AUDITOR’S REPORT

The auditor's report is a formal opinion, or disclaimer thereof, issued by either an internal auditor or an independent external auditoras a result of an internal or external audit or evaluation performed on a legal entity or subdivision thereof (called an "auditee"). The report is subsequently provided to a "user" (such as an individual, a group of persons, a company, a government, or even the general public, among others) as an assurance service in order for the user to make decisions based on the results of the audit.

An auditor's report is considered an essential tool when reporting financial information to users, particularly in business. Since many third-party users prefer, or even require financial information to be certified by an independent external auditor, many auditees rely on auditor reports to certify their information in order to attract investors, obtain loans, and improve public appearance. Some have even stated that financial information without an auditor's report is "essentially worthless" for investing purposes.

Special AuditA special review entails a comprehensive and objective examination of the business underlying the numbers. It assists management to identify and focus on key areas and issues and provides insights and comfort to them as well as to outside interests. We provide services on specific audit assignments like cost audits, fraud investigations, investment audits, compliance audits, salary audits, certification of sales and other special assignments necessary to provide assurance to management and interested parties.

AUDIT OF BANKING COMPANIES

Banking Regulation Act, 1949

30. Audit

[(1 ) The balance-sheet and profit and loss account prepared in accordance with section 29 shall be audited by a person duly qualified under any law for the time being in force to be an Auditor of companies.]

(1A) Notwithstanding anything contained in any law for the time being in force or in any contract to the contrary, every banking company shall, before appointing, re-appointing or removing any Auditor or Auditors, obtain the previous approval of the Reserve Bank.

(1B) Without prejudice to anything contained in the Companies Act, 1956 (1 of 1956), or any other law for the time being in force, where the Reserve Bank is of opinion that it is necessary in the public interest or in the interests of the banking company or its depositors so to do, 128[it may at any time by order direct that the special audit of the banking company's accounts, for any such transaction or class of transactions or for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order either appoint a person duly qualified under any law for the time being in force to be an Auditor of companies or direct the Auditor of the banking company himself to conduct such

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special audit] and the Auditor shall comply with such directions and make a report of such audit to the Reserve Bank and forward a copy thereof to the company.

(1C) The expenses of, or incidental to, 129[the special audit] specified in the order made by the Reserve Bank shall be borne by the banking company.]

(2) The Auditor shall have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities and penalties imposed of Auditors of companies by 130[section 227 of the Companies Act, 1956 (1 of 1956)] 131[and Auditors, if any, appointed by the law establishing, constituting or forming the banking company concerned].

(3) In addition to the matters which under the aforesaid Act the Auditor is required to state in his report, he shall, in the case of a banking company incorporated 102[in India], state in his report:-

(a) whether or not the information and explanations required by him have been found to be satisfactory;

(b) whether or not the transactions of the company which have come to his notice have been within the powers of the company;

(c) whether or not the returns received from branch officers of the company have been found adequate for the purposes of his audit;

(d) whether the profit and loss account shows a true balance 132[of profit or loss] for the period covered by such account;

(e) any other matter, which he considers should be brought to the notice of the shareholders of the company.

AUDIT OF INSURANCE COMPANIES

THE DUTIES OF THE AUDITOR UNDER THE INSURANCE

COMPANIES ORDINANCE

Scope of the Ordinance

5. The Ordinance is applicable to all persons (companies or individuals) carrying on insurance

business in Hong Kong (including insurance brokers) other than those persons noted in

paragraph 7 and those specifically exempted by section 51 (see paragraph 8). Insurers which

are deemed to carry on insurance business in or from Hong Kong will also fall within the

scope of the Ordinance. Section 2(3) provides that a person shall be deemed to carry on

insurance business in or from Hong Kong if he opens or maintains an office or agency in

Hong Kong for the purpose of carrying on insurance business, or he holds himself out as

carrying on insurance business, in or from Hong Kong. Insurers will fall within this scope if

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they are incorporated in Hong Kong, have a place of business here, are represented here by THE DUTIES OF THE AUDITOR OF AN INSURER AUTHORIZED

UNDER THE INSURANCE COMPANIES ORDINANCE

4 PN 810.2

an agent or are holding themselves out as carrying on insurance business in or from Hong

Kong. The following would therefore be included within the scope of and required to be

authorized under the Ordinance:

a. a Hong Kong incorporated company carrying on insurance business in Hong Kong;

b. a Hong Kong incorporated company carrying on insurance business through an

overseas branch or agency, whether or not it is operating as an insurer in Hong Kong;

c. an overseas incorporated company carrying on insurance business through a Hong

Kong branch;

d. an overseas company carrying on insurance business in Hong Kong by means of an

agency;

e. a captive insurer, as defined in section 2(7);

f. reinsurance companies carrying on reinsurance business in or from Hong Kong (but

see paragraph 8(b)); and

g. any other person holding himself out as carrying on insurance business in or from

Hong Kong.

6. The location of the risks is not relevant in determining whether a particular entity falls within

the scope of the Ordinance. Thus, for example, an insurer or a reinsurer who is incorporated

overseas and who has not established a place of business in Hong Kong, is not represented

by an agent in Hong Kong, and does not hold himself out as carrying on insurance business

in or from Hong Kong, can accept insurance or reinsurance premiums relating to Hong Kong

risks, without having to be authorized under the Ordinance.

7. Under section 6(1), Lloyd's and an association of underwriters approved by the IA are allowed

to carry on insurance business in or from Hong Kong without having to be authorized under

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the Ordinance. Also, the following persons, although involved in insurance business, do not

have to be authorized under the Ordinance:

a. a Hong Kong incorporated company with an overseas incorporated subsidiary that

carries on insurance business outside Hong Kong, provided that the Hong Kong

holding company is not itself an insurer;

b. an insurance agent (being a person who holds himself out to advise on or arrange

contracts of insurance in or from Hong Kong as an agent or subagent of one or more

insurers). However, an insurer is required to register its appointed insurance agents

in accordance with section 66 and the IA has the power, also under section 66, to

direct the insurer to de-register its appointed insurance agents under certain

conditions.

8. Section 51 specifically exempts the following persons from the provisions of the Ordinance:

a. any body of persons carrying on insurance business in Hong Kong whose gross

premiums do not exceed HK$500,000 in any financial year and who are bound

together for certain specified purposes but not for the purpose of gain;

b. persons carrying on only reinsurance business in Hong Kong (unless incorporated in

Hong Kong or, if incorporated elsewhere, who have a place of business in Hong Kong

or are represented in Hong Kong by an agent or any other person or partnership

having a place of business in Hong Kong);

c. registered trade unions (subject to certain limitations); THE DUTIES OF THE AUDITOR OF AN INSURER AUTHORIZED

UNDER THE INSURANCE COMPANIES ORDINANCE

5 PN 810.2

d. registered co-operative societies;

e. the Hong Kong Export Credit Insurance Corporation;

f. banks, restricted licence banks and deposit-taking companies carrying on insurance

business, limited to certain long term or general insurance business carried on solely

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for the purposes of their banking or deposit-taking business;

g. the Credit Union League of Hong Kong;

h. a recognized clearing house (as defined in section 51(h));

i. a person who is authorized under Part III of the Securities and Futures Ordinance (as

defined in section 51(i)).

9. Under section 53 the Chief Executive in Council has power to exempt any insurer from any of

the provisions of the Ordinance or to modify or vary any of its provisions in respect of any

insurer.

Audit Of Educational InstitutionsAudit of books of educational institutions like school, college, universities etc. or other

such institutions which are engaged in the educational field is known as audit of

educational institutions. Auditor should check income and expenditure account and

balance sheet of such institutes in order to verify and report the true and fairness of

results presented by income statements and financial position presented by the balance

sheet. Generally, the methods and procedures for vouching and auditing is same even

though an auditor of educational institution should perform following tasks:

1. The auditor should go through the University Act. Trust deeds and should note the

rules and regulations relating to accounts. The governing body may pass resolutions

from time to time in respect to accounts. A copy of minutes books should be made

available to him so that he may be able to confirm whether the decision of the government

body have been compiled with.

2. Auditor should obtain a copy of budget or financial statements to study of different

heads of income and expenditure.

3. Auditor should thoroughly assess the strength of internal check.

4. Auditor should vouch the grant-in-aid from the government carefully.

5. Auditor should verify the receipts of monthly fees from students, from counterfoils or

carbon copy of the receipts. He should also see whether cash received has been banked

daily or not.

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6. Other charges from the students such as examination fees, laboratory fees, fines etc.

should be carefully verified.

7. Any fees received in advance should be properly adjusted.

8. The concession of fees and other charges should be duly authorised by the proper

authority. Any charges becoming irrecoverable should be written off only after proper

authority has recommended.

9. Any grant-in-aid or funds received for a particular purpose must be utilised for the

same.

10. The donations and other subscriptions from the various authorities have been

accounted for and acknowledged.

11. The income from property, investment etc., should be properly verified from the

vouchers.

12. Auditor should vouch the amount of salaries paid with the Salary Register. Any

increment given to an employee shall be duly sanctioned.

13. The staff provident fund should be verified and it should be seen that it is invested as

per the rules.

14. The establishment expenses must be carefully vouched and it should be seen that

capital expenditure has not been treated as revenue expenditure or vice versa.

15. The payment of scholarship should be verified with the receipt from students and

Scholarship Register.

16. All the assets and liabilities should be properly exhibited in the balance sheet.

17. The stock of equipment, stationary, furniture should be carefully verified.

18. While making payment of staff salaries, income tax should be deducted at source and

shall be duly deposited with the Income Tax Department.

EFFICIENCY AUDIT

Efficiency audit:-

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1. Efficiency audit is related to that whether corporate plans are effectively executed. 2. In this, auditor investigates the reasons of variances in actual performance and planned performance.3. It also investigates that capital resources of company   are properly utilized or not.

Propriety audit:-

1. It is related to that whether executive plans and action are perfectly executed or not.2. In this auditor investigates that the planned expenditure are designed to give optimum results or not.3. It also investigates, whether the return from expenditure on capital as well as current operation could be better by some other alternative plan of action.

Social audit is a process of reviewing official records and determining whether state reported expenditures reflect the actual monies spent on the ground.[1]

Civil society organisations (CSOs), nongovernmental organisations (NGOs), political representatives, civil servants and workers ofDungarpur district of Rajasthan and Anantapur district of Andhra Pradesh collectively organise such social audits to prevent mass corruption under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).[2]

BackgroundA grass roots organisation of Rajasthan, Mazdoor Kisan Shakti Sangathan (MKSS) is believed to have started the concept of the social audit while fighting corruption in the public works in the early 1990s. As the corruption is attributed to the secrecy in governance, the 'Jansunwai' or public hearing and the right to information (RTI), enacted in 2005, are used to fight this secrecy.[3] Official records obtained using RTI are read out at the public hearing to identify and rectify irregularities. "This process of reviewing official records and determining whether state reported expenditures reflect the actual monies spent on the ground is referred to as a social audit." [4] Participation of informed citizens promotes collective responsibility and awareness about entitlements.[5]

Cost auditingFrom Wikipedia, the free encyclopedia

Cost Audit represents the verification of cost accounts and check on the adherence to cost accounting plan. Cost Audit ascertain the accuracy of cost accounting records to ensure that they are in conformity with Cost Accounting principles, plans, procedures and objective.[1] Cost Audit comprises following;

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1. Verification of the cost accounting records such as the accuracy of the cost accounts, cost reports, cost statements, cost data and costing technique and

2. Examination of these records to ensure that they adhere to the cost accounting principles, plans, procedures and objective.

Objectives of Cost Audit

1. Prospective Objective: Under which cost audit aims to identify the undue wastage or losses and ensure that costing system determines the correct and realistic cost of production.

1. Constructive Objectives: Cost audit provides useful information to the management regarding regulating production, economical method of operation, reducing cost of operation and reformulating Cost accounting plans .

Types of Cost Audit

1. Cost Audit on behalf of the management:2. Cost audit on behalf of a customer

3. Cost Audit on behalf of Government

4. Cost Audit by trade association

5. Statutory Cost Audit

QualificationBasic qualification for a cost auditor is the prescribed examinations and practices by the professional & Regulatory body for Cost & Management Accountancy of the country or in case a person is the member of other professional bodies, exemption should be allowed to him/her under the mutual recognition agreements (MRAs) to become a cost auditor.

Cost Audit ProceduresCost audit comprises following three steps;

1. Review2. Verification

3. Reporting

TAX AUDIT

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The provisions for tax audits in India are covered under section 44AB of the Income Tax Act 1961. As per section this section, every person who falls under one of the categories listed below shall have their accounts audited by a practicing chartered accountant (CA), and have an audit report submitted by the due date for the filing of income return.

Any person carrying on a business whose total sales, turnover or gross receipts in the business exceeds Rs.1 crore; or

Any person carrying on a profession whose gross receipts exceeds Rs.25 lakh; or Any person carrying on a business where the profits and gains from the business are

determined on a presumptive basis under section 44AE, 44BB or 44BBB, and who has claimed their income to be lower than the profits or gains of his business; or

Any person carrying on a business whose income is determined on a presumptive basis under section 44AD and who has claimed such income to be lower than the profit of their business, yet exceeds the maximum amount which is not chargeable as income tax.

Such an audit report shall be filed using Form 3CA (in case of a company), Form 3CB (other than a company), and shall be accompanied with Form 3CD. The due date of filing a return, in the case where an assessee is required to furnish an audit report, is September 30th after the end of the financial year.

If the person is required by any other law to have their accounts audited, it shall be sufficient compliance within the provisions of this section if the accounts are audited before the specified date and a report of the audit is furnished by that date, including a further report by a CA in the form prescribed under this section.

The basic question that then arises is in regards to the definition of turnover. Does it refer to gross turnover or net turnover? Does it include value-added tax, excise duty, or service tax?

A summarised meaning of turnover, after considering the guidance notes of the Institute of Chartered Accountants of India (ICAI), states that turnover is the aggregate value for which sales are effected or services are rendered. It includes all type of taxes applicable on such goods or services.

If the tax audit report has not been obtained from the CA on or before the due date of filing an income return, penalty under section 271B shall be attracted. The penalty is equal to half the percent of total sales, turnover or gross receipts, or Rs.1 Lakh – whichever is less.

Management Audit' is a systematic examination of decisions and actions of the management to analyse the performance. Management audit involves the review of managerial aspects like organizational objective, policies, procedures, structure, control and system in order to check the efficiency or performance of the management over the activities of the Company. Unlike financial audit,[1] management audit mainly examine the non financial data to audit the efficiency of the management. Somehow audit tries to search the answer of how well the management has been operating the business of the company? Is managerial style well suited for business operation? Management Audit focuses on results, evaluating the effectiveness and suitability of controls by challenging underlying rules, procedures and methods.[2]

Management Audit is an assessment of methods and policies of an organization's management in the administration and the use of resources, tactical and strategic

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planning, and employee and organizational improvement. Management Audit is generally conducted by the employee of the company or by the independent consultant and focused on the critical evaluation of management as a team rather than appraisal of individual.[3]

Objectives of Management Audit

1. Establish the current level of effectiveness2. Suggest Improvement

3. Lay down standards for future performance

Audit Procedures in Management AuditGenerally auditor deploy following audit procedures to conduct the management audit.

1. Questionnaire2. Interview with employee and managers

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