CHARTERED ACCOUNTANT’S IN PLANT TRAINING REPORT

CHARTERED ACCOUNTANT’S

A REPORT ON

IN PLANT TRAINING IN

“CHARTERED ACCOUNTANT’S”

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INTRADUCTION

 

CHARTERED ACCOUNTANT (CA):

 

 

Is an accounting designation given to accounting professional in many countries around the world, aside from the United States.  A CA designation typically proves the holder an the qualification to file a business’s tax return, audit financial statements & business practice, and offer advisory services to client.  In the United States, the equivalent to a CA designation is the Certified Public Accountant (CPA)

Designation.

  • Accounting, Auditing and Taxation are the core areas dealt with by chartered accountants.
  • They are also capable of experts level services in the areas of general management, personnel management, financial management, operation management, HR management.

STEPS to Become A CHARTERED ACCOUNTANT

STEPS to Become A CHARTERED ACCOUNTANT

PROCESS BOOK KEEPING OF SRK COMMERCE

 

  • Understand the Business.
  • Study Prior Period Financial Statements if any.
  • Study Prior Accounting System in detailed.
  • List down the required documents for Current Period.
  • Communicative Listed Required Documents.
  • Receive Documents.
  • Validate Documents.
  • Sort out the Documents Month Wise & Date Wise.
  • Update Document checklist
  • Enter transactions in Tally ERP as per SRK Standards.
  • Note down the list of internal / external clarifications.
  • Discus the listed internal / external clarifications.
  • Action for clarification.
  • Review – Self.
  • Review – Peer.
  • Review – Management.
  • Review – Client.
  • Handover Books of Accounts.

 

Chapter- 02

ACCOUNTING

Definition:

                   “Accounting is an art of recording, classifying, and summarizing in a significant manner and in terms of money transactions and events which are in part at least of a financial character and interpreting the results thereof”.

Meaning:

                   It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information.  It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities and owners’ equity.

Features of Accounting:

  • Identifying: Selecting transactions and events of separate nature.
  • Measuring: Expressing the business transaction in terms of
  • Recording: Recording in books of accounts.
  • Classifying: Grouping of transactions of same type in separate accounts.
  • Summarizing: To bring together a number of classified account under one single account. For example the accounts of various customers are grouped under as debtor’s accounts.
  • Significant: Accounting information is presented in a significant manner for making decisions.
  • Interpretation : Explaining the meaning and significance of the relationship of established.
  • Communication: Communicating the results of interpretation of financial statements to the end – users.

ACCOUNTING STRUCTURE

ACCOUNTING STRUCTURE

VOUCHING

Vouching is defined as the “verification of entries in the books of account by examination of documentary evidence of vouchers, such as invoices, debit and credit notes, statements, receipts, etc.,”

“Vouching is the essence or backbone of auditing because when performing an audit, an auditor must have proof of all transactions.  Without the proof provided by vouching, the claims provided by the auditor are just that, only claims.”

IMPORTANCE OF VOUCHING

Vouching is the process of checking the evidence between the accounting systems, booking records (transactions) and the supporting documents     (invoice, receipt. Bills…) to detect or to find out errors or frauds, and to check the accuracy and reliability of records.

  • Proper Evidence – It acts as an evidence for the entries recorded in the books of accounts. It is the work of vouching to ensure that proper evidence is available for every entry.
  • Proper Authority – To verify proper authority behind every transaction. Transactions are not accepted without signature of concerned manager.
  • Cash Balance – It is conducted to check if the cash in hand is correct. To count cash and compare it with cash book.
  • Backbone of Auditing – Vouching is the only way of detecting all sorts of errors and planned frauds. Hence it is the backbone of auditing.
  • Essence of Auditing – Auditing checks if transactions are related to business or not. It checks for fictitious transactions created for committing frauds. All these facts can be found with the help of vouching.  So, vouching is essential for auditing.
  • To check whether evidences are correct or not – Frauds may be committed presenting duplicate vouchers. Evidential documents or records are to be checked carefully which is the scope of vouching.

 

          TECHNIQUES OF VOUCHING

  • Documentary evidence
  • Correct accounts
  • Agreement

Chapter-03

                   BASIC INTRODUCTION TO AUDITING

                                                                                     

Meaning of auditing:

 Auditing is an independent examination of financial information of an entity whether profit oriented or not and irrespective of its size with a view to express an opinion.

Components of Financial Statement:

  • Balance sheet
  • Profit & Loss Account
  • Cash Flow Statements
  • Notes to Accounts

Uses of Financial Statement:

  • Owner
  • Management
  • Lenders & Creditors
  • Customers
  • Government
  • Employees

Features of Auditing:

  • Audit is a systematic and scientific examination of the books of accounts of a business.
  • Audit is undertaken by an independent person or body of persons who are duly qualified for the job.
  • Audit is a verification of the results shown by the profit & loss account and the state of affairs as shown by the balance sheet.
  • Audit is a critical review of the system of accounting and internal control.
  • Audit is done with the help of vouchers, documents, information and explanations received from the authorities.
  • The auditor has to satisfy himself with the authenticity of the financial statements and report that they exhibit a true and fair view of the state of affairs of the concern.
  • The auditor has to inspect, compare, check, review, scrutinize the vouchers supporting the transactions and examine correspondence, minute books of shareholders, directors, memorandum of association and article of associations etc., in order to establish correctness of the books of accounts.

Objectives of Auditing

 There are 2 main objectives of auditing.  The primary objective and the secondary or incidental objective.

  1. a. Primary Objective – The primary duty (objective) of the auditor is to report to the owners whether the balance sheet gives a true and fair view of the company’s state of affairs and the profit and loss account gives a correct figure of the profit of loss for the financial year.

  1. Secondary Objective – It is also called the incidental objective as it is incidental to the satisfaction of the main objective. The incidental objective of auditing

Are:

  • Detection and prevention of frauds, and
  • Detection and prevention of errors.

Limitations of Auditing:

  • Non – detection of errors/frauds: – Auditor may not be able to detect certain frauds which are committed with malafide intentions.
  • Dependence on explanation by others: – Auditor has to depend on the explanation and information given by the responsible officers of the company. Audit report is affected adversely if the explanation and information prove to be false.
  • Dependence on opinions of others:-Auditor has to rely on the views or opinions given by different experts viz Lawyers, solicitors, Engineers, Architects etc., he cannot be an expert in all the fields 16
  • Conflict with others: – Auditor may have differences of opinion with the accountants. Management, engineers etc. In such a case personal judgment plays an important role.  It differs from person to person.
  • Effect of inflation: –Financial statements may not disclose true picture even after audit due to inflationary trends.
  • Corrupt practice to influence the auditors: –The management may use corrupt practices to influence the auditors and get a favorable report about the state of affairs of the organization.

  • Inherent limitations of the financial statements: – Financial statements do not reflect current values of the assets and liabilities. Many items are based on personal judgment of the owners. Certain non-monetary facts cannot be measured.  Audited statements due to these limitations cannot exhibit true position.
  • Detailed checking not possible: -Auditor cannot check each and every transaction. He may be required to do test checking.

Some of the basic Auditing Terminologies:

  • Audit Evidence: Information obtained by the auditor to draw conclusions & express opinion on Financial Statements.
  • External : Audit Evidence obtained from Third parties ( other than Business entity resource)
  • Documentations: Material that service as a record or proof.
  • Working Papers: Auditor records his observations or process of a audit of a particular entity.
  • Audit Sampling: Technique used in conducting Audit. Checking records by less than 100%
  • Audit Planning: It is conducted at the beginning of Audit top ensure all the areas of audit are covered within the scheduled time by keeping in mind nature, extent & Timing.
  • Vouching: Process of Examining vouchers, documents, evidence relating to a transaction to ensure it is properly accounted in the books of accounts.

  • Points to be considered while examining vouchers:

  1. Voucher is properly dated.
  2. It is in Client’s name
  3. It is duly authorized
  4. Voucher is complete in all respects
  5. Amount & nature of transactions are clearly shown
  6. Voucher should be stamped

  1. Verification: It is a process to verify the ownership, valuation, possession & Existence of a particular Asset or Liability.

                             Objective of Verification:

  1. Authorization; To ascertain the transactions are authorized.
  2. Cost: To ascertain cost of the entity
  3. Valiaton: To find out accuracy of valuation of Asset.
  4. Existence: To ensure asset is actually in existence
  5. Ownership: To ascertain actual ownership title of that particular  asset
  6. Disclosure: To check appropriate disclosure of the asset in the Books of Accounts.

Auditor:

          The auditor is an individual who is trained to review and verify that the accounting data provided by an audited entity accurately corresponds to the activities that have been partaken by the by the company.

          Financial Statements preparations are the responsibility of the Management.  Auditor role is to express an opinion on such Financial Statements whether it reflects true & fair view of the Entity & it’s free from all material misstatements.  Auditor expresses their opinion in Audit Report.

 

GST

Issues in indirect taxes at present:

  • Cascading effect of tax / Tax on more than 100% value
  • No credit of Taxes paid – CST, Octroi, etc.
  • Various forms to be submitted
  • Compliance under multiple laws
  • Check posts, transport documentations, delay in transportation
  • Less use of technology in tax administration
  • Complex Tax Structure
  • High scope of litigation
  • Ways to parallel economy / corruption

GST

GST

WHAT IS EXCLUDED????                                                                        

  • Petroleum crude;
  • High speed diesel;
  • Motor spirit (commonly known as petrol);
  • Natural gas;
  • Aviation turbine fuel; and
  • Alcohol for Human Consumption;
  • Electricity Duty;
  • Stamp Duty


GST IN INDIA

  • Origin based to destination based
  • Multi-stage value added tax
  • Levy and collection by both Centre and States
  • Recommendation by GST Council +Law making by Parliament    and State Legislatures
  • IGST, CGST & UTGST Law – Parliament & Govt.
  • SGST – by the respective State Legislature and State Govt.
  • Upto 1.5 Crores – 90% of assesses by State and 10% by Centre
  • Above 1.5 Crores – 50% by each
  • Filing of returns Electronically.. GSTN
  • Lot of documentation and procedural compliances
  • State wise / business vertical wise registration
  • . very few, may be by way of refunds
  • Levy is on Supply
  • Extends to whole of India except the state of Jammu & Kashmir.
  • Clarity awaited on area based exemption
  • Works contract is confined only to Immovable Property.  

BASIC CONCEPT

  • Intra-State supply (Local Supply)– CGST + SGST/UTGST
  • Inter-State supply/ Imports – IGST  Exports – Zero rated supply (including SEZ) – No tax – Credit Available
  • Stock Transfers
  • Within the tax – No Tax (covering under one Regn.)
  • Inter-state – Liable for GST
  • Rate Tax structure – 0%, 0.25%, 3%, 5%, 12%, 18% & 28%
  • Registration and threshold Limit is similar to VAT law – Once regd. Will become taxable person.
  • Within the tax – No Tax (covering under one Regn.)
  • Inter-state – Liable for GST
  • Rate Tax structure – 0%, 0.25%, 3%, 5%, 12%, 18% & 28%
  • Registration and threshold Limit is similar to VAT law – Once regd. Will become taxable person.
  • Each registration is separate person;
  • Purchase/procurement by Regd. Person from Unregistered – Receiver to pay GST on Reverse charge (URD);
  • Specific Services – Receiver to pay tax;
  • In case of supply of goods through E-commerce operators – Tax to be paid by Supplier – E-com operator will deduct 2% tax;
  • Anti-Profiteering Measure;
  • Compliance Rating – Un-organized business to have negative impact;
  • Multiple returns and state-wise registrations – ITC Matching concept;

LEVY of GST

  • On Supply of:
  • Goods
  • Services
  • Both
  • On Value to be determined;
  • At rates to be notified by Govt. (as recommended by GST Council)
  • Collected as per the Rules framed
  • To be paid by TAXABLE PERSON

SUPPLY

NOT SUPPLY

Schedule 111: specifies certain activities as neither supply of goods nor supply of service

  • Services by:
  • Employee to the employer
  • Any Court & Tribunal
  • Funeral, burial services
  • Actionable claims other than  lottery, betting and gambling
  • Sale of land & Building  after OC or First Occupation;
  • Functions performed by the MPs, MLAs, Members of Panchayats, Members of Municipalities and Members of Local Bodies and Person who hold post in pursuance of provisions of Constitution etc.,

 

 

 WHY REGISTRATION??

  • Statutory requirement
  • To claim Input Tax Credit
  • Except in case of composition scheme
  • Collection of Tax
  • Except in case of composition scheme

 

 

TAXABLE PERSON & REGISTRATION.

  • Taxable person means a person who is:-
  • Registered or
  • Liable to be registered under section 22 or 24
  • Every supplier shall be liable to registered in the state or union territory From where he makes taxable supply

 WHO is REQUIRED to be REGISTERED.

  • Supplier when aggregate value exceeds 20L (in case special category states – 10L);
  • Person Regd. under pre-GST law – on appointed day;
  • Persons making any inter-State taxable supply;
  • Who supply goods or services on behalf of others including Agent;
  • Casual taxable persons making taxable supply;
  • Non-resident taxable persons making taxable supply;
  • When goods or services are supplied through E-com;
  • Where tax is payable on reverse charge;
  • Who is required to deduct tax under section 51;
  • Input Service Distributor;
  • E-commerce operator;
  • OIDARS from outside India to person in India, other than a registered person
  • Others as may be notified by Govt.

How Aggregate Turnover Computed

  • Aggregate value of all (to be computed on all India basis) :
  • Taxable supplies (both inter-state and intra-state);
  • Nil Rated goods/services;
  • Exempted goods/services;
  • Non-taxable supplies;
  • Export of goods and/or services;
  • Excludes
  • taxes, if any (CGST,SGST or IGST);
  • Specifically stated as – not supply of goods or service
  • Should include even supplies made on behalf of his principals.
  • Supplies made by Job Worker – treated as supply in the hands of principal.

Illustration

  • A manufacturer has five factories in Maharashtra and sale office in 3 states (including Maharashtra). It also has centralized service tax registration at Maharashtra. What would be difference in registration requirements under GST?
  • Total Present Registration: 5 (excise) + 3 (VAT) + 1 (Service Tax) = 9
  • Registration under GST: 3 (in 3 states) {In each state, registration would be with both CG and SG. But only one registration number and certificate would be issued for each state)

 Exemption From Refg.

  • Person engaged exclusively in supply of goods/services
  • Not liable to tax; or
  • Wholly exempt from tax under this act or IGST act;
  • Agriculturist, to the extent of supply of produce out of cultivation of land;
  • Notified category of persons (on recommendation of council)

COMPOSITION LEVY

Govt may permit a regd. Taxable person whose aggregate TO in the preceding FY did not exceed Rs. 75 lakhs to pay composition tax.

Aggregate Turnover as explained earlier

Composition-Restriction

  • Composition is not available for –
  • Service provider other than supply of food and beverages mentioned above.
  • Making supplies not leviable to tax (Petroleum and alcoholic beverages).
  • Engage in making inter– state outward supply of goods.
  • Supply of goods through e-com. Operator.
  • Not a manufacturer of notified goods.

  • Cannot opt for different Scheme in different Regn.
  • It will lapse on crossing the limit;
  • Tax cannot be collected as well as No Credit eligibility

Composition-Restriction

TIME OF SUPPLY

  • GST Payable on advances received;
  • Advance can be collected inclusive of Taxes;
  • All adjustments through Debit Notes/ Credit Notes

POS-GOODS-Within INDIA

POS-GOODS-Within INDIA

VALUATION

SPECIFIC QUERIES

  • Rate of Taxes
  • Arecanut
  • Fresh – Nil
  • Dried – Whether or not shelled – 5%
  • Rice
  • Put up in Container and bearing Regd. Brand Name – 5%
  • Others – Nil
  • Avalalkki – Nil
  • Rice Bran, Husk – Nil
  • Others – to be identified with specific classification.

INCOME TAX

          INTRODUCTION

  • Income tax is today an important source of revenue for government in all countries.
  • More than 3,000 years ago, the inhabitants of ancient Egypt and Greece use to pay income tax, consumption taxes and custom duties.
  • Income tax was 1st introduced in Srilanka in 1932 by Mr. N.J.Husham was appointed as the commissioner to administer tax.

Definition:

The definition of the term “income” in section 2(24) is inclusive and not exhaustive.  Therefore, the term “income” not only includes those things which are included in section 2(24) but also includes such things which the term signifies, according to its general and natural meaning.  Before discussing the definition of income given in section 2(240, it is imperative to know meaning of “income” as generally understood.

Meaning:

          The term income simply means something which comes in.  It is a periodical return with regularity or expected regularity.  Income does not only refer to monetary return but also includes non-monetary returns.  It includes value of benefits and perquisites as well.  All such incomes are to taxed unless otherwise it is specifically exempted by any such provisions of the Act.

What is Income Tax?

  • An income tax is a government tax imposed on individuals or entities that varies with the income or profits (taxable income) of the tax payer.
  • Many jurisdictions refer to income tax on business entities as companies tax or corporation tax.
  • Partnerships generally are not taxed; rather, the partners are taxes on their share of partnership items.
  • Tax may be imposed by both a country and subdivisions there of most jurisdictions exempt locally organized charitable organizations from tax.
  • Income tax generally is computed as the product of a tax rate times taxable income.
  • The tax rate may increase as taxable income increases (refer to as graduated rates).
  • Tax rates may vary by type or characteristics of the taxpayer.
  • Capital gains may be taxed at different rates than other income.
  • Credits of various sorts may be allowed that reduce tax.
  • Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income.

 

Why do the Government Impose Tax?

  • Raising money for government spending.
  • Redistributing income.
  • Social development.
  • Demand management.
  • Correcting market failure.

 

 

Why Do We Need Pay Income Tax?

  • Income tax is one of the major taxers that most people pay.
  • The Constitution gives the government the right to collect taxes for several reasons, including waging war, borrowing money and providing services.
  • In addition, most governments collect income taxes that they use for many of the same reasons, which include providing some vital services to taxpayers.

FEATURES OF INCOME:

                   A study of the following broad principles will be helpful for understanding the concepts of income:

  1. a) REGULAR AND DEFINITE SOURCE: – The term “income” connotes a periodical monetary return coming in with some sort of regularity or expected regularity from definite source.

  1. b) INCOME MUST COME FROM OUTSIDE: – No one can earn income from himself. There can be no income from transactions between head office and branch office. Contributions made by members for the mutual benefit and found surplus cannot be termed as income of such group.
  2. c) RECEIPTS VS. ACCRUAL: – Income arises either on receipt basis or on accrual basis. Income may accrue to a taxpayer without its actual receipt.  Moreover, in some cases, income is deemed to accrue or arise to a person without its actual accrual or receipt.

  1. d) TAINTED INCOME: – The income-tax law does not make any distinction between income accrued or arisen from a legal source and income tainted with illegality. Assessment o illegal income does not grant him immunity from the applicability of the provisions of other Act.

  1. e) DISPUTED TITLE-Income: – tax assessment cannot be held up or postponed merely because of existence of a dispute regarding the title of income.

  1. f) TEMPORARY OR PERMANENT: – Whether the income is permanent or temporary, it is immaterial from the tax point of view. Even temporary income is taxable.

  1. g) DIVERSION OF INCOME BY OVERRIDING TITLE VS. APPLICATION OF INCOME: – Any expenditure / investment, after income is received, is application of income. “Income” under the income-tax Act, which is chargeable to tax, is income before application of income.  Any expenditure investment out of such income is deductible only if it is permitted by a provision under the income-tax act or income -tax rules.

          Diversion of income means that a part of the income or whole of such income does not reach to assess.  It is diverted to some other person due to some legal obligation.

  1. h) LUMP SUM RECEIPT:- Income, whether received in lump sum or in installments, is liable to tax. For instance, arrears of bonus, received in lump sum, are income and are taxable as salary.

  1. I) TAX-FREE INCOME:- If a person receives tax-free income on which tax is paid by the person making payment on behalf of the recipient, it has to be grossed up for inclusion in his total income.

  1. j) VOLUNTARY RECEIPTS: – The receipts which do not arise from the exercise of a profession or business or do not amount to remuneration and are made for reasons purely of personal nature are not included in the scope of total income.  Receipt on account of dharmada, gaushala, and pathshala is not income and, therefore, not liable to tax`

  1. k) INCOME INCLUDES LOSS:- Income includes loss. While income, profits and gains represent “plus income”, losses represent “minus income”.

  1. l) TREATMENT OF GIFTS:-W.e.f.1-10-2009 in case of individual or U.F., subject to certain exceptions, the following three kinds of gifts are treated as income under the head other sources u/s 56(2)
  • Monetary Gifts
  • Gift of Immovable Property
  • Gift of Property other than immovable property

Chapter04

                                            

 

CONCLUSION

____________ Chartered Accountants Company.  ______. Is also one of the Chartered Accountants in __________.  This was an added challenge to all the accounting staff as the listing the accountability of the organization as gained a higher reach.  The accounts department took the challenge and proved their spirit by the timely publication of yearly annual financial Reports.  Each and every section in the department deserves to the complemented.  In this report I have tried my level best to identify management accounting technique and procedures used by __________,. What and how ___________,. Use accounting information for decisions making and external financial reporting along with describing the procedure and systems of using accounting information.  In this report, imply our acquired knowledge from accounting course and try to comply with the techniques procedure and system followed by the company.

VOUCHING OF FILES

VOUCHING OF FILES

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