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 EXECUTIVE SUMMARY

The Internship Report Was Made after having Internship at RAY & RAY CHARTERED
ACCOUNTANTS in TAX & AUDIT Department .

RAY & RAY CHARTERED ACCOUNTANTS - as my first Experience to the Professional

World RAY & RAY CHARTERED ACCOUNTANTS has established a Close Working
Relationship with Many Firms & Companies for Providing Services to Clients in All Over India .
In this way RAY & RAY CHARTERED ACCOUNTANTS has enriched its Professional Base
for Serving Clients Interest in Best Manner.

In this one month internship program, I was allocated in the RAY & RAY CHARTERED
ACCOUNTANTS as ARTICLE Assistant. I have worked in this report followed by the knowledge that
I have gained from working, training and my personal experiences.

The first part of the report consist a study background of the project. The second part of the
report contains of Organizations profile of RAY & RAY CHARTERED ACCOUNTANTS. In the third
part of the report I have tried to discuss about literature review of the Audit , TAX and
Accounting procedure In India. And in sub - division of third part about Accounting, Tax and Audit
procedures followed by RAY & RAY CHARTERED ACCOUNTANTS . And in Fourth part of the
Project I have Discussed the Process of Auditing an Milk Producing Company& Process of Filing
an Income Tax Return

Followed by this in the next section I have tried to discuss about some challenges I have faced
during the internship program. In the end of the report, I have drawn an overall conclusion.
 CHAPTER1

Introduction

The Institute of Chartered Accountants of India (ICAI) is the national professional

Accounting body of India. It was established on 1 July 1949 as a Statutory body
under the Chartered Accountants Act, 1949 enacted by the Parliament (acting as the
provisional Parliament of India) to regulate the profession of Chartered Accountancy
in India. ICAI is the second largest professional Accounting & Finance body in the
world. ICAI is the only licensing cum regulating body of the financial audit and
accountancy profession in India. It recommends the accounting standards to be
followed by companies in India to National Financial Reporting Authority and sets
the accounting standards to be followed by other types of organizations. ICAI is
solely responsible for setting the Standards on Auditing (SAs) to be followed in the
audit of financial statements in India. It also issues other technical standards like
Standards on Internal Audit (SIA), Corporate Affairs Standards (CAS) etc. to be
followed by practicing Chartered Accountants. It works closely with the Government
of India, Reserve Bank of India and the Securities and Exchange Board of India in
formulating and enforcing such standards.

Members of the Institute are known as Chartered Accountants (either Fellow or

Associate). However, the word chartered does not refer to or flow from any Royal
Charter. Chartered Accountants are subject to a published Code of Ethics and
professional standards, violation of which is subject to disciplinary action. Only a
member of ICAI can be appointed as statutory auditor of a company under the
Companies Act, 2013.ThemanagementoftheInstituteisvestedwithitsCouncilwiththe
president acting as its Chief Executive Authority. A person can become a member of
ICAI by taking prescribed examinations and undergoing three years of
practicaltraining.Themembershipcourseiswellknownforitsrigorousstandards.
Chartered accountants were the first accountants to form a professional accounting
body, initially established in Scotland in 1854. The Edinburgh Society of Accountants
(1854), the Glasgow Institute of Accountants and Actuaries (1854) and the Aberdeen
Society of Accountants (1867) were each granted a royal charter almost from their
inception. The title is an internationally recognized professional designation; the
certified public accountant designation is generally equivalent to it.

Women were able to become Chartered Accountants only following the Sex
Disqualification (Removal) Act 1919 after which, in 1920, Mary Harris Smith was
recognized by the Institute of Chartered Accountants in England and Wales and
became the first woman chartered accountant in the world. Chartered accountants
work in all fields of business and finance including Auditing, Taxation, Financial and
general management. Some are engaged in public practice work, others work in the
private sector and some are employed by government bodies.

Chartered accountants' institutes require members to undertake a minimum level of

continuing professional development to stay professionally competitive. They
facilitate special interest groups (for instance, entertainment and media, or insolvency
and restructuring) which lead in their fields. They provide support to members by
offering advisory services, technical helplines and technical libraries. They also offer
opportunities for professional networking, career and business development. In India
,Chartered Accountants are regulated by the Institute of Chartered Accountants of
India(ICAI) which was established by the CharteredAccountantsAct,1949.
Associate members of the ICAI are entitled to add the prefix CA to their names.
Members who are in full-time practice, and have completed five years of practice, can
use FCA.

Members of the Institute are known as Chartered Accountants. Becoming a member

requires Passing the prescribed examinations ,three years of practical training (known
as Articleship ) and meeting other requirements under the Act and Regulations .A
member of ICAI can use the title CA before his/her name. A member of ICAI may
either bean Associate Chartered Accountant (A.C.A.) or a Fellow Chartered
Accountant (F.C.A.) based on his experience.
 Further based on holding Certificate of Practice, they may also be classified as
practicing and non-practicing Chartered Accountants .As of April 2021 ,the Institute
has 327081members. The B.N. Chaturvedi family is credited to be the only family in
India to be Chartered Accountants in 5 Generations. An important phenomenon of
recent times is the rapid growth of the Accountancy profession. The vast changes
occurring in the economy of the country have been placing great Responsibilities on
the Chartered Accountants.

It also constitutes a challenge to the profession to bring to bear their knowledge and
skill in their specialized fields of activity. The types of functions generally performed
by the Chartered Accountant are varied. The more important ones amongst them are
discussed below.

(a) Accountancy:
This includes the writing up of accounts and the preparation of financial statements /
Books of Accounts .It has a wide area ranging from simple Book keeping to complex
financial analysis.

(b) Auditing:

Possibly one of the most important functions of a Chartered Accountant ,it is here
that his specialized Training, Skill and Judgment are most often called into play. The
purpose of auditing is to satisfy the users of financial statements that the Accounts
presented to them are drawn up on correct accounting principles and that they
represent a true and fair view of the state of affairs of the organization.

(c) Taxation:
With a number of taxes on the statute book, current and continuing tax information
has become vital to the effective economics of business management .The assessment
of taxes is very closely linked with Financial Accounts. The Chartered Accountant
with his Experience in accounts is in an Advantageous position for preparing the
returns for tax purposes, representing assesse before the Income-Tax authorities and
rendering general advice on taxes to his clients .An additional responsibility placed on
him recently is that his services will be required by the tax Department for Auditing
 complicated Cases , having large revenue Potential . The requirement under the
Income-Tax law for compulsory maintenance of Books of Accounts by the specified
categories of taxpayers would also make a demand on his time and services. Every
assesse with a Minimum Turnover of Rs. 50 lakhs in the case of professionals and Rs.
2 Crores ( 10 Crores if Expenditure & Receipts of Business in Cash are less than
5%of Turnover) in the case of business concerns is compulsorily required to get his
Books of Accounts Audited under the Income-Tax law. This has considerably helped
the revenue authorities in making proper assessments.

(d) Cost Accountancy:

A Chartered Accountant is also trained to ascertain the costs of production and of

processes at different levels of operations in the manufacture of a product and in the
rendering of a service. He is also equipped to provide costing information for the
guidance of management ,introduce cost control methods and assist the management
in establishing appropriate selling prices.

(e) Special Company Work:

The services of Chartered Accountants are frequently sought in connection with

matters such as the formation, financial structure and liquidation of companies
.Secretarial and Registration work and the duties of a Receiver a real so undertaken
by them, in addition to other company work.

(f) Investigation/ Forensic Audit:

Chartered Accountants are often called upon to carry out investigation to ascertain the
financial position of business in connection with matters such as a new issue of share
capital, the purchase or sale or financing of a business, reconstruction and
amalgamations. Their services are also sought for undertaking investigations with a
view to achieving greater efficiency in management or administration, finding out
reasons for increases or decreases in profit etc.
(g) Executors and Trustees:

A Chartered Accountant is also often appointed executor under a will or trust

inordertocarryontheadministrationoftheestateorsettlements.Appointments of this
nature require the Chartered Accountant to work in Co-operation will solicitors or
Lawyers. Conversely, Solicitors or lawyers carrying out works of this kind usually
call in Chartered Accountants to assist them in the accounting aspects of their work.

(h) Directorship:

Many members of the Institute who hold senior position in industry and commerce
are also Directors of their companies. Moreover, many members who are actively
carrying on public practice are also directors of companies. The advantages of having
a Chartered Accountant on the Board of Directors are now well recognized and the
practice of making such appointments has grown rapidly.

(i) Companies Secretarial Work:

In a well-organized company or group of companies, the Secretary is a man with a

professional qualification (often a Chartered Accountant) who, in addition to his
Multi farious other duties ,is an important link in the management chain.The
continued growth of limited companies enables the professional accountants to offer
secretarial services to small companies, many of which are being virtually run by a
few individuals who are unable to afford a full-time Secretary.

(j) Management Accounting:

This is another field in which the Chartered Accountant is able to render a service
which is utilized in a variety of ways like formulation of policies, day to day control,
performance evaluation, etc.

(k) Share Valuation Work:

The Chartered Accountant undertakes the valuation of shares of public and private
companies when amalgamation or re-organization takes place for the purpose of take
 overbids and other acquisitions.

(l) Other Activities:

Among the many other duties undertaken by a Chartered Accountant, mention may be
made of service as an arbitrator for the settling of disputes and those connected within
solvency work, such as the preparation of statements of affairs and the duties of a
trustee in bankruptcy or under a deed of arrangement.
 WHAT IS AN AUDIT ?

As per ICAI – An AUDIT is an Independent Examination of Financial Information of an

Entity Whether Profit Oriented or not , Irrespective of its Size or Legal Form With a View
to Express an Opinion thereon.

An Audit is Governed by Various Standards (standard of Auditings)

Objectives of an Audit :An Audit is carried by a Auditor

The Primary Objective of an Auditor is to Express an opinion on the Whether the Financial
Statements show a True & Fair View.

1. Whether Financial Statement are Free From Material misstatement

2. Whether Financial Statement are as per Applicable financial Reporting Framework

The Secondary Objective of an Auditor is Prevention & Detection of Fraud.

Scope of an Audit:

1. LAW
2. ICAI
3. Contract / Letter of Engagement

An Auditor Checks/Verifies :

1. Journal Entries
2. Audit Evidences
3. Manipulation in Books
4. Completeness of Information
5. It is as per Applicable Financial Reporting Framework / Accounting Standard
Advantages of an Audit:

1. Safeguard Financial Interest.

2. Keeps a moral check on employees.
3. Helplful in settling Trade Liabilities , Tax Liabilities & Negotiating loans.
4. Helpful in Detection of Wastages & Losses.
5. Government Requirement for Passing Specific trade license.
6. Increases the reliability of Financial Statements
7. Protect Interest of Stakeholders
8. Helps in Improving the Control systems
9. Helps in Prevention & detection of Fraud

Inherent Limitations of an Audit: an Auditor cannot provide Absolute Assurance Because

Auditing Suffers from Some Inherent Limitations

1. Nature of Reporting : Many Financial Statements involve Subjective decisions Eg : RDD

,Life of an Assets etc . hence an Auditor cannot find a Conclusive evidence
2. Nature of Audit Process : Management may not Provide Complete data and Power of
Auditor is Limted
3. Timeliness of Reporting : Due to Time Constraint it is Impossible for an Auditor to
Address all Informations
4. Cost Constraints: Due to Cost Constraint Indepth Examination is Impossible

Who Can Perform Audit :

Only a Practising Chartered Accountant in India Can Perform Audit

Types of Audit:

1. Statutory Audit : It is a Legally Required review of Accuracy of a Company’s or

Government’s Financial Statement & records.
2. Internal Audit : It is an Independent ,objective Assurance and consulting Activity
designed to Add value to and Improve an Organisation’s Operations. Internal Audit is a
Process so it not Compulsory that only Chartered Accountant can do it
 Organization Profile

RAY & RAY, Chartered Accountants, is one of the leading CA firms in India with its
head office in Kolkata. The firm has a pan India presence through branch offices in
major metropolitan cities and offers audit, tax and advisory services in India and
abroad RAY & RAY, over the period of last ten decades, since its inception in 1922,
has grown into an institution that embodies the highest standards of professional
integrity, expertise and values combines the efficiency and technical expertise with
the intellectual and personal skills required to build close, successful client
relationships. Using its service-offeringexpertise, knowledge and technology
capabilities, Ray & Ray Chartered Accountant assists businesses in identifying issues
that can have various impacts in their workings & developing practical solutions. The
original concept of service, predicated upon the personal attention of partners to the
needs of the clients, has remained unchanged.
We take immense pleasure in the fact that we have helped our clients grow, and have
grown with them. We have been and continue to be partners in their success. It is a
matter of immense professional satisfaction to us that we have achieved this status
and confidence with our clients today. We are committed to our objective of
striving towards excellence in client deliverables and also believe in commitment
towards our employees. We foster a working environment where people are
respected, challenged, encouraged, trained and nurtured where achievements are
recognized and praised. Ray & Ray Chartered Accountant is a leading financial
advisory service provider. We offer our advisory services for Shop Act Registration,
VAT Registration, Partnership Registration, Company Registrationand Service Tax
Registration. Apart from this we also offer our services in LLP Registration, Income
Tax Returns, Statutory Audit , Internal Audit , Transfer Pricing ,GST Audit, Hotel
Audit , Bank Audit , Special Services , TDS Matters and Accounting Services. Our
offered service range is directed toward financial benefit of our esteemed customers.
Since our inception, we have been offering the most profitable and feasible
registration solutions in order to attained maximum client contentment. Due to our
rich domain expertise we are able to provide financial services with highly effective
manner and within stipulated time frame. Owing to our fair business practices and
transparent business dealings we have carved niche in the industry. Moreover, we
follow all industrial and government rules while offering our registration services in
All over India.
Services provided in different Sectors :

During the Last 10 Decades the firm has provided to Large Number of industries in
Different Sectors and in Some cases such Services have been rendered over a long period of
time . thus the firm has gained indepth knowledge in their functioning and acquired the
domain Experience . the various industries where the firm has gained such experience inter
alia include the Following

 Agro Based Industries  Common Effluent Treatment

Plans
 Airlines
 Courier Services
 Aluminium
 Dairy Services
 AMFI Audit
 Diagnostic centres
 Animal Husbandry
 Educational Institutions
 Milk Producing Companies
 Electricity Generation
 Banks
 Financial Institution
 Carpet
 FMCG Products
 Civil Construction
 Garment Manufacture
 Clubs & Association

 Coal Mining

 General finance  IT & ITES

 Glass  Jute Products

 Hand Knotted Carpets  Life Insurance

 Hospital & Nursing Homes  Logistics & Transport

 Hotels  Lubricants

 Hydel Power  Mutual Funds

 Industrial Chemicals  Newspapers

 Iron & Steel  NGos

 Oil & Gas Exploration  Robotic Machinery

 Paper & Paper Products  Rubber products

 Pension Funds  Shipping

 PetroChemicals  Social Welfare Associations

 Petroleum Refinery &  Spice & Food Products

Marketing
 Tea Plantation
 Pharmaceuiticals
 Telecommunications
 Power Transmission
 Textiles
 Printing & Publishing
 Tourism & Travel
 Rayon
 Tyres
 Real Estate
 Water Distributrion
 Refactories
 Water Treatment
 Religious trusts & Institutions
 SEZ Services
 Restraunts
MISSION , VISION , VALUES :

MISSION :

Our Aim is to continue the Legacy of Highest Professional Standards through the Process of
Assurance Embodied in Personalized Services to our Clients helping them to Function Seamlessly
to Reach their True Potential

VISION :

The firm‟s vision is to be a Natural Choice as Accountant, Adviser or Consultant ofMNCs, Large
Corporate, SMEs and Owner Managed Businesses across All Industries.

Values:

 To satisfy expectations of our client and people by best professional services, continuous
professional education, integrity and hard work.
 We believe that our success depends first and foremost on people. By respecting people in
everything we do, we will develop and maintain highquality, mutually beneficial
relationship with our clients, professional colleagues, community members and each other.
 We seek to earn long-term client loyalty by developing a deep understandingof each
client‟s business and personal goals, by demonstrating unwavering reliability and integrity
in our work.
 Statement and Objectives

I choose to work with Ray&RAY Chartered Accountants During this internship I

have learnt many new skills. Before internship I have only theoretical knowledge
about work in organization but now I have practical experience of working in
organization. Also I have knowledge about the organizations working environment
and how organizationswork and achieve their goals and objectives.
Following are the objectives that I have in my mind before working as an internee.

 To improve communication skills.

 To solve the queries related to direct and indirect tax.

 To apply theoretical knowledge in actual organization. 

 To compare practical aspects with theoretical knowledge.

 To learn more than the theoretical knowledge.

 To learn how to maintain books of accounts of clients.

 To compare practical aspects with theoretical aspects.

 To give effective advice to clients regarding Tax planning.

 To have an overall idea about the procedure of Ray & Ray Chartered Accountants 

 To get to know about organizational behavior, ethical rules and regulations.

 Services

RAY & RAY CHARTERED ACCOUNTANTS is a professional firm associated

with providing Service Tax filing, ROC Returns and various other allied services to
the clients. Further, we also offer E-filing of Income Tax solutions to the customers in
a sophisticated manner. This wide spectrum of services is offered by us with the
assistance of our skilled experts well-versed in the fields of investment, risk
management and finance. All our services are reliable and can be availed by the
people by paying nominal charges to the advocates and accountants in our team. We
have appointed a team of expert and trained professionals whose sole aim is to render
effective and reliable legal services to our prestigious clients. Our offered services are
highly demanded by our clients owing to their cost-effectiveness and reliability. Our
dedication and hard work has enabled us to render qualitative services which have
helped enhance the level of customer-satisfaction.

Accountancy:

 Financial and management accounting.

 Maintenance of books of accounts- manual and computerized.

 Analysis and interpretation of financial statements.

 Preparing and reviewing fund flow and cash flow statements.

Auditing, Assurance & Financial advisory:

RAY & RAY CHARTERED ACCOUNTANTS is a leading Auditing,

Assurance & Financial advisory service provider firm. Major services provided
by us can be categories as below:

 Statutory Audit of companies under the Indian Companies Act, 2013: A

legally required review of the accuracy of a company or governments
financial record is what termed as Statutory Audit. Tax Audit as per Indian
Income Tax Act, 1961: A Tax Audit is an audit, made compulsory by
 Income Tax Act, if the annual gross turnover/receiptsof the assesse
exceed the specified limit.

 Internal Audit as per the need of the client: Internal audit is an

independent, objective assurance and consulting activity designed to
addvalue and improve an organizations governance, risk management
and management control over efficiency/effectiveness of operations,
the reliability of financial and management reporting and compliance
with laws and regulations.

 Trust Audit: Trusts are formed under the Indian Trust Act for charitable
and religious purpose. Trustee is a person who manages trust property
and executes the business of the trust. The operations of the trusts are
governedby a Trust Deed the provisions of the Public Trust Act and Trust
Deed provide that accounts of trusts should be audited by a qualified
auditor. The auditor assures that the accounts have been properly
maintained and that there has been no misappropriation of trust money
or fraud.

 VAT Audit: A VAT Audit exists to review the goods and invoice flow to
ensure their compliance. The audit can also consist of a comprehensive
examination of the company accounts, in order to identify the
purchases and sales flows, and check their compatibility.

 Concurrent Audit: Concurrent Audit is a systematic and timely

examination of financial transactions on regular basis to ensure
accuracy, authenticity, compliance with procedures and guidelines.
Stock Audit: Stock Audit or Inventory Audit is a term that refers to
physical verificationof a company or institutions inventory assets.
Project Financing: Project financing is a funding of long-term
 infrastructure, industrial projects, and public services using non-
recourseor limited recourses financial structure.

Direct & Indirect Taxation:

Income Tax:

An income tax is a tax that governments impose on income generated by businesses

and individuals within their jurisdiction under Income Tax Act 1961. By law,
taxpayers must file an income tax return annually to determine their tax obligations.
Income taxes are a source of revenue for governments. They are used to fund public
services, pay government obligations, and provide goods for citizens. Certain
investments, like housing authority bonds, tend to be exempt from income taxes.

 Tax Planning by legitimate way

 Timely, correctly & efficiently preparing & filing Income Tax returns and
other mandatory documents with Income Tax Authorities
 Diligently handling the cases of cases of representation before the Income
TaxAuthorities.

Sales Tax/Service Tax:

Sales Tax

 Sales tax is charged on taxable goods that are manufactured in or imported

into,Malaysia. Manufactured goods exported would not be subject to sales tax.

 The proposed rates of tax will 5% and 10% or a specific rate. Goods are taxable
unless specifically listed as being exempt from sales tax. Sales tax is a single-
stage tax meaning that it is only imposed at one stage in thesupply chain at the
import or manufacturers level.
 To maintain the single-stage principle, manufacturers would be entitled to
an exemption on sales tax paid on their raw materials and other input to
production.
Service Tax :

 Service tax is imposed on specific prescribed services provided by a taxable

personin the course or furtherance of a business in Malaysia. The proposed rate of
service tax 6%.
 Service tax is also a single-stage tax charged once by the service provider.
Thereare no input or exemption mechanisms available for service tax.
 Services specifically proposed to be subject to service tax include hotels,
restaurants, telecommunication, gaming, professional and consultancy services,
motorvehicle repair, credit cards, domestic flights, IT services and electricity.

 Maintenance of statutory record

 Timely, correctly & efficiently preparing & filing Tax returns and other

 mandatory documents with Income Tax Authorities

 Diligently handling the cases of cases of representation before the Income

TaxAuthorities

Registration:

We provide registration services mainly for:

 Service Tax, Sales Tax, Profession Tax,

 Trust Registration, Company Registration, Shop Registration,
 Partnership Firm Registration
 Society Formation
 Digital Signature

Company Law:
Our various services under the Indian Companies Act, 2013 are as below:
 Incorporation of companies under the Indian Companies Act, 1956
 Compliances under the various sections of the said Act
 Timely, correctly & efficiently preparing & filing ROC returns and other
mandatoryDocuments with MCA.
 SWOT Analysis

The SWOT Analysis framework facilitates an organization to identify the internal

strategic factors such as strategies and weaknesses, & external strategic factors such
as opportunities and threats.

STRATEGIC ANALYSIS

INTERNAL EXTERNAL

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

 
The main purpose of SWOT Analysis is to identify the strategies that an organizationcan use
to exploit external opportunities, counter threats, and build on & protect strengths, and
eradicate its weaknesses.
 Strengths:

 Over the years CA firms invest in building a strong brand portfolio. The
SWOT Analysis underlines this fact. This brand portfolio can be extremely
useful if the organization wants to expand into new product categories.
 Investing huge resources in training and development of its employees
resulting in a workforce that is not only highly skilled but also motivated
toachieve more.
 Superb performance in new markets helps the organization to build new
revenue stream and diversify the economic cycle risk in the markets it
operatesin.
 It has a strong base of reliable supplier of raw material thus enabling
thecompany to overcome any supply chain bottlenecks.


Weaknesses:

 The profitability ratio and net contribution % of CA firms are below the
industry average.
 The company has to build internal feedback mechanism directly from
salesteam on ground to counter challenges.
 Need more investment in new technology to integrate the processes across
theboards. Right now the investment in technologies is not at par with the
vision of the company.
 Even if the firm is leading organization in its industry it has faced challenges
in moving other product segments
Opportunities:

 Over the past few years the company has invested vast sum of money into
theonline platform.
 New trends in the consumer behavior can open up new market for CA firm.
Itprovides a great opportunity for the organization to build new revenue
and diversify into new product\services.
 Increasing the spending on infrastructure may spur demand for
advisoryservices.
 Providing consultancy services to the Companies continuously looking for
consulting services.

Threats

 The automation in technology will take the job of bookkeepers.

 Brand recognition is also a threat to the small tax or bookkeeping business.

 Competitors are also the biggest threats to the organization.
 Accounting services are a luxury, or unnecessary expense, for the
average person, so people with low incomes are unlikely to hire an
accountant forbudget management or tax preparation.
 Role in the organization

I was inducted in various Accounting , Taxation , Audit assignment where my job

and responsibility included preparation of preliminary trial balance, financial
statement, preparation ofworking papers vouching. Filing Income tax Returns of
Indiviuals ,LLP , Companies . Transfer Pricing . Tax Audit . Auditing Milk Producing
Companies , Semen Stations . Filing GST return of Clients , Filing Final Return of
GST , Registration of GST Client , Due Digilence , Risk Matrix & Assurance Audit &
Assurance Etc.

All these activities that have performed during my internship are the parts of different
services offered by the firm to its customers. Thus, these activities are the
components/parts of the organizational activities which aided in providing services to
its clients.
 TAX & TAX PLANNING

Taxation is the imposition of compulsory levies on individuals or entities by governments in

almost every country of the world. Taxation is used primarily to raise revenue for government
expenditures, though it can serve other purposes as well

Taxation is Divided into Three Broad catogeries

 Direct Tax : A direct tax is a type of taxation of an individual that is typically based on
the individual’s ability to pay as measured by income, consumption, or net wealth.
 Indirect Tax : An indirect tax is a type of taxation levied on the production or
consumption of goods and services or on transactions.
 Value Added Tax : VAT is a type of indirect taxation levied by a government on the
amount that a business adds to the price of a commodity during production and distribution
of a good. VAT is collected through the credit method, which recognizes and adjusts for
the taxes paid on previously purchased inputs.

Purposes of taxation :

During the 19th century the prevalent idea was that taxes should serve mainly to finance
the government. In earlier times, and again today, governments have utilized taxation for other
than merely fiscal purposes. One useful way to view the purpose of taxation, attributable to
American economist Richard A. Musgrave, is to distinguish between objectives of resource
allocation, income redistribution, and economic stability. (Economic growth or development and
international competitiveness are sometimes listed as separate goals, but they can generally be
subsumed under the other three.) In the absence of a strong reason for interference, such as the
need to reduce pollution, the first objective, resource allocation, is furthered if tax policy does not
interfere with market-determined allocations. The second objective, income redistribution, is
meant to lessen inequalities in the distribution of income and wealth. The objective of
stabilization—implemented through tax policy, government expenditure policy, monetary policy,
and debt management—is that of maintaining high employment and price stability.
DIRECT TAXES

Direct taxes are primarily taxes on natural persons (e.g., individuals), and they are typically based
on the taxpayer’s ability to pay as measured by income, consumption, or net wealth. What follows
is a description of the main types of direct taxes.

Individual income taxes are commonly levied on total personal net income of the taxpayer (which
may be an individual, a couple, or a family) in excess of some stipulated minimum. They are also
commonly adjusted to take into account the circumstances influencing the ability to pay, such as
family status, number and age of children, and financial burdens resulting from illness. The taxes
are often levied at graduated rates, meaning that the rates rise as income rises. Personal
exemptions for the taxpayer and family can create a range of income that is subject to a tax rate of
zero.

Taxes on net worth are levied on the total net worth of a person—that is, the value of his assets
minus his liabilities. As with the income tax, the personal circumstances of the taxpayer can be
taken into consideration.

Personal or direct taxes on consumption (also known as expenditure taxes or spending taxes) are
essentially levied on all income that is not channeled into savings. In contrast to indirect taxes on
spending, such as the sales tax, a direct consumption tax can be adjusted to an individual’s ability
to pay by allowing for marital status, age, number of dependents, and so on. Although long
attractive to theorists, this form of tax has been used in only two countries, India and Sri Lanka;
both instances were brief and unsuccessful. Near the end of the 20th century, the “flat tax”—which
achieves economic effects similar to those of the direct consumption tax by exempting most
income from capital—came to be viewed favourably by tax experts. No country has adopted a tax
with the base of the flat tax, although many have income taxes with only one rate.

Taxes at death take two forms: the inheritance tax, where the taxable object is the bequest received
by the person inheriting, and the estate tax, where the object is the total estate left by the deceased.
Inheritance taxes sometimes take into account the personal circumstances of the taxpayer, such as
the taxpayer’s relationship to the donor and his net worth before receiving the bequest. Estate
taxes, however, are generally graduated according to the size of the estate, and in some countries
they provide tax-exempt transfers to the spouse and make an allowance for the number of heirs
involved. In order to prevent the death duties from being circumvented through an exchange of
property prior to death, tax systems may include a tax on gifts above a certain threshold made
between living persons (see gift tax). Taxes on transfers do not ordinarily yield much revenue, if
only because large tax payments can be easily avoided through estate planning.

How a Return is Filed

Before filing a Return one needs to Understand the basics and preparation of Return of Income.

It was Easy for me to understand the Filing of Tax as i was a CA Student

Income of an Indiviual/any Person is Divided into 5 Parts/Income is earned from 5 Sources

1. Income from House Property

2. Salaries
3. Profit & Gains from Business & Profession (PGBP)
4. Capital gains
5. Income from Other Sources

Income from House Property :

Income from House Property in India: The income arising out of a house property either in the
form of a rental income or on its transfer is referred to as ‘income from house property’. In
essence, any property such as house, building, office, warehouse is treated as ‘house property’
under the Income Tax Act. The ‘Income from House Property’ is one of the five heads of income
that is taken into account for calculating the gross total income (GTI) of an assessee during the
year. However, there are several deductions allowed before the income from house property may
be taxed. Wondering if there are different types of house property to take into account? Note this
point – the house property can be either self-occupied, let out or inherited, based on which the
taxation will differ.
Structure of Finding “ Income from House Property “

Particulars Amount
Gross Annual value (GAV) XXXXX

Less : municipal tax paid by owner in PY XXX

Net Annual Value (NAV) XXXX
Less : Deduction U/S 24
a) 30% of NAV (XXX)
b) Interest on Borrowed Capital (XXXX)
Income from House Property XXXXX

SALARIES :

Income from salary includes wages, pension, annuity, gratuity, fees, commission, profits, leave
encashment, annual accretion and transferred balance in recognised Provident Fund (PF) and
contribution to employees pension account.

Salary is Computed on Due or Receipt whichever is Earlier

Computation of Salary :

Particulars Amount
1. Basic Salary
2. Advance salary
3. Arrears of Salary
4. Bonus ( Receipt Basis)
5. Commission
 6. Allowances ( Note 1)
Less : Deductions
7. Retirements Benefits (Note 2)
Less: Exemptions
8. Perquisite ( Note 3)
9. Profit in Lieu of Salary
10. Gross Salary
Less : Deductions ( Note 4)
Net Salary

Note 1 : Allowances

1. Dearness Allowances
2. Foreign Allowances
3. House Rent Allowances
4. Special Allowances
5. Allowances based on certain Exemption Limit
6. Fully Taxable Allowances
7. Fully exempt Allowances

Note 2 : Retirement Benefits

1. Gratuity
2. Pension
3. Leave Salary
4. Retrenchment Compensation
5. Voluntary Retirement Scheme
6. Provident Fund
7. Superannuation Fund
Note 3 : Perquisites
1. Value of rent free Unfurnished Accomodation
2. Value of rent free Furnished Accomodation
3. Value of Accomodation Provided at Concessional rate
4. Value of perquisites in respect of Free Domestic servants
5. Value of perquisites in Respect of Gas, Electricity,Water Supply
6. Value of Perq. In respect of Free Institute
7. Leave travel concession
8. Valuation of perq. For Interst free loan or loan at Concessional rate of Interest
9. Valuation of Perq. In respect of Movable Assets
10. Valuation of perq. For sale of movable assets by Employer to employee of
Nominal price
11. Valuation of medical Facilities
12. Valuation of perquisite in respect of Motor Car
13. Valuation of Perq. In Respect of Lunch / Refreshment
14. Value of Perq. Of Gift, Voucher, Token
15. Valuation of Perq. For Credit Card
16. Valuation of perq. In respect of Club Expenditure
17. Value of Specified Security or Sweat Equity share for Purpose

Note 4 : Deductions
1. Entertainment Allowances
2. Professional Tax
3. Standard Deduction of 50000 Rupees

Profit & Gains from Business & Profession

PGBP Income means "Profits and Gains of Business or Profession" Hence, It includes
profits and loss of. Any Business (Any shop/factory etc) Any profession (Service sector
like Doctor/Advocate/CA etc)

Computing : for Computing Income under PGBP we need to study both Income Income
& Expenditure

Computation :
Net Profit as per P&L XXXXX
Add: Exps debited to P&l A/c but not Allowed as XXX
deduction
Add: Income not Credited to P&L but Taxable XXX

Less: Exps not debited to P&L but Allowed (XXX)

Less: Income Credited to P&L but charged in (XXX)
other Sources or Exempt
PGBP XXXX

Tax Audit (U/S 44AB): Auditing Books of Accounts of Persons whose Turnover has
exceeded permissible Limit
For Business : Total Turnover of Business Exceeds 2 Crores Rupees are covered
U/S 44AB there is a relaxation Provided by Governement ( Any business whose
turnover is less than 10 crores Rupees and whose Business payments & Receipts
are less than 5% on Cash Basis are not Required to Audit there books )

For Profession : Gross receipt of Business exceeds 50 Lacs Rupees are covered
under Section 44AB

Capital Gain :

 The term capital gain refers to the increase in the value of a capital asset when it
is sold Put simply, a capital gain occurs when you sell an asset for more than what
you originally paid for it. Almost any type of asset you own is a capital asset
whether that's a type of investment (like a stock, bond, or real estate) or
something purchased for personal use (like furniture or a boat). Capital gains are
 realized when you sell an asset by taking the subtracting the original purchase
price from the sale price. The Internal Revenue Service (IRS) taxes individuals on
capital gains in certain circumstances.

KEY TAKEAWAYS
 A capital gain is the increase in a capital asset's value and is realized when the
asset is sold.
 Capital gains apply to any type of asset, including investments and those
purchased for personal use.
 The gain may be short-term (one year or less) or long-term (more than one year)
and must be claimed on income taxes.
 Unrealized gains and losses reflect an increase or decrease in an investment's
value but are not considered a taxable capital gain.
 capital loss is incurred when there is a decrease in the capital asset value
compared to an asset's purchase price.

As noted above, capital gains represent the increase in the value of an asset. These gains
are typically realized at the time that the asset is sold. Capital gains are generally
associated with investments, such as stocks and funds, due to their inherent price
volatility. But they can also be realized on any security or possession that is sold for a
price higher than the original purchase price, such as a home, furniture, or a vehicle.

Capital gains fall into two categories:

 Short-term capital gains are those realized on assets that you've sold after holding
them for one year or less
 Long-term capital gains are realized on assets that you've sold after holding them
for more than one year
Both short- and long-term gains must be claimed on your annual tax return.1
Understanding this distinction and factoring it into investment strategy is particularly
important for day traders and others who take advantage of the greater ease of trading in
the market online.
Realized capital gains occur when an asset is sold, which triggers a taxable event.
Unrealized gains, sometimes referred to as paper gains and losses, reflect an increase or
decrease in an investment's value but are not considered a capital gain that should be
treated as a taxable event.

A capital loss is the opposite of a capital gain. It is incurred when there is a decrease
in the capital asset value compared to an asset's purchase price.

Tax Rate For Capital gains :

A. Equity share / unit of Equity Oriented Fund :

Purchased through Stock exchange : STT will be Applicable

LTCG : Section 112A Amt 100000  10% on above 1 lacs

STCG : Section 111A  15%

Purchased outside stock exchange : STT not Applicable

LTCG : Section 112  With Indexation  20%

 Without Indexation  10%

STCG : Finance Act i.e Added to Total Income

B. Any other Assets :

LTCG : Section 112  20%

STCG : Finance Act i.e Added to Total Income

Income from Other Sources :

Income from other sources, which is the last among the five heads of income sketched out in the
Income Tax Act, is essentially a head of income that includes all receipts that cannot otherwise be
classified under any of the other heads of income.

According to section 56 of the Income Tax Act, the following three conditions need to be satisfied
for a receipt to be categorized as income from other sources.

 There is an income.
 Such income is not exempted under any other provisions of the Income Tax Act.
 Such income cannot be charged as salary, income from house property, profits and gains
from business or profession, or capital gains.

What does this head of income include?

Here’s a list of the receipts that fall under the category of income from other sources.

Dividends: Dividends are taxable as income from other sources depending on the residential
status of the company that paid them out.

Dividend from an Indian company: If the company has paid Dividend Distribution Tax on this
receipt, the dividend is exempted from tax. However, under section 115BBDA of the income tax
act, if a resident individual/HUF/firm received dividends in excess of ₹ 10 lakhs from Indian
companies, then the amount exceeding ₹ 10 lakhs is taxable at 10%.

Dividend from a foreign company: Dividend received from foreign companies is subject to tax
as income from other sources.

One-time income: One-time incomes like winnings from lotteries, crossword puzzles, horse
races, card games and other games of any sort, or gambling or betting of any form or nature are
covered under income from other sources.

Interest on compensation: Interest received by an assessee (tax payer) on the amount of

compensation or reimbursement given in situations like compulsory acquisition is taxable under
this head of income.

Gifts: Gifts such as any sum of money and movable or immovable property that’s received
without consideration are also taxable.
Income Tax Act has provided various Deduction in respect of Income

1. Section 80C  max upto 1.5 lacs on insurance premium paid ,contribution to Super
annuation fund,etc
2. Section 80D  Deduction in respect of mediclaim
for himself + spouse +children  max upto 25000 ( if senior citizen max upto 50000)
for Parents  max upto 50000
3. 80E  Loan for Higher Studies
4. 80EE Interest on Loan taken for House property
5. 80G  donation to certain fund, charitable Institution ( 100% or 50%)
6. 80GG  rent paid by self Employed
7. 80TTA  for Indiviual and Huf deduction on savings Bank Interest max upto 10000
8. 80TTB  for Senior citizen deduction on Fixed deposit & Savings bank interest max upto
50000

There are Many More Deduction provided by Income Tax Act

TAX Deduction at Source

According to the Income Tax Act 1961,a specific amount is reduced when a certain payment like
salary, commission, rent, interest, professional fees, etc. is made. The person who makes the
payment deducts tax at source, and the person who receives a payment/income has the liability
to pay tax. It lowers tax evasion because tax will be collected at the time of making a payment.

Tax Collected at Source :Tax collected at source (TCS) is the tax payable by a seller which he
collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods
on which the seller has to collect tax from the purchasers.

Advance Tax

Advance tax is tax payable by individuals who have sources of income other than their salary.
This is applicable to rent, capital gains from shares, fixed deposits, lottery winnings, etc. It can be
paid online or through certain banks.

Computation of Total Income :

Particulars Amount Amount

Income From Salary XXXX
Less : Standard Deduction ( Max 50000) (XXXX) XXXX
Income from House property XXXX
Income from PGBP
Net profit as per p&l XXXXX
Add : Inadmisssible Expense XXX
Less : Deductible Expense & Income of other Heads XXXX
Less : Depreciation as per IT Act XXX XXXXX
Capital Gains
LTCG XXXX
STCG XXXX XXXX
Income from Other Sources
Gross Total Income XXXXXX
Deductions Under chapter Vi A (XXXX)
Total Income XXXXX
TAX Rate+ Surcharge +Cess XX %
Tax on Total Income XXXX
TDS (XXX)
Advance Tax (XXX)
Self Assesment Tax paid (XXX)
Balance Tax Payble XX
Tax Rate Applicability :

For Determinig Tax Rate one needs to find the Residential Status of a person/Body.

Resident Indiviual Resident Indiviual of Resident Indiviual of

below age of 60+ Age 60 or more at any age 80 or More at any
HUF+ AJP+ AOP+ time during PY time during PY
BOI+All non Resident
Indiviual
Basic Exemption 2,50,000 3,00,000 5,00,000
Limit
5% From 2.5L – 5 L From 3L-5L -
20% From 5L – 10L From 5L – 10L From 5L – 10L
30% Above 10L Above 10L Above 10L

Rates for Firm , LLP, Local Authority  30%

Rates for Domestic Company  30% but if Gross Receipts / Turnover of FY 2017-18 is upto
400 Crore than Tax Applicable is 25%

In Case of Foreign Company  40%

Rebate U/S 87A  only for Resident Indiviual + Total Income does not Exceed 5L rupees

12500 or tax whichever is Lower

Surcharge :

Indiviual /HUF/AOP/BOI/AJP 

Total Income Rate

>50L but <= 1 Crore 10%
>1Crore but <=2 Crore 15%
>2 Crore but <=5 Crore 25%
>5 Crore 37%

Firm/LLP/Local Authority  Total Income > 1Cr  12%

Company  Domestic Company  >1cr but < 10cr : 7%

 >10Cr : 12%

Foreign Company  >1cr but < 10cr : 2%

 >10 cr : 5%

Round off U/S 288A/ 288B  10 Rupees Round off if lower than 5 : then Lower Side

CESS  4%
 AUDIT

As Discussed Above Audit is Divided into 2 Parts

 Statutory Audit

 Internal Audit

Statutory Audit :

What Is a Statutory Audit?

A statutory audit is a legally required review of the accuracy of a company's or

government's financial statements and records. The purpose of a statutory audit is to
determine whether an organization provides a fair and accurate representation of its
financial position by examining information such as bank balances, bookkeeping records,
and financial transactions.

How Statutory Audits Work

The term statutory denotes that the audit is required by statute. A statute is a law or
regulation enacted by the legislative branch of the organization’s associated government.
Statutes can be enacted at multiple levels including federal, state, or municipal. In
business, a statute also refers to any rule set by the organization’s leadership team or board
of directors.

An audit is an examination of records held by an organization, business, government entity,

or individual. This generally involves the analysis of various financial records or other
areas. During a financial audit, an organization’s records regarding income or profit,
investment returns, expenses, and other items may be included as part of the audit process.
Several of these items are also used when calculating a combined ratio.

The purpose of a financial audit is often to determine if funds were handled properly and
that all required records and filings are accurate. At the beginning of an audit, the auditing
entity makes known what records will be required as part of the examination. The
information is gathered and supplied as requested, allowing the auditors to perform their
analysis. If inaccuracies are found, appropriate consequences may apply.
 Internal Audit :

What is an Internal Audit?

Internal audits evaluate a company’s internal controls, including its corporate governance
and accounting processes. These audits ensure compliance with laws and regulations and
help to maintain accurate and timely financial reporting and data collection. Internal audits
also provide management with the tools necessary to attain operational efficiency by
identifying problems and correcting lapses before they are discovered in an external audit.

Understanding Internal Audits

Internal audits play a critical role in a company’s operations and corporate governance, especially
now that the Sarbanes-Oxley Act of 2002 (SOX) holds managers legally responsible for the
accuracy of their company's financial statements. SOX also required that a company's internal
controls be documented and reviewed as part of their external audit.1 Internal controls are
processes and procedures implemented by a company to ensure the integrity of its financial and
accounting information, promote accountability, and help prevent fraud. Examples of internal
controls are segregation of duties, authorization, documentation requirements, and written
processes and procedures. Internal audits seek to identify any shortcomings in a company's
internal controls.

In addition to ensuring a company is complying with laws and regulations, internal audits also
provide a degree of risk management and safeguard against potential fraud, waste, or abuse. The
results of internal audits provide management with suggestions for improvements to current
processes not functioning as intended, which may include information technology systems as well
as supply-chain management. Cybersecurity is becoming increasingly important as companies
need to protect their confidential electronic information from outside attacks.

Internal audits may take place on a daily, weekly, monthly, or annual basis. Some departments
may be audited more frequently than others. For example, a manufacturing process may be audited
on a daily basis for quality control, while the human resources department might only be audited
once a year. Audits may be scheduled, to give managers time to gather and prepare the required
documents and information, or they may be a surprise, especially if unethical or illegal activity is
suspected.
Internal Audit Process

Internal auditors generally identify a department, gather an understanding of the current internal
control process, conduct fieldwork testing, follow up with department staff about identified issues,
prepare an official audit report, review the audit report with management, and follow up with
management and the board of directors as needed to ensure recommendations have been
implemented.

Assessment Techniques

Assessment techniques ensure an internal auditor gathers a full understanding of the internal
control procedures and whether employees are complying with internal control directives. To
avoid disrupting the daily workflow, auditors begin with indirect assessment techniques, such as
reviewing flowcharts, manuals, departmental control policies or other existing documentation. If
documented procedures are not being followed, direct discussion with department staff may be
necessary.

Analysis Techniques

Auditing fieldwork procedures can include transaction matching, physical inventory count, audit
trail calculations, and account reconciliation as is required by law. Analysis techniques may test
random data or target specific data, if an auditor believes an internal control process needs to be
improved.

Reporting Procedures

Internal audit reporting includes a formal report and may include a preliminary or memo-style
interim report. An interim report typically includes sensitive or significant results the auditor
thinks the board of directors needs to know right away. The final report includes a summary of the
procedures and techniques used for completing the audit, a description of audit findings, and
suggestions for improvements to internal controls and control procedures. The formal report is
reviewed with management and recommendations for improvement are discussed. Follow up after
a period of time is necessary to ensure the new recommendations have been implemented and have
improved operating efficiency.
 In My Period of Internship I have Learned Internal Audit by doing Internal Audit of Milk
Producing Companies & Semen Stations .

For Doing Internal Audit the Audit Team Visits Client Place and Checks their Process and
provide an opinion on the Procedure followed by Client

In my Period of Internship I have Visited Kaushikee MMPC at Saharsa Bihar,

Sabarmati Ashram Gaushala at Bidaj Gujarat , I also completed an Audit of Ruhanii MMPC
Chandigarh but I was Unable to visit that Because of third Wave of Covid 19

What is the Internal Audit Procedure / Process?

An internal audit should have four general phases of activities—Planning, Fieldwork,

Reporting, and Follow-up. The following provides a brief synopsis of each phase.

Planning – During the planning process, the internal audit team will define the scope and
objectives, review guidance relevant to audit (e.g., laws, regulations, industry standards,
company policies and procedures, etc.), review the results from previous audits, set a timeline
and budget for the audit, create an audit plan to be executed, identify the process owners to
involve, and schedule a kick-off meeting to commence the audit.

Fieldwork – Fieldwork is the actual act of auditing. Throughout this phase, the audit team will
execute the audit plan. This usually includes interviewing key personnel to confirm an
understanding of the process and controls, reviewing relevant documents and artifacts for an
example execution of the controls, testing the controls for a sample over a period of time,
documenting the work performed, and identifying exceptions and recommendations.

Reporting – As you might guess, internal audit will draft the audit report during the reporting
phase. The report should be written clearly and succinctly to avoid misinterpretation and to
encourage the intended audience to actually read and understand the report. Findings should be
accompanied by recommendations that are actionable and lead directly to process
improvements. The process of issuing an internal audit report should include drafting the
report, review the draft with management to ensure the accuracy of findings, and issuance and
distribution of the final report.

Follow-up – The final stage is an important one that is often overlooked and neglected.
Following up is critical to ensure that the recommendations have been implemented to address
the findings identified. This process should include appropriate follow-up with process owners
needing to implement the recommendations as well as Board oversight of the company’s
overall status in addressing findings identified by internal audit. If an organization fails to
follow-up on the implementation of recommendations, it is unlikely that the changes will be
made.

We as an Auditor Checks

 Journal Entries

 Audit Evidence

 Manipulation in Books of Accounts

 Completeness of Information provided by Client

 Financial Statement are as per Applicable Financial Reporting Framework

 Financial Statement Shows True & Fair View

Audit Procedures :

As per SA( Standards of Auditing ) 315  Risk Assesment Procedure

i.e Understanding the Entity & its Environment i.e Obtaining Knowledge of Client Business

Evaluating the Entity Accounting Systems & Related Internal Controls

It help Auditor to Indentify & Assess ROMMS ( Risk of Material Mistatement ), Whether due
to Fraud & Errors
This Procedures are divided into Two Parts :

1) Compliance Procedure : I.e Test of Controls  Auditors Verifies

a) Existence of Internal Controls
b) Effectiveness of Internal Controls
c) Consistency of Internal Control System
2) Substantive Procedure :
a) Test of Details : An Auditor Vouches & Verifes ACPD (Amounts , Classification ,
presentation , disclosure) to Indentify a Mistatement , if any in Books of Accounts
b) Analytical Procedures : it Includes Adding formulas and Comparing ratios

An Auditor needs to Perform the Above Audit Procedure in order to Obtain Sufficient &
Appropriate Audit Evidence for Providing an Opinion on the Financial Statement

The Above Audit Procedures are Performed using the Below Audit Techniques
A) Inquiry
B) Inspection
C) Observation
D) Confirmation
E) Re-calculation
F) Re-performance
G) Analyitical Procedures

The Above Procedures are made by using Sampling technique

It is an Application of Audit Procedures Applied to less than 100% of Items within a Population of
Audit Relevance such that all Sampling units have Equal Chance of Selection i.e Unbiased
Approach . In order to provide Auditor with Reasonable Basis on Which to Draw Conclusion
about the Entire Population
What is an Population ?

An Entire Set of Data from which sample is Selected

Following are the Characteristics of Population

a) Completeness : a sample provides Complete information about Population

b) Appropriateness

c) Reliable

Sample Selection Techniques :

1) Statistical Approach :

a) Random Sampling : Every unit has Equal Chance of Selection . Selection can be done
by picking up number randomly from a Drum or it can be done using Computer
random no. tables it is also called Unbiased Selection

i) Simple Random Sampling : Random Selection Across the population without

dividing it into Groups

ii) Stratified Random Sampling : Divides population into Groups then Random
Sampling is done in Each Group

b) Systematic Sampling : the Population is divided into sample size and then we choose
every Xunit from the population

c) Monetary Units Sampling : Accounts with Larger Amounts have Better Chance of
Selection

d) Block Sampling : Selection of an Continuous items from the Population

 2) Non Stastical Approach : It is also Called Judgemental Approach / Haphazard
Sampling . it has no Structured Technique the sample selection is based on Auidtor
Judgement & Experience. There can be a Possibility of Biased sampling

An Auditor Always Provide Reasonable Assurance not Absolute Assurance because of Inherent
Limitations of Audit.

An Auditor provides 4 Types of Opinion :

1) Qualified Opinion : The Financial Statement have some Material Effect but the Effect is
not Pervasive ( has Big Impact) whether Auditor has obtained SAAE( Sufficient &
Appropriate Audit Evidence ) or not

2) Adverse Opnion : Auditor provides Adverse opnion when he has Obtained SAAE & it has
Material as well as Pervasive Effect .

3) Disclaimer of Opinion : When Auditor is unable to find SAAE and as per his Judgement
the Effect of that can be Material & Pervasive he Provide Disclaimer of Opinion

4) Unqualified Opinion : The Financial Statements shows a True & Fair View and are
Appropriately Presented then a Auditor provides Unqualified Opinion
 What is Audit Evidence

Information Based upon which Auditor Derives Conclusion & Forms an Opinion on Financial

Statement

Auditor Needs to Obtain Sufficient & Appropriate Audit Evidence

1) Sufficiency : It Refers to Quantity of Information

2) Appropriateness : it Refers to Quality of Opinion . it is finded by

a) Relevance : The Information Received should have Logical connection

b) Reliability : The Information Received should be Appropriate & Accurate

Types of Evidence :

1) By nature of Sources :
a. Internal
b. External

2) By Nature of Information :
a. Visual Evidence
b. Written evidence
c. Oral Evidence
 CHALLENGES

 Our education system is stick to typical traditional theoretical system of learning even in
practical course like accounting. So when I was exposed to the financial statements, I was
shocked. We were used to the hypothetical financial statements with limited number of
items in trial balances and other financial statements like income statements, balance sheet
etc. But when I got exposed to the real ones, I found huge differences and contrasts with
the hypothetical ones that we are taught. So I got the opportunity to get acquaintedwith the
real world auditing and accounting practices.

 As an intern there‟s not enough work assigned to you. On the other hand because interns
are just glad to get a foot in the door, some work places maytake advantage of young
workers by giving then very long hours of dull, repeated work.

 However from my observation, this seems to be less of an intern problem and more the
experience Communication is one of those internship challenges that actually hinder your
internship time. 

 You might land a really good internship but upon starting you realize that work
environment is excessively grave and professional. In such an environment, you find it
difficult to ask questions for the fear of being judge
.
 I must admit that I feel I have not taken complete advantage of my internshipprogramme. I
allowed myself to remain in my personal comfort zone

These are the common internship challenges that we as a student while doing
internship. But if we really dig into it, that they aren‟t grave or unsolvable.
 Suggestions

 Working at Ray & Ray Chartered Accountants Was a great experience for me. I have
learnt so many things throughout my internship period.

 Ray & Ray Chartered Accountant is a Mid Size firm. Due to Mid Size Firm firm they
have very Huge Number of Clients so the work pressure is quite high. But the person
working was very less hence the Work Load was very High
 Conclusion

Everyone are studying a lot of in the class room as well as lecture hall but that full fill, When
those class room and lecture hall studies going to be implemented. That is different experience
and needed experience for everyone in the world. According to the curriculum I had the great
internship training in one of growing private company.
Actually nowadays practical experience much needed than theoretical base studies. I spent
around one month at the company for my internship training the training gave to me such
opportunity to enhance my knowledge and skills with the practical business environment. This
hind of training much needed for every student in their life.

Especially now every company gives for their newly recruited people first six or three month as
training period after that they gave the appointment as permanent according to this practice we
can evaluate the vital part of the internship training. Especially the Department and the faculty
allowed the students to get the internship training as their wishes but that should be met with
their specialization and discipline of the study.

In the future the faculty and each department should consider internship training with public
quoted company as well as multinational company that will help the students more to learn and
enhance the skill and knowledge. Also the period of the internship the faculty supervisor should
be visited to the student‟s internship training organization that will encourage the students and
monitor the students in a proper manner.
The internship training should be continued in the future for the students‟ improvement in the
faculty.