INTRODUCTION

Ranjith and Ranjith is a reputed Chartered Accountancy firm based in Thrissur, Kerala, offering
a wide range of professional financial and auditing services. Established in 2016, the firm has
built a strong reputation for delivering reliable, efficient, and client-centric solutions to
businesses and individuals across various industries.

With a commitment to upholding the highest standards of professional integrity and compliance,
Ranjith and Ranjith specializes in key areas of accounting and auditing, including statutory
audits under the Companies Act, internal audits, income tax and GST audits, and regulatory
filings. The firm also provides expert advisory services on tax planning, financial reporting, and
compliance, ensuring businesses meet their financial obligations efficiently.

The firm caters to a diverse clientele, with a strong presence in industries such as automobile
dealerships, agriculture, hospitality, pharmaceuticals, and education. In addition to traditional
audit and tax services, it offers specialized services such as preparing project reports for bank
loans, issuing wealth and utilization certificates, and handling RoC filings.

By leveraging its industry expertise and a client-focused approach, Ranjith and Ranjith
continues to be a trusted partner for businesses seeking financial clarity, regulatory compliance,
and sustainable growth.

Business Overview
Firm Structure and Operations
The firm operates as a partnership, enabling shared leadership and efficient management. It
has a team of 20 employees, including auditors, accountants, and administrative staff,
ensuring smooth operations. The audit function is led by two experienced auditors, who
oversee financial reporting, compliance, and assurance services.

Client Base
The firm primarily serves corporate clients and MSMEs (Micro, Small, and Medium
Enterprises). Corporate clients rely on the firm for comprehensive audit and advisory
services, while MSMEs benefit from customized financial guidance to ensure compliance
with statutory and regulatory requirements.

Regulatory Compliance and Ethical Standards

The firm maintains a strict commitment to regulatory compliance and ethical standards,
adhering to:

●​ Indian Accounting Standards (Ind AS) and Generally Accepted Accounting

Principles (GAAP)
●​ The Companies Act, 2013, ensuring statutory compliance for businesses
●​ Guidelines of the Institute of Chartered Accountants of India (ICAI)
●​ Ethical principles such as integrity, objectivity, professional competence,
confidentiality, and due diligence

Key Services Offered

The firm provides a range of audit, tax, and advisory services, including:

●​ Statutory Audits – Ensuring financial statements comply with legal and regulatory
requirements
●​ Internal Audits – Assessing internal controls, risk management, and financial efficiency
●​ Tax Audits – Conducting audits under the Income Tax Act, 1961
●​ Compliance Advisory – Helping businesses navigate financial and legal obligations
●​ Due Diligence – Evaluating financial health for business transactions such as mergers
and acquisitions

By combining technical expertise with a client-centric approach, the firm ensures transparency,
accountability, and compliance in financial reporting.

Documented Reports

The audit firm prepares various reports, including statutory audit reports, internal audit reports,
tax audit reports, and GST audit reports, These reports ensure compliance with the Income Tax
Act, Companies Act, GST Act, maintaining accuracy and transparency in financial reporting.

In statutory audits, the firm verifies the financial statements of companies under the Companies
Act, 2013, ensuring compliance with accounting standards and corporate governance
requirements. Auditors examine books of accounts, assess internal controls, and identify
financial misstatements. The firm ensures accuracy by reconciling financial statements with
supporting documents and verifying disclosures under Schedule III of the Companies Act.

Internal audits focus on evaluating internal control mechanisms and risk management systems.
The firm assesses operational efficiency, identifies control weaknesses, and provides
recommendations for improvement. Transparency is maintained by conducting periodic audits,
ensuring compliance with internal policies, and identifying potential financial irregularities.

Tax audits are conducted in accordance with Section 44AB of the Income Tax Act, ensuring that
businesses correctly report income, expenses, and tax liabilities. The firm verifies tax
computations, TDS deductions, and GST compliance. To ensure accuracy, financial statements
are cross-checked with tax returns, and reconciliations are performed to detect discrepancies.

GST audits, required under Section 35(5) of the CGST Act, involve reviewing GST returns, input
tax credit claims, and tax liabilities. The firm ensures compliance by reconciling GST data with
financial records, verifying tax payments, and identifying any discrepancies in filings. Accuracy
is maintained by ensuring that all transactions comply with GST regulations.

To uphold accuracy and transparency in all reports, the firm strictly adheres to the relevant legal
and regulatory frameworks. Compliance with the Income Tax Act, Companies Act, GST Act, and
Multi-State Cooperative Societies Act ensures that all financial information is reliable, error-free,
and presented in accordance with statutory requirements.

Auditing Process: A Case Study

Internal Audit of an Automobile Dealership

This case study examines the internal audit conducted at an automobile dealership to assess its
financial and operational controls. The audit aimed to evaluate bookkeeping practices,
delegation of authority, and inventory management, identifying areas of non-compliance and
inefficiencies.

Key Challenges Identified

1.​ Lack of Bookkeeping Entries – The audit revealed inconsistencies and missing entries
in financial records, leading to difficulty in tracking revenue, expenses, and outstanding
dues.
2.​ Lack of Delegation of Authority – There was no clear segregation of duties among
employees, leading to operational inefficiencies and a lack of accountability.
3.​ Lack of Control Over Stock of Spares and Accessories – The dealership faced
inventory mismanagement, with discrepancies between recorded stock levels and actual
physical inventory. Unauthorized access to spare parts and accessories was also
identified as a concern.

Corrective Measures Implemented

To address these challenges, the firm recommended and oversaw the following corrective
actions:

1.​ Appointment of a Stock Manager – A dedicated stock manager was hired to oversee
inventory control, ensure proper documentation, and prevent pilferage.
2.​ Monthly Internal Audit and MIS Reporting – A structured audit schedule was
implemented, with monthly internal audits and the preparation of a Management
Information System (MIS) report to track financial performance, stock levels, and
compliance with operational protocols.
 3.​ Department-Wise Segregation of Duties – Responsibilities were assigned to different
departments, ensuring that each team had defined roles and a structured reporting
hierarchy. Each department now reports to the General Manager, enhancing oversight
and accountability.

Key Findings and Outcomes

1.​ Improved Financial Record-Keeping – With stricter controls on bookkeeping, financial

discrepancies were minimized, and real-time tracking of revenue and expenses became
possible.
2.​ Enhanced Inventory Control – The appointment of a stock manager led to better
documentation and monitoring of spare parts and accessories, reducing losses and
unauthorized transactions.
3.​ Better Organizational Efficiency – The segregation of duties improved overall
workflow, accountability, and decision-making within the dealership.
4.​ Compliance with Internal Control Standards – Monthly audits and MIS reports
enabled management to identify and rectify operational inefficiencies promptly, ensuring
compliance with internal and industry-specific standards.

Through these corrective measures, the dealership achieved better financial discipline,
operational efficiency, and stronger internal controls, ensuring long-term sustainability and
profitability.

Audit Planning and Execution

Audit Planning Process

The firm follows a structured audit planning approach to ensure accuracy, efficiency, and
compliance in every audit engagement. The key steps include:

1.​ Understanding the Entity and Its Environment​

○​ The firm analyzes the client’s business operations, industry risks, and regulatory
environment.
○​ Key suppliers and vendors are identified to assess procurement processes and
payment cycles.
2.​ Reviewing Standard Operating Procedures (SOPs)​

○​ Internal policies and workflows are evaluated to understand control mechanisms

and operational efficiency.
3.​ Comparing Actual Performance with Established Requirements​
 ○​ Financial statements and operational data are reviewed to identify discrepancies
and ensure compliance with applicable standards.
4.​ Estimating the Time Required for the Audit​

○​ A detailed audit timeline is prepared based on the complexity and size of the
engagement.
5.​ Estimating the Number of Employees/Staff Involved​

○​ Audit personnel are allocated based on the scope of the audit to ensure thorough
examination and efficient execution.
6.​ Defining the Type of Audit Procedures​

○​ The firm determines appropriate audit approaches, such as substantive testing or

tests of controls, based on risk assessment.

Risk Assessment Before Audit

Before initiating an audit, the firm conducts a comprehensive risk assessment to identify
potential issues that may impact financial reporting and compliance. This includes:

●​ Identifying Inherent Risks: Evaluating risks associated with industry trends, regulatory
changes, and financial misstatements.
●​ Assessing Control Risks: Examining the entity’s internal controls to determine their
effectiveness in preventing fraud and errors.
●​ Considering Detection Risks: Analyzing the likelihood of failing to detect material
misstatements and adjusting audit procedures accordingly.
●​ Applying a Risk-Based Approach: Prioritizing high-risk areas to enhance audit
efficiency and accuracy.

Audit Execution Methodologies and Frameworks

The firm employs a range of methodologies to ensure thorough audit execution, including:

1.​ Sampling Techniques​

○​ Statistical and judgment-based sampling methods are used to select transactions

for verification.
2.​ Questionnaire Preparation​

○​ Structured inquiries are conducted with management and employees to validate

financial and operational data.
3.​ Physical Inventory Counting​

○​ On-site inventory verification is performed to ensure proper stock valuation and

existence.
 4.​ Quality Check on Internal Controls​

○​ The design and operational effectiveness of internal controls are assessed to

identify areas for improvement.

Ensuring Compliance with Legal and Accounting Standards

The firm ensures that all audit engagements adhere to relevant legal and accounting standards
by:

●​ Comparing Current and Previous Year’s Audit Reports​

○​ Financial statements from prior years are reviewed to maintain consistency in

accounting policies.
●​ Adhering to Accounting Standards and GAAP​

○​ Compliance with AS-10 (PPE) for depreciation calculation and other applicable
financial reporting standards is ensured.
●​ Ensuring TDS Compliance and Adherence to the Income Tax Act​

○​ The correct deduction and timely remittance of TDS are verified as per statutory
requirements.
●​ Maintaining Accuracy in Bookkeeping​

○​ Financial records are examined to ensure they comply with GAAP and regulatory
guidelines, minimizing the risk of misstatements.

Conclusion

Ranjith and Ranjith has established itself as a trusted auditing firm, serving corporate and
MSME clients across industries such as automobile dealerships, agriculture, hospitality, pharma,
and education. With a strong emphasis on statutory compliance, financial transparency, and
ethical governance, the firm ensures businesses adhere to regulatory requirements under the
Income Tax Act, Companies Act, GST Act, and other relevant laws.

Observing key trends, including the rise of startups in Kerala and increasing financial
misrepresentation, the firm has refined its audit approach to prioritize stronger internal controls,
enhanced financial reporting, and ethical corporate practices. A recent internal audit for an
automobile dealership identified challenges like inadequate bookkeeping, lack of delegation,
and poor stock management. The firm addressed these through structured reporting, monthly
audits, and improved departmental oversight, leading to better financial accuracy and
operational efficiency.

Looking ahead, Ranjith and Ranjith aims to enhance its audit methodologies by improving team
efficiency, strengthening interdepartmental communication, and expanding into portfolio
management. Future initiatives include adopting automated audit software and promoting
financial literacy through educational programs. By continuously evolving with industry trends,
the firm remains committed to upholding the highest standards of financial accountability,
regulatory compliance, and client service excellence.