Executive Summary
This report
encompasses my challenging and enthralling 24 weeks of articleship at Walker
Chandiok & Co LLP (the member firm of Grant Thornton) as an Articled
trainee in the most possible comprehensive manner. I joined this Top 5 firm on
13th February,2023 after being selected through a rigorous interview
process after my resume had got shortlisted. Here it continues with a
superlative experience which have prepared me for the future readiness in this
competitive world by augmenting various aspects of my personality and skills.
In this
report, I have not only covered the selection process, life at workplace, description
of work performed but also included my own journey of emotional and psychological
developments, ever evolving learning curve and maturity, decision making and relationship
management hacks and of course the lessons of survival and growth.
During the
whole tenure, I have been engaged in statutory audit of 2 listed public
companies in the Information technology industry and a private limited company in
the agro-tech industry where I was fortunate enough to be able to work across significant
and sensitive areas.
What is an Articleship?
Under the
new course, Articleship is a 2 years’ mandatory practical training as a part of
the Chartered Accountancy course by the Institute of Chartered Accountants of
India. The main objective of this training is to let the CA students acquire
on-the-job work practical exposure that would complement the degree for various
opportunities once a student clears his/her CA Final examination. ICAI mandates
a minimum stipend policy for promoting the concept of “Earn while you learn”. A
student becomes eligible to get registered for Articleship once they clear both
the groups of CA Intermediate and completing 4 weeks Integrated course on
Information Technology and Soft skills (ICITSS).
Categories
of Work Experience
As CA course
covers multi-disciplinary scope of knowledge through its curriculum, it has
built no bar to let the student gain experience exposures in variety of works. Some
significant domains are Statutory Audit, Internal audit and financial due diligence,
Direct and Indirect taxation, Accounting and Management consultancy, transfer pricing,
Merger and Acquisition, Private equity, valuations, international assurance,
Information technology. A student may also consider an organisation where he/she
is given exposure to multiple domains. The main idea of the framework is to
promote professionalism at a very young age that would suffice the industries’
checklist. The bokeh of choice also put on an important responsibility to
carefully plan one’s career path.
Technicalities
and Restriction during the training period
The training
period is the most significant essence of this CA course and thus it has been
guarded with various rules and regulations. The registrant signs Form 102
countersigned by his/her principal and also mutually agrees the details of
articleship through an official deed. Form 103 is generated by the principal
which has to countersigned by the trainee before submission for RO approval. Apart
from the regular registration, there can be another arrangement such as Article
under secondment where an article get registered under a ICAI member but gets
to work under a different firm on the basis of an agreement. It is compulsory
for the trainees to work for minimum 35 hours a week and maintain a report of
their work done. Only 1 parallel course is allowed to pursue during the
articleship period provided the timing does not overlap the working hours which
is ensured by submission of Form 112. An article is prohibited to pursue any
kind of business or occupation during this phase without prior approval of the Institution.
Recruitment
Process
This is
reality check step for the CA students when they have to get through a rigorous
screening and selection process to enter into their dream CA firm. It is
obvious that different CA firms would offer different exposure, learning curve
and growth prospect. It is obviously a very important decision to be taken in
order to proceed towards various aspects. There are different pathways for
recruitment. They are as follows:
1. Pre
result recruitment drive – Various large CA firms provisionally interviews
students pre-result basis and assures their selection on the basis of their
result. This generally operates through social platforms like LinkedIn,
Telegram or WhatsApp groups.
2. Walk in
drive- Many firms conduct mass interviews on a particular date through
announcements in social media
3. Through
Social networking sites and career portals- This is the most common Recruitment
path. Most firms announce their vacancies within few hours of Intermediate
result and they have a regular screening and interview process. It is important
to remain updated by following HR managers in social media, firm’s social
handles, and joining special CA students’ group.
4.
Referrals- Referral plays a big role in almost every job market and therefore
having a strong reference could help me you to raise the chance of selection.
5. College/
Council’s placement cell- Many firms even come at placement cells of various
colleges and even ICAI council’s placement cells. It is also a very effective
path to check out.
The whole
process can be summarised in following steps:
1. A preliminary
screening process like resume screening or psychometric test (contains criteria
like no. of attempts, location, co-curriculum activity, usage of key words in
resume, transfer cases, number of groups cleared, demanded role, apparent
attitude reflected in resume etc.)
2. HR round
3. Technical
round
How did I
select my domain and the firm?
It was a
really anxious period during the recruitment phases. I did not get any call
from EY who organised a pre-result drive. After I successfully clear my
Intermediate both groups in my first attempt, I was confident that I would get
a good firm but it was more challenging than what I had imagined. I was going
throughs significant FOMO and was eager to get into a reasonably good firm by
hook and crook. Majorly we have sources like teachers, elders, senior articles
and the one and only internet to help us but research is what important before
taking any decision. I have shortlisted few firms like Big 4s, BDO, Grant
Thornton, Desai Haribhakti, NA Shah, KNAV and a few more mid-sized firms and
have sent them resume through various paths. Finally, I had a major ambiguity
in decision making between Haribhakti and Grant Thornton. After considering the
comparative scale of work, and interesting proposed work culture, I have opted
Grant Thornton to be my life’s first professional platform to thrive. The
decision regarding the domain was simple as my objective was to understand
various business process and their walkthroughs and hence I wanted to opt for
Audit and assurance domain.
Hacks I
have learned in the process
1. Sending
mail with contact details at the end of mail
2. Using CV
review website to understand whether your CV is up to industry standard
3. Go
through the Company’s vision and mission to align your thoughts at their level
during the interview
4. If you
don’t know about anything, then confess and say more about what you know
5. Properly
address your future career path to showcase the longevity of association with
the firm
Precaution
One should take before joining Articleship
1. Transfer
policy
2. Policy
regarding rotation in various domain
3. Type of
role being provided and prospective learning curve
4. Study
leave policy
5. Clientele
base
6. Timing
and Comp off policy
7. Attrition
rate in firm
8. Scalar
chain and reporting framework
All these
information can be known by availing firm’s policy documentation, contacting
senior articles via LinkedIn, or directly asking in the interview board. One
can also check about work environment review in websites like Glassdoor,
ambitionbox, Quora, Topmate etc.
About the
Firm
Grant
Thornton is the World’s seventh largest by revenue and sixth largest by number
of employees professional services network of independent accounting and
consulting member firms which provide assurance, tax and advisory services to
privately held businesses, PSU, NPOs. As per 2022 reports, it had US $ 7.2
billion revenue and employs 68000 employees. It was founded in 1980 in UK.
Walker
Chandiok & Co LLP is the member firm of Grant Thornton which is engaged in
the audit and assurance service on behalf of GT. It has an exciting lists of
clientele base and a remarkable past work portfolio for 87 years. It has 15
offices in India, 55 partners, 1750+ staffs, and 100+ audit for large and
listed client. It stands out to be the 4th Largest firm in India by
number of companies audited as per Prime database group as of Jan 2022.
Culture,
Beliefs, and Values
The firm believes
on the concept of CARE which stands for Collaboration, authenticity,
responsibility, respect and excellence. The firm believes in quality without a
question. It incorporates ethics and integrity as two major practices. The firm ensures that each task is performed
by staff with adequate skills and knowledge. It is a ISO 27001:2013 certified
firm and has implemented ISMS. It has an effective quality and risk management
systems which includes independence monitoring, numerous basic principles,
tools and processes that support teams in delivering high quality services and
ensures compliance with legislations, professional standards and guidelines.
Structural
Framework of the audit group
There are
two groups- National Professional Standards Group Leader which further divides
into accounting principles group, auditing standards group, regulatory
framework and the second major group is Quality and Risk management group
leader which has subgroups under audit quality and independence manager such as
audit quality and technical support, independence technical support and
independence administrative support. The whole statutory audit is presently
conducted on the basis of LEAP framework which organises and prioritises audit
procedure to be performed, guidelines of audit and manual to be followed.
Involvement
of Technological framework
It has been
able to incorporate technological applications to conduct paperless audit and
increase efficiency of operations using innovative tools such as-
1. WCGT
Lake- It contains streams of applications like WCGT 360(personnel management
platform), ILEARN (training application), BookmyDesk (seat booking application)
etc.
2. Voyager-
A powerful software for audit documentation and review
3. Data
vault- A data security vault
4. Usage of
software like IDEA for analytical procedures, OneDrive for cloud storage, MS
Office for official works is some of their technological approach.
Client
Base
The firm has
a dynamic list of clientele base that ranges in multiple industries like
Information technology, Banking, FMCG, Pharmaceuticals, Agriculture, Construction,
Finance, Automobiles etc. During my articleship period, I have been plotted to
two IT companies and a company from the agricultural sector.
Career
Path and role description
The firm has
a well-designed career path to motivate the employees for long term prospective
in the firm. In the audit domain, the path is as follows: -
1. Article
2. Analyst
(in 2nd and 3rd year of articleship)
3. Consultant
(both CA and non CAs accommodate this role)
4.Assistant Manager
(acts as a mediator between the manager and tier 3 staffs)
5. Manager
(actively accountable for everything in the working tier)
6. Associate
Director (
7. Director
8. Partner
As an
article, we mainly report to the Assistant Managers and Managers by being
supervised under a consultant. The senior articles or analysts help the new
articles to learn things and solve doubts. The work review is generally a muti
fold system where the preliminary review of an article’s assignment is done by
the consultant, then assistant Manager and the manager. Final sign off is made
by the Engagement partner after the review partner is satisfied with the
quality and sufficiency of work done.
Key
Interesting policies
1. Work from
anywhere policy- The firm promotes flexibility of work from anywhere. It is
upon the team whether to follow this policy or not. This also the firm to do
space management and efficient utilisation of resources.
2. Flexible
dress code policy- The employees are allowed to wear smart casuals at workplace
and hence there is no compulsion to be in formals all the time.
3. Unlimited
leave policy- The team may decide on providing any number of leaves to the team
members provided the work quality does not get compromised.
4. Staff
referral scheme- There is a well-designed referral system in order to attract quality
hirings through present employees by rewarding with monetary amounts for each
successful hirings.
5. Group
term life and health insurance policy- The firm has partnered with a company to
cover employees and partners under term life and health insurance.
6.
Supercoach programme- Each personnel is assigned with a super coach, Co
supercoach and a Pal. They coordinate together in terms of training, leaves,
decision making, problem redressals etc.
7. Reward
and recognition programme- There are multiple awards and recognition initiative
to reward the staffs. Few such examples are- Spot award, Supercoach
leaderboard. 10-year long service award, E appreciation cards etc. The same is
based on assessment which is based on a process that includes goal setting,
engagement appraisal, mid-year review and the year end review. There are 3
scales set which are Above Expectation, Meet Expectation, and Below
Expectation.
8. Ultraflex
policy- Team may decide to take an extra day leave apart from the weekends if
they manage to complete their tasks efficiently within the rest of the days.
The
position of Articled trainee:
Let’s now
understand the key role of an Articled trainee in the firm. In this segment I
will try to describe the objective viewpoint of the role of an Articled
assistant in the firm. Later in this chapter, I will explain my own point of
view over this role along with practical experiences.
Articles
play a very important role in the audit domain and they are treated as a major
backbone of the team. The onboarding process is looked after by the People and
Culture team and they take care of the registration process from start to end. An
induction programme is organised to let them have a bird eye view of the role
and their relationship in the firm. They both work in the areas of attestation,
client interaction and administrative or assistance tasks. They are offered
very good sum of stipend, reimbursements of out of the pocket expenses and
compensatory offs for the overtime they do. Generally, they charge for 40 hours
a week in the timesheet. They have to serve a two-month notice if they wish to
take transfer. They are allowed to take exam leaves and a 5 month leave before
the CA final examination. A team may contain maximum 20 articles for a big
assignment and at minimum 1 article along with a consultant for a small
assignment.
The key
responsibilities are-
1. Vouching
and verification
2. Expense
reconciliation
3. Checking
profit and loss items
4. Filings
and indexing
5. Research
works
6. Ledger
scrutiny etc.
Articles
also prepares planning, substantive and concluding workpapers and put their
sign offs. In this firm, an article with good aptitude and working capacity
might be provided risky and important areas to work on.
They are
also provided with virtual and live trainings for both hard skills and soft
skill enhancements.
Let us now
explore my journey in the firm in the next chapter.
The
voyage through the voyager
Let us now
explore the 5.5 months of my wonderful and mind-boggling experience in the
firm. I would like to divide this chapter into 3 comprehensive parts- 1) Training
2) Technical work done 3) Soft and Smart skills 4) Life
outside work 5) key challenges 7) Best memories 8) Key
takeaways
Trainings
Apart from
live trainings, firm has an online platform for allotment of virtual trainings called
ILEARN which comes up with various mandatory and non-compulsory courses from
time to time. The topics range from technical to soft skill enhancement and social
and corporate awareness.\
OFFLINE
TRAINING
Within 1
week of joining the firm, an offline training was conducted at SMAASH, Lower
Parel. Both consultants, articles and mangers were invited for the training.
The training
covered topics like-
1. Internal
Financial control- Internal financial control mainly convers the following:
-
· Orderly and efficient conduct of business,
including adherence to company’s policy
· Safeguarding of assets
· Prevention and detection of fraud and
errors
· Accuracy and completeness of
accounting errors
· Timely preparation of reliable
financial information
The concept
has been laid in Section 134, 143, 177 of the Companies Act, 2013.
As per the
auditing standard, SA 315 has laid foundation in explaining the key application
of this concept. The internal financial control has to be ensured by the
auditor the applicable entities in order to determine the overall effectiveness
of the control and materiality aspect of audit. If the control is weak, the
auditor has to consider lower materiality and apply more audit procedures before
providing any opinion over the financial statements. It includes Scoping,
Design Assessment, Gap remediation, Operating effectiveness, and finally
assessment and reporting. As per the companies Act, 2013, presence of strong internal
financial control is an obligatory compliance for all public listed companies, public
unlisted companies with paid up share capital greater than equal to 10 Cr,
turnover greater than equal to 100 or borrowing greater than equal to 50 cr and
all private companies with paid up share capital of 20 cr or more.
In order to
practically ensure this, there is proper process we perform during audit that I
got to work on. I will explain the procedure in detail in the technical part of
this chapter.
2. Fraud Investigation-
The role of a statutory auditor is not to detect fraud as the role is not meant
to become a detective or investigator. Rather that part is looked after by the
forensic audit domain. Contrary to this, if an auditor, during the course of
audit, finds out any fraud then he cannot overlook. He must discuss with the
management and those charged with governance to understand the vitality of this
issue and mandatorily report under applicable framework. SA 240 and Section
143(12) of Companies Act align detailed explanations of fraud reporting. We
have been shown a video case study which showed a case of fraud and material
misstatement in the entity and how the auditor detected the fraud and
mis-reporting in the financial statements and finally reported the same in
their audit report. General types of fraud can be as follows-
· Understatement, overstatement or
omission in financial statement
· Wrongful reporting through window
dressing
· Fraudulent transaction and money
laundering etc.
We have
discussed about major popular fraud cases like Harshad Mehta scam, Enron scam,
Arthur Andersen Scam, Satyam scam, Sahara scams etc.
3. We were
made aware about some small but vital things during audit
· Use of legends for highlighting the
source of information checked while performing audit procedure
· Importance of signing off for
becoming credible for the workpapers we make
· Importance of formatting to make any
work presentable and uniform
· Use of diligence before referring any
past years’ workpaper and not blindly follow the same working
· Importance of charging time sheet
regularly on appropriate job code
· Regularly remain updated on the new
amendments, firm’s notifications
· Always try to fetch help of seniors
or experienced before starting an unknown assignment in order to avoid fatal
errors.
It was nice
day where we met with new joiners like me and we were also served tasty meals
as bonus treat.
2. ISA
training – This was a long virtual test-based training module which covered all
major standards of International Standards on Auditing issued by IAASB
(International Auditing and Assurance Standards Board). This was a wonderful
training to make us revise the theoretical concepts of the standards along with
practical case studies and trivia. Major focus was provided on ISA 220, 230, 240,
550, 315, 330, 402, 450, 500, 501, 520, 530, 540, 550, 700, and SQC 1.
Each
standards have unique things to elaborate and they can be learned even through
the internet free materials but the training involved interactive games and custom
case studies which enhanced the learning effectiveness. Each module had a test
after it gets completed which required 75% score for qualifying for the next
module. We got to learn the standards more deeply and it also revised whatever
we have learned in our audit subject in CA intermediate.
3. Training
on Firm code of conduct and practices- This was a very important
training before getting into the workplace in order to understand the frequency
and thought process of the firm. The training also taught about maintaining a
uniform colour code policies like purple, teal etc during documentations, use
of legend signs only for Remarque add-ins in Microsoft office, Use of uniform
fonts styles and sizes, Use of various virtual platforms in the firm
4. Technical
training on tools- A hard skill training was also conducted to make us learn
about Microsoft Excel, PowerPoint, IDEA, Voyager (firm’s own audit
documentation and filing software)
· Excel- Learned about various new
shortcuts like
o
Alt+n+j+p
= For attaching objects
o
Alt+h+o+I
= Autofit
o
Alt+h+f+f
= change font style
o
Alt
+h+f+s = change font size
o
Alt
+ ; = select visible cells
o
Ctrl+
[ = enter into link
o
F7=
Grammer check
o
Alt
+ a +t = filter
o
Alt
+ a+ c = clear filter
o
Alt+
d+ e= Delimited
o
Alt+f+p=
format painter
o
F4=
Copy format of previously selected cell
Extensive use of formulae like vlookup, sumif, if , countif,
subtotal, sum, date, Iferror, unique, abs,
round etc
Use of tools like Pivot table, Conditional formatting, Get
and transform data etc.
· IDEA- Learned about Smart Analyzer
and Random sampling
· Voyager- Went through the concept and
utility of voyager and how it has removed the need of paper works in audit
documentation process
Technical
works done
I have been
plotted first into year-end audit of Mastek Limited.
Mastek is an
enterprise-level digital engineering and cloud transformation company with
operations in 40 countries. Listed on the National Stock Exchange and Bombay
Stock Exchange, the company provides digital transformation services and
software to large public and private enterprises, with over 5,810 employees
globally. The company is headquartered in Mumbai, Maharashtra.
It provides
multiple services like Oracle ERP implementation and support, Salesforce
implementation and support., cloud services, data analytics, automation and AI
services.
The whole
audit is divided into 3 stages and 2 phases. The stages are planning,
substantive testing and concluding & reporting. The 2 phases are audit and
then archival phases. The period of audit was roughly about 1.5 month and 30
days was specified for the archival period.
In the
planning meeting, all the members in the engagement team attends. The
presentation was prepared by assistant managers and reviewed by the manager
before showcasing it to the Directors and partners. First, introductory
explanation of the company is given along with its business description, historical
performances, and present position. Then, materiality and component materiality
are decided based on which scoping is to be finalised. Materiality is
determined based on different benchmarks like Total revenue, Profit before tax,
total assets. Calculation of material subsidiary is presented as a requirement
of SEBI LODR regulation where a subsidiary is said to be material if the total
revenue or total net worth is 10% or more of the consolidated figure. Determining
materiality is a risk based subjective concept. Once it is finalised,
performance materiality and trivial is lower bars below materiality level to
determine the extensiveness of audit procedure to be performed so that true
application of pareto principle takes place.
Thereafter,
there was a discussion regarding the timelines, audit approaches, allotment
styles and finally the engagement team is showcased in the screen. Crucial
areas are also highlighted which has been investigated earlier in the internal
quality control review ( IQCR) so that audit can be done with due care at those
areas.
After the
planning meeting, an allocation list along with template links were uploaded.
We were mainly allotted the planning workpapers. My first workpaper was control
environment template.
CONTROL
ENVIRONMENT TEMPLATE:
Understanding the control environment is a primary task of an auditor as per SA
315. As auditor has to document each and every procedure performed, it is also
important to document how we have understood the control environment.
In that
template, I have to find out whether the entity has maintained a culture of
honesty and ethical behaviour, and whether the elements in the environment
proofs to be activator of a strong internal control in the company. I went
through the company’s latest annual report and noticed the changes in their
organisational framework, cultural developments and change in policies and
tried to opine over the change in internal control due to such alterations. The
observations were also to be confirmed from respective personnels in the
management in order to proof the validity of those stated information in
writing. I had approached the company secretary, HR heads and Assistant Manager
Finance in order to confirm the incorporation of the stated policies.
BUSINESS
PROCESS TEMPLATE: Understanding
the business process is another aspect of preliminary audit procedure. It is
something based on which audit walkthrough would be made. Client provides SOPs
(Standard Operating procedures) or RCMs (Risk control matrix) based on which we
are required to make a summery of understanding along with the risks and
controls associated with each process and sub process. I have been allotted for
2 business process- O2C and Treasury
· O2C – O2C stands for Order to cash
cycle. The whole process has been divided into parts like Quotation, Client
onboarding, Sales order, order fulfilment, shipping, billing and encashing. It
comprises from the client onboarding process to revenue recognition and collection
from debtors.
· Treasury- This process explains how
the company parks its excess funds in fixed deposits and mutual funds to check
on time value of money.
AUDIT
DOCUMENTATION CHECKLIST- Audit is a vast process with hundreds of documentations. Hence there is
also a requirement of tracker to maintain the status and accountability of work.
I was given the responsibility to prepare such checklist by enlisting all the
workpapers to be prepared by grouping them into various stages. This was an
easy administrative task.
TEST OF
EFFECTIVENESS OF CONTROL- Before explaining how I have made this workpaper, let us understand what
is this about. It is a very important workpaper which is conducted as a part of
IFC requirement. As we have already understood about IFC, this is a procedure
to test whether the control is strong or weak.
First of
all, Walkthrough document is made based on the SOP or RCM provided by the
client. Each process is broken into parts and for each part, auditor has to
check whether there is sufficient presence of control in order to prevent any
breach or fallacy in the occurrence. Based on subjective judgement, it is
decided that whether the control is a check of assertions like Occurrence,
completeness, accuracy, valuation or measurement, existence. The walkthrough
template contains fillable boxes such as risk associated with the process, control
to mitigate such risk, control frequency, nature of control (whether it is
preventive, detective or corrective). From auditor side, he/she has to check
whether the process sworn in the SOP are true or not. To ensure, auditor takes
a sample transaction or event and perform audit procedure by checking whether
such process exists along with the control stated. Attachments of such tested
documents are required as proof of audit procedure performed. The main idea is
to walk through the whole process as if a sleuth is strolling around the crime
spot. Once walkthrough is finalised, then key control is decided which are
majorly significant for transaction associated with it. For example, Presence
of segregation of duty is necessary for recording and editing a revenue
transaction and as breaching this control may lead to fraud, it can be
considered as a key control. Key controls are checked more extensively over
more number of samples for getting satisfied with the effectiveness of it. Here
comes the workpaper named TOE or Test of effectiveness of control.
In this
workpaper, it is important to identify all the key controls and then decide on
the attributes to be tested. For examples, in order to record a purchase transaction,
multiple approvals are needed and each such approval results into different
types of documents say quotation mail, approval mail of initiating the
transaction, Statement of works or contract, subsequent addendums, purchase
order, invoice. Now based on professional judgement, auditor may choose
attributes where he will check the SOW (having signature of both parties),
Purchase order and invoice recorded. These selected attributes are called test
attributes. For the purpose of testing, samples are drawn from population using
random sampling. So, first appropriate population has to be readied.
Population
should have the criteria like it has to cover 100% transaction or event for the
period of audit, it must have unique identifiers like serial number, invoice
number, party code, acknowledgement number in order to distinguish each
transaction from another. The total of the monetary value should match with the
financial statements. The population should only contain transaction and event having
same nature. It should not contain unnecessary columns which are not relevant
for our TOE.
Number of
samples to be drawn is based on the audit approach and risk factor associated.
In my firm, two factors are considered. They are risk and frequency of such
control.
Risk is to
be identified from the scoping sheet. In my firm, risk can be classified into
SCOT+, Material only, other and not in scope. Frequency can be understood from
walkthrough itself. It can be every transaction, as and when needed, daily,
weekly, monthly, quarterly, semi-annually or annually. These two factors decide
the number of samples to be drawn and tested. The numbers are pre-decided based
on subjectivity.
After
drawing the samples, it is required to attach the samples and the valid
documents as proof of sampling method performed. Document such as screenshot of
population and sample in IDEA, Sample and population history (to state when the
sampling was done) and their field statistics whether statistics of the data
has not been window dressed.
Then,
requirement list for checking the attributes for each sample is made and
demanded from the client and then the testing is done. Control is said to be
strong if maximum samples satisfy the attributes. It depends on the strength of
the internal control based on which auditor shall decide the extensiveness of
test of detail or substantive testing for the area decided. Normally,
walkthroughs and TOEs are made for significant areas of balance sheet and
p&l based on the scoping sheet such as Revenue, Employee Compensation,
Operating expense, Treasury (Cash Bank, Investments), Purchase/Procurement, Taxation
etc.
I have
worked upon Revenue TOE in and followed the above-mentioned procedures.
Challenges
faced during the assignment and how did I overcome them?
1. Defining
attributes and preparing a suitable requirement list
2. Handling
and testing data for 40 samples
3. Making
Discrepancies noted to be agreed by client and fetching the reasons for the
same. Few such examples are-
· SOW and PO calculation for time-based
contracts does not match- Additional addendum/mails showed change in terms
· Maker and checker does not exist in
some subprocesses- Client agrees that they could not assign such due to limited
resource.
OVERALL
ANALYTICAL REVIEW
This is one
of the most important workpaper for substantive testing. An analytical review
is a review of an organization's financial statements to ensure they are
accurate. Substantive audit procedures are the techniques used by auditors to
verify the accuracy of financial statements to ensure proper reporting. There
are two types of substantive audit procedures: analytical procedures and test
of details.
Analytical
procedures are used to assess both financial and non-financial business
information to identify the connections that can or should be found to support
the financial statement's declarations. When there is variance between what the
data is expected to show and what the data actually shows, an investigation is
required to gather more information to understand and document the variance.
Test of details includes analysis of the detailed information, such as trend
analysis, ratio analysis, and reasonableness testing.
Process
to make an OAR:
1. Prepare a
comparative financial statement with various periodic comparisons based on
audit approach such as YTD, Q1 vs Q4, Q1 vs Q1 etc. For Q2 and year end audit,
both the balance sheet and profit and loss components are considered for the
review whereas for 1st and 3rd quarterly limited review,
generally p&l components are only reviewed.
2. Figures
are not merely copied from the financial statement prepared by client.
Professional expertise has to be used to in order to verify the completeness
and accuracy of information used to prepare the financial statements.
3. Variance
analysis is performed over all the elements of financial statements.
|
1.
For change in Revenue- The reasons can be change in number of customers, loss
of sale due to economic crisis, change in profit margin, elimination of
resources |
1. analysis
of revenue register 2. tracing
Customer master file 3. CVP
and marginal analysis 4.
List of contracts and their correspondence mails |
|
2.
For change in Employee cost- Layoffs, Change in Requirement of resource,
Revised CTC, change in assumptions in actuarial valuations of
gratuity, leave encashment etc. |
1.
Salary register 2.
CTS restructuring mails 3. recruitment
mails 4.
Employee headcount details 5.
Actuarial report 6.
Time sheets for calculation of chargeable amount |
|
3.
For change in Operating expense- Change in scale of operations and production
capacity, limited overhead cost due to better operational planning, economies
of scale |
1.
Rent agreement 2.
Fixed assets register 3. Production
plan 4. Bills
pertaining to electricity and subcontracting charges |
|
4.
For change in other income- change in investment in property plant and
equipment and financial instruments, change in rental agreement |
1.
Investment tracker 2.
Bank statements 3. Agreements 4.
Form 26AS |
|
5.
For change of equity- Issue or redemption of share capital, issue of bonus
share |
1. Meeting
minutes and Board resolutions 2.
Copy of share certificates |
|
6.
For change in Statutory dues and contingent liability- new cases and
litigation requirements, requirement of due diligence for tender application |
1.
Litigation tracker 2. Legal
notices sent 3.
Meeting minutes |
|
7.
For change in other liability- ESOP accruals, relatively more accrual than
clearance, purchase of Insurance plan |
1.
Challans and Bank statements 2.
ESOP agreement 3.
Insurance policy |
|
8.
For change in other assets- Excess/deficit funds, maturity of investments,
increase in prepaid expenses for new service agreements |
1. Investment
register 2.
AIS 3.
Copy of service agreements 4.
Bank statements |
4. For
amounts which are above the performance materiality, completeness testing is
mandatory. For those items, separate tabs are to be created for auditor’s
working and its comparison with client’s working and reason of difference, if
any.
5. All the procedures performed have to
documented either in the LEAD tab or the specific item tabs separately. Legends
are to be marked for easy reference of reviewers and other users
6. Important
documents like confirmations, actuarial reports, and snips should be attached
for augmenting or substantiating the observations/workings.
7. Cross
referencing of workpapers might be provided in case separate workpapers are
prepared by ET. For example- there can be separate workpaper for cash and cash
equivalent or income tax for all the entities together. References of minute
synopsis, recent legal pronouncements, CARO checklists might be also provided.
Plotting
techniques (USING SAP DATA)
1. Plotting
of values can be done in several ways. It is always important to plot the data
faster and in efficient manner so that more time can be utilised for analysis
and review.
2. After IPE
(Information provided by client) testing, we can use the trial balance, General
ledger dump and Journal Entry dump directly with appropriate due diligence.
3. For most
of the items, Trial balance will directly fetch the balance without any post TB
adjustments. Those balances can be cross verified from GL dump also. We can
make Pivot table of the whole dump by selecting the appropriate group
description column for each component. We can also use the formula of SUMIF for
getting the value of line items. For few items, reconciliation is necessary for
adjustments made due to different reasons like rectification of errors,
adjustment due to subsequent event, change in foreign exchange rate, change in
presentation or disclosure, fair value adjustments, reclassification entries
etc.
4. For Interim
periods or quarter wise detail, we can make two pivots and find the difference.
For example- In order to do Q4 vs Q1 comparison, we can either filter the dates
in dump or find the difference of balances in pivot made up to Quarter 3 and
the year end balances.
VOUCHING
Vouching can
be simply called test of details. It is a part of substantive testing. Based on
scope of checking, extensiveness and materiality, Sampling calculators are
prepared which suggests the number of samples to be checked. It is a subjective
decision of the firm to select to choose number of samples to be tested based
on the risk associated with it.
In my firm, there
was a pre-decided chart mentioning number of samples to be drawn. It is
required to test 100% samples. It is to be noted that items having the monetary
amount above the performance materiality is checked on 100% basis as they are
significant in terms of their impact.
Let us understand
how I performed the revenue testing-
The stream
of revenue can be mainly classified into two parts- Implementation and support
services.
Implementation
services are implantation of ERP like ORACLE in a company’s accounting
framework. The whole process is very long and therefore revenue is recognised
based on POCM (Percentage of Completion method). In this method, the percentage
of cost of work done is applied on the overall contract price to calculate the
revenue to be recognised.
After we
draw the samples from the prepared population (here, Revenue Register), we have
to define multiple checklists based on the parameters identified. Few such
examples are: -
1. Check the
Invoice and trace the amount of invoice, date of invoice, Party name, Purchase
order and SOW no., Billing and shipping address (May be different in case of
Bill to ship to model), HSN code. We have to also verify nature of invoice and
its appropriability. For example- Tax invoice, Revised invoice, Bill of Supply
2. We have verified
the parameters of invoice in the respective signed Purchase order and contract.
The dates need to verified whether they actually pertain to the said PO and
Contract or not. Whether there is any variation in terms of the contract or PO
and accounting policy of applying a specific method has been applied
consistently.
3. We may
also consider proof of delivery of service for the said sample in order to
confirm that the services are actually provided and not a book entry by getting
documents like Acknowledgement mail of customer
4. In the
whole testing, it is mandatory to check whether revenue has been recognised as
per applicable standards. In this case, IND AS 115.
5. Material
discrepancies should be noted and discussed with the engagement team.
6. All the
document tested must be archived properly, legends must to be used cross
reference any other workpaper and traced documents. One such example is –
CONTRACT
TESTING
Contract
testing is also substantive approach to test the contracts of the company on a
sample basis. To give a draft outline of the type of contracts-
There will
be Master Agreement based on which SOW is prepared. Any amendment is agreed in
subsequent addendum or CCN (Change contract note). In SAP, the contract may be
present digitally in the form of GME (Gross Margin Estimation) and CNF
(Customer Notification form).
These must
be agreed upon mutual terms and signed by authorised representatives only.
MINUTE
SYNOPSIS CHECKLIST
Minute
synopsis checklist is a concluding workpaper and it is an important audit
procedure to trace evidences of material events. Major decisions taken by
passing resolutions, discussions related to company’s future plan, any risks of
contingencies, entity’s going concern assumption etc. can be known. The process
of making this workpaper is as follows: -
1. Receive
all the meeting minutes throughout the year. Meetings can be Board minutes,
AGM, EGM, UGM etc.
2. Read and summarise
the minutes and categorise resolutions in to two parts – a) Matter having
financial impact b) Matter having no financial impact
3. Mention
how the ET has addressed the event in a particular workpaper. No audit
procedure is performed on mere procedural events.
4.
Subsequent minute synopsis is also prepared to identify any subsequent
adjusting events.
EMPLOYEE
COMPENSATION WORKPAPER
Employee Compensation is one of the most
important workpaper in substantive stage as this is not only material but also
risky in terms of its financial impact. The extensiveness of checking is based
on the component significance of the entity.
For
non-significant entity, we had to check the accuracy, completeness and occurrence
assertion. For variance which are material, analysis is important why such
variance has been caused. Trivial variance might be ignored as they might have occurred
in the normal course of business. Both micro and macro point of view is
necessary during analysis.
For
Significant entries, there is an extensive list of procedure which are as
follows: -
1. Periodic
comparisons
2. Month on
month reasonableness check of the employee cost
3. Month on
month Headcount reconciliation (New joiners and replacements, Existing, Resignations)
and understanding the reasons for major attrition or fluctuations. For example-
Onboarding new projects can suddenly require more employees, economic
recessions might result into increasing layoffs, there can be a pattern of
resignation each year during appraisal season). On sample basis, headcount
testing may be done to ensure parameters like Employee contract, CTC vs
Payroll, Background checking , compliance of company’s internal policy for
recruitment, promotion, and separation.
4. Check the
treatment of provisioning and its appropriate classification as short term or
long term.
Opening: Get satisfaction on the
opening balance
Creation of
provision- Understand the appropriability of assumption or consistency of
policy regarding creation of provision.
Reversal of
provision- Provision might have been reversed due to following reasons: -
Recognition of actual expense, rectification of error, reclassification of
expense, reversal of excess provision etc.
Closing
Balance- It should match with the closing balance appearing in balance sheet.
Net provision created in the current year should appear in the profit and loss
a/c and amount paid should be traced from salary register and bank statement.
5. Test
various items and their legal compliances and compliances as per applicable
accounting standards ( Here IND AS) and audit assertions( Accuracy, Occurrence,
Completeness) . Also perform own computation and compare with client’s working
to find out discrepancies, if any. Few such components of employee compensation
are such as:
· Fixed Salary
· Bonus
· Variable Pay
· Employer’s contribution to provident fund
(Refer EPF Act, 1952)
· ESI (Refer ESI act, 1948)
· Commission
· Gifts (Refer Income tax Act, 1961)
· Reimbursements
· Loan given to Employees
· ESOPs
· Leave encashment
· Gratuity (Refer Gratuity Act, 1972)
· TDS deducted
Also Refer
Companies Act, 2013 and rules for verifying their compliance.
Documents
Required (Not exhaustive): -
· Employee Masterfile
· Policy documents
· CTC related documents
· Actuarial reports
· ESOP documents
· Loan agreements
· Salary register
· Timesheet detail
· Listing and working for each type of
employee cost reference of our working
· Bank statement of payment tracing
· TDS challans
Also try to
find out the reason of period vs period variances by your own and get the
client’s viewpoint regarding such differences.
CONSOL
TRACING
CONSOL
tracing is another workpaper I have assisted in. In this workpaper I had to map
the figures of Profit and loss and Balance sheet of each subsidiary to check
they add up to the figures actually visible in the Consolidated financial
statement.
It is a
really tedious activity which is to check mainly accuracy.
Differences
need to sorted out. Differences can be due to the following reasons:
1. Grouping
difference
2. IND AS
adjustments at consolidated level
3. Elimination
of intercompany balances.
4. Errors
and omission
After
completion of Audit of Mastek Limited, I was among very few from the Mastek
engagement team who was plotted into another listed client called BlackBox
Limited. I was in the part of BBC( Blackbox Corporation) which is the US
division of the Company.
In Mumbai,
AGC Networks Limited was established in 1986 under the name Tata Telecom Ltd.,
promoted by Tata Industries Ltd (TIL). Manufacturing electronic private
automated branch exchanges (EPABX) was one of its main goals, and it also
offered services like software integration, installation, commissioning, and
service support. In order to create a new business called "Trans India
Network Systems Private Limited," Tata Telecom and AT&T Network
Systems International Inc. USA entered into a joint venture agreement in 1994.
Its goal was to produce OPTIMUX and 2Mb/S systems, MAR systems, SLC 120 network
access systems, and related modules. As AT&T left, Tata Telecom and Avaya
Systems established a joint venture in 1996. In India, Tata Telecom introduced
a line of call centre products in 2000 that it had purchased from its joint
venture partner Avaya Communications (formerly Lucent Technologies). Tata
Telecom, the joint venture between Tata and Lucent Technologies, was known as a
Tata-Avaya. Once the Tata Group sold its 25.1% ownership in Tata Telecom to its
joint venture partner, Avaya Inc., the company Avaya Global Connect was created.
AGC Networks Limited was created in 2010 after Essar Group purchased Avaya
Global Connect from Avaya Inc. In 2019, Black Box Corporation was acquired by
AGC Networks. In 2021, AGC Networks changed its name to Black Box. Black Box
operates in 75 locations across 35 countries. Black Box has more than 3,800
employees worldwide.
The company
operates both in goods and services. Products include AV accessories,
networking tools, switches, signage etc. and services like Wi-Fi as a service (WAAS),
network as a service (NAAS), data centre services etc.
Technical
Works done
Walkthrough
As already
explained earlier about walkthrough, this time I was given an opportunity to do
the walkthrough based on the process note provided by the client. The area of
walkthrough was HR Payroll and Revenue. The procedure was same but the content
was different being different client and their different policy and framework.
Segregation
of Duties template
This is a
new template to work on. The objective of this template is to find the presence
of maker-checker-reviewer role in multiple process. We have to decipher and
confirm from client that whether for a particular process SOD control is
present to ensure proper internal control.
If there is
no maker and checker for an activity, there is always a risk of fraud.
Other
liabilities and Provision for Expenses workpaper
I was given
the responsibility to prepare the other liabilities workpaper for all the major
4 significant components of BBC.
Other
liability includes both other long-term liability and other non-current
liabilities which included statutory dues, employee payables, sundry expenses
payables, insurance premium payable etc.
Provision
for expenses includes long term and short-term provisions such as provision for
commission, provision for unearned revenue etc.
The whole
walkthrough of this workpaper is like every other substantive workpaper.
Firstly, we
have to check the scoping file to understand scope of this component in the
financial statement. It was “material only” and “other” thus we needed to perform
audit procedure less extensively than the revenue workpaper.
Then, we
have to figure out the heads from balance sheet and figure out the listing form
Trial balance. From TB, we get GL codes. Then we send requirement list by
mentioning the GL codes to check accuracy, occurrence and completeness of the
figure using documentary evidences and our professional expertise.
For all the liabilities,
I had to check basis of accrual and proof of payment. For change in liability,
the variance analysis is again a must have.
Some of the
major observations during audit were:
1) An
increase in employee payables and provision related to those expenses due to
increase of headcount
2) Increase
in Insurance payable due to purchase of more insurance plans
3) Unearned
revenue means the revenue that is booked is not yet earned and journal entry is
Debtor a/c
To Unearned Revenue a/c
Hence it is
a provision. Increase in this ledger can be linked with increase in number of
contracts in the current year.
For the
purpose of explanation, unbilled revenue is an asset which is earned but not
yet billed to the customer. The journal entry is –
Unbilled
revenue
To Revenue
4) There has
been reasonable upward shift in OPEX related provisions and liabilities due to
increase in scale of operations that can be evidenced from reasonableness
testing and other economic factors.
It is
important to note if there are any absurd variances. Some common reason for
those absurdity can be
1) Any
incidental expense incurred in the current year
2)
Contingent liability becoming certain
3) Merging
two ledger a/c into 1 or vice versa
4) Maturity
of insurance / Redemption of loan happens in the current year.
5) Long term
becomes short term or vice versa
Etc.
Due care
should be taken while auditing the statutory dues. Accuracy of Accrual of sales
tax and use tax should be verified by reperformance of calculating tax based on
applicable law of the respective country. Payments must be verified from
challans and bank statements.
Other
Assets
Other assets
include loans and advances paid to employees and vendors, security deposits,
prepaid expenses etc. It also can be classified into financial and
non-financial and subdivided into current and non-current. Unlike liabilities,
it adds to another point of check for actual payments with the help of challans
and bank statements. Any security deposit or loans should align with proper
documents like signed Agreement. It may also contain intercompany payments for
sister concerns which should align with intercompany liability accrued in the
books of the other company. The movement of opening balance add accrual of
other asset less reversal resulting into closing balances should be confirmed
in terms of their accuracy, completeness and valuation. All the OPEX and
Employee Comp related items should align with the OPEX and Employee Comp
workpaper. In all the aspects, questioning the reasonableness is very
important.
SFUL (Search
for another liability)
It is a very
investigative workpaper as the name suggests. I was given the responsibility to
make SFUL workpapers of all the significant components. There are 2 objectives
of this workpaper- 1) To ensure that the company has passed the entry for
provision for expenses which has incurred in the concerned financial year but
no invoice has been raised 2) Whether there was any unrecorded liability for
which payment has been made in the subsequent financial year.
The basic
process is to get all the requirements ready like Subsequent GL dump for the
considered months say April and May based on professional judgement, current
year financials and their GL dumps provided completeness of the dumps have been
verified, subsequent invoices raised and bank statement to trace the payments.
There are some ways to figure out whether the subsequent expenses pertain to
the current period-
1) From GL
descriptions/ Ledger name
2) From
voucher reference or voucher date
3) Directly
ask from client
After
identifying them, it is important to vouch those expenses with the help of
relevant documentary evidences.
To trace any
unrecorded liability, check for payments made in the considered subsequent period
and then segregate all the between two class- current year and previous year.
After identifying the payments related to previous year, check whether
liability stands in the current year’s balance sheet.
Trivial
discrepancy can be ignored on grounds of immateriality provided. This workpaper
is a true application of professional scepticism.
JE
Testing
It is a
robust workpaper that is mainly about verifying the completeness of the audit.
Unlike small entities, it is not feasible for the auditor to make the entire
financial statements and compare it with the client’s one. Formerly, in
traditional accounting, there were many scopes of errors from entry, posting to
finalisation of accounts but due to advent of technology, until and unless
there is wrong input in the accounting system or ERP, there is lesser risk as
the finalisation gets done automatically with the source data. For the sake of
verifying whether the JE dumps are complete or not we perform JE testing to
ensure the data provided by the client has no missing data. Though this will
not give us any conclusion about the correctness of the accounting or aptness
of the accounting principle applied but it will give us a preliminary
satisfaction about the completeness of the dataset provided. To start with JE
testing, we have to receive the entire JE dump for the whole year from client.
Here you have to be ready to handle millions of lines of entry. The basic idea
of completeness is that, for P&L related GL, whatever amount is visible as
TB should be equal to sum of all the entries for that GL code in the JE dump.
For Balance sheet related GL accounts, the change in opening balance and
closing balance should be equal to sum of all the entries posted for that GL in
JE dump. When it is verified, we shall proceed towards several methods of
testing to suffice all areas of scepticism.
1. Entries
ending with 999
2. Entries
ending with 000
3. Entries
passed by users for very less frequency
4. Random
Sampling of entries and their testing whether for each leg of debit/credit,
there exist the other leg of credit/debit. This is nothing to verification of
dual aspect system of accounting.
5.
Identifying manual entries
6. Test for
entries above amount exceeding performance materiality
For most of
these, Smart Analyzer is a useful took in IDEA which can perform analysis based
on parameters by appending the large datasets which is very inefficient to
handle in Excel due to its less processing power.
Virtual
Stock Verification
This was a
nice experience indeed. I was given the responsibility to perform stock count
for a warehouse of the company in Netherland. The products were mainly cables,
chords, broadcasting equipment. I was provided with sample stock data location
wise. The supervisor was on the other side of the call who was ready with a
camera. I had to instruct the person to take the camera to each location of the
warehouse and show me boxes/ cartons. I counted the number of boxes and
verified with the sample data provided from the accounting system to validate the
accuracy and existence. On test basis, I have also checked the products inside
the boxes to have a check on any discrepancy. The experience was nice but I
wish I could go there for physical stock count and that would have been better.
After
submission of RRD or the end of audit, the archival phase was a long period
where the main work is to archive the entire documentations in the audit
period, giving sign offs to workpapers etc.
Once the
archival period ends, I was plotted to a Private Limited Company named NBHC
Limited. IND AS is applicable on this company and therefore it was a very
comprehensive learning platform as the scale of business was comparatively
lesser than the listed companies and the nature of business was interesting to
explore.
NBHC Limited
The company
has established its strong leadership by offering Integrated Services for
Agri-commodities viz., Tech-enabled Procurement, Storage, Commodity Care,
Collateral Management, and Supply-chain Solutions. Other Value-Added Services
include Quality Testing & Digitized Inspection to capture traceability,
Pest Management, Audit, Surveillance & Control, and Agri-loan Distribution.
NBHC's transformation into a knowledge-based company is marked by its focus on
technology-driven service lines such as Pest Management and Quality Inspection
& Testing. Digitization initiatives have helped to build a robust
operational backbone for the Asset Management businesses, in a 100% paperless
transaction and governance environment. Furthermore, Differentiation through
Digitization has been a key strength, and with the launch of Krishi Setu, an
e-marketplace for Agri Commodities, NBHC has strengthened its local footprints
by opening the national market for farmers from any part of India; thereby
being a one-stop solution provider in Post-Harvest Agri - Ecosystem.
NBHC is
managing assets worth Rs 1,85,000+ cr for 54 banks and has a pan-India
warehousing presence with more than 3000+ warehouses across 23 states - adding
up to total of 65 million metric tonnes Agri commodities under management. It
has 45+ functional QA labs and 200 + mobile labs for quality testing of around
170 Agri-commodities, as well as pest management services across 16 states.
NBHC also works closely with Government Organizations such as Food Corporation
of India. It is accredited with ISO 9001: 2015 / ISO 22000: 2005. It is
empanelled with ICCL (BSE) as Approved Warehouse Provider & Assayer for
Agri, non – Agri / Processed Commodities.
Technical
Works done
In this
engagement, I could analyse tip to toe of the revenue which is the most
interesting aspect of the company. The Revenue comprises of two parts – sale of
goods and sale of services. Each area requires vast understanding of their
business model and diverse revenue streams. While performing the audit
procedure, comprehensive understanding was required from understanding the
business process, identifying the significant risks and effectiveness of
control, evaluating the approach for substantive audit procedures.
Sale of
Goods:
Sale of
goods relates to Sale of TF goods (Trade facility). The company purchases on
behalf of a company and then sell to third party. This is the minor contributor
to the company’s profit because it is highly sensitive to market price and the
company sometimes completes the whole transaction at very less profit margin in
order to avoid the price decay and increased carrying cost.
In the
substantive workpaper, first we had to check the accuracy of the value shown in
the financial statement by recomputation of the flow of transaction from the
respective GL dump after becoming satisfied with its completeness i.e. invoice
register should reconcile with GL dump of revenue account. Invoice register
mainly does not contain the information of credit note, reclasses, cancelled
invoices and hence respective data should be considered while performing the
reconciliation.
Then,
analysis was performed such as customer wise, geographical, product wise, month
on month rationalisation, Year on Year growth / fall along with the reasons and
rationale.
It is to be
noted that this analysis helped to reason out the variances in an analytical
approach which can be also compared with management’s point of view.
For example-
in customer wise analysis, we took the sales registers of both years which
contained the customer names. First of all, we applied a pivot to find out the
total of each unique customers and then we figured out the following: -
1. Top 10
customers of current year
2. No. of
customers left and impact on revenue
3. No. of
new customers and its impact
4. Change in
revenue due to existing customers
5. Major
customers left abruptly and why etc.
Another
important analysis was gap testing and duplicate invoice testing which
tells whether there are any gaps in invoice numbers or duplicate invoice numbers
present if it is sorted in chronological order. This is done to find out errors
or frauds.
Above all,
it is important to note that revenue must be recognised adhere to the
applicable IND AS. In order to ensure that, testing is performed.
For this Sampling
calculator is used, based on extensiveness and risk setting, the calculator
shows the number of samples to be drawn. Invoices above the amount of
performance materiality shall be checked 100% basis.
On every
sample, invoices, Purchase Order, Customer name, GST charged based on
taxability, Bank statement shall be verified on real time basis.
Cutoff
testing shall be
performed by taking first 5 and last 5 invoices of the financial year.
Sale of
Services
Sale of
services was the one of the biggest workpaper I have made. They have 8 major
sources of revenue in this area like Warehouse Management services, Warehouse
and storage Income, Collateral Management services, Fumigation services,
Procurement commissions, foreign exchange income, interest on financed money to
clients, Pest management services etc.
Under this
workpaper, the approach was same as sale of goods but the extensive testing was
required for all the major 8 sources of revenue. These services are generally
backed by agreements and their addendum and hence it is important to match the
recognition of revenue along the terms and conditions of contract.
For
analytical reasoning, we have performed analysis.
Physical
Verification of Stock at Haryana
This was my
first experience of physical verification I have done at Haryana state. I along
with one of a new Article was sent alone for the stock taking procedure. Before
this, we were given a small training at office where the seniors shared their
experience of stock count for this company. We were required to count the TF
stocks and also analyse the effectiveness of internal control present in the go
downs. We had 3 days in hand and we had to cover 6 locations which were not
close. The hotels and flights were pre booked and all the on-duty expenses were
to be reimbursed.
We have been
given a map for planning our journey. We were all nervous about the completion
due to hassle of long journey in limited time and our first-time doing it but
we wanted to stay confident to cope us with all challenge.
On 3/04/2023,
We left early morning and started our journey from Mumbai airport. We had to
cover one location at Gharaunda as one of the locations which was nearby Delhi
airport was primarily cancelled due to non-availability of sample data.
Things required
to be done: -
Internal
control testing
1. Warehouse
should be in a protected area
2. Registers
such as visitors register, Clientwise register, Weighbridge register, Stackwise
registers, Daily Summary register has to be maintained.
3. Whether
warehouse is not maintained properly and there are many litters all around
including dead rodents, bird stools, leakage wastes.
4. There
should not be any electric connection that would push any risk of fire due to
short circuits.
5. The firefighting
equipment must not have been expired
6. Proper
Godrej lock with tagged seal should be present and test checking of the tags
through applications have to be done to check they are unique. Seal register
should be updated.
7. We were
also said to keep note whether signature of auditors were being taken while we
entry and exit as a part of marking their effectiveness.
8. Monthly
Internal audit should have been performed as per the company practice for due
diligence. There will be internal audit report, Signature of internal auditor
in the visitor’s register and stack wise summary.
Stock
Verification
1. We were
required to do 100% checking of the population. The bales were kept stack wise
and each god own has 4-5 stacks on average.
2. A stack
has a stack summary attached to it which contains details of inward and outward
and closing balance. The figure is verified and signed by the Internal auditor
and the supervisor.
3. No. of
bags in stack should match as closing balance of stack wise summary & register,
Daily stock register, client wise registers and internal audit report.
4. Finally,
it should match with the ERP data provided to us. Any discrepancy shall be
noted for further investigation.
5. To take
note of the Pala Bags (Gunny Bags)
6. If there are
any movements during the stock count and after 31st March, 2023,
Reco should be prepared as we had to get the no. of stock as on 31st
March, 2023.
7. Cutoff
procedure to be done if there had any movement in first 5 and last 5 days of FY
2022-23.
8. To make a
summary of all the amount as per register, as per actual count, as per ERP and
find the difference along with its reason after correspondence with supervisor
and CIO (chief Inventory officer)
Hurdle
Faced & action taken
· Counting procedure is different here.
The bales are in (8+10) per layer *7 *8 as an exemplary format. We were not
completely aware about the procedure. We understood the counting procedure from
the supervisor by requesting him to count.
· Time management was a big issue to
complete so many godowns. We have planned our routes, eliminated plans for
sight-seeing, divided our tasks. The first location took a bit more time but it
was important for complete understanding of the overall process.
· In certain times, we faced some
difficulty to get all the details from supervisor but we could able to access
everything by convincing the importance of the audit and the procedure is a
part of statutory compliance.
· Miscommunication related to locations
and their heads. We faced a issue related to identifying the heads of different
location and their phone number. It was managed subsequently over call with the
cluster heads.
· One of the warehouses was under
fumigation thus we have only performed internal control testing and noted the
observations.
· In one of the warehouses, movement of stock
was going on. We performed reconciliation procedure to address this issue.
· In one of the warehouses, we observed
that the records were not updated in some books & the supervisor was eager
to alter the books during the process. We have noted that fact and the
connected discrepancy.
One of the
warehouses was missed due to lack of time. We could successfully do stock
verification in 5 warehouses out of the 7. After the stock count, we were to
prepare summary sheet to note down all the procedures and archive the photos
captured as proofs of observation. The observations altogether formed part of
inventory substantive workpaper.
Soft and smart skills
All have to
agree that every internship connects directly a student to the real work
environment where there are many elements present apart from the work aspects.
I have understood some hard-core realties, became better at communication and
decision making and prioritisation of tasks.
I could explore multiple traits of different personalities with varied
point of view of life which enriched my own thought process.
1.
Importance of asking questions- If you don’t ask, you won’t get, if you still
ask, you aren’t still late. As interns, do not get introverted at asking from
seniors and those who are experienced. It is obvious that everybody will not be
100% helpful but most of the people in the office would be helpful as they also
have passed this phase.
2. Power of
team work- When you are in a team, the chance of better decision making and
innovative ideas increases. The division of work will speed up completion and
reduce the scope of error.
3. Confess
if you have done mistake and rectify – Hiding an error is more sinful than
committing in the corporate world. Human makes mistake but it is our duty to
confess once we figure out the mistake and then take corrective action as soon
as possible.
4. Use of
technology- It is important to use technology in the day-to-day life and get up
to date with the handy techniques. Application of AI like ChatGPT, Google BARD
is getting common nowadays to summarise things, drafts emails, and
understanding complex concept in a simpler way with just few prompts free of
cost.
5. Getting
rid of procrastination through Prioritising and time management- In boring
tasks, we always face procrastination but the best way to deal with them is to
prioritising. If we divide our time into multiple tasks, we will not be getting
bored and exhausted. It is similar to our school routine with a subject every hour
or two.
6.
Importance of remembering names- When you remember names and address the people
by their names, the other people feel identifies his importance for you. It
actually builds up mental connect for sure.
7. Right to
say NO- Everything you can not accept as a rational human. While dealing with
multiple people, many will be there to exploit your energy by delegating their
work. It is your duty to make them understand value of your existing work and
deny to take up additional responsibility. But in some cases, taking up extra
work pleases your boss. You have to analyse what will be more fruitful to
you.
8.
Punctuality and discipline- These values are never be discarded throughout our
time. Being humble to your life and desperate at goal can make you successful.
9. A conversation is more effective than writing – It is a tendency of people
to manage issues without personally getting involved at discussion. Though
written conversation is able to inculcate organised and detailed information,
most issues can be solved over call or direct one to one conversation.
10. Importance
of being curious and reading- When you are updated and knowledgeable, you will
not only be respected but also you can build insights into your work. With
knowledge, you will be able to challenge on going flawed systems.
11. Getting
into core of a thing- Many employees are only concerned about doing a task
rather it is always recommended to delve deep into it to know why is it really
required. It makes your concepts strong. The way to do this is- 1) First
understand your work 2) then identify where your work will be used 3) then try
to understand the master concept and its flow 4) discuss with people involved
in aspect closely connected with your work
12. Be
interested and show your interest- In workplace, you have to stay focused and
interested. There will be supervisors who will be eyed at your approach towards
organisation’s activity. You should
adaptive to organisation’s style of work.
13. Harsh
Truths about top companies-
·
You
really struggle to have work life balance. time for study
·
Lot
of documentation (some are dispensable too)
·
You
are given work without proper direction
·
Your
seniors are your saviours
·
Many
are copying paste works
·
Many
parts works is more about methodology than professional judgment
·
Office
politics and lobby are real
·
You
may have to work till 3 am at night. 8 hours work is a joke
·
Most
of the people can’t use their intelligence and innovation into work
·
Top
authority is not always approachable
·
You
are responsible for everything in your work paper even if it was delegated to
many
·
Don’t
depend on prior period documentations blindly
·
Nobody
except few cares for your growth. They only care about their work being done
·
If
you complain, you can’t sustain
·
Under
the table settlement is real
·
First
comply, then rely
·
Either
you socialise or you are paralysed
·
Priorities
may change frequently, hence flexibility is the key
·
You
will feel that you are wasting your life for living
·
Most
people have no passion for hobbies, if you have you will be celebrated
·
Your
presentation is your representation and sometimes too much focus is given to
your formatting
·
Follow
ups and excuses are part and parcel. Get ready for that
·
Even
at these top companies, they struggle with managing resources.
·
There
will be always some incompetent at the top position and some deserving person
not getting recognition.
14. For
tackling a new problem , there is a systemised approach one can follow if there
is nobody to explain – 1) Understand the responsibility 2) Get some reference
of past work 3) Divide your job into clerical and analytical aspects 4) Figure
out the requirements and utility and then mail to client as it takes time and
by the time you can think about your work 5) Understand the flow of work and
identify the concepts which are completely new to you 5) use help of internet
and fellow colleagues. Maintain a diary for noting your observations and
insights.
15.
Communication hacks I learned:
1. Smile and adapt to the culture
2. Avoid backbiting and negative gossips
3. Adapt to jargons
4. Make eye contact while making
conversations
5. Be participative at discussions
6. Be good at regional language of the
workplace
7. Be updated with current affairs
8. Stay away from passing offensive
comments
9. Show respect for other’s culture and
thought process
10.
Do
not complain a lot
11.
Always
practice hygiene of words depending on the person who your talking
Life
outside work
Life outside
work actually effects life at work in many ways. Your relationship with others
outside the work help you to achieve smoothness at work. We should participate
at parties or arrangements outside the work to get closer to people’s mind. In
my small tenure there, I have not got a chance for any office party but we have
had many dinners outside that made us learn about each other’s interest, aim in
life and hidden aspects of office including office politics, with whom we must
be careful during talking etc. But it is a suggestion that always clear all
your debts to office colleagues which is not a case with friends.
Key
Challenges
There are
some key challenges which might not be same for others.
1. Work
Pressure- There was huge work pressure of course. We had to work multiple
assignment simultaneously and most of the works had similar deadlines.
2. Issue
redressal- There were problems related to solving issues as there were mostly
inexperienced members in the team and the experienced members were busy. Hence
this created difficulty.
3. Mismatch
of knowledge with interns and clients- Though we were trainees but we had to
discuss with employees who are highly experienced and knowledgeable, it was
challenging to deal with them with confidence.
4.
Miscommunication- There has been certain instances of miscommunication due to
scanty interaction with top authority and interns. This issue resolves with
time.
Best
Memories
Though the
whole period will always be intact in my memory. There had been times when we
were cussing the time being exhausted and sometimes, we were rejoicing our
accomplishments.
1. The first day was obviously super
important. I got introduced to the team members. The zeal to prove my work even
at the insignificant responsibilities was damn high.
2. After the
signing of Mastek, we together went to Marine Drive and enjoyed precious
moments and then we went to dinner at Charni Road.
3. After
late night sittings at Black box, we have enjoyed a great gossip night at the
hotel terrace where seniors danced and we sang.
4. At the
last day of audit in Black box, we joined together in the cafeteria and we I
have sang 2 single and 1 duet.
5. My last
day in office will also be memorable. One executive had arranged farewell cake
for me and I sang “Tera mujhse hai pahele kanaata koi”. Everybody wished me
luck after I sent the last farewell mail to my colleagues.
Key
Takeways
This whole
articleship report represent my comprehensive experience. Still, I would like
to summarise the whole into a few points that I think have transformed into a
better human.
1. Never
fear to take challenge and explore newer opportunities
2. There
will be pros and cons of everything but we have to go on consistently
3. Each and
every incident has a butterfly effect in our life. Take the positive and ignore
the negative.
4. Good
Relationship is that ship which help you sail in waters of varied currents
5. Curiosity
to Knowledge is the key to success
6.
Communication is the biggest gift of God and we should make it stronger. Our
personality and attitude can define our existential attributes.
Conclusion
Audit
documentation (SA 230) taught me to write down walkthroughs step by step and
this is what I applied in this whole report. 28th July was my last
day in Grant Thornton and I was emotional for sure. I experienced an important
phase of my life that will surely help me grow in future.
Soumyadeep
Pramanick
Signing Off…
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