3.4 SCOPE OF AUDIT
The scope of an audit are:

1.Legal Requirements

The auditor can determine the scope of an audit of financial statements

in accordance with the requirements of legislation, regulations or
relevant professional bodies.
The state can frame rules for determining the scope of audit work. In
the same way, professional bodies can make rules to conduct the audit.

2.Entity Aspects

The audit should be organized to cover all aspects of the entity as far as
they are relevant to the financial statements being audited.
A business entity has many areas of working. A small entity may have
few functions while a large concern has many functions. The auditor
has the duty to go through all the functions of the business.
The audit report should cover all functions so that the reader may
know about all the working of a concern.

3.Reliable Information

The auditor should obtain reasonable assurance as to whether the

information contained in the underlying accounting records and other
source data is reliable and sufficient as the basis for preparation of the
financial statements.
The auditor can use various techniques to test the validity of data. All
auditors while doing the audit work usually apply the compliance test
and substance test. The auditor can show such information in the
report.
4.Proper Communication

The auditor should decide whether the relevant information is properly

communicated in the financial statements.
Accounting is an information system so facts and figures must be
presented in that the reader can get information about the business
entity. The auditor can mention this fact in his report.
The principles of accounting can be applied to decide about the
disclosure of financial information in the statements.

5.Evaluation

The auditor assesses the reliability and sufficiency of the information

contained in the underlying accounting records and other source data
by making a study and evaluation of accounting system and internal
controls to determine the nature, extent, and timing of other auditing
procedures.

6.Test

The auditing assesses the reliability and sufficiency of the information

contained in the underlying accounting records and other source data
by carrying out other tests, inquiries and other verification procedures
of accounting transactions and account balances as he considers
appropriate in the particular circumstances.
There are compliance test and substantive test in order to examine the
data. The vouching, verification and valuation technique is also used.
7.Comparison

The auditor determines whether the relevant information is properly

communicated by comparing the financial statements with the
underlying accounting records and other source data to see whether
they properly summarized the transactions and events recorded
therein.
The auditor can compare the accounting records with financial
statements in order to check that the same has been processed for
preparing the final accounts of a business concern.

8.Judgments
The auditor determines whether the relevant information is properly
communicated by considering the judgment that management has
made in preparing the financial statements, accordingly.
The auditor assesses the selection and consistent application of
accounting policies, the manner in which the information has been
classified and the adequacy of disclosure.
3.5 BASIC PRINCIPAL OF AUDITING
 INTEGRITY, OBJECTIVITY AND INDEPENDENCE:

The auditor should be honest and sincere in his audit work. He must
be fair and objective. He should also be independent.

 CONFIDENTIALITY:

The auditor should keep the information obtained during audit,

confidential. He should not disclose such information to any third
party. He should, keep his eyes and ears open but hismouth shut.

 SKILL AND COMPETENCE:

The auditor should have adequate training, experience and

competence in auditing. He should have a professional qualification (
i. e. be a chartered accountant) and practical experience. He should be
aware of recent developments in the field of auditing such as statement
of ICAI, changes in company law, decisions of courts etc.

 WORKING PAPERS:

The auditor should maintain working papers of important matters to

prove that audit wasconducted with due care according to thebasic
principles.
  PLANNING:

The auditor should plan his audit work. He should prepare an audit
programmed to complete the audit efficiently and in time.

 AUDIT EVIDENCE:

The report of the auditor should be base on evidence obtained in the

course of audit. The evidence may be obtained through vouching of
transactions, verification of assets and liabilities, ratio analysis etc.

 EVALUATION OF ACCOUNTING SYSTEM AND INTERNAL CONTROL:

the auditor should ensure that the accounting system is adequate. He

should see that all the transaction have been properly recorded. He
should study and evaluate the internal controls.

 OPINION AND REPORT:

The auditor should arrive at his opinion on the account based on the
audit evidence and submit his report. The opinion may be unqualified,
qualified or adverse. The audit report should clearly express his
opinion. Law should require the content and form of audit report.
3.6 AUDIT PROCEDURE IN INDIA
General Definition of audit process and procedure
Auditing is a significant part of the company’s compliance efforts.
Properly executed, audits will enable to identify conduct which may
violate the federal and state laws or detect weaknesses in the claim
development and submission process. Audits also will enable to
appropriately target and measure the effectiveness of its educational
efforts, ensure that appropriate corrective actions have been taken and
quickly identify problems in the claim development and submission
process which give rise to civil or criminal exposure.

 Audit process
It is a sequential order of steps followed by the auditor in the
examination of client records. The audit process may vary depending
upon the nature of the engagement, its objectives, and type of audit
assurance desired. The process includes understanding the particular
client's environment, conducting the auditing procedures and tests,
appraising the audit results, and communicating the results to
interested parties.
 Auditing procedure
It is auditor technique in gathering auditing evidence to substantiate
the reliability of the accounting records. The auditor evaluates whether
the information presented is logical and reasonable. Examples of
auditing procedures are observing assets to verify existence and
amount (e.g., fixed assets), collecting independent confirmations from
external parties (e.g., bank confirmation), evaluating internal control,
appraising management's activities, and obtaining management
representations. The audit procedures to be followed on an
engagement are indicated in the audit program. The work papers
indicate what has been done on the audit.
Audit process and procedures in India

The audit firm India are regulated and guided by the Institute of
Chartered Accountants Of India. ICAI has suggested and provided the
firm with different subject regarding auditing. Like others it has
suggested auditing procedures that can be followed by the audit firm in
India in its Audit Practice Manual.

Audit process suggested by Audit Practice Manual (APM) may be

summarized as follows.
1) Planning
2) Collection of evidence
3) Controlling and recording
4) Review and opinion

Audit Process

Collection Controlling
Review &
Planning of &
Opinion
evidence Recording

Planning
 In order to assist in a disciplined approach to planning and to
ensure compliance with Indian Standards on Auditing (ISA), the
APM provides documentation enabling a record of planning to be
kept, demonstrating the approach adopted for each audit and the
reasons for that approach.

Collection of audit evidence

The APM audit programs are comprehensive and designed to deal
with most eventualities. However, it is crucial that the programs
are tailored to meet particular circumstances of the client
Controlling and recording
This section provides detailed guidance on the use of the
documentation, including the way in which the forms should be
completed for the preparation of a well-documented audit file.

Review and opinion

This section deals with how partner can review the overall audit and
form an opinion. APM provides some checklists which can be used to
review the overall performance of the client.
3.7 Audit procedures followed by V.K Jindal &
Company

The primary goal V.K Jindal & Company at the time of involving in
any audit engagement is to provide the opinion on Financial
Statements in accordance with Indian Standards on Auditing (ISA) as
well as International Standards on Auditing (ISA). V.K Jindal &
Company also seek to provide auditing and management consultancy
services that are innovative, efficient and most importantly responsive
to the client’s needs.

It is another fact that before starting the audit procedure there presents
a series of more procedures. For example audit engagement letter,
audit clearance letter, team meeting etc.

Engagement Procedures
Before discussing the Audit Procedures followed by V.K Jindal &
Company, I will try to focus on the engagement procedures through
which V.K Jindal & Company is engaged/ recruited by the client to
perform the audit. Before starting the audit work, some letters are
exchanged between V.K Jindal & Company and clients.
V.K Jindal & Company faces three kinds of situations in engagement
process:
Engagement with new client.

Engagement with existing client

NEW CLIENTS

In case of new clients, four letters are exchanged between V.K Jindal &
Company and client including acceptance letter of appointment at the
time of involving with the new client. Following stages are followed by
both V.K Jindal & Company and client:

STAGE – 1: Client requires for technical and financial proposal from

the V.K Jindal & Company

Client generally gives circular with the newspaper or directly wants

proposal for audit from the audit firm. In case of direct offer they
request to the audit firm to submit a quotation for the cost of
conducting audit of the client. They also mention the specific date to
confirm the decision taken by the audit firm and completion date for
audits. The client firm mentions here the key areas of the audit in the
form of attachment. It assures that if V.K Jindal & Company audits
client’s firm, they will supply the formal terms of reference/audit
mandates to govern the conduct of audit.

STAGE – 2: The technical and financial proposal is sent by V.K Jindal &
Company to the client.

After reviewing the client letter or paper’s circular, audit firm drafts a
proposal letter to the client. The proposal letter contains technical and
financial proposal for carrying out the subject of audit. V.K Jindal &
Company estimates its personnel costs after considering the mandates
to be utilized and using the minimum hourly rate of fees as prescribed
by The Instituted of Chartered Accountants of India (ICAI). The firm
also mentions that as it is an estimate, the cost may vary with variation
in number of mandates estimated to be utilized for the job.
STAGE – 3: Acceptance by the client on the basis of proposal of V.K
Jindal & Company – A letter of contract

After receiving proposal letters from various audit firms, client then
selects the one which is favorable to them, and it appoints the audit
firm for audit purpose. From the technical and financial proposal of
the V.K Jindal & Company the client company understands the nature
of the audit (such as independent, external) to assess the
organization’s internal control system in administering the matter of
audit.

STAGE – 4: A letter is sent by V.K Jindal & Company to the client

confirming to work with the client – Confirmation Letter

After receiving the acceptance letter from the clint, V.K Jindal
& Company provides confirmation letter describing the firms’s
willingness to work with the client.

EX-CLIENTS OR CLIENTS FROM LAST YEAR

Three letters are exchanged between V.K Jindal & Company and
client:

Willingness letter for reappointment: In this letter V.K Jindal &
Company wants to audit this year. It can request to increase audit
fee or change some other conditions.

Client sends appointment letter.

V.K Jindal & Company accepts this appointment.
Audit Procedures followed by V.K Jindal & Company

There are seven steps involved in the procedures that come one after
another. The procedures followed by the V.K Jindal & Company are
basically inspired by the approaches suggested by ICAI in Audit
Practice Manual. Steps are as follows:
1. Identity Overall Goals
2. Gather & Evaluate Initial Information
3. Assess General Risks
4. Assess Account Specific Risk
5. Develop Efficient And Effective Audit Plan Program
6. Conduct Audit Testing
7. Evaluate And Communicate Audit Results.
 Chapter 4

LEARNING PART

4.1 INTRODUCTION
4.2 NATURE OF JOB
4.3 SPECIFIC RESPONSIBILITY OF JOB
4.4 CRITICAL OBSERVATION
4.1 Introduction
In six weeks of internship I was assigned at the audit learner, from
the firm V.K Jindal & Company Chartered Accountants for the audit
of: many companies to complete my internship program as an audit
staff. During my internship program most importantly I realized how
to work under the pressure of responsibilities maintaining chain of
commands and working in a team. CA Sumit sir, taught me to work
with rules and regulations, where I have gained the understanding on
how to reach a mutual understanding between different people while
working together. This practical orientation is necessary for the
development and preparation of a person before entering into the
corporate world. The things that I have learned at V.K Jindal &
Company Chartered Accountants are:

 Meaning of responsibility
 Responsibility to the profession
 Necessity of commitment
 Auditing and Reporting responsibilities
 Working with ethics
 Working Independently
 Client dealings
 Working with Generally accepted auditing standards
 Punctuality and regularity is very important
 Ability to interact with different sorts of people

4.2 Nature of the Job

My job in V.K Jindal & Company was to work in probed the audited
part of companies.I was assisting an audit learner. The team
consisted of two people including me.

First few days I do not have to do anything except observing them

and I was asked to learn by communicating and staying with them.
At the first week my primary work was to learn how to operate an
ms-excel customize software which is used for maintaining company
account. Then, I practically involved in work with the auditor’s
team. I was mainly handling cheque register book where I kept
record of each cheque received from client. In addition I had to make
a notification
report every day according to the cheques drawing date and
vouching of purchases & sale and expenses invoices. It is worth to
mention that, I had great opportunity to be a part of audit of the
company at the end of the year.

To be part of the team it is responsible for maintaining an efficient

and accurate Accounting function.

4.3 Specific Responsibilities of the

Job
Basically, I had to verify calculations,vouching of purchases and sale
invoice, maintained cheque book register and prepared cheques for
payment.

4.4 Critical Observation

The Working environment is very friendly and employees/staff are
ready to help all the time. There is a good chain of command always
followed.
 Chapter 5
Recommendations
 Recommendations

Working at V.K Jindal & Company, Corporate Office was a great

experience for me. I have learnt many things throughout my
internship period. From my little knowledge what I have some
recommendations as follows:

V.K Jindal & Company have a very few employee at account

management department whereas the work pressure is high. So the
firm could increase their workforce and share the work together.
Secondly, to increase the rate of work efficiency they need faster
computer with user friendly operating system. There is customized
accounting software in the firm which is not beneficial. The
company should update or add more features in that software and
appoint a professional operator so that it might save time, money,
labor and execute an impact for the long run.
Chapter 6

Conclusion
CONCLUSION
 Bibiliography
https://content.wisestep.com/top-advantages-disadvantages-auditing/
www.google.com
https://economictimes.indiatimes.com/definition/audit