319155985-project-report-on-a-ca-firm.docx

Major Project Report ON THE STUDY OF AUDITING FUNCTIONS WITH REFERENCE TO NEOSIS ADVISORY PVT. LTD.

Submitted in partial fulfillment of requirement of Bachelor of Business Administration (B.B.A) General

BBA VTH SEMESTER (MORNING) (B) BATCH 2012-2015

Submitted to:

Submitted by:

Mrs. Prabhjot Kaur

Neela Kohli

Designation

11514101712

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

ACKNOWLEDGEMENTS

A lot of effort has gone into this training report. My thanks are due to many people with whom I have been closely associated. I would like all those who have contributed in completing this project. First of all, I would like to send my sincere thanks to MRS. PRABHJOT KAUR for her helpful hand in the completion of my project. I would like to thank my entire beloved family & friends for providing me monetary as well as non – monetary support, as and when required, without which this project would not have completed on time. Their trust and patience is now coming out in form of this thesis.

STUDENT’S UNDERTAKING

I hereby certify that this is my original work and it has never been submitted elsewhere.

By: Neela Kohli 11514101712

CONTENTS

S. No

Description

1.

List of Tables

2.

List of Figures

3.

Executive Summary

4.

Certificate of completion

5.

Introduction to Topic

6.

Objectives

7.

Literature review

8.

Research Methodology

9.

Analysis & Interpretation

10.

Findings & Inferences

11.

Limitations

12.

Recommendations and Conclusion

13.

Appendices

14.

Bibliography

Page No.

LIST OF TABLES

LIST OF TABLES S. No 1.

Table title

Page No.

EXECUTIVE SUMMARY

The general definition of an audit is a planned and documented activity performed by qualified personnel to determine by investigation, examination, or evaluation of objective evidence, the adequacy and compliance with established procedures, or applicable documents, and the effectiveness of implementation. The term may refer to audits in accounting, internal controls, quality management, project management, water management, and energy conservation. Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. The purpose is then to give an opinion on the adequacy of controls (financial and otherwise) within an environment they audit, to evaluate and improve the effectiveness of risk management, control, and governance processes.

CERTIFICATE OF COMPLETION

This is to certify that Neela Kohli, pursuing V semester (B) (M) from Jagannath International Management School, Kalkaji, has completed her project on the topic “Study on Auditing Functions with reference to NEOSIS ADVISORY PVT LTD.” under

my

Project guide: Mrs. Prabhjot Kaur

guidance.

Her

work

is

appreciable.

CHAPTER I INTRODUCTION TO THE TOPIC

The general definition of an audit is a planned and documented activity performed by qualified personnel to determine by investigation, examination, or evaluation of objective evidence, the adequacy and compliance with established procedures, or applicable documents, and the effectiveness of implementation. The term may refer to audits in accounting, internal controls, quality management, project management, water management, and energy conservation. Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. The purpose is then to give an opinion on the adequacy of controls (financial and otherwise) within an environment they audit, to evaluate and improve the effectiveness of risk management, control, and governance processes. A commonly used definition for internal audit is: ‘An independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes’. This definition recognises two roles for internal audit: • to provide an independent assurance service to the board, audit committee and management, focusing on reviewing the effectiveness of the governance, risk management and control processes that management has put into place. • to provide advice to management on governance risks and controls, for example, the controls that will be needed when undertaking new business ventures. Professional guidance is available from a number of sources. Building on the definition above, the Institute of Internal Auditors (IIA) has issued professional standards for both assurance and consulting work. Public sector organisations are likely to follow internal auditing standards and guidance set by HM Treasury

and other public sector related bodies such as the Chartered Institute of Public Finance and Accountancy (CIPFA).

Internal audit Staffing internal audit is a joint exercise that includes input from the audit committee and management. Several factors — such as an organization’s size, complexity, level of risk and geographic diversity — can infl uence decisions regarding the level of internal audit certifi cation that may be desired.

Selection criteria Audit committees and management might consider the following factors in staffi ng an internal audit function: • A strong leader — Internal audit leaders (often called chief audit executives or directors of internal audit) must not be afraid to bring potential problems to light. • Reporting relationships — Regardless of its defi ned reporting relationship to management and the board,1 internal audit should have frequent, open and direct lines of communication with the audit committee, and the freedom to address meaningful organizational risks. • Need for specialists to deal with complex or diffi cult transactions. • Geographic diversity — Organizations with wide geographic reach may benefit from having internal audit personnel located near significant operations. • Form of compensation fosters appropriate focus on audit quality. • Objectivity or “independence” — Internal auditors should be familiar with the subject matter, but should not be so closely tied to the area that their neutrality is impaired.

Audit committee considerations To ensure that the organizational framework for the internal auditing function is comprehensive and balanced, the audit committee should consider the following three areas. Internal audit philosophy

Corporate accountability and governance necessitate an ongoing appraisal of the entity’s auditing philosophy. Some internal audit functions focus exclusively or primarily on operations, while others extend their focus to fi nancial reporting. The audit committee and management should: • understand and agree with the operating philosophy, and • be confi dent that internal audit has appropriately skilled resources to execute on the chosen philosophy.

Internal audit independence Appropriate levels of independence enable internal audit to design and execute audit procedures in all necessary areas and fully support findings and recommendations to management and the audit committee or the full board. COSO’s Guidance on Monitoring Internal Control Systems contains some helpful direction regarding the broad concept of objectivity. Objectivity refers to the extent to which evaluators and information sources can be expected to perform an evaluation or provide information with no concern about possible personal consequences and no vested interest in manipulating the results for personal benefit or self-preservation. Personal integrity is a primary consideration in assessing objectivity, but other, more easily observed factors include compensation incentives, reporting responsibilities, personal relationships and the degree to which individuals might be otherwise affected by the results of monitoring.

Structure and logistics Organizations, depending largely on their nature, size and complexity, have different internal auditing needs. The audit committee should review the plans and budgets of the internal auditors in relation to the entity’s auditing needs and potential auditing benefits. Equally important, the committee should review the organization chart of the internal auditing function to determine that it is balanced in accordance with the

audit plan. An illustrative organization chart shows how the internal audit function of a multinational enterprise might be organized on a centralized basis.

Monitoring the internal audit function The audit committee’s routine oversight of internal audit is beneficial for the following reasons. First, it enhances the audit staff’s independence and strengthens its image in the corporate structure. Second, the audit committee can help coordinate internal and external audit activity, thus improving the efficiency of both. Third, an effective internal audit function assists the audit committee in discharging its responsibilities in light of its limited time and oversight capacity.

Appraising the quality of internal auditing staff Chief audit executives (CAEs) should be able to articulate to the audit committee how they meet the standards set forth by the IIA.4 Criteria for which the audit committee should look include the following: • Proficiency • Due professional care • Continuing professional development • Internal and external quality assessments • Reporting on the quality assurance and improvement program

The audit committee also should inquire of the independent auditor regarding the quality of internal auditing personnel in relation to: • the professional qualifi cations and educational backgrounds of the staff, • the use of professional training and development programs for the corporate audit staff, and • the performance appraisal and evaluation system.

Finally, while each audit committee may develop its own approach to monitoring the activities of the internal audit function, the following summary thoughts should be helpful. In general audit committees should: 1. assist in the overall internal auditing policy determination and approve such policies to ensure that the staff has authority commensurate with its responsibilities; 2. review the scope of the internal and external auditing plans in order to maximize the resources allocated to the audit function and minimize the outside auditing fees; 3. review copies of the internal auditing reports and critically evaluate findings, recommendations, management’s response and courses of action taken, and review the disposition of the recommendations in the independent auditor’s management letter;

4. review and appraise the staff’s organization regarding its auditing philosophy, independence and logistical operations; 5. assess the quality of the auditing personnel and training to ensure that the internal auditing function is adequately staffed; 6. assure the CAE that the audit committee supports his function in the corporate structure and the director has access to the committee and the functional areas within the entity, and obtain assurance that the staff is receiving the proper cooperation from management; and 7. determine the need for specialists, such as in complex areas of accounting or evaluation of computer security.

Status of internal audit Where there is an internal audit function, its status and remit derives from the needs of the organisation and should be set at the top of the organisation, i.e. by the board and the audit committee. There is no single model for internal audit and each organisation will determine what is appropriate to suit its requirements. In general, internal audit could, if agreed by the audit committee, seek assurance that: • The organisation has a formal governance process which is operating as intended:

values

and

goals

are

established

and

communicated,

the

accomplishment of goals is monitored, accountability is ensured and values are preserved. • Significant risks within the organisation are being managed and controlled to an acceptable level as determined by the board. In addition, internal audit can be used to facilitate the strengthening of the governance and risk framework within the organisation.

Terms of reference The overall status and remit of internal audit should be formalised in terms of reference, often referred to as an audit charter, and approved by the board, normally through the audit committee. These should then be communicated to

relevant people within the organisation. Internal audit’s terms of reference or charter should provide clarity about its: • Strategy and objectives; • Role and responsibilities within the organisation; • Scope of work; • Accountability to the audit committee; • Reporting lines for line management purposes; • Accessibility to the board and the audit committee; and • Unfettered access to all information, people and records across the organisation. The terms of reference should make it clear that internal audit should not be put in a position where it has to review its own work.

Audit approach The audit approach taken by internal audit will largely depend on its remit and the objective assurance that the board requires.

Audit plans Internal audit should, on at least an annual basis, develop a plan of work that it will cover to provide the required assurance to the audit committee and the board. This plan should retain some flexibility to enable internal audit to respond to new issues as they arise. The audit plan should identify how internal audit will: • Obtain assurance on the effectiveness of the governance and risk management processes; • Support the development and maintenance of governance and risk management processes; • Challenge the board’s assessment of risk and the controls in place to manage the identified risks; • Evaluate and test the effectiveness of controls in place to manage the identified risks; and

• Co-ordinate with other sources of assurance, e.g. health and safety, external auditors, etc.

In setting the audit plan, there should be effective dialogue between the audit committee, management, internal audit and external auditors to ensure that there is adequate assurance from all sources to cover all key business risks. Audit committees need to make clear their expectations that both internal and external auditors will communicate effectively with each other about how their respective audit plans and objectives will cover these key business risks. The IIA’s Performance Standard 2201, Planning Considerations, states that internal auditors, in planning their work, should consider the objectives of the activity being reviewed, the risks related to that activity, the adequacy and effectiveness of the activity’s risk management and control systems and the opportunities for making significant improvements to those systems.

Skills and resources Internal audit needs to have adequate budget and resources to complete its work plan and fulfil its remit. In achieving appropriate coverage of the agreed risk areas, it will need to have staff with the right skills and expertise. It may also require access to specialist resources which might include using staff from elsewhere in the organisation or external resources.

Sourcing of internal audit There is no requirement for internal audit to be provided by an organisation’s own employees. The organisation may choose to have the service provided fully from within, may outsource it entirely to an external provider or may consider a mixture of internal and external sourcing. However the service is provided, it needs to fit into the overall remit and scope that has been set and its effectiveness needs to be monitored and reviewed on a regular basis by the audit committee.

Performing the audit work In order to perform its work efficiently and effectively, internal audit will need to have unfettered access to necessary information, people, records and outsourced operations across the organisation. IIA Performance Standard 2300, Performing the Engagement, states that internal auditors should identify, analyse, evaluate and record sufficient information to achieve the engagement’s objectives. The head of internal audit will need to determine how internal auditors carry out their work and the level of evidence required to support their conclusions. Evaluation of findings Internal auditors will normally evaluate the findings of each engagement. They should assess whether the actions adopted by management address risks in the manner and to the extent intended and identify and report any weaknesses.

Communication of results Under the IIA’s Performance Standard 2400, Communicating Results, it is recommended that internal auditors report internally to the board, the audit committee and management on a regular basis. Internal audit’s reports, opinions and any recommended management actions need to be communicated in a clear, concise, reliable and constructive way. They should demonstrate a clear understanding of the organisation and its objectives. All significant actions need to be communicated to the audit committee regularly, together with dates of implementation. Where key agreed actions are not appropriately implemented by management, there needs to be a mechanism for internal audit to investigate the reasons why and, if necessary, escalate matters to the audit committee. It is important for both internal and external auditors to co-operate, communicate and share their evaluations and the results of their audit work when relevant and subject to any confidentiality requirements. This dialogue should take place regularly throughout the year.

External audit Selecting and evaluating the external auditor Few decisions that audit committees make are more important than the recommendation or selection of external auditors.5 Audit committee members should, therefore, be diligent in selecting the right auditor and in evaluating the auditor’s performance throughout the engagement. Exhibit 2 includes some selection criteria for audit committee consideration. These same criteria also can be used to evaluate the auditor’s performance during or at the end of an audit. External auditor selection/evaluation criteria Industry experience

Audit committees of large, complex organizations, and those that venture into complicated industries like software or finance, need to ensure the external auditors have an appropriate level of industry experience.

Support network available Audit committees should be confident that the within the external auditing external auditor has access to specialized technical firm

resources — whether in a national office or spread around its geographic footprint. Ask the prospective auditor to describe the process for answering a technical question that cannot be handled solely by the engagement team.

Independence

Audit committees should be confident that the external auditor has appropriately evaluated and reported the firm’s independence,

considering

family relationships, investment holdings or other business relationships. Independence requirements apply to the engagement team, to the firm’s local office, and in most public company situations, to the firm as a whole.

Reasonableness of audit The audit committee should be confi dent that the plan

prospective auditor’s audit scope is reasonable and adequate, and that it includes locations that, on their own, are material to the fi nancial statements. Smaller locations may be included on a rotating or limited-scope basis. Audit committees should heed unusually low competitive bids, which may signal that the auditor doesn’t understand the scope required or that he plans to make up the difference through special billing. Require proposing fi rms to quote both hours and fees by major audit area to evaluate differences in hourly rates (which may refl ect the personnel level planned for the work) and number of hours (which may refl ect audit plan adequacy or excessiveness).

Ability to toe the line

Audit committees should be confi dent that the audit partner has the fortitude to deliver constructive criticism. Over time — in executive session — ask open-ended questions about management’s and/or internal audit’s performance, and evaluate the partner’s demeanor and response. To evaluate how well a prospective auditor communicates diffi cult information, ask references or the audit partner for examples of issues he has reported. Confi dentiality may rightly prevent full disclosure of such issues, but the audit committee should be able to get a sense of the auditor’s candor.

Form and frequency of The audit committee should expect frequent, open communications

auditor

communication

with

management

and

• With management

internal audit, and may reasonably expect the

• With internal audit

auditor to spend time talking to managers and

• With the audit committee

employees outside of the executive suite. Auditing standards require the auditor to have certain types of communications with the audit committee. At a high level the audit committee should expect: • An audit planning discussion early in the year describing what the auditor plans to do, where he plans to do it and how much effort he expects it to take • Interim updates measuring progress against the plan • Immediate communication of issues like suspected fraud, major internal control problems or indication of a prior-period material error

Lack of surprises

Audit surprises, in this context, come in two forms: • Those related to last-minute audit adjustments • Those related to last-minute cost overruns Both can be caused either by the company’s failure to provide necessary information to the auditor by the agreed-upon date, or by the auditor’s failure to perform necessary procedures early enough to detect

a

particular

problem.

Proper

interim

communication and routine audit committee/auditor exchanges

about

the

status

information

usually

prevent

of

requested

auditor

downtime,

overruns and rushed audit procedures.

Partner and manager

A

typical

audit

includes

20

to

30

percent

involvement

partner/manager time, but audit complexity can raise or lower those percentages. The mix of partner and manager time also varies based on the number of audit managers staffed and their level of experience. The quality of the hours spent, especially by the partner, is more important than the number of hours spent. The partner’s early involvement in the planning process, frequent interim reviews of the audit work, and adequate review time in the field translate into an effective and efficient audit.

Quality control procedures

Auditors of public companies are required to have concurring or second partner reviews,6 often called “engagement quality reviews.” The audit committee should inquire about the skills and involvement of the

concurring

partner,

who

should

have

appropriate industry experience and be available to the engagement team as needed. Using the work of others

The audit committee should be confident that the external auditor is making appropriate but not excessive use of the internal control testing performed by others, including internal audit.

Usefulness of

External auditors are uniquely positioned to add

recommendations

value beyond the assurance provided in the audit opinion, and audit committees should be confident that the auditors they select have a continual improvement mindset. With unprecedented access to business operations and related books and records, and valuable knowledge gained from other companies’ best practices.

Team chemistry —

Audit committees should expect the audit team to

Balancing client

be courteous, respectful and reliable, and at the

relationships with duty to same time, to maintain a financial statement users

“healthy skepticism.”8

Committee members should ask management periodically about the auditor relationship — looking equally for signs of excessive tension and excessive collegiality9 — and should ask the auditor about the nature of management’s interactions.

External auditor reporting Auditing standards require the external auditor to communicate certain things to “those charged with governance,” which usually includes management and the board (through the audit committee).12 In general, the audit committee should expect the auditor to communicate: • The auditor’s responsibilities in relation to the financial statement audit, • Planned scope and timing of the audit, • Significant findings from the audit, and • Auditor independence.

Accounting Auditing is a vital part of accounting. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business. Financial audits are performed to ascertain the validity and reliability of information, as well as to provide an assessment of a system's internal control. The goal of an audit is to express an opinion of the person / organization / system (etc.) in question, under evaluation based on work done on a test basis. Due to constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements – a concept influenced by both quantitative(numerical) and qualitative factors. But recently, the argument that auditing should go beyond just true and fair is gaining momentum. And the US Public Company Accounting Oversight Board has come out with a concept release on the same. Cost accounting is a process for verifying the cost of manufacturing or producing of any article, on the basis of accounts measuring the use of material, labor or other items of cost. In simple words, the term, cost audit means a systematic and accurate verification of the cost accounts and records, and checking for adherence to the cost accounting objectives. According to the Institute of Cost and Management Accountants of Pakistan, a cost audit is "an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at, in accordance with principles of cost accounting. An audit must adhere to generally accepted standards established by governing bodies. These standards assure third parties or external users that they can rely upon the auditor's opinion on the fairness of financial statements, or other subjects on which the auditor expresses an opinion. The definition for Audit and Assurance Standard AAS-1 by the Institute of Chartered Accountants of India (ICAI): “Auditing is defined as a systematic and independent examination of data, statements, records, operations and performance (financial or otherwise) of an enterprise for a stated purpose. In any auditing situation, the auditor perceives and recognizes the proposition before him for examination, collects evidence, evaluates the same and on this basis

formulates a judgment which is communicated through an audit report. An audit is an independent examination of financial information of an entity, irrespective of its size and form, when such examination is conducted with a view of expressing an opinion thereon.”

Integrated audits In US audits of publicly traded companies are governed by rules laid down by the Public Company Accounting Oversight Board (PCAOB), which was established by Section 404 of the Sarbanes–Oxley Act of 2002. Such an audit is called an integrated audit, where auditors, in addition to an opinion on the financial statements, must also express an opinion on the effectiveness of a company's internal control over financial reporting, in accordance with PCAOB Auditing Standard No. 5. There are also new types of integrated auditing becoming available that use unified compliance material (see the unified compliance section in Regulatory compliance. Due to the increasing number of regulations and need for operational transparency, organizations are adopting risk-based audits that can cover multiple regulations and standards from a single audit event. This is a very new but necessary approach in some sectors to ensure that all the necessary governance requirements can be met without duplicating effort from both audit and audit hosting resources.

Assessments The purpose of an assessment is to measure something or calculate a value for it. Although the process of producing an assessment may involve an audit by an independent professional, its purpose is to provide a measurement rather than to express an opinion about the fairness of statements or quality of performance. Auditors Auditors of financial statements can be classified into two categories: 

External auditor / Statutory auditor is an independent firm engaged by the client subject to the audit, to express an opinion on whether the company's financial statements are free of material misstatements, whether

due to fraud or error. For publicly traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, are regarded as independent auditors. 

Cost auditor / Statutory Cost auditor is an independent firm engaged by the client subject to the Cost audit, to express an opinion on whether the company's Cost statements and Cost Sheet are free of material misstatements, whether due to fraud or error. For publicly traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over Cost reporting. These are Specialized Person called Cost Accountants in India & CMA globally either Cost & management Accountant or Certified management Accountants.

The most used external audit standards are the US GAAS of the American Institute of Certified Public Accountants; and the ISA International Standards on Auditing developed by theInternational Auditing and Assurance Standards Board of the International Federation of Accountants. 

Internal auditors are employed by the organizations they audit. They work for government agencies (federal, state and local); for publicly traded companies; and for non-profit companies across all industries. The internationally recognized standard setting body for the profession is the Institute of Internal Auditors - IIA (www.theiia.org). The IIA has defined internal auditing as follows: "Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance [5] processes". Thus professional internal auditors provide independent and objective audit and consulting services focused on evaluating whether the board of directors, shareholders, stakeholders, and corporate executives have reasonable assurance that the organization's governance, risk management, and control processes are designed adequately and function effectively. Internal audit professionals (Certified Internal Auditors - CIAs) are

governed by the international professional standards and code of conduct of the Institute of Internal Auditors.[6] While internal auditors are not independent of the companies that employ them, independence and objectivity are a cornerstone of the IIA professional standards; and are discussed at length in the standards and the supporting practice guides and practice advisories. Professional internal auditors are mandated by the IIA standards to be independent of the business activities they audit. This independence and objectivity are achieved through the organizational placement and reporting lines of the internal audit department. Internal auditors of publicly traded companies in the United States are required to report functionally to the board of directors directly, or a sub-committee of the board of directors (typically the audit committee), and not to management except for administrative purposes. As described often in the professional literature for the practice of internal auditing (such as Internal Auditor, the journal of the IIA) or other similar and generally recognized frameworks for management control when evaluating an entity's governance and control practices; and apply COSO's "Enterprise Risk Management-Integrated Framework" or other similar and generally recognized frameworks for entity-wide risk management when evaluating an organization's entity-wide risk management practices. Professional internal auditors also use Control Self-Assessment (CSA) as an effective process for performing their work. 

Consultant auditors are external personnel contracted by the firm to perform an audit following the firm's auditing standards. This differs from the external auditor, who follows their own auditing standards. The level of independence is therefore somewhere between the internal auditor and the external auditor. The consultant auditor may work independently, or as part of the audit team that includes internal auditors. Consultant auditors are used when the firm lacks sufficient expertise to audit certain areas, or simply for staff augmentation when staff are not available. Risk is inherent in the decisions that an organisation takes to manage and run its business and in the business processes established to assist in the achievement of its business objectives. Changes in the way organisations carry out their normal activities resulting from, for example, expansion of the business or changes in the regulatory framework, can place enormous strain

on an organisation’s control mechanisms and become major sources of risk. That is why establishing, implementing and embedding effective risk and control elements of the overall corporate governance framework are of fundamental importance to all organisations. Internal audit can play an important assurance role in an organisation’s governance processes, particularly in the area of risk management and control. In many organisations, the expectations placed upon internal audit have increased and the function is being relied on to make a significant contribution. With the introduction of the revised Combined Code and the Smith Guidance, audit committees are expected to take a more focused oversight role in respect of risk management and internal control. They need assurance from management and independently that good internal controls are in place and operating effectively. Internal audit can contribute to independent assurance on the overall risk management, control and corporate governance processes. It can also be a useful catalyst for change and improvement within the organisation. It is important therefore for the audit committee to distinguish between the role of management and that of internal audit. Management has primary day-to-day responsibility for managing risk and for the operation of internal controls within an organisation. Internal audit’s role is separate and independent from management. ‘Independence’ has a different meaning for internal audit than it does for external audit.(1) The internal audit function is generally considered independent when it can carry out its work freely and objectively.

Performance Audit Safety, security, information systems performance, and environmental concerns are increasingly the subject of audits. There are now audit professionals who specialize in security audits and information systems audits. With nonprofit organizations and government agencies, there has been an increasing need for performance audits, examining their success in satisfying mission objectives.

Quality Audits Quality audits are performed to verify conformance to standards through review of objective evidence. A system of quality audits may verify the effectiveness of a quality management system. This is part of certifications such as ISO 9001. Quality audits are essential to verify the existence of objective evidence showing conformance to required processes, to assess how successfully processes have been implemented, and to judge the effectiveness of achieving any defined target levels. Quality audits are also necessary to provide evidence concerning reduction and elimination of problem areas, and they are a hands-on management tool for achieving continual improvement in an organization. To benefit the organization, quality auditing should not only report nonconformance and corrective actions but also highlight areas of good practice and provide evidence of conformance. In this way, other departments may share information and amend their working practices as a result, also enhancing continual improvement.

Project Management Projects can undergo 2 types of Project audits: 

Regular Health Check Audits: The aim of a regular health check audit is to understand the current state of a project in order to increase project success.



Regulatory Audits: The aim of a regulatory audit is to verify that a project is compliant with regulations and standards. Best practices of NEMEA Compliance Center describe that, the regulatory audit must be accurate, objective, and independent while providing oversight and assurance to the organization.

Energy Audits An energy audit is an inspection, survey and analysis of energy flows for energy conservation in a building, process or system to reduce the amount of energy input into the system without negatively affecting the output(s).

Operation Audit An operations audit is an examination of the operations of the client's business. In this audit the auditor thoroughly examines the efficiency, effectiveness and economy of the operations with which the management of the entity (client) is achieving its objective. The operational audit goes beyond the internal controls issues since management does not achieve its objectives merely by compliance of satisfactory system of internal controls. Operational audits cover any matters which may be commercially unsound. The objective of operational audit is to examine Three E's, namely Effectiveness – doing the right things with least wastage of resources. Efficiency – performing work in least possible time. Economy – balance between benefits and costs to run the operations

OBJECTIVE

1. Identify different functions taken up by the Auditing firms. 2. Identify the different types of auditing methods. 3. Understand the importance of auditing. 4. Understand the concept of readership and circulation.

CHAPTER-II LITERATURE REVIEW

Advantages of Auditing 1. Assurance of true and fair accounts - An audit provides an assurance to the investors, government, lenders, creditors, owners, management etc. That the final account presented shows the true and fair picture of the profit and losses and financial position of the concern 2. True and fair balance sheet - The user of final accounts can be sure that the assets and liabilities disclose true and fair view of financial position of the concern, it’s neither more nor less, and it’s free from window dressing or secret reserve. 3. True and fair profit and loss account - The user of final accounts should be sure that the profit and loss account show true amount of profit or less as it is. 4. Tally with books of accounts - The audited final accounts should tally with the books of accounts of the concern. So it can be easy to calculate the taxable income without checking all the transactions. 5. Disclose all material facts - The audited final accounts should disclose all material facts, thus users can rely on them for making useful decisions of lending, investing etc. 6. As per law - The audited final accounts should be prepared as per the rules and guidelines laid down by law. 7. Detection of errors and frauds - It is assumed that the audited final accounts are free from errors and frauds, the auditor with his expertise knowledge would detect the errors and fraud so as to show the true figure of final accounts. 8. Moral check on employees - Auditing techniques such as verification, vouching of cash, assets, stock etc. act as a moral check on the employees, this forces them to keep the accounts up-to-date and free from errors and frauds. 9. Advice to concern - Auditor can also advise the client about internal control, taxation, finance, accounting system etc.

Limitations of Auditing 1. All transactions cannot be checked - It is not possible for an auditor to check each and every transaction; he has to check them on sample basis. 2. Evidence is not conclusive - Audit evidence is not conclusive in nature the confirmation of debtors is not conclusive evidence that all amount will be collected, the conclusions are persuasive rather than conclusive. 3. Not easy to detect some frauds - It’s not easy for an auditor to detect the deeply laid frauds which involves acts designed to conceal them such as forgery, false explanation, and not recording transaction and so on. 4. Audit cannot assure about profitability or efficiency of management Even though the accounts are audited it doesn’t that the user can take granted the future profitability or prospects of concern as audit don’t comment on efficiency of the management. 5. Rely on experts - The auditor has to rely on experts like lawyers, engineers, valuers etc. for estimation of contingent liability and valuation of fixed assets

Chapter III COMPANY PROFILE

Noesis is a unique hospitality professional services firm in India. It offers a complete cycle of broad-based services across a wide range of hospitality retaining the specialist skills, attention to detail, and quality of service. Considered by its many multi-national, national and regional clients as a particular “safe pair of hands”, with the resources and skills to offer both, a “one stop” service and in-depth expertise, Noesis has built up an excellent reputation for adding value to the client. Noesis provides Developers, Investors and corporates with a comprehensive range of services including research, consultancy, transactions, Capital markets, retail, education and hospitality advisory.

Client Focus: Noesis places the client first and adopts a genuine partnering approach. From the outset, Noesis places great emphasis on understanding the client’s current and likely future business, alongside its challenges and opportunities. Through this rigorous brief derivation, regular discussion and reporting, Noesis breadth of experience enables our client to make decisions based on maximum information.

The Noesis Approach: Noesis team approach, with the right blend of experience and skills, offers the client effective support. Rigorous proven methodologies, and innovative thinking, enable

Noesis

to

stimulate

imaginative

solutions

that

work.

Good

communications and a holistic approach involving all stakeholders with frequent workshops.

The Noesis Difference: Noesis is entirely independent and can offer unbiased advice and assistance. Noesis team works closely with client’s and therefore offer support with a clear understanding of the client’s perspective.

Accustomed to viewing life through the client’s eyes, Noesis offers unrivalled commercial counsel to protect the client’s interests - whether it is advisory, transactions or negotiating on behalf of the client. Location: Headquartered in the Mumbai, Noesis takes care of its Western and Southern India’s assignment from this office. Noesis Delhi office takes care of Northern and Eastern India assignments. Noesis also works extensively internationally, including in Thailand and the Middle East. Neosis advisory private limited is a private company incorporated on 27 April 2010. It is classified as Indian non-government company and is registered at registrar of companies , Delhi. Its authorized share capital is Rs. 100,000 and its paid up capital is Rs. 100,000. Neosis advisory private limited’s annual general meeting (AGM) was last held on 30 September 2013 and as per records from ministry of corporate affairs (MCA), its balance sheet was last filed on 31 March 2013. Neosis advisory private limited’s corporate identification number (CIN) , is U67190DL2010PTC202034 and its registration number is 202034. Its registered address is C-20 Jangpura B, New Delhi – 110014 , Delhi , India. There are two directors of Neosis advisory private limited. Neosis Advisory with the aim of providing a wide range of accounting and financial services to clients in India. We are a team of chartered accountants in India, with vast knowledge and professional experience, serving its clients and specializes in the fields of accounting, auditing, taxation, foreign investments, company law consultancy. software development consultancy, ISO 9000-2001 certificate consultancy. Neosis Advisory is a team of distinguished chartered accountant, corporate financial advisors and tax consultants in India. Our firm of chartered accountants represents a coalition of specialized skills that is geared to offer sound financial solutions and advices. The organization is a congregation of professionally

qualified and experienced persons who are committed to add value and optimize the benefits accruing to clients.

Capital Market Noesis Capital Market team advises on investment and divestment strategies across the entire Hospitality Consultant asset classes. Capital Market team primarily serves hospitality consultant funds, HNI’s investors, developers and asset owners. Offer solutions based on the specific needs of the client; we take mandate from client after understanding the investor’s objectives and assignment in detail. Our advice and services are backed by unparallel hospitality consultant market knowledge, enabling clients to make a quality decision. Our in-depth coverage ensures we offer a spread of opportunities to our clients.

Capital Market Services include: 

Structured joint venture.



Asset investments (pre-let) and securitization.



Project or Joint Venture appraisal and valuation.



Financial structuring and valuation.

Investor Relations We at Noesis Capital Advisors believe in creating long term sustainable value for our esteemed clients. The services provided by our Investor Relations team include but are not limited to: 

We undergo due diligence as to sector in which client operates and thereafter detailed due diligence in understanding company’s business model.



We make financial model, which is then portrayed into investor friendly investor presentation, in terms of clear understanding.



Client’s business story is communicated to buy side & sell side by conducting road shows, conference calls, one to one meet and media channels as required.



Any query as regards to investment & structure of same is handled by our qualified team.



Any major update with respect to client’s industry will be communicated to client on regular basis.



Evaluating

the

current

Investor

Relations

situation

based

upon

communication with the investment community and current market sentiment toward your corporation’s 

Creation of a Corporate Fact Sheet and Investor Kit geared to both current and prospective investors of your company notifying current shareholders of forth-coming events and intriguing new investors with the same information.



Distributing your company's investor kit and corporate fact sheet through Direct

Mail

Programs

to

Institutional

and

Individual

Investors housed in Funds and Financial Firms. 

Amplifying the message and model in which your company shows Accountability and Value to shareholders through Road Shows. This allows you to get your company's message in front of hundreds of firms for evaluation and potential investment.



Creation and maintenance of Investor Communications via phone, e-mail, and Investor Community teleconference calls allowing the Company to provide an “open book” of information to investors of all types.



Increase of Institutional Awareness through our In House active call center. Allow our IR reps exhibit the value of your corporation to potential qualified investors, funds and financial centers over the phone.



Press Release Submission over various News, Market and Press wires in a timely manner. We can also construct news content for your approval with facts that you provide in order to keep the Press Release process time efficient.



Any other Investor Relations Needs provided by our client, we could provide a direction in which to act throughout consultation with our Market and IR Experts. We strive for the success of each and every client contracted through our firm

Project Management Noesis Project Management Consultancy (PMC) vertical provides professional services to our clients in achieving their goals of projects within time, quality and budget. We further adds on project cost savings, proactive risk management, and profitable strategies for sustainability. You gain an unparallel advantage of having greater control of outcomes through our suite of specialized industry solutions – Hotel, Commercial, Education, Health, Infrastructure, Industrial, Residential and Retail. PMC Division plays the role of a planner, scheduler, coordinator and supervisor for projects right from concept to completion. Our consultative and methodical approach brings efficiency and effectiveness into projects that create real value for your company. A single point-of-contact (SPOC) provides end-to-end turnkey solutions for Construction Management, Project Audit Services and Fit-Out Management. 

Execution of the project in the quickest possible time, with due diligence to safety



Delivery at the most competitive cost



Consistently maintaining high levels of quality

Our expert team has delivered variety of projects for owners, occupiers and investors across the nations. We have largely delivered projects across the country to mention few are Bengaluru, Mumbai, Pune, Kolkata, Hyderabad, and Agra and many more. We have the experience to handles every stage of a project’s life-cycle: PreConstruction, Construction & Post-Construction. Our expert professional team has wide-ranging expertise in design and engineering. The Project Management Platform: 

Greenfield Projects



Project Management - Interior Fit-Outs



Construction Management



Design & Build Services



Account Management



Renovation/Refurbishment Manage



Technical Advisory / Due Diligence



Development Advisory/Development Management

Research & Consulting Noesis Consulting & Advisory team is equipped with requisite skills sets to provide comprehensive consultation, advisory, research and valuation services, valuable to a wide range of industries. We provide detailed and accurate information that are beneficial for your unique circumstances. Our expertise extends to every aspect of hospitality industry . 

Best use Studies or feasibility studies



Independent Market Land Valuation



Portfolio valuation



Acquisition/Disposition consulting

With our services, you can make a quality decision regarding your hospitality consultant that is based on an independent analysis of current market conditions. We provide services to clients such as corporations, financial institutions, government agencies, public sector entities, developers, hospitality consultant funds and private investors.

Hospitality Services Noesis Hospitality team provide customized and unparallel solutions to clients. Our in-depth understanding enables us to guide clients in shaping effective entry strategies. If you need a partner that understands the complexities of the hospitality industry as an operating business and as a hospitality consultant investment, we can provide the solutions you need. Our strong operations and consulting background coupled with the domain knowledge in hospitality consultant provides a holistic view to both developers and brands. Developers benefit from our comprehensive analysis of a large variety of brands, and consequently enable them arrive at the best fit for their development needs. Brands that work with us can make sound, informed decisions based on our unbiased and objective evaluation of the developers and locations.

Noesis offers the full range of services 

Advisory services



Entry strategy



Site selection & negotiations



Feasibility and valuation reports



Debt and equity finance



Management Operator selection & negotiations

ANALYSIS AND INTERPRETATION

FINDINGS AND INFERENCES The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because of the nature of audit evidence and the characteristics of fraud, the auditor is able to obtain reasonable, but not absolute, assurance that material misstatements are detected. The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatement, whether caused by errors or fraud, that are not material to the financial statements are detected.

LIMITATIONS

 The sample size is not universal , some part of other cities remained uncovered  Unavailability of some information due of lack of awareness of retailers  Time and expenses were major constraints  Personal basis may be existing as the dealer of varied nature elicits the information

RECOMMENDATION

CONCLUSION

The project was a great experience for me in order to study the marketing aspects in the world. It was a great opportunity for me to express what I have studied. This industry is a place where two major players are there in the world.

APPENDICES

QUESTIONNAIRE NEWSPAPERS: SURVEY Q1. Name: Q2. Age: a.) 10-20 b.) 20-30 c.) 30-40 d.) 40-50 e.) Above 50 Q3. Which newspaper do you read? a.) Hindustan Times b.) Times of India c.) Hindu d.) Pioneer e.) Others Q4. How often do you read any newspaper? a.) Daily b.) Weekly c.) Never Q5. Have you heard of Pioneer? a.) Yes b.) No Q6. Why do you read newspapers? a.) Daily habit

b.) Knowledge c.) Competitive exam d.) Gossips

Q7. What do you like the most in the newspaper? a.) Advertisements b.) Content c.) Details d.) Headlines e.) Pictures Q8. If you have heard of Pioneer, what did you like the most about it?

BIBLIOGRAPHY

REFERENCES http://pcaobus.org/Standards/Auditing/Pages/AU110.aspx https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja& uact=8&ved=0CDQQFjAE&url=http%3A%2F%2Fbaf.co.in%2Fauditing-advantagesand-limitations%2F&ei=uof5Ub5A5CTuATVxIGYBw&usg=AFQjCNFJsVVQUSJaQ59gXT8WS8dQ9-sAgQ