INTERNSHIP TRAINING REPORT

A report is submitted to NGM College for the award of the degree of

Bachelor of Commerce (Professional Accounting)

Submitted by
S.SANJAY
(19-CP-21)

Under the guidance of

Dr.S.B.GAYATHRI, M.Com, M.Phil., Ph.D.,
Assistant Professor

UNDER GRADUATE DEPARTMENT OF COMMERCE PROFESSIONAL ACCOUNTING

NALLAMUTHU GOUNDER MAHALINGAM COLLEGE

(An Autonomous and Affiliated to Bharathiar University)
Re-Accredited with “A” Grade by NAAC
An ISO 9001:2015 certified institution
Pollachi – 642 001
March-2022
 CERTIFICATE

CERTIFICATE
 This is to certify that the Project report prepared by S.SANJAY (19-CP-21) is a
Bonafide work done under my supervision.

Place:
Date :

----------------
GUIDE

COUNTER SIGNED BY

----------------------------------
HEAD OF THE DEPARTMENT

-------------------------------- --------------------------------

INTERNAL EXAMINAR EXTERNAL EXAMINAR

AUDITOR PROFILE
 AUDITOR PROFILE

NAME : S.RAMKUMAR

ORGANISATION NAME : SRI VARI AUDITOR

ADDRESS : Near Canara Bank, Palani Main Road ,

Madathukulam, Thirupur DT,

PIN- 642113

EDUCATIONAL QUALIFICATIONS : Bcom, GSTP

DEIONIZATION : TAX AUDITOR

PHONE NO. : 9865195493

EMAIL ID : [email protected]

NO OF STAFFS : 10

NATIONALITY : INDIAN

AREA OF SERVICE : External Auditing, Internal auditing, Income

Tax, TDS Consultancies, Sales tax,

VAT&CST, Applying for PAN CARD ,

TIN&CST Registration.
DECLARATION
 DECLARATION

I do hereby declare that this project report entitled PRACTICAL AUDITING INTERNSHIP
TRAINING REPORT is submitted to Nallamuthu Gounder Mahalingam College (an Autonomous and
Affiliated to Bharathiar University) in partial fulfillment of the requirement for award of B.Com (PA).,
degree is a record of original work done by us during the period of our study 2019-2022, under the

supervision and guidance of Dr.S.B.GAYATHRI, M.Com, M.Phil., Ph.D., Assistant Professor NGM
College, Pollachi.

Place:

Date :

Signature of the Candidates

ACKNOWLEDGEM
ENT
 ACKNOWLEDGEMENT
Blessing of Almighty to complete the research work successfully. Any piece of research, being a
team work, is almost impossible to complete without the help of others. This Study became possible due to
the whole hearted co-operation of many scholastic person and well-wishers. I deem it a great pleasure to
acknowledge them here.

My Sincere thanks to our Principal Dr. R. MUTHUKUMARAN, M.A.,M.Phil.,B.Ed,.Ph.D.

Principal, Nallamuthu Gounder Mahalingam College, Pollachi for providing the necessary facilities to carry
out the research.

My pleasure to record my thankfulness to my guide, Dr. S.B.GAYATHRI.,M.Com., M.Phil., Ph.D.

Associate Professor of Commerce, Nallamuthu Gounder Mahalingam College, Pollachi for her valuable
guidance, Constant encouragement and motivating me in successful completion of this project work with in
short span of time.

I Show my gratitude and thanks to Dr. S.B.GAYATHRI.,M.Com., M.Phil., Ph.D. Associate

Professor and Head of Commerce professional accounting, Nallamuthu Gounder Mahalingam College,
Pollachi for moral support and motivating me to complete this project.

It’s my bounded duty to express my heartiest thanks to all other Faculty Members of Commerce
professional accounting, Nallamuthu Gounder Mahalingam College, Pollachi for their encouragement to
carry out the course.

I committed to place my heartfelt thanks to S.RAMKUMAR An Auditor and other office

colleagues, Pollchi for their continuous support, suggestions and encouragement in the completion of this
project work.

I feel happy to express my thanks My Parents & My Friends who always stand with me and render
all necessary help in all my efforts and accomplishment during the period of project.
CONTENTS
CHAPTE CONTENTS PAGE
R NO : NO

1 AUDITING & ACCOUNTING

Accounting
Need and importance of accounting
Features of accounting
The auditor
Qualification and disqualification of auditor
Functional qualification of auditor
Difference between internal and external auditor
Meaning of auditor
Definition
Objectives of auditing
Limitation of auditing
Accounting audits

FILING, VOUCHING,
2
VERIFICATION, VALUATION
Filing
Meaning of voucher
Definition of vouching
Characteristics of vouching
Objectives of vouching
Importance of vouching
Points to be considered in vouching
Verification & valuation
Meaning of verification
Objectives of verification
Difference between vouching and verification
Meaning of valuation
 Difference between valuation and verification

TALLY ERP 9
3
Introduction
Objectives
Short cuts of tally
Accounting vouchers
Conclusion
4 GOODS AND SERVIVES TAX
Introduction
Types of GST

Benefits of GST Implementation

Challenges for Implementing GST System
Advantages of GST
Disadvantages of GST
How will GST work in India
Filling GSTR-3B
To make payment towards GSTR-3B
Conclusion

5 SUMMARY AND CONCLUSION

Summary
Conclusion
 CHAPTER 1
AUDITING&ACCOUNTING
 AUDITING & ACCOUNTING

2.1 ACCOUNTING:
Accounting involves recording and maintaining books of accounts and it also includes analysing,
interpreting and communicating the information. Accounting is the practice and body of knowledge
concerned primarily with

1. Methods for recording transactions,

2. Keeping financial records,
3. Performing internal audits,
4. Reporting and analysing financial information to the management and
5. Advertising on taxation matters

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.

1. Resources available to a firm,

2. The means employed to finance those resourced and
3. The results achieved through their use.

2.2 NEED AND IMPORTANCE OF ACCOUNTING:

Accounting is useful to know:

 What has happened to the investments?

 What is the result of business transaction?
 What are the earnings and expenses?
 How much amount is receivable from the customer and to whom the goods are to be sold on
credit?
 How much amount is payable to the suppliers on account of credit purchases?
 What are the nature and value of assets possessed by the business concern?
 What are the nature and value of liabilities of business concern?

2.3 FEATURES OF ACCOUNTING

2.3.1 Recording

Accounting is the art of recording of transactions only business relative transaction are recorded in
which money is mentioned. All transactions are recording detail. Both journal and subsidiary books are
used for this.

2.3.2 Classifying
 Accounting’s main feature is also classifying all business transactions. Accounting makes group of all
similar accounting entries in one place. For example all receipt and payment will be shown in cash book.
So, all transactions are collected under one common head. This system is also called classification of
transaction. This process is completed by opening accounts in books. These books are called ledger.

2.3.3 Summarizing

Summarising is the art of showing business results in summarize form. After this, it can use for all
the interested parties. This future tells about to financial statement. One is trading and profit and loss
account and other is balance sheet.

2.3.4 Interpreting

By interpreting, we can know whether the position of profitability is good or bad. By knowing
this, we can estimate business’s performance.

2.4 THE AUDITOR

The person conducting the audit is known as auditor. He makes report to the person appointed
him after due examination of the accounting records and the accounting statements in the form of an opinion
on the financial statements. The opinion that he is called upon to express is whether the financial statement
reflect a true and fair view.

2.5 QUALIFICATION AND DISQUALIFICATIONS OF THE AUDITOR

 He must not be the employee or officer of the company.

 He must not be indebted to the company for a sum exceeding Rs.1000.
 He must not be the partner or employee of the officer or employee of the company
 In India, under the authority of the companies act, 1956 only chartered accountants are
professionally qualified for the audit of the accounts of companies. Qualified auditor: a
person who is a chartered accountant within the meaning of the chartered accountants acts,
1949.

2.6 FUNCTIONAL CLASSIFICATION OF AUDITOR

AUDITO
R

INTERNAL AUDITOR EXTERNAL AUITOR

2.7 DIFFERENCE BETWEEN INTERNAL AUDITOR AND EXTERNAL IN TABULAR FORM

S.NO BASIS INTERNAL AUDITOR EXTERNAL AUDITOR

1. Appointment Appointed by the Appointed by the shareholders

management
2. Legal position He is not compulsory His appointment is compulsory
by law
3. Status He is an employee of the He is independent person
company
4. Qualification Specific qualification is not Specific qualification is
compulsory compulsory

5 Submission of He need not submit any He need to submit the report to

remuneration report the shareholders

6. Fixation of Internal auditor External auditor remuneration

remuneration remuneration is fixed by is fixed by the shareholders of
the management of the the company
company
7. Name of Internal auditor receives External auditor receives audit
remuneration salary fee
8. Nature of checking Internal auditor checks all External auditor may apply test
the transactions check

9. Right of attending Internal auditor has no right External auditor has a right to
meeting to attend the meeting of the attend the meetings
company’s shareholder

10. Kinds of audit Internal audit is kind of External audit is conducted

continuous audit after the preparation of final
accounts

11. Guidance Internal auditor gives External auditor has no need to

suggestions to the give suggestions unless he is
management for the asked
betterment of the business

12. Duties Internal auditor primary External auditor has to report

duty is to find the frauds about final accounts whether
and errors these are true or false

13. Removal Internal auditor can External auditor can be

removed by the removed by the shareholders.
management

14. Case of misconduct Internal auditor cannot be External auditor can be

prosecuted for professional prosecuted
misconduct except (C.A)
2.8 MEANING OF AUDITING:

1. As examination and verification of a company’s financial and accounting records and supporting
documents by a professional, such as a certified public accountant.
2. As audit is an IRS examination of an individual or corporation’s tax return, to verify its accuracy.

There are three types of audits.

I. Correspondence audits (the IRS mails a request for additional information),

II. Office audits (an interview is conducted at a local IRS office) and
III. Field audits (an interview is conducted at a taxpayer’s place of business, for a corporate tax
return)

Since there is always the chance of an audit, experts recommend keeping good records to support all the
information in a return. The reason detailed and accurate book keeping is so important is that the burden of
proof is on the filer, not the IRS.

2.9 DEFINITION

Accounting to general guidelines on internal auditing issued by ICAI, “auditing is defined as a

systematic and independent examination of data, statements, records, operations and performance of an
enterprise for a studied purpose. In any auditing situation the auditor perceives and recognize the
propositions before him for examination, collects evidence, evaluates the same and on this basis formulates
his judgements which is communicated through his audit report.”

2.10 OBJECTIVES OF AUDITING

There are two objectives of auditing.

 Primary objective as per section 227 of the companies act 1956, the primary duty (objective) of the
auditor is to report to the owners whether the balance sheet gives a true an fair view of the
company’s state of affairs and the profit and loss a/c a gives a correct figure of profit or loss for the
financial year.
 Secondary objective it is also called incidental objective as it is incidental to the satisfaction of the
main objective. The incidental objectives of auditing are:
I. Detection and prevention of frauds and
II. Detection and prevention of errors

2.11 LIMITAIONS OF AUDITING

 Non-detection of errors/frauds
 Dependence on explanation by others
 Dependence on opinions of others

 Conflict with others

 Effect of inflation
 No assurance
 Corrupt practices to influence the auditors
 Financial statements do not reflect current values of the assets and liabilities
 Detailed checking not possible

ACCOUNTIG AUDITS:
 Accounting audits bring these two distinct concepts together and can convey significant benefits to
small and large businesses alike. An accounting audit by definition is a systematic review and investigation
of the policies, procedures and systems put in place to record, store and present financial data within a
company. Accounting audits cover the full range of the accounting cycle, looking for inconsistencies,
inefficiencies, errors and incidents of unethical conduct at all steps in the process. Audits begin by analyzing
the systems put in place to ensure that the accounting department receives all transaction documents in a
timely manner. Audits review the accounting system in depth to ensure that all necessary accounts are
present and maintained accurately. Accounting audits also review financial statements and the processes
used to prepare financial statements.

DUTIES OF AN AUDITORZ

I came to know that the auditors while performing their auditing work are very keen and careful
in their duties. The duties of auditor are very much essential in order to complete their work very effectively
and efficiently. Their first and foremost duty is detection and prevention of errors and frauds and expression
of opinion regarding the financial statement. Some of the other duties performed by the auditors are as
follows:
  The auditor must verify the stocks of furniture, equipments, stationery etc.,
 He must see that all the assets and liabilities have been brought into accounts.
 He must verify the balance at bank and cash in hand.
 He should see that annual increments in the salary to the staff members are duly authorised by the
managing committee.
 He should carefully go through the documents relating to the setting up of the organisation such as
Partnership Deed, MOA, AOA and note important points
 He should ascertain whether there is an effective interval check and internal control
 He must see that the expenses are properly classified between capital and revenue.
 He must thoroughly check all payments on account of salaries, wages, electricity, purchase etc.,
 He must verify the closing stock.
 He must see that proper depreciation is provided for all assets like machines, furniture and other
equipments
 Vouch the payments on account of advertisements with the agreements entered with the advertising
 Vouch the receipts with the counter files of carbon copies of the receipt books
 Payments should be vouched with vouchers
 He should see whether the expenditure under different heads does not exceed the budgeted amount.
 He should examine the system of book keeping in the company
 He should physically verify the several assets of the company in the respective ledger accounts and
stock registers etc.,
 Reconcile the books of accounts with respective tax returns

WHY AUDITING IS ESSENTIAL?

Getting their accounts audited is very much essential and useful in various ways to the owners or
shareholders or any person of their concern. Some of the advantages of auditing as per the details equipped
during the training are here under:

 Errors and frauds are located at an early date and in future, no attempt is made to commit such or one
is rather careful not to commit an error or a fraud as the accounts are subject to regular audit
 The auditing of accounts keep the accounts clerks regular and vigilant as they know that the auditors
would complain against them if the accounts are not prepared up-to- date or if there is any
irregularity
 In case of fire, the insurance company may settle the claim on the basis of the audited accounts of the
previous years
 Money can be borrowed easily on the basis of previous audited balance sheet
  If the business is to be sold as a going concern, there will not be difficulty regarding the valuation of
assets and goodwill as the accounts have already been subject to audit by an independent person
 Income-tax authorities generally accept the Profit & Loss A/C which has been prepared by a
qualified auditor and they do not go into details of the accounts
 Sometimes the management may consult the auditor and seek his advice on certain technical points
although it is not the duty of the auditor to give advice
 If the accounts have been prepared on a uniform basis, accounts of one year can be compared with
other years and if there is any discrepancy, the cause may be enquired into
 Audited accounts are considered correct by the Sales Tax Authorities
 It would also facilitate the settlement of the accounts of a decease

BOOKKEEPING & VOUCHING

Bookkeeping involves the recording of a company's financial transactions. The transactions will
have to be identified, approved, sorted and stored in a manner so they can be retrieved and presented in
the company's financial statements and other reports. Today bookkeeping is done with the use of
computer software. Common financial transactions and tasks that are involved in bookkeeping include:

 Billing for goods sold or services provided to clients.

 Recording receipts from customers.
 Verifying and recording invoices from suppliers.
 Paying suppliers.
 Processing employees' pay and the related governmental reports.
 Monitoring individual accounts receivable.
 Recording depreciation and other adjusting entrie
 Chapter 2
FILING, VOUCHING, VALUATION,
VERIFICATION

FILING, VOUCHING, VALUATION, VERIFICATION

3.1 FILING:
Collection of data or information or bill that has a name is known as file. Analysing the data before
vouching is known as filing.

3.2. MEANING OF VOUCHER

 Vouchers the documentary evidence in support of transactions entered in the books of accounts .For
every entry in the books of accounts, there should be a voucher supporting it. Receipt, invoice, cash memo,
debit note, credit note, account sales, correspondence, counter-foils of cheque book & pay in-slip, bank pass
book, dividend warrant, wage sheets, agreements, a copy of purchase order, material requisition, minutes,
resolutions are some of the important vouchers.

3.2.1 DEFINITION OF VOUCHING

In simple words, vouching means verification of accuracy, authority and authenticity of transactions
that appear in the books of original entry with the help of vouchers of these
transactions.
We shall examine some definitions of vouching given by different authors:

(1) According to B.B. Bose: “By vouching is meant the verification of the authority and
authenticity of transactions as recorded in the books of accounts.”

(2) In the words of Ronald A. Irish, “Vouching is a technical term, which refers to the
inspection of documentary evidence supporting and substantiating a transaction.”

3.2.2 CHARACTERISTICS OF VOUCHING

The following characteristics of vouching are clear from above mentioned definitions:
(1) It is an examination of entries in books of accounts.
(2) Such examination is done with the help of vouchers like receipts, invoices, counterfoil or
cheque books & pay-in-slips, pass-book, agreements, resolutions, minute book, correspondence etc.
(3) Vouching substantiates a transaction.

(4) It ensures the correctness of transactions entered in the books.

(5) It is an important aspect auditing.
(6) Auditor begins his audit-work with vouching.

3.2.3 OBJECTS OF VOUCHING

The principal objects of vouching are as under:
(1) To see that all transactions correctly recorded in the books of accounts.
(2) To see that entries recorded in the books of accounts are supported by documentary
evidence.
(3) To ascertain that all transactions are duly authorized.
(4) To ascertain that no transaction is left out from being recorded.
(5) To see that necessary vouchers relating to entries recorded in books are with the client.
Thus the purpose of vouching is not merely to verify that the payments have been made, but
to verity further that the payment relates to the business and is approved by proper authority.

3.2.4 IMPORTANCE OF VOUCHING

Vouching is the first step for auditing. The auditor commences his work with the examination of entries and
vouching plays an important role in this respect. The correctness of books of accounts is tested by vouching.
If the vouching is carried out with due care and intelligence, the audit work becomes smooth and easier. All
subsequent steps of auditing are dependent on vouching. Usually frauds and errors can be detected by
vouching.

In the words of De Paula, “Vouching is the essence of auditing.” The success of failure of Auditing
depends on vouching. Audit work is impossible without vouching. It is, therefore, no exaggeration to say
that “the vouching is the soul of auditing.”

The following points will make clear the importance of vouching:

(1) Reliable examination: In vouching, the entries in original books of accounts are verified to ensure that
the transactions are genuine; they are authenticated and comply with normally accepted principles of
accounting. If a transaction is not authenticated or is not properly recorded, then the final accounts would
not show a true and fair view of the profit or loss and state of affairs of business. The entries in the books of
original entries are the foundation on which the correctness of entire accounting record is based. Thus,
vouching tests the very base of accounting process.

(2) Examination of original evidences: Checking of entries is done by examining the original evidence
supporting such entries. Vouchers are thus links between transactions and entries. By vouching the
particulars of transactions, such as dates, amounts, the names of parties, etc. are known. Thus details are
compared with the final evidence establishing the correctness of entries in books of accounts.
(3) Detection of errors at initial stage: By checking the entries, with original evidence, the
errors and frauds can be located at an early stage. The maxim that ‘the prevention is better than cure’ is
achieved as the vouching prevents the errors before they assume serious proportion.
(4) Keeps the auditor alert: Since the starting point of audit is vouching, the auditor can
detect errors and frauds in the beginning of audit. If he finds any errors, he becomes more alert and careful
and extends his checking to very important transaction. He resorts to auditing in depth’ and can thus carry
out his work in a more responsible manner. In case of Armitage Vs. Brewer and Knott, 1982, it was held that
audit is dependent on vouching and if the auditor shows carelessness in vouching, he will be held liable for
it.

3.2.5 POINTS TO BE CONSIDERED IN VOUCHING

While vouching, an auditor should keep in mind the following points :

(1) Serial number: The auditor should see that the vouchers are consecutively numbered according to date
and the order of transactions. If this is not done then the auditor’s time would be unnecessarily wasted in
finding out required vouchers.
(2) Date: The auditor should carefully check the dates on vouchers. The vouchers should relate only to the
year for which the accounts are audited. Otherwise the vouchers of earlier year may be produced again and
cash or goods might be misappropriated.
(3) Name: The vouchers should be in the name of client. The transactions recorded in the books of a client
would be correct only if they are supported by bills, documents and other evidences in the name of that
particular client. The name of the party from whom the voucher is received should be compared with the
name of supplier in the books of accounts.
(4) Address: The voucher should be addressed to the client in whose books the transaction is. If the voucher
is in the personal name of director, partner, or manager, the same may not be relating to business itself.
(5) Amount: The amount shown in the voucher should tally with the amount recorded in the books of
accounts. The amount in voucher should be indicated both in figures and in words, so that the alterations in
figures can be avoided.

(6) Particulars: The auditor should carefully examine the particulars mentioned in the voucher. From the
particulars given in the vouchers, auditor is able to ascertain whether the item is of a revenue or capital

nature. This distinction is of great importance, since the capital income and expenditure are shown in the
Balance Sheet whereas revenue income and expenditure are shown in Profit and Loss Account.
(7) Approval and Signature: Each voucher should be properly approved and authenticated.
The person who authorizes payment or other transaction should put his signature in support of having
approved the voucher. The auditor should have with him specimen signature of various officers, with
schedule of their powers.
(8) Revenue stamp: For payments exceeding Rs. 5000/- the relative receipts should bear revenue stamp of
Re. 1.00. However, where the items are purchased for cash and a cash-memo is obtained, there is no need to
obtain stamped receipt.
(9) Continuous vouching: As far as possible the auditor should complete the vouching of a
particular period of a book in single sitting. If the vouching is kept pending or incomplete, then there are
chances of figures being altered and a fraud being committed after the vouching is over.
(10) Cancelling the voucher: Once the voucher is audited, the same should be cancelled so
that it may not be produced again. Rubber stamp, Seal or Ticks of particular colour is used to cancel the
voucher.
(11) Period: The auditor should pay particular attention to the period to which the voucher
relates. If the expenditure is for the period beyond the accounting year of client, the proportionate amount of
expenditure should be debited to prepaid expense accounts. Similarly, from verification of period, the
auditor gets an idea about income received in advance, income due but not received for which correct
adjusting entries should have been passed.
(12) Entry in the books of accounts: While examining vouchers, the auditor should see that correct entry is
passed in the books of accounts and he should see that there is no voucher which is left to be recorded in the
books of accounts. Moreover, as per details of voucher, correct classification of revenue and capital is done.
(13) List of Missing Vouchers: After vouching is over, the auditor should go through the
relevant books or register and find out the un-ticked items. The items may not be ticked for want of
vouchers. The auditor should prepare a list of missing vouchers and ask the person concerned to obtain the
same. If he does not get the vouchers within reasonable time or if he has not offered satisfactory explanation
about missing vouchers, he should mention the facts in his report. In several types of expenses vouchers are
not received e.g. Tea and breakfast, cartage, etc. In such cases he should verify the signature of employees
through whom the payment is made and should also see that the payments are approved by responsible
person.

3.2.6 VERIFICATIN & VALUATION:

The auditor has to give a certificate on the accounts examined by him that the Profit and Loss
Accountant shows as a true and fair view of the profit or loss of business and the Balance Sheet shows a true
and fair view of the state of affairs of the business. Hence it becomes the duty of the auditor not only to
vouch the expenses and incomes, but also to verify and check the valuation of the assets and liabilities of
business. He has to satisfy himself that the assets and liabilities do in fact exist, and they are properly valued.

3.3 MEANING OF VERIFICATION

Verification means verifying the truth of the existence, values and ownership of the assets. Before
signing his report, auditor has to satisfy himself that the assets shown in the balance sheet really exist, they
are in the name of his clients and the values shown are proper. The process of satisfying himself regarding
all these points is ‘verification’.

According to Spicer and Pegler “The verification of assets implies an inquiry into the value,
ownership and title, existence and possession, the presence of any charge on the assets.”

According to Joseph Lancaster “Verification of assets is a process by which the auditor

substantiates the accuracy of the right-hand side of the Balance Sheet, and must be considered as having
three distinct objects : (a) the verification of the existence of assets (b) the valuation of assets and (c) the
authority of their acquisition”.

From the definitions it can be inferred that verification involves the following:
(1) That assets actually exist.
(2) That the assets are acquired for the business.
(3) That the assets are properly valued.
(4) Whether the assets are clean or there is a charge on the assets.
(5) That its balance tallies with that shown in the balance sheet and is clearly and correctly
shown in the balance sheet.

3.3.1 OBJECTS OF VERIFICATION

Verification of assets and liabilities is undertaken with the following objects:

(1) To satisfy himself about the existence of the assets.
(2) To see that assets and liabilities are valued on the basis of generally accepted principles and that
valuation is consistent with that of previous year.
(3) To verify that the assets and liabilities not connected with business are not shown in the balance sheet.
(4) To verify that business assets and liabilities are included in the balance sheet and no item is left out.
(5) To see that the balance sheet shows a true and fair view of state of affairs of business.
(6) To see that the ownership and possession of assets are with the company.
(7) To check that no fraud or irregularity are committed in connection with any asset or liability.
(8) To see that the accounts of assets and liabilities are arithmetically correctly recorded.
(9) To verify that the all assets and liabilities are properly shown in the balance sheet
according to rules and legal requirements of the institution.

3.3.2 DIFFERENCE BETWEEN VOUCHING AND VERIFICATION

It has been stated earlier that both vouching and verification are very important aspects to
auditing. However, verification is a much wider term than vouching. The points of difference between the
two may be stated as follows:
(1) Vouching means substantiating an entry in the books of account with the supporting
vouchers like receipts, invoices, correspondence, contracts etc.
Verification means examining with regard to the assets shown in the balance sheet that
they exist, are in the name of the company, are properly valued and are free from any charge.
(2) The object of vouching is to check that the entries made in the books of accounts are
correct. Whereas the object of verification is to check the existence, valuation, ownership
and possession of the assets.
(3) Vouching is carried out with the help of vouchers. Verification includes in addition to
vouching, the checking of physical existence, valuation and ownership of the assets.
(4) Vouching is done at any time during the year. Verification is done only after accounts are
completed and balances are drawn. .
(5) Vouching of assets is undertaken once during the life time of the asset. Verification of
assets shown in the balance sheet is done every year.
(6) Vouching does not include valuation of assets and liabilities. Verification includes valuation of assets
and liabilities.
(7) Vouching is the first step taken before verification. It involves examining the transactions
when they take place. Verification is the next step after vouching is completed. It includes
checking many aspects of assets and liabilities.

3.4 MEANING OF VALUATION

As we have seen earlier, an auditor is required to certify that the balance sheet shows, true and fair view of
company’s affairs. Naturally, if the assets and liabilities are shown at their proper values, the balance sheet
would be true and fair. Hence the auditor has to satisfy himself that the assets are shown in the balance sheet
at their true and fair values.
Now the problem is what the correct value of an asset is. The assets would be deemed to be properly valued,
if valuation is made according to the generally accepted principles of accounting.
For example, the fixed assets are to be shown at cost less depreciation to date. If this practice is not followed
and if depreciation is more or less than the fair amount, the profit will be understated or overstated. A
number of complications will then arise and the balance sheet will not show true and fair financial position
of business.
Now what are the duties of the auditor with regard to valuation of assets? As stated above, he
has to ensure that generally accepted principles of accounting have been followed. He is not a
technical man and cannot ascertain correct values of all types of assets. Hence, he has many times to rely on
the certificates of the trusted officials of the company. But he should exercise reasonable care and skill in
satisfying himself that the values of assets are correct.
3.4.1 DIFFERENCE BETWEEN VALUATION AND VERIFICATION

1. Meaning Verification means checking whether the assets shown in the balance sheet are in
the name of business, whether they exist or not, whether there is any charge on it etc. Valuation means
determining the proper values of assets and liabilities shown in the balance sheet
2. Purpose The purpose of verification is to check existence, ownership and possession of
assets. The purpose of valuation is to determine the proper values of assets as per generally accepted
principles.
3. Basis The basis of verification is the type of assets, and liabilities. There is not fixed
method of verification. The basis of valuation of assets is the types of assets are valued on different basis.
4. Certificate The auditor is not able to get certificate of verification of assets and liabilities. The auditor is
entitled to get certificate of valuation of assets from responsible officer of
the business unit.
5. Vouching Verification includes vouching. Valuation does not include vouching.
6. Scope The scope of verification is wide. It includes checking of many things like existence, ownership,
possession etc. The scope of valuation is limited. Here only values of assets and liabilities are determined
and checked.

Chapter 3
 Tally-erp 9

TALLY-ERP 9
TALLY
4.1 INTRODUCTION
Tally is complete Accounting system. It handles different types of vouchers, for example,
Payments, Receipts, Journals, Debit Notes, Sales, Purchase, Delivery note and etc. Accounts Receivables is
the amount to be received from Sundry Debtors and Accounts Payable is the amount payable to Sundry
Creditors. Tally provides complete bill wise information of amounts receivable as well as payable either
Party wise or Group wise. Activate ‘Bill Wise' details by pressing F11 (Features). Now Create a Party
(Ledger A/c) under the group ‘Sundry Debtors' as well as one under group ‘Sundry Creditors', and also
activate ‘Maintain balances bill by bill' for
all the Parties while you are in Ledger creation mode.

Tally is versatile and massive software package. It is used by various types of trade and industry. Tally
Software business was set up in 1986 by late S.S. Goenka, who was the founder of the company Peutronics
Private Limited., Bangalore. He mentors his son Bharat Goenkar in creating software that would handle the
financial accounts for his business. Bharat Goenkar spends a lot of months to develop path breaking
technology. Tally is user friendly software used to solve all the complicated accounting structure.Bharat
Goenkar is the original architect and programmer of the Tally Accounting systems and also developer of the
“No-Code” concepts of accounting entities. Tally is a globally recognized name with 2 million users in over
90 countries experiencing the “Power of Simplicity”. This value is reflected in innovative, uncomplicated
and customer-centric approach. Tally recognizes its own format in ASCII (American Standard Code for
Information Interchange) from which data can be imported into Tally. To export your database file
application to tally, you have to export data in tally acceptable format in ASCII. The milestone statement of
the Tally division is “Continuously doing the right thing”.

For example, if you are starting out a general store, what would you require?

• Accounting

• Billing

• Sales and profit analysis

• Banking

• Inventory

• Taxation (VAT, TDS, TCS)

I have brainstormed the needs of a newly opened general store which are all covered by Tally. There are
more functions than this like Audit, Payroll, Manufacturing and so on which if needed can be used.

This was just an example of a general store and almost any business which requires a software for its
functioning, Tally can be a best fit.

This was Tally and it can do much more. I will take you to explain some of the core features of Tally.

4.2 OBJECTIVES

• Describe the purpose of the Tally.ERP 9 Accounting Vouchers

• Create and alter Accounting Vouchers

• Use vouchers to enter Accounting transactions

• Describe the use of Non-Accounting Vouchers

• Use vouchers to enter VAT & CST

4.3 SHORTCUTS OF TALLY

1. Alt +C: To create any master (e.g. ledger, stock item) on a voucher creation or alteration screen

2. 2. Ctrl + Enter: To alter any master item on a voucher creation or alteration screen

3. 3. Ctrl + R: To repeat narration on a voucher

4. 4. Ctrl + Q: To cancel or quit the screen without saving any of the changes made

5. 5. Ctrl + D: To delete a line in a voucher

6. 6. Alt + D: To delete a voucher from its alteration screen, you can press ‘Alt + D’

7. 7. Alt + A: To add a voucher right after the cursor position in a list of vouchers

8. 8. Alt + I: To insert a voucher before the cursor position in the vouchers list

9. 9. Alt + D: To delete a voucher from the Day Book

10. 10. Alt + 2 : To duplicate a voucher

11. Alt + Enter: To view the ‘Voucher Display’

4.4 ACCOUNTING VOUCHERS

Tally.ERP 9 is pre-programmed with a variety of accounting vouchers, each designed to perform a

different job. The standard Accounting Vouchers are:

• Contra Voucher (F4)

• Payment Voucher (F5)

• Receipt Voucher (F6)

• Journal Voucher (F7)

• Sales Voucher (F8)

• Purchase Voucher (F9)

Contra vouchers

Go to the Gateway of Tally > Accounting Vouchers > F4: Contra

 .

Payment vouchers

Payment Voucher is used to record all bank and cash payments, For example: company settles a
creditor's bill by cheque.

Gate way of Tally.ERP>Accounting Vouchers>F5: Payment display the payment voucher

Transactions: Paid salary Rs.5000, Office rent 2000 by cheque of SBI Bank as 15.04.2012

Receipt voucher
 Any money received from debtors against sales Invoices or on Account and for all transactions
where money is received are accounted or entered into Tally.ERP using the Receipt Voucher

Gate way of Tally.ERP>Accounting Vouchers>F6: Receipt display the receipt voucher.

Transactions: Amount collected and deposited to SBI Rs.93600 from swayam computer

Transactions: Rs.500 interest received from SBI Bank

Sales voucher

Sales Voucher is used to record the Sales transactions of the company. You can pass an entry using
the Voucher mode or the Invoice mode where the calculations can be automated and the transactions can be
fed into the system easily.

When a company sells goods on credit or cash, Sales voucher is used to record all the Sales transactions of
the company.

Gate way of Tally.ERP>Accounting Vouchers>F8:Sales display the Sales voucher.

Journal Vouchers

Journal Vouchers are used to adjust the debit and credit amounts without involving the cash or bank
accounts. Hence, they are referred to as adjustment entries. Journal entries are usually used for finalization
of accounts.

Gateway of Tally > Accounting Vouchers> F7

Purchase Voucher Entry

Purchase voucher is used to record the Purchase transactions of the company. The entry can be
passed using the Voucher mode or the Invoice mode where the calculations can be automated and the user
can experience the ease of feeding the transactions into the system.

When a company buys goods on credit or cash, Purchase voucher is used to record all the Purchase
transactions of the company.

Gateway of Tally > Accounting Vouchers > F9

4.5 CONCLUSION
The Tally.ERP 9 software is designed for the sole purpose of helping businesses succeed in an
integrated and controlled environment. It is a business system that does not discriminate based on the
location of the user and can be used with a variety of platforms. It comes with tutorials and demonstrations
that allow users to better understand the way the application works.

The application provides ease of access in all aspects, including the way that it is installed onto a
platform. There are various methods for installation, but it can be easily completed by even new users. The
installation has walkthrough demonstrations that allow users to control every aspect of the installation. It is
also equipped with features like the ability to install only what is needed in the particular business setting.
Users can choose which features they want to use and install them. All of the features that are available with
the system do not have to be used by all business managers.
CHAPTER 4
 GOODS AND SERVICES TAX

GST
(Goods and Services Tax)

INTRODUCTION

Introduction of the Value Added Tax (VAT) at the Central and the State level has been
considered to be a major step – an important step forward –in the globe of indirect tax
reforms in India. If the VAT is a major improvement over the pre-existing. Central excise
duty at the national level and the sales tax system at the State level, then the Goods and
Services Tax (GST) will indeed be an
additional important perfection – the next logical step – towards a widespread indirect tax
reforms in the country. Initially, it was conceptualized that there would be a national level
goods and services tax, however, with the release of First
Discussion Paper by the Empowered Committee of the State Finance Ministers on
10.11.2009, it has been made clear that there would be a “Dual GST” in India, taxation
power – both by the Centre and the State to levy the taxes on the Goods and Services.
Almost 150 countries have introduced GST in some form. While countries such as Singapore
and New Zealand tax virtually everything at a single rate, Indonesia has five positive rates, a
zero rate and over 30 categories
of exemptions. In China, GST applies only and processing services. GST rates of some
countries are given below. Country Australia France Canada Germany Japan Singapore
Sweden New Zealand Rate of GST 10% 19.6% 5% 19% 5% to goods and the provision of
repairs, replacement 7% 25% 15% World over in almost 150 countries there is GST or VAT,
which means tax on goods and services. Under the GST scheme, no distinction is made
between goods and services
for levying of tax.

Dual Tax

Dual GST means, the proposed model will have two part called

1. CGST – Central goods and service tax for levied by central Govt.
2. SGST – State goods and service tax levied by state Govt.

There would have multiple statute one CGST statute and SGST statute for every state.

10. Benefits of GST

1. GST provide comprehensive and wider coverage of input credit setoff, you can use
service tax credit for the payment of tax on sale of goods etc.

2. CST will be removed and need not pay. At present there is no input tax credit
available for CST.

3. Many indirect taxes in state and central level included by GST, You need to pay a
single GST instead of all

1. Uniformity of tax rates across the states

2. Ensure better compliance due to aggregate tax rate reduces.

6. By reducing the tax burden the competitiveness of Indian products in international

market is expected to increase and there by development of the nation.

11. Indirect taxes included under GST

The following indirect taxes from state and central level is going to integrated with GST

State taxes

1. VAT/Sales tax

2. Entertainment Tax (unless it is levied by local bodies)

3. Luxury tax

4. Taxes on lottery, betting and gambling.

 5. State cesses and surcharges in so far as they relate to supply of goods and services.

6. Entry tax not on in lieu of octroi.

7. Purchase tax (This is not sure still under discussion)

11.2 Central Taxes

1. Central Excise Duty.

2. Additional Excise Duty.

3. The Excise Duty levied under the medical and Toiletries Preparation Act

4. Service Tax.

5. Additional Customs Duty, commonly known as countervailing Duty (CVD)

6. Special Additional duty of customs- (SAD)

7. Surcharges

8. Cesses The above taxes dissolve under GST instead only CGST & SGST exists.

Process of return filing GST:

Step 1: GST home page

Step 2: login page

Step 3: File Return

GSTR 1
Step 4: Manually adding invoices
Step5 : Uploading Invoices

Step 6: Completed final process.

Impact of Goods and Service Tax

I. Food Industry
The application of GST to food items will have a significant impact on those who are
living under subsistence level. But at the same time, a complete exemption for food items
would drastically shrink the tax base. Food includes grains and cereals, meat, fish and
poultry, milk and dairy products, fruits and vegetables, candy and confectionary, snacks,
prepared meals for home consumption, restaurant meals and beverages. Even if the food is
within the scope of GST, such sales would largely remain exempt due to small business
registration threshold. Given the exemption of food from CENVAT and 4% VAT on food
item, the GST under a single rate would lead to a doubling of tax burden on food.

II. Housing and Construction Industry

In India, construction and Housing sector need to be included in the GST tax base
because construction sector is a significant contributor to the national economy.

CONCLUSION

GST is the most logical steps towards the comprehensive indirect tax reform in our
country since independence. GST is leviable on all supply of goods and provision of services
as well combination thereof. All sectors of economy whether the industry, business including
Govt. departments and service sector shall have to bear impact of GST. All sections of
economy viz., big, medium, small scale units, intermediaries, importers, exporters, traders,
professionals and consumers shall be directly affected by GST... One of the biggest taxation
reforms in India – the Goods and Service Tax (GST) -- is all set to integrate State economies
and boost overall growth. GST will create a single, unified Indian market to make the
economy stronger. Experts say that GST is likely to improve tax collections
and Boost India’s economic development by breaking tax barriers between States and
integrating India through a uniform tax rate. Under GST, the taxation burden will be divided
equitably between manufacturing and services, through a lower tax rate by increasing the tax
base and minimizing exemptions

CHAPTER 5
SUMMARY AND CONCLUSION
 SUMMARY AND CONCLUSION

SUMMARY

The internship training summarizes the following aspects:

 The aims and learning comes out of internship program are very general as organizations provide a
range of opportunities for students to be involved from routine tasks to testing to special projects
within the organization.
 To know about auditor qualification.
 To learn about auditing and its related works.
 Voucher is an evident for the support of a financial verification.
 All the business transactions are recorded in the books of accounts.
 The objectives of accounting are keeping systematic records.
 These positions may be paid or unpaid and are usually temporary.

ANALYSIS – I
 The Auditing and its essence is explained in detail. The auditing, its features, its advantages
and disadvantages are explained. The advantage of having an independent audit is also explained.

ANALYSIS – II

Documentation and in what methods it can be done are explained. Vouching of transaction is
an important topic. The types of vouching different transaction are explained in simple manner.

ANALYSIS – III

Tally and its approach in recording transactions are explained in detail. The shortcut keys
used in tally are given in detail. Recording of transactions of accounting voucher are explained in detail with
pictorial representations. It will be simple and easy to understand the recording of entries.

ANALYSIS – IV

E – Filing and its methods are explained in detail. The need for e – filing income tax return is
indicated. Steps involved in e – filing income tax return are given. An overview on GST is given. The
methods of filing e – returns in GST are explained with pictorial representation for better understanding. On
the whole accounting and information technology are becoming interdependent day- by- day. So there needs
to be a regular up gradation of techniques used in accounting and information technology. And so the
technology should be used wisely without doing any to others.

CONCLUSION

Throughout the report we have seen about various topics like internship, auditing and documentation
types like excel, examination of documentary evidences i.e. vouching, usage of tally, e-filing methods i.e.
direct and indirect taxes. It shows us that accounting and information technology needs integration always
so that the work can be performed well. It also shows us that certain necessary upgrades needed to be
adopted.

***