Audit interview qns & ans

whether the income exceeds 40 lacs or above. we have file 
the tax audit report to IT. during tax audit we have to 
check all the current liabilities,like sales tax, TDS 
payable,& etc. we have to give 3CB,3Cd,43B for Tax audit

All statutory compliances & its payments were tobe checked 
and certified in the Tax Audit Report. Few cases as follows:
1) Tax Deduction on Payments to Contractors & Sub 
Contractors - Verification of % & its deduction. Whether 
the same has been paid to the Department in the subsquent 
month before due date.
2) Provident Fund,Profession Tax, IT on Salary , Service 
Tax, Sales Tax etc (all the Government Levies) Whether 
deductions made properly in line with the Law and Payemnt 
has been made properly before due date.
3) Interst,Dividend,Dividend Tax etc., also to be checked 
the deduction & payment.
4) Cash payment should not be made >20,000 if so it will be 
disallowed.
5) Huge cash balance should not be kept & it will leads to 
wealth tax.
6) Any delayed payment on government levies will attract 
interest.
7) what ever the rpovisions made earlier earlier year  has 
been set off to be checked.

in case
1) excess payament made to party
2) adv. payment made to the party
3) amount wrongly debited or twice record
4) direct payment to creditors by debtors or etc. without   
   intimetion

Depends upon the purchase order we have to make the payment 
to supplier, as the same way we have released payement and 
debited accordingly.But in some cases if any damages while 
unloading / transporting the material that time we may not 
verify these are not a usable condtion. So that as per 
stores information we may debit the same amount. so it may 
posible to show negetive balance.

1.Wrongly debited or posted
2.Make payment twice unknowingly

to find out true & fair view of the organisation.

AN AUDITOR WHO CAN MAINTAIN THE FINANCIAL STATUS OF AN 
ORGANISATION , THATS THE ONLY REASON I WANT TO BE AN AUDITOR

AN AUDITOR WHO CAN MAINTAIN THE FINANCIAL STATUS OF AN 
ORGANISATION , THATS THE ONLY REASON I WANT TO BE AN AUDITOR

By being an Auditor You give justice to yourself & for the 
organisation where you work for. Its almost the fullest 
form of an efective & enthusiastic Job in the universe "If 
& only if you are dedicated enough".

to be an independent persons

cash is monitery term

money direct payment is cash
bank is a big area transactional of money

its mean that net balance in bank...as per bank book

cash in bank is the net balance of cash in bank

cash in bank is the credit balance in a bank account as 
will be indicated in a companys books.

In Monetary term "Cash" Refers to Current Asset that means 
which this we Can buy any thing like funiture, Machinery, 
furits, Clothes, 

Bank : A Place where Public money is "Protect" from thefts 
and when ever it is useful we can Deposit Or Withdrawn is 
said to be Bank, "Bank Means it is the bridge of customers 
and Banker.

provision : provision entry made during end of the 
financial year. for eg: we have to pay salary for 
march .and we are paying 4th april'08. below entry should 
be created
Dr salary a/c
cr Salary payable a/c

Payable : payable is our liability for every month. it may 
TDS payable,VAT payable,& etc..

provision made on probable basis. We can confirm the amount 
of payable but not for provision. 
eg. amount of rent payable is fixed but amount of provision 
for telephone exp. is not fixed

PROVISION; Provision is made in the books for those 
liabilities which may  probably be occur in the future and 
provision is made for the amount  on the basis of 
estimation.

PAYABLE: Payable is a liability which has been occurred but 
not paid. There is no need to estimate the amount.

In provision, either the receipient or the amt. involved or 
both are not certain & even TDS is not attracted on 
provision made.

In case of payable or outstanding liability, both the 
amount & receiptient are certain but bill for the same may 
or may not have been received. TDS, if applicable, shall be 
deducted for creating any liability or payable.

Provisions: It is the estimated amount which is set aside 
or retained by a company for meeting the future liability 
whose amount cannot be determind with substantial accuracy.
provision are madefor liability which may occur in future.
Examples:Provision for depriciation,Prov For Doubtful 
debt,Prov for taxation etc.

Payables:It is the actual amount of liability which has 
occured in an accounting year but not paidoff.Its amount is 
not estimated it is actual.ITs a company  obligation to pay 
off a short-term debt to its creditors. The accounts 
payable entry is found on a balance sheet under the heading 
current liabilities.

Payables are the fixed amount for which some services had 
been taken and amount of that services is to be paid.

while creation of provisions are depends on happening or 
non happening of an event.

eg. Outstanding of electricity exp -Payables
    Provision for bad debts -Provision

• In a broader sense, provision is nothing, but liability, 
and considered an obligation of a business to be met in 
near future implying cash outflow.
• However, on closer inspection, provision appear to be a 
special type of liability.
• This is because of certainty that is normally associated 
with liability, and which is lacking in the case of 
provision.
• This means that we are accepting provision and liability 
to be similar, but not saying this clearly, but accepting 
them as two points on a continuum.

WITH THE USING OF FINANCIAL DATA RELATING TO THE BUSINES 
FINANCIAL DATA MEANS TRIAL BALANCE AND OTHER DATA

You have to prepare income earning first, then retain 
earning , then balance sheet ( because to prepare retain 
earning, you need to have net income or net loss), and 
balance sheet statement needs retain earning.

financial statements are prepared by balances of accounts 
from adjusted trial balance.profit & loss is prepared 
first,then balance sheet & then cash flow statment.

Financial Statement includes trading and profit and loss 
account and balance sheet of the organisation for a 
relevant period.
First prepare Trading Acc to find out GROSS PROFIT/LOSS
profit and los acc to find out NET PROFIT / LOSS
balance sheet to show the affairs of the company

Financial Statement means- Profit and Loss Account and 
Balance Sheet.

Profit and Loss Account shows the current year Net Loss or 
Profit of the Business for the desired year and the Balance 
Sheet is the status  of Assets and Liabilities of the 
business entity and hence these should be prepared in 
accordance with the Accounting Standards issued by ICAI.
Notes are important for the contingent Liabilities, Events 
occuring after the Balance Sheet date.

A.Control risks
B.Detection risks
C.Inherent risks
D.Sampling risks

A.Controls are implemented as prescribed.
B.Documentation is acurate and current.
C.Access to users is provided as specified.
D.Data validation procedures are provided.

Main reason for creating provision for outstanding expenses 
some of the amount for the year ending has to be created in 
order determine the amount of expenditure actual going to 
incurred in that month

All Payable entries create under liabilities group, sapose
mar month expenses payables like salaries payable,
electricity payables we have to pay coming next month ... so
in that period mar month liability shoing Cr Balance so, in
Trial balance it will show as a liability...

It should have provision of entry so that no amount would
leftover for an accounting year which are definitely going
to inccured in future during an accounting year.It should be
added up with all other expenses in the P&L A/C and should
be treated as a liabilities in the Balance Sheet.

no affect trail balance because it is a fully omission affect.
outstanding exp entry are miss in journal .

auditor should check the payments made in next months 
whether there is payment made related to previous year.

audiors should check he bokking of exps. like Telephone, 
Elecricity,water, Security Exps. etc.. All the exps. should 
be booked for the entire 12 months by this auditor can find 
out the missing provision entries.

Auditor can find it by seeing the exps. entries of April & 
May next year as most of the exps. must have been entered 
by that time.

If there is a practce of a company to debit outstanding 
liabilities in case of all exps payments which is related 
with last year , we can easily check through the ledger of 
outstanding liabilities.We should maintain every year 
ledger reconciliation sysmem in case of outstanding 
liabilities.

It is only practical to find this missing entry, if there 
is a separate sub-ledger for the expenses creditor wise. In 
such case, the total from sub-ledger should tally with 
amount in the account. 

Not practical otherwise.

If an entry is miss by an accountant to enter in the books, 
which can be find out on the basis of monthly booking of 
the particular expense. Example, Rent is always booked on 
monthly basis, if one month rent is forget to book in the 
books of accounts, it can be found on the basis of monthly 
booking status.

basically it is found out only while preparin t a/cs and
somtimes we can pass a rectification entry also

Trial balance will not get tallied. Its corresponding 
Account will not tally.

Like many companies passes JV for cash payments, if I miss 
to pass the cash paid antry, cash account will not tally 
with Actual physical cash.

It can be tracked.

I CAN'Y SAY EXACTLY, BUT I WILL GIVE AN EXAMPLE:-

JOURNAL : SALARIES PAID.

P&L A/C ..............DR
     TO CASH A/C

IF U MISS TO POST THIS TRANSACTION.

BANK/PHYSICAL BALANCE CANNOT BE RECONCILED. OUTSTANDING 
SALARIES APPEARED ON LIABILITIES SIDE.

TRIAL BALANCE WILL NEVER EFFECT WHEN WE MISS TO POST 
JOURNAL ENTRY.

No, we need not deduct TDS for Computer Software 
Subscripttttion.

Please support your answer through Section details or Case Laws...

As per as Cost Audit, Efficiency,quality,less cost,improved 
methodology is to be observed. So that Material, Labour, 
Overhead, Stock of WIP,Finished goods are to be checked 
also give your valuable qualification on the object 
matters.

Every person who has turnover above 40 lacs is foll under 
audit compulsury . This is the tax audit . 
         In tax audit every transaction is checked carefuly 
relating tax and or that transaction comes under any Act.

u/s 44AB of Income Tax Audit Persons earning more than
40 Lakhs, should maintain books of account for the same. 
His accounts should be audited by a Chartered Accountant 
and certify that is called tax audit.

tax audit is compulsory to company but a individual firm 
and partner firm turnover cross 40 lakhs they are liable to 
tax audit,they hire a C.A. do the tax audit

Tax audit is done for valuating of income tax if the 
company or partnership firm has turnover exceeds 40 lacs in 
one previous year or for profeessional the gross fees 
should be more than 10 lacs as per Sec 44AB of income tax 
act 1961

Tax audit is an audit to find out the accurate tax payable 
by the company as per the income tax 1961. And ensure that 
all statutory payments are remitted on or before the 
respective due dates by company.

Moreover, it helps to find out the differebce between 
Company's act and income tax act. The difference is called 
deffered tax assets and liability of the company.

Tax Audit is done if gross turnover of an assessee exceeds 
40 Lac in case of non -professionals and in case of 
professionals the limits is 10 lac, this audit is 
complusory to be done before 31.10.08, otherwise the 
assessee is penalised as per the provisions of the income 
tax act.

Every person who has turnover above 40 lacs is foll under 
audit compulsury . This is the tax audit . 
         In tax audit every transaction is checked carefuly 
relating tax and or that transaction comes under any Act.

Tax audit is compolsary for whose company, etc.. turnover 
40 lakhs and above. this audit is done by a chartered 
accountant. who is a mamber of the institute of chartered 
accountant of india.

In case of company tunover is 40 lac or above Then company 
is Liable to audit the account By chated Accountant. In 
case of indvidual tunover is 10 lac then is liable to audit 
the accounts by chated accountant

carrying on business shall, if his total sales, turnover or 
gross receipts, as the case may be, in business exceed or 
exceeds forty lakh rupees in any previous year or 
carrying on profession shall, if his gross receipts in 
profession exceed ten lakh rupees in any previous year; or 
carrying on the business shall, if the profits and gains 
from the business are deemed to be the profits and gains of 
such person under section 44AD or section 44AE or section 
44AF, as the case may be, and he has claimed his income to 
be lower than the profits or gains so deemed to be the 
profits and gains of his business, as the case may be, in 
any previous year get his accounts of such previous year 
audited by an accountant before the specified date and 
furnish by that date the report of such audit in the 
prescribed form duly signed and verified by such accountant 
and setting forth such particulars as may be prescribed: 
Provided that this section shall not apply to the person, 
who derives income of the nature referred to in section 44B 
or section 44BB or section 44BBA or section 44BBB, on and 
from the 1st day of April, 1985 or, as the case may be, the 
date on which the relevant section came into force, 
whichever is later: 
Provided further that in a case where such person is 
required by or under any other law to get his accounts 
audited it shall be sufficient compliance with the 
provisions of this section if such person gets the accounts 
of such business or profession audited under such law 
before the specified date and furnishes by that date the 
report of the audit as required under such other law and a 
further report in the form prescribed under this section.

Other than individuals, tax audit is casual for all other 
persons. So, government cannot take a car and go to make 
assessment for every tax audit persons. so, government 
introduced Tax audit wherein an Auditor(CA) should verify 
the facts, and should ensure that information provided thru 
tax audit report (Form 3cd) is 'True and Correct'(not 'True 
and fair').

tax audit is compulsory for every company,partnership firm 
or undertaking whose turn over exceeds40 lacs and 10 lacs 
in case of professionals have to compulsory go forthe 
auditing of accounts from a Chartered Accountant under 
section 44AB of the income tax act 1961.

Tax audit is compulsury for Company have turnover more than 
30 Lac, and Individual have turnover more than 10 Lac.

Every person who has turnover above 40 lacs is foll under 
audit compulsury . This is the tax audit . 
         In tax audit every transaction is checked carefuly 
relating tax and or that transaction comes under any Act.
  He should manitain books of account for the same . His 
account by a Chartered  Accountant and certfy that is 
called TAX AUDIT.

person comes under section 44AB or say the person whose 
Sales or Turnover exceeds 40 Lakhs in case of indvidual and 
Company whether listed or unlisted it doesnt matters and in 
case of Professonalism if turnover exceeds 10 Lakhs these 
Persons are Liable for Compulsory Tax Audit dult signed by 
a Chartered Accountant before the due date for furnishing 
return.

more than 40 lacks turnover on the sales

Tax Audit is compulsory for company whose turnover is above 
40 lakhs. turnover means a sales turnover. government 
employees cannot check all firms or cannot audited each and 
every firm or company, for that purpose they can give 
authority to C.A. Who is a authoriesd person of the 
chartered accountant institute of india. in tax audit C.A. 
can check all documents, vouchers, receipts etc. it is not 
only external audit but also internal audit.
Nobody Can Fraud with Government and complite the audit 
procedure truly.

Tax Audit means, audit of accounts of : 
  1. A person carrying on business, if the total sales, 
turnover or gross receipt in business for the accounting 
year or years relevant to the assessment year exceed or 
exceeds40 lakh.
  2. A person carrying on profession, if his gross receipts 
in profession for an accounting year or years relevant to 
any of the assessment year exceeds10 lakh.
  3. An assessee who carries on a business and if  the 
profits and gains from the business are deemed to be the 
profits and gains of such person under section 44AD or 
section 44AE or section 44AF or section 44BB or section 
44BBB, as the case may be, and he has claimed his income to 
be lower than the profits or gains so deemed to be the 
profits and gains of his business, as the case may be, in 
any previous year

Tax Audit means, audit of all type of tax payment or 
received
  1. A person carrying on business, if the total sales, 
turnover or gross receipt in business for the accounting 
year or years relevant to the assessment year exceed or 
exceeds40 lakh.
  2. A person carrying on profession, if his gross receipts 
in profession for an accounting year or years relevant to 
any of the assessment year exceeds10 lakh.
  3. An assessee who carries on a business and if  the 
profits and gains from the business are deemed to be the 
profits and gains of such person under section 44AD or 
section 44AE or section 44AF or section 44BB or section 
44BBB, as the case may be, and he has claimed his income to 
be lower than the profits or gains so deemed to be the 
profits and gains of his business, as the case may be, in 
any previous year
    In Other Word In case of company tunover is 40 lac or 
above Then company 
is Liable to audit the account By chated Accountant. In 
case of indvidual tunover is 10 lac then is liable to audit

Tax Audit is an independent examinition of the Taxpayer's 
Tax returns, books of accounts and records in order to 
determine the correct amount of tax to be paid

xyz was bon thidn dd

Tax audit is done for valuating of income tax if the 
company or partnership firm has turnover exceeds 40 lacs in 
one previous year or for profeessional the gross fees 
should be more than 10 lacs as per Sec 44AB of income tax 
act 1961

any person who is carrying on a business and his annual turn over or gross receipts or sales exceed to 60.00lac in any previous year is required to be audited by a chartered accountant, that is called a tax audit under section 44ab of income tax