Greetings of the Day to all my lovely friends:
It had been months that I have not contributed anything on CACLUBINDIA (CCI).
A couple of days before a new intern joined my firm, and believe me he was too frightened. He asked me that you all are involved in Auditing Line, so give me some tips so that it will help me out for my future projects.
So at that point of time I thought to write an Article on "Auditing - Points to be considered while starting an Audit". So that it can help out the fresh passed out IPCC students.
So let's go for it .
Auditing - A Need for IPCC Students:
1. Preparation of Audit Program:
Many of the students will be familiar with this term, But i will explain it for fresh students. At the first stage we need to prepare an Audit program which includes,
a. Name and Address of client.
b. Business of Client.
c. Audit Done by and Person dealt in.
Basically it covers the general detail regarding client.
2. Checking of Opening Balances:
This is the second stage in which the Auditors need to check the Opening Balances Of the Financial Year (F.Y) (which needs to be audited) with the closing balances of the Previous year Figure of the Following -
a. Debtors and Creditors.
b. Cash and Bank Balances.
c. Loans and Advances.
d. Fixed Assets.
The basic objective of doing is too see whether the Figures get tallied with previous year ones and also to check the accuracy.
First of all vouching means "Checking of Revenue Items." While Doing it following points needs to be checked -
a. Whether or not voucher has been prepared for the relevant expense.
b. Whether or not the payment was duly authorized.
c. If there is any payment above Rs 5,000 - There should be a Revenue stamp affixed to it.
d. No payment should be made in cash for a sum of 20,000 or Above.
e. Vouchers should be duly signed by the Persons in charge.
4. Checking Of Provident Fund (EPF):
a. First of all we need to check whether or not It was deposited within the stipulated period i.e.15th of next month.
b. And if it has not been deposited within the Due date the in will result in Creation Of DTA / DTL.
c. General Provisions regarding it - Rate of Deduction -
Employee - 12%
Employer - 3.67% Toward P.F ; 8.33% Toward Pension
d. Admin Charges (For Employees of P.F Establishment) - 1.61%
Salary on which P.F will be deducted (Maximum) - Rs 6,500 P.M
5. Checking Of TDS:
a. Mainly you will find section 194 C, 194 J and 194 I applicable on all the clients.
b. First check whether or not TDS has been deducted on right Rate or not.
c. Then check whether TDS has been deposited within Due Date or not i.e. 7th of next month.
d. Whether TDS Return has been filed or not.
e. To see whether TDS has been deposited within due Date, You can check up with the counterfoils.
6. Ledger Scrutiny:
a. In it you need to check all the ledgers very carefully.
b. Major focus should be on Debtors and Creditors.
c. Check the period from which they are standing and ask why they have not been written off.
d. If there has been any Loan Addition ask for the Loan agreement.
e. If there is any rental or Lease income ask for the respective agreements.
f. If any Loan has been given to the Employees, ask the name of the employees and check whether or not they have repaid it.
7. Checking Of Service Tax, VAT, EXCISE:
Follow all the point Given in point no.5.
8. Documents Required:
a. If there has been any Addition to Fixed Assets, Ask for the Original Bills.
b. Counterfoils to TDS, SERIVE TAX, VAT, EXCISE Returns as well as CHALLANS.
c. Counterfoils To EPF, ESIC CHALLANS.
d. Any important voucher you think Relevant.
e. Loan Agreement.
f. Lease Agreement.
At the end maintain all the documents in a file.
So this will bring an end to my Article. Hope you all will appreciate my small effort.
Thanks & Regards