A

PROJECT REPORT

ON

'AUDIT OF FINANCIAL STATEMENT'

In partial fulfillment of the requirement

for the award of the degree of

POST GRADUATE DIPLOMA IN MANAGEMENT 2016-18

Faculty Mentor Submitted by:

Ms. DEEPSHIKHA KALRA CHANDNI

Professor Enrollment no.: 42115103916

MANAGEMENT EDUCATION & RESEARCH INSTITUTE

(Affiliated to Guru Gobind Singh Indraprastha University)
D-53, Institutional area, Janakpuri
New Delhi- 110085
 EXECUTIVESUMMARY

The project is about auditing of Financial Statement of M/s. Shiv Electricals Private Limited
(“the Company”).The auditing was done based on American Standard of accounting which
comprise the Balance Sheet as on 31st March 2017 and Statement of Profit and Loss for the year
ended on that date, and a summary of significant accounting policies and other explanatory
information.Report and finding shows how a firm has used the tools to audit the financial
statement of a company. The project concluded that, given the complexity and development of
Company, the overall level of compliances with the standards and codes is of high order. This
project gives the correct ideas about how the major areas can be found by way of effective
auditing system i.e. errors, frauds, manipulations etc. form this auditor get the clear idea show to
recommend on the position
 INTRODUCTIONOFAUDITING:-

AUDIT: The word audit is derived from the Latin word “audire” which means to hear. It is an
important tool of management. It is concerned with making an analytical and critical analysis of
the books of accounts, checking and verification of evidence in support of entries appearing in
the books of accounts, and ascertaining the authenticity of the financial statements. Auditor has
used to send for the accountants and hear whatever they had to say in connection with the
accounts. The auditor has to look into the facts behind figures and he must certify their accuracy.
Auditing is to ascertain the balance sheet and profit and loss account that they show a true and
fair view of the financial state of affairs of a concern.

The Institute of Charted Accountants of India has issued a number of statements of standard
auditing practices and accounting standards for guidance of Auditor of India.

ORIGIN OF AUDITING: Auditing has its origin in the necessity in the development of some
system to put a check on the persons whose duties were to record receipts and disbursements of
money on the behalf of owners. In the ancient days auditing was confined to public accounts
only. With the development of trade and commerce, the need for recording transactions was felt
by businessman. The audit in its present shape is the result of large- scale production
inconsequence of Industrial Revolution during the 18th Century.
As the trade and commerce grew extensively globally, the involvement of public money therein
also increased manifolds. This in turn created a demand from the investors to have the accounts
of the business ventures examined by a person independent of the owners and management of
the business to ensure that they were correct and reliable. Such a demand laid down the
foundation for the profession of auditing.

ASPECTS OFAUDIT
The principal aspects to be covered in an audit concerning final statements of accounts are as
follows:-
 Examination that the statutory requirements are complied with.
 Verifications of the liabilities stated in the balance sheet.
 Check the arithmetical accuracy of books of accounts by the verification of postings,
balances etc.
 Examine the documentary evidence to establish the accuracy, authenticity and validity of
transactions recorded.
 Verifying that a proper distinction is made between capital and revenue items.
 Verification of the title, existence and valuation of assets appearing in the balance sheet.
OBJECTIVE OFAUDITING
  To understand the objective of auditing
 To verify there are no frauds
 To learn techniques of auditing
 To analyse the financial statemet
 To have better understanding of mathemetical accuracy.

BENEFITS OFAUDITING

 Identify problems earlier

 Clarify performance/cost/schedule relationships
 Improve project performance
 Identify future opportunities
 Evaluate performance of project team
 Reduce costs
 Inform client of project status/prospects

LITERATURE REVIEW

Batra & Kaur (2010): The Institute of Internal Auditors (The IIA) attempts to better understand
the expanding scope of internal auditing practice throughout the world. The purpose of this
review of recent internal auditing literature inThe Americas is to document how the internal audit
function is changing in response to the shifts in global business practices.

Jacab(2011): Audit – Presentation Transcript’ this paper explore that management audit is an
independent review and investigation which is concerned with the identification of those
functional and operational areas where management has failed to achieve the required external
standards of performance and with evaluation of decision making with the aim of monitoring and
improving the efficiency and effectiveness of the organization.

COMPANYPROFILE
Company Overview

S K Varshney & Associates is a firm of Chartered Accountants (CA) based in New Delhi, India.
It is registered with the Institute of Chartered Accountants of India (ICAI).It was founded by
Sunil Kumar Vashney.

COMPANY’S VISION & MISSON:-

 The main aim of the company is that to be among top trusted advisors in india by 2025.

 To provide the best of accouting services to its clients

 Their main aim is to secure the money of their customer in future advancement.

 To educate and empower the individual to make better tax and investment decisions
through quality advice and superior service.

SERVICES PROVIDED BY COMPANY:-

 Independent audit

 Independent verification

 Effective Supervision

 Accountability

 Sufficient number of Independent directors on the Board.

 Formation of an independent audit committee for the board

 Adequate disclosure and transparency in reports

 Participation in board meetings

 RESEARCHMETHODOLOGY
The information is collected through primary sources during the project. That information was
utilized for calculating performance evaluation and based on that, interpretations were made.

Sources of Primary Data:

1. The Auditor’s report was provided by the trainer (CA Raj Kumar Aggrawal) for evaluations.

2. The documents used and presented in this report do not contain any confidential information
of Shiv Electronics Ltd.

3. The Auditors report and Balance Sheet was presented and adopted in Annual General
Meeting of the company.

4. Most of the calculations are made on the financial statements of the company provided
statements.

5. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.

6. Method- to assess the performance of the company method of observation of the work in
finance department in followed.

7. Data used in this project is the non-confidential private data i.e. Unpublished Balance sheet.

SHIVELECTRICALSPRIVATELIMITED
About the Company:
Shiv Electricals Private Limited, founded in 1987 promoted by Mr. Subhas Gokhale. The
Company is primarily engaged in providing Electrical project designing with automation &
related instrumentation. It undertakes Testing, Installation & Commissioning of electrical
fittings, erection, industrial fabrication, Supply of H.T. & L.T. switchgear, upgrade systems for
both HT & LV loads for various valued customers. It is pioneer in providing Turnkey Solution
for installation of all electrical equipments right from the stage of Designing to Implementation
electrical equipment. All the necessary approvals for commencement of this business are in
place. Background of Key Management Personnel: Being the Second Generation entrepreneur;
Mr. Sachin Subhash Gokhale (Director) son of Mr. Subhas Gokhale, aged 33 years holds a
bachelor degree of Commerce and Diploma in Electrical Engineering from DIESE, Pune. He is
qualified Engineer with more than 10 years of qualitative experience. He has proven track record
of undertaking valued engineering initiatives, establishing new set-ups, streamlining operations,
evolving cost reduction mechanism, producing engineering techniques and creating a team work
environment to enhance productivity with new initiatives and innovations within the
organizations.

SHIV ELECTRICAL PVT. LTD.

Statement of Profit and Loss for this year ended 31-Mar-
2017
Particular Note As at 31-03-2017 As at 31-03-2016
No.

1. EQUITYAND LIABILITY
Shareholder’s fund : 14732115.62 1090900.28
(a) Share capital 451200.00 451200.00
(b) Resesve and surplus 1021915.62 639700.28
2.
Non-current liability
3. (a) Long term borrowing
Current Liabilities 1389435.00 1389435.00
a) Short term borrowings
1389435.00 1389435.00
b) Trade payables
1767787.96 2002349.33
c) Other current liability
728880.32 344654.32
d) Short term provision
374422.72 1121234.72

TOTAL 660689.45 339997.82

3795.47 196462.47

ASSETS

Non-current assets 4482684.61

(a)Fixed Assets 4630338.58

693255.00
(i)Tangible Assets
647022.00 369203.00
(ii)Inatangible assets
322970.00 353709.00

310936.00 15494.00
(b)Long term loans and
 advances 12034.00
324052.00

Current Assets 3789429.61

324052.00
(a) Current investment
(b) Inventories 175393.04
(c) Trade receivable
235098.00
(d) Cash And cash equivalents 3983316.58
(e) Short term loans and 3030252.50
advances
278290.07
(f) Other current assets 175393.04
40080.00
TotaL 275080.00
30316.00
3240920.00
4482684.61
20627.07
40080.00

30316.00
4630338.58
 SHIV ELECTRICAL PVT. LTD.
Statement of Profit and Loss for this year ended 31-Mar-
2017

Particular Note 1-Apr-2016 to 31- 1-Apr-2016 to 31-

No. Mar-2017 Mar-2017
I Revenue from operation 4984998.49 10242318.52
II Other income - 32018.00
III TOTAL REVENUE(I+II) 4984998.49 10274336.52
IV EXPENSES
Purchase of Stock-in-trade 2331601.74 6473439.95

Changes in inventories -40882.00 30382.00

Emlpoyee benefit Expenses 345348.00 231729.30

Finance cost 40010.00 68750.00

Depereciation and Amortization 46233.00 48653.32

Other expenses 1880472.41 3066345.06

TOTAL EXPENSES 4602783.15 9919299.63

Profit before extraordinary items and

Profit before Tax & Extraordinary
items 382215.34
Extraordinary items - 355036.89
Profit before Tax 382215.34
-
Tax Expense -
355036.89
Current Tax -
Deffered Tax - -
Profit/(Loss) for the period 382215.34 -
continuing operations(IX-X) -
Profit/(Loss) from discontinuing - 355036.89
operations
-
Tax expense of discontinuing
operations -
Profit/(Loss) from disontinuing
-
operation (after tax)(XII-XIII) 382215.34
Profit/(Loss) for the period(XI+XIV)
Earning per equity share -
-Basic -
-
-Diluted
-

355036.89

-
-
 Accounting Standards
(Currently Applicable and used in company or not)

Accounting Standards Y/N

AS 1 Disclosure of Accounting Policies Y
AS 2 Valuation of Inventories Y

AS 4 Contingencies and Events Occurring After the Y

Balance Sheet Date
AS 5 Net Profit or Loss for the Period, Prior Period Items Y
and Changes in Accounting Policies
AS 6 Depreciation Accounting Y
AS 9 Revenue Recognition Y

AS 10 Accounting for Fixed Assets Y

AS 13 Accounting for Investments Y

AS 14 Accounting for Amalgamations Y
AS 15 Employee Benefits Y
AS 16 Borrowing Costs Y

AS 18 Related Party Disclosures Y

AS 20 Earnings Per Share Y

AS 22 Accounting for Taxes on Income Y

AS 26 Intangible Assets Y

Legal Requirement:-
 We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of the audit.
 In our opinion, proper books of account as required by law have been kept by the
company so far as appears from our examination of those books.

 The Balance Sheet and Statement of Profit and Loss dealt with by this report are in
agreement with the books of account;

 In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the
Accounting Standards referred to in sub section (3C) of section 211 of the Companies
Act, 1956;

 On the basis of written representations received from the directors as on 31st March,
2017 and taken on record by the Board of Directors, none of the directors is disqualified
as on 31st March, 2017 from being appointed as a director in terms of clause (g) of sub-
section (1) of Section 274 of the Companies Act, 1956;

 Since the Central Government has not issued any notification as to the rate at which the
cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any
Rules under the said section, prescribing the manner in which such cess is to be paid, no
cess is due and payable by the Company
 CONCLUSION
The project concluded that, given the complexity and development of Company, the overall
level of compliances with the standards and codes is of high order. This project gives the correct
ideas about how the major areas can be found by way of effective auditing system i.e. errors,
frauds, manipulations etc. form this auditor get the clear idea show to recommend on the
position. Project also contain that how to conduct of audit of the company, what are the various
procedure through which audit of company should be done. Form auditing point of view, there is
proper follow up of work done in every organization there no misconduct of transactions is taken
places for that purpose the auditing is very important aspect in today’s scenario form company
and point of view.
THANK
YOU