ACKNOWLEDGMENT

I would like to wish thank you to my Mentor and research guide Dr. Vijay Behere for
giving me the opportunity to work under his guidance and his continuous support and
encouragement throughout [Link], his keen interest, guidance and timely suggestions
have been a source of inspiration and have helped me throughout the course of my study.

I am grateful for the respondents who spared their valuable time for fulfilling the
questionnaire and answering my queries. Their help in completing this study is great
acknowledged.

Signature of Student
 DECLARATION

I hereby declare that the work embodied in this project work titled “Audit planning of
three firms of auditors” is my own contribution to the research work carried out under the
guidance of Dr. Vijay Behere at Symbiosis College of Arts And Commerce, Pune-
411004.

This work has not been copied from any other source or submitted from any other degree
of this or any other university. It has been checked and approved by the guide.

If any consequences arise regarding to copyright or any other issue it will be my sole
responsibility.

Signature of Student

NAME: Mohan Dhotre

Date:

Place: Pune

Date: 5/03/2018
Place: Pune
 INDEX

SERIAL NO. PARTICULARS PAGE NO.

1. INTRODUCTION

1.1 TITEL 1

1.2 OVERVIEW OF AUDITING 2

1.3 INTRODUCTION 3-9

1.4 WHAT IS AUDITING 10-12

1.5 WHAT IS AUDITOR 13-22

1.6 HISTORY OF THE FIRM 23-25

2. REVIEW OF LITRATURE

2.1 DEFINATION 27

2.2 MEANING 28-30

2.3 REVIEW LITERATURE ON AUDITING 31-32

3. RESEARCH METHODOLOGY

3.1 DEFINATION AND TYPES OF RESEARCH 34-41

3.2 RESEARCH PROCESS 42-63

3.3 HYPOTHESIS 64-65

3.4 AIMS OND OBJECTIVES 66-73

4. DATA ANALYSIS AND INTERPRETATION

4.1 DATA ANALYSIS AND INTERPRETATION 75-100

5. SUGGESTION, OBSERVATION,
RECOMMENDATION, CONCLUSION.

5.1 SUGGESTION 102

5.2 OBSERVATION 103

5.3 RECOMMENDATION 104-105

5.4 LIMITETION OF RESEARCH 106

5.5 LIMITETION OF RESEARCHER 107

5.6 CONCLUSION 108

5.7 BIBLIOGRAPHY 109

5.8 ANNEXURES 110-112

5.9 QUESTIONNAIRES 113-119

 LISTS OF FIGURE
[Link]. PARTICULAR PAGE NO.

1 Investigation taken in present of entity 75

2 Accounts of the auditor 76

3 Audit is necessary 77

4 Reduce tax liability 78

5 Detect fraud from the book 79

6 Investment physically verified 80

7 Statutory books like minute book, general book during audit 81

8 SMC or NON-SMC 82

9 Accounting standard applied properly 83

10 Under audit regarding to get through TAX audit 84

11 Company keep secretariat 85

12 Necessary to check the fixed aseet during the audit 86

13 Obtain information regarding the appointment of during 87

previously

14 Scrutinized for any notes 88

15 Internal Audit report on internal control 89

16 Respect of dealing with group of company 90

17 Provision for income tax, dividend and transfer of reserve 91

18 Obtain document policy of credit control 92

19 Original invoice is compulsory during audit 93

20 Contract of the company with other company 94

21 It is not necessary to check the audit control 95

22 Check the book stock with physical stock during audit 96

23 Internal audit job is like detective job 97

24 Test checking helps in saving in tearms of time, cost and 98

energy

25 Surprise check help you in framing the audit report 99-100

 CHAPTER 1
INTRODUCTION
1.1 TITLE

“AUDIT PLANNING OF THREE FIRMS OF AUDITORS”

Audit Firm Visited:

For the purpose of this project, I have visited following three audit firms in pune:

1. KAILAS R MALPANI & CO.

2. BRIJESH CHANDAK & CO.

3. PUSHPAK B MUNDADA & ASSOCOTES

I have spoken to the Chartered Accountant of each of the audit firm to gain the better
understanding of the audit planning process and practical approach.

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1.2 OVERVIEW ON AUDITING

In any current business organization, progress that the company is making is recorded as
basis for, among a host of other essential things, decision-making and as a benchmark of
measuring the firm‟s performance for the period under scrutiny. A financial situation
analysis or evaluation is one such yardstick that documents current and future financial
situation in an attempt to determine a financial strategy to help achieve organizational
goals. With regards to this, this paper will review some issues related to auditing as
guidance of determining the financial situation of a business. Actually, auditing in any
businesses is the inspection and verification of the accuracy of financial records and
statements.
Private businesses and all levels of government conduct internal audits of accounting
records and procedures. Internal audits are conducted by a company‟s own personnel to
uncover bookkeeping errors and also to check the honesty of employees. In large
companies, internal auditing is an ongoing procedure. A company that trades stock on a
registered stock exchange or is preparing to issue new shares of stock must submit to an
external audit. These companies are known as publicly traded companies. Moreover, an
external audit is used to give the public a true statement of a company‟s financial
position. It is made at least once a year by public accountants who are not regular
employees of the company. The auditors make sure that the company has followed proper
accounting procedures in its financial records and statements. They compare the current
financial statements with those of the previous year to determine whether the statements
are calculated consistently. If they are not, they present a real estate, buildings, and other
assets to see if their value is overstated. Debts and other liabilities are checked to see if
they have been understated

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1.3 INTRODUCTION

Audit planning is one of the most crucial aspects of an audit because without undertaking
a sufficient programmer of planning, the auditor risks going in blind, which in turn
increases audit risk - that being the risk of forming an incorrect opinion on the financial
statements.

Planning an audit involves establishing the overall audit strategy for the
engagement and developing an audit plan. The objective of auditor is to plan the audit so
that it will be performed in an effective manner.

An Audit plan is the specific guideline to be followed when conducting an

audit. It helps the auditor obtain sufficient appropriate evidence for the
circumstances, helps keep audit costs at a reasonable level, and helps avoid
misunderstanding with the client. It addresses the specifics of what, where, who, when
and how:

1. What are the audit objectives?

2. Where will the audit will done? (i.e. scope)
3. When will the audit (s) occur?
4. Who are the auditors?
5. How will the audit be done?

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MEANING

International standars on Auditing (ISA) 300, “Planning an audit of Financial

Statements” should be read in conjuction with ISA 200, “Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with International
Standards on Auditing.

ISA 300 required the auditor to perform “preliminary engagement activities” at the start
of an audit assignment. These activities let the auditor identify and evaluate events or
circumstances that undermine their ability to plan and perform the audit.

It includes following procedures:-

1) Knowledge of client's business

2) Development of audit strategies or overall plan (who, when and how)

3) Preparation of audit programme

Planning an audit involves establishing the overall audit strategy for the engagement and
developing an audit plan. Adequate planning benefits the audit of financial statements in
several ways, including the following:

1. Helping the auditor to devote appropriate attention to important areas of the audit.
2. Helping the auditor identify and resolve potential problems on a timely basis.

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3. Helping the auditor properly organize and manage the audit engagement so that it is
performed in an effective and efficient manner.
4. Assisting in the selection of engagement team members with appropriate
Levels of capabilities and competence to respond to anticipated risks, and the proper
assignment of work to them.
5. Facilitating the direction and supervision of engagement team members and the review
of their work.
6. Assisting, where applicable, in coordination of work done by auditors of
components and experts.

MAIN PURPOSE OF THE STUDY

The International Standards on Auditing (ISA) are issued by the International Federation
of Accountants (IFAC), part of the International Auditing and Assurance Standards
Board (IAASB). The IAASB goal is to develop a set of international standards generally
accepted worldwide. Despite the fact that ISA has been accepted throughout the world
and tend to have standardized practices, some differences remain due to own
characteristics.

We want to focus on the phase “plan the audit”, and especially the use of analytical
procedures involved in this phase. The reason of choosing analytical procedures is
motivated by the fact that their application is based upon auditors judgment‟s
.Furthermore, analytical procedures are appropriate to our study because they are
uncertain by nature, since they require auditors to use professional judgement rather than
rules to form expectations of account balances. The phase “plan the audit” also involves
the auditor to assess evidence and internal control environment in order to set correctly
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the level of risk; therefore we also take an interest in those elements. We want to discover
how differences might affect the audit process by comparing audit planning of different
firms. First of all, we want to measure how auditors from each firm rely on analytical
procedures. Secondly, we want to find out if differences play a role in judging evidence
the client‟s internal control environment.

AIMS AND OBJECTIVES

1) To ensure appropriate attention is given to all areas of the audit.

2) To pick potential problems during audit such as weaknesses in the internal

control system and may have material effects on the financial statements.

3) In ensuring proper coordination and allocation of financial resources during the audit
by assigning highly and experienced staff to high risk and most important areas.

IMPORTANCE

1) It helps the auditor obtain sufficient appropriate evidence for the circumstances
2) It helps to keep audit costs at a reasonable level.
3) It helps to avoid misunderstandings with the client.
4) It helps to ensure that potential problems are promptly identified
5) It helps to know the scope of audit program by an Auditor.
6) Understanding the client.

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REQUIREMENTS:

Involvement of key Engagement Team Members:

The engagement partner and other key members of the engagement team shall be
involved in planning the audit, including planning and participating in the discussion
among engagement team members.

Preliminary Engagement Activities:

The auditor shall undertake the following activities at the beginning of the
current audit engagement:
(a) Performing procedures required by ISA 220 regarding the continuance of the client
relationship and the specific audit engagement
(b) Evaluating compliance with relevant ethical requirements, including independence, in
accordance with ISA 220
(c) Establishing an understanding of the terms of the engagement, as required by ISA 210

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Planning Activities

The auditor shall establish an overall audit strategy that sets the scope, timing
and direction of the audit, and that guides the development of the audit plan.

In establishing the overall audit strategy, the auditor shall:

(a) Identify the characteristics of the engagement that define its scope
(b) Ascertain the reporting objectives of the engagement to plan the timing of the audit
and the nature of the communications required
(d) Consider the results of preliminary engagement activities and, where applicable,
whether knowledge gained on other engagements performed by the engagement partner
for the entity is relevant
(e) Ascertain the nature, timing and extent of resources necessary to perform the
engagement.

The auditor shall develop an audit plan that shall include a description of:
(a) The nature, timing and extent of planned risk assessment procedures, as determined
under ISA 315
(b) The nature, timing and extent of planned further audit procedures at the assertion
level, as determined under ISA 330
(c) Other planned audit procedures that are required to be carried out so that the
engagement complies with ISAs.
The auditor shall update and change the overall audit strategy and the audit plan as
necessary during the course of the audit.
The auditor shall plan the nature, timing and extent of direction and supervision of
engagement team members and the review of their work.

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DOCUMENTATION

The auditor shall include in the audit documentation:

(a) The overall audit strategy
(b) The audit plan
(c) Any significant changes made during the audit engagement to the overall audit
strategy or the audit plan, and the reasons for such changes.

ADDITIONAL CONSIDERATIONS IN INITIAL AUDIT

ENGAGEMENTS:

The auditor shall undertake the following activities prior to starting an initial audit:
(a) Performing procedures required by ISA 220 regarding the acceptance of the client
relationship and the specific audit engagement
(b) Communicating with the predecessor auditor, where there has been a change of
auditors, in compliance with relevant ethical requirements.

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1.4 AUDITING

According to Lawrence R. Dicksee, "an audit is an examination of accounting records

undertaken with a view to establishing whether they correctly and completely reflect the
transactions to which they relate. In some instances, it may be necessary to ascertain
whether the transactions themselves are supported by authority."R. K. Mautz defines
auditing as being "concerned with the verification of accounting data, with determining
the accuracy and reliability accounting statement and reports."
It is clear from the above definition that auditing is the systematic and scientific
examination of the books of a accounts and records of a business so as to enable the
auditor to satisfy himself that the Balance Sheet and the Profit and Loss Account are
properly drawn up so as to exhibit a true and fair view of the financial state of affairs of
the business and profit or loss for the financial period. The Auditor will have to go
through various books and accounts and related evidence to satisfy him about the
accuracy and authenticity to report the financial health of the business.

OBJECTIVES OF AUDITING

Auditing main purpose or object is to find the opinion of an auditor about

correctness and reliability of accounts and the financial position of the business concern.
For this purpose, auditor has to check the arithmetically accuracy of the books of account
and find out that whether the transactions entered in the book of account are correct or
incorrect. This is done by various methods like inspecting, comparing and checking.

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ADVANTAGES OR MERITS OF AUDITING

1. Verification of Books and Statement:-

The main object of audit is the verification of the books and the financial statements of
the company concerned.

2. Discover and Prevention of Error:-

While examining the books, auditors detect some errors. These are various kinds of
errors. So audit is very useful in preventing and detecting the errors.

3. Discovery and Prevention Of Fraud:-

Fraud means false representation made intentionally with a view to defraud somebody. It
is the duty of the auditor that he should detect the fraud. So audit main object and
advantage is that fraud may be detected and prevented. Auditor may also suggest various
methods of internal check which will prevent fraud.

4. Moral Check:-
When each staff of the company knows that this financial transactions will be examined
by the auditor then he fears to do that fraud. The fear of their detection acts as a moral
check on the staff of the company.

5. Independent Opinion:-
Auditing is very useful to obtain the independent opinion of the auditor about the
business condition. If the accounts are audited by the independent auditor, the report, of
the auditor will be a true picture and it will be very important for the management.
Keeping in view the report, owner of the business will be able to prevent frauds and
errors in future.

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6. Protects the Interest Of Share Holder:-
Audit protect the interest of shareholders in the case of joint stock company. Through
audit shareholders are assured that the accounts of the company are maintained properly
and their interest will not suffer.

7. Check on Directors:-
Audit acts a check upon the directors and precaution against fraud on the part of the
management.

8. Proper Supervision:-
Sometimes owner of the business cannot look after the business personally.
Audit acts as a check on employees and it saves the owner from losses.

9. Valuable Advice:-
The auditor has expert knowledge about the accounts and finance problems, so he may be
consulted about these problems.

10. Disputes Settlement:-

In case of partnership, audit is very useful in settling the disputes among the partners. If
any partner dies, or retires, the audited balance sheet will be very useful in estimating the
value of goodwill.

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1.5 AUDITORS

DEFINATION

According to Montgomery, a well known author, "auditing is a systematic examination of

the books and records of a business or the organization in order to ascertain or verify and
to report upon the facts regarding the financial operation and the result thereof.

MEANING

An auditor is an official whose job it is to carefully check the accuracy of business

records. An auditor might be either an internal auditor, external auditor or independent
auditor for accounting firms in the public or private sector. Auditors can also work for
many different entities, such as the IRS or a state government.

In accounting, an auditor is someone who is responsible for evaluating the validity and
reliability of a company or organization‟s financial statements.

The auditor is an individual who is trained to review and verify that the accounting data
provided by an audited company accurately corresponds to the activities that have been
taken by the company.

The auditor's job is to write a report at the conclusion of the audit which determines the
level of accuracy and clarity that the organization has accounted for.

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For instance, if all accounting moves made by the company are reflected in the books
(such as the general ledger), and all data that appears in the records correspond to the
course of business in the company, then the audit will have shown no misstatements.

TYPES OF AUDITORS

1) External Auditors: An external auditor performs independent third-party reviews all

the financial records of a company or corporation. 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, should be regarded as independent.

2) Internal Auditors: An employee of a company changed with providing Independent

and objective evaluation of the company financial and operational business activities.
Internal auditors work with government departments or private businesses, checking for
mismanagement of funds and finding ways to eliminate waste and fraud. Typical goals
include reducing accounts receivable, improving payroll processes, and setting up more
frequent sweeps of funds into interest-bearing accounts. Internal auditors observe
industry trends, track revenues and expenditures, and make efficiency recommendations
to upper management.

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3) Government Auditors: Auditors employed by the government are called government
auditors. They are employed by state and local agencies. Because they internally.
Government auditors maintain and examine records of government agencies and of
private businesses or individuals performing activities subject to government regulations
or taxation. Auditors employed through the government ensure revenues are received and
spent according to laws and regulations. Government auditors detect embezzlement and
fraud, analyze agency accounting controls, and evaluate risk management

4) Forensic Auditors: They are employed by the corporation, government Agencies

public accounting firms, and consulting and investigative services firms.

5) Public auditors perform accounting, tax and consulting work for corporations,
governments and individuals. These auditors work with tax forms and balance sheet
statements that companies provide to potential investors. For example, some public
accountants advise corporations on tax advantages of certain business decisions, or
prepare individual income tax returns. Many public auditors are CPAs who work for
public accounting firms or own their own businesses.

6) Private auditors record and analyze financial information of the organization for which
they work. Private auditors work on budgeting and performance evaluation; help plan the
cost of doing business, and select financial investments for their companies.

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HOW ARE AUDITORS APPOINTED

The first auditor of a company would usually be appointed by the directors, or

alternatively the shareholders may appoint the auditor at the first Annual general meeting
(“AGM”). Auditors are appointed at the AGM and hold office from the conclusion of the
AGM to the conclusion of the next AGM. A retiring auditor shall be re-appointed without
any resolution being passed unless:

1) He is not qualified for reappointment;

2) A resolution has been passed at that meeting appointing somebody instead of him or
providing expressly that he shall not be re-appointed; or
3) He has given the company notice in writing of his unwillingness to be reappointed.

DUITIES AND RESPONSIBILITIES

1) Protects assets by ensuring compliance with internal control procedures, and

regulation.
2) Verifies assets and liabilities by comparing items to documentation.
3) Completes audit work papers by documenting audit tests and findings.
4) Appraises adequacy of internal control systems by completing audit questionnaires.
5) Maintains internal control systems by updating audit programs and questionnaires;
recommending new policies and procedures.

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AUDITORS QUALIFICATION / EDUCATION

Auditors typically have a bachelor‟s degree in finance, accounting or business

administration. Many earn graduate degrees in finance or accounting. Professional
designations such as certified public accountant (CPA), certified internal auditor (CIA),
certified government auditing professional (CGAP), certified financial services auditor
(CFSA) or certification in control self-assessment (CCSA) increase job prospects and
income.

STEPS OF AUDIT PLANNING

1) Announcement Letter: The client is informed of the audit through an announcement or

engagement letter from the Internal Audit Director.

2) Initial Meeting: the client describes the unit or system to be reviewed, the organization,
available resources (personnel, facilities, equipment, funds), and other relevant
information.

3) Preliminary Survey: In this phase the auditor gathers relevant information about the
unit in order to obtain a general overview of operations.

4) Internal Control Review: The auditor will review the unit's internal control structure, a
process which is usually time-consuming.

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FURTHER STEPS ARE

1) Meet with client at the commencement of the audit planning phase of the assignment.
Good communication between the client and the auditor is essential to an effective audit.
The use of a pre-set agenda for planning meetings with the client will ensure that all
matters required to be addressed with the client are covered during the course of the
meeting.

2) Ensure an agreed and signed engagement letter is on file before the assignment
commences. Cold file reviews regularly identify errors in the drafting of engagement
letters. The use of a pre-approved quality checked template for drafting engagement
letters can eliminate many of these errors.

The following errors are common:

a. Wrong legislation references covering company law and third party reporting
obligations of the auditor.

b. A failure to state the responsibility of the directors for the selection of the financial
framework adopted in the preparation of the financial statements.

c. Omission of the basis for the calculation of audit fees.

d. Failure to amend the letter for unique factors in audit assignment.

3) Ensure that all standard audit request letters are issued at the commencement of the
assignment. A common weakness in audit files is the failure to obtain some of the
standard audit request letters. This can be due to the issue of the letters to the third parties

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at a very late stage in the audit assignment leaving insufficient time to obtain a reply
before sign off. If such request letters are issued at the commencement of the assignment
there will be adequate time to obtain a reply. The use of a standard procedure where the
following letters are issued immediately after the company‟s financial year end is
recommended:

a) Bank audit request letter.

b) Law Society approved solicitor request letter.

c) Debtors‟ circulation letters.

d) Letter(s) to company solicitor seeking confirmation that the company has good and
marketable title to the properties on the balance sheet. e. Letters requesting confirmation
of related company balances.

4) Acceptance / reappointment procedures. The development of a standard acceptance /

reappointment procedure will ensure the necessary steps are taken and documented to
show compliance with the requirements of the ethical standards, International Standards
on Auditing and anti-money laundering legislation.

5) Learn from experience gained in prior year audits. At the conclusion of each audit, a
debriefing session should be held with the client and audit staff to identify problems and
issues that arose during assignments. This will allow changes in approach to be made in
future audits to avoid a repetition of the problems.

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6) Obtain a good knowledge of the client and the sector in which the client operates.
Good knowledge of the client and the sector in which the client operates is the foundation
to good audit risk assessment.

7) Determining materiality and performance materiality for the audit assignment. The
determination of materiality limits is an area where many audit staff struggle to
understand the requirement of the International Standard Auditing (ISA 300).

8) Good communication between audit assignment staff. Good communication between

assignment staff is critical to an effective audit. The audit plan should be circulated to all
assignment staff to ensure that the staffs understand the audit risk issues and the planned
audit response.

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 MAJOR FACE IN AUDIT PLANNING

CLIENTS ACCEPTANCE/ACCEPTING TERM

PREPLANNING

ACCESS RISK & ESTABLISH MATERIALTY

PLAN THE AUDIT

CONSIDER AND AUDIT INTERNAL CONTROL

AUDIT BUSINESS PROCESS & ACCOUNTS

COMPLETE THE AUDIT

EVALUATE RESUKTD AND AUDIT REPORT

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The figure above, extract from the text book “auditing and assurance services” gives you
a good glance of the major phases of the audit process. As you can see, some phases of
the audit process do not contain professional judgment, or at least, much less professional
judgment than the others. For instance, the first phase defined as “Client acceptance”
required less professional judgment because of the reputation risk. Nowadays, more and
more audit firms have standardized practices throughout the world to accept or refuse a
new client.
Client acceptance phase deals with legal issue, set by International Standards on
Auditing. The standard states that the agreed terms would need to be recorded in an audit
engagement letter or other suitable form of contract. In this way, the auditor needs to
follow ISA 210 without adding personal consideration regarding the engagement terms.
ISA 300 requires that the successor auditor communicates with the predecessor auditor,
in the case that the prospective client has previously been audited. This standard is also
involved in the client acceptance phase.

By contract the phase “assess the risk and establish materiality” involves lots of personal
judgment as Donald et al. (2001) said: “the judgment of the individual auditor or audit
team is the basis for determining the size of materiality within a specified audit”.

The next phase is called “plan the audit” and embraces different duties that have to be
performed by an audit team, such as assessing a preliminary level for control risk by
account and assertion, identifying related parties, developing an overall audit strategy for
instance. As we said previously in the part “purpose of our study”, we picked up this
phase to carry out our research. Further in our paper, we will see that we also included
the assessment of evidence and the client‟s internal control environment because both are
involved in the planning phase.

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1.6 HISTORY OF THE FIRMS

History on “Kailas R Malpani & Co.”

Kailas R Malpani and co. established on August 1997 by C.A. Kailas Malpani in Pune.
It is a proprietor ship firm, which deals on audit, financial consultant, direct and indirect
tax consultant all over the Pune district.

In Pune, district Kailas R. Malpani and co help key people like individual, different
companies and firms. With the help of 11 employees, the turnout revenue of this goes
over the 26 lakh per annum (approx.). The Kailas Malpani with the objective to provide
services to people and help them out in various issues related to accounting, auditing and
taxation. Initially the firm finanacial position was low as time passed by in the year 2009
it got that position in pune, which helped the firm to become one of the renowned firms.
Now the current financial position of the firm is sound and the business is continuously
growing with every passing year.

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History on “Brijesh Chandak & Co.”

Brijesh Chandak & Co. in Shukrawar peth, Pune on 1st September 2004. Brijesh Chandak
& Co. It is a proprietor ship firm, which deals on audit, financial consultant, direct and
indirect tax consultant all over the pune and parts of india. The services provided by this
firm consist of all taxations like income tax, wealth tax, sales tax, service tax, central
exise duty, provident funds, luxury tax related matters and cover the audit programmes
as an auditor by collecting the data from primary sources and secondary sources. The
number of employee working are 9 with the help of them the annual revenue generated
in 9 lakh per annum (approx.). the Brijesh Chandak & Co. does not have any history, it
was founded with an objectives “ to pay tax to the government not more not less”. This
firm does not face any problems with their related clients due to having a mutual
agreement between position all over the year.

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History on “Pushpak B Mundada & Associated”

Pushpak B Mundada & Associates were founded in 2009, by C.A. Pushpak Mundada in
pune as its head quarter. It is a chartered accountant firm, which deals in audit, financial
consultant, direct and indirect tax consultant all over the pune and other parts of india.
Pushpak B Mundada & Associates does not have any history , C. A. directly established
it. Pushpak Mundada with the objective to provide service to people and help them out in
various issues related to accounting, auditing, and taxation. The fiem financial position
was always sound due to its healthy relationship between the firm and their clients and
the work culture of the firm, which help them to become a famous in the city

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 CHAPTER 2

REVIEW OF LITRATURE

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2.1 DEFINATION

According to Cooper (1988) '... a literature review uses as its database reports of primary
or original scholarship, and does not report new primary scholarship itself. The primary
reports used in the literature may be verbal, but in the vast majority of cases reports are
written documents. The types of scholarship may be empirical, theoretical,
critical/analytic, or methodological in nature. Second a literature review seeks to
describe, summaries, evaluate, clarify and/or integrate the content of primary reports.

The review of relevant literature is nearly always a standard chapter of a thesis or

dissertation. The review forms an important chapter in a thesis where its purpose is to
provide the background to and justification for the research undertaken (Bruce 1994).
Bruce, who has published widely on the topic of the literature review, has identified six
elements of a literature review. These elements comprise a list; a search; a survey; a
vehicle for learning; a research facilitator; and a report (Bruce 1994)

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2.2 MEANING

A literature review is an evaluative report of information found in the literature related to

your selected area of study. The review should describe, summaries, evaluate and clarify
this literature. It should give a theoretical base for the research and help you (the author)
determine the nature of your research. Works which are irrelevant should be discarded
and those which are peripheral should be looked at critically.

A literature review is more than the search for information, and goes beyond being a
descriptive annotated bibliography. All works included in the review must be read,
evaluated and analysed (which you would do for an annotated (Bibliography), but
relationships between the literature must also be identified and articulated, in relation to
your field of research.

Why do a literature review?

A crucial element of all research degrees is the review of relevant literature. So important
is this chapter that its omission represents a void or absence of a major element in
research (Afolabi 1992). According to Bourner (1996) there are good reasons for
spending time and effort on a review of the literature before embarking on a research
project. These reasons include:

1. To identify gaps in the literature

2. To avoid reinventing the wheel (at the least this will save time and it can stop you from
making the same mistakes as others)

3. To carry on from where others have already reached (reviewing the field allows you to
build on the platform of existing knowledge and ideas)

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4. To identify other people working in the same fields (a researcher network is a valuable
resource)

5. To increase your breadth of knowledge of your subject area

6. To identify seminal works in your area

7. To provide the intellectual context for your own work, enabling you to position your
project relative to other work

8. To identify opposing views

9. To put your work into perspective

10. To demonstrate that you can access previous work in an area

11. To identify information and ideas that may be relevant to your project

12. To identify methods that could be relevant to your project

A good literature review requires knowledge of the use of indexes and abstracts, the
ability to conduct exhaustive bibliographic searches, ability to organize the collected data
meaningfully, describe, critique and relate each source to the subject of the inquiry, and
present the organised review logically, and last, but by no means least, to correctly cite all
sources mentioned (Afolabi 1992). The Library offers a range of training for research
students that will assist with the production of literature reviews. Sessions include:
electronic databases, using Endnote to download records, internet searches, Library
catalogue searching, cloud (online) student orientation, subject resources, and research
skills.

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ELEMENT OF GOOD LITRATURE REVIEW

1. Purpose of the review established

2. Scope of the review clearly set out

3. Critical evaluation of the literature

4. All reviewed literature is pertinent to your research field, as opposed to

vaguely relevant

5. Identification of landmark and any seminal publications

6. Identification of a gap in the literature, which you‟re proposing to address with your
own research

7. Emergence of key themes, trends and controversies

8. Identification of key researchers and authors

9. Summary of prevailing theories and hypotheses

10. Critical appraisal of methodologies used

11. Formulation of questions which lead to further research

12. Clear justification for your research proposal

13. Material organized in an effective way

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2.3 REVIEW OF LITRATURE ON AUDITING

Audit planning will ensure that appropriate attention is given to crucial areas of the audit
and that potential problems are identified on a timely basis. At the planning stage the
audit engagement partner should assign the necessary staff who possesses the skills and
ability required in order to ensure the audit is carried out efficiently and in accordance
with the International Standards on Auditing (ISA 300).ISA 300 says that audit
engagement so that it will be performed in an effective manner and in accordance with
auditing standards.

Audit planning is a difficult task because it has two conflicting issues: maximizing audit
benefits, and minimizing audit cost. Maximizing audit benefit is defined as auditors to be
selected ways that detect fraud or error.
Minimizing audit cost refers to subjects selected a way that resources needed to succeed.
The audit planning is designed to enable the auditors to perform and business risk
assessment and develop a specific audit program and scope to test in the audit process.
The four components of audit planning are internal control review, initial meeting,
preliminary survey, announcement letter.

1. ANNOUNCEMENT LETTER: The client is informed of the audit through an

announcement or an engagement letter from The Internal Audit Director.

2. INITIAL MEETING: The client describes the unit or system to be reviewed, the
organization, the available resources (equipment, facilities, funds, personnel) and other
relevant information.
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3. PRELIMINARY SURVEY: In this phase the auditor gathers relevant information
about the unit to obtain general overview of operations.

4. INTERNAL CONTROL REVIEW: The auditor will review the units internal control
system, a process that is usually time consuming.

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 CHAPTER 3

RESEARCH METHODOLOGY

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3.1 DEFINITION

Research is a process of steps used to collect and analyze information to increase our
understanding of a topic or issue”. It consist of three steps: Pose a question, collect data
to answer the question, and present an answer to the question.

-Creswell, J. W. (2008)

“In the broadest sense of the word, the definition of research includes any gathering of
data, information and facts for the advancement of knowledge.

- Martyn Shuttleworth

Research is systematic investigation of a subject to discover new knowledge, including

designs of new products and processes. The process of carrying out research is influenced
heavily by the topic being researched and the purpose of research.

Research refers to a search of knowledge. In fact, research is an art of scientific

investigation. Dictionary definition of research is a careful investigation or enquiry
especially through search for new facts in any branch of knowledge. To study a subject in
detail, especially in order to discover new information or reach a new understanding.
Research is careful and organized study or gathering of information about a specific
topic. The systematic investigation into and study of materials and sources in order to
establish facts and reach new conclusions.

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However we can identify following main steps in all kinds of research projects.

1) Identifying the problem or the specific research task.

2) Studying existing information related to the problem or the research task.

3) Formulating a hypothesis that gives possible explanation or description of the facts to

be uncovered by the research.

4) Collecting data or evidence that enables the researcher to test the validity of the
hypothesis.

5) Analyzing the data collected and drawing conclusions based on it.

TYPES OF RESEARCH ARE

1) Basic Research- Basic (aka fundamental or pure) research is driven by a scientist's

curiosity or interest in a scientific question. The main motivation is to expand man's
knowledge, not to create or invent something. There is no obvious commercial value to
the discoveries that result from basic research.

This research is conducted largely for the enhancement of knowledge, and is research
which does not have immediate commercial potential. The research which is done for

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human welfare, animal welfare and plant kingdom welfare. It is called basic, pure,
fundamental research. The main motivation here is to expand man's knowledge, not to
create or invent something.

According to Travels, “Basic Research is designed to add to an organized body of

scientific knowledge and does not necessarily produce results of immediate practical
value.” Such a research is time and cost intensive.

For example, basic science investigations probe for answers to questions such as:

 How did the universe begin?

 What are protons, neutrons, and electrons composed of?
 How do slime molds reproduce?
 What is the specific genetic code of the fruit fly?

2) Applied Research-Applied research is designed to solve practical problems of the

modern world, rather than to acquire knowledge for knowledge's sake. The goal of
applied research is to improve the human condition. It focuses on analysis and solving
social and real life problems. This research is generally conducted on a large scale basis
and is expensive. Applied research is used to find solutions to everyday problems, cure
illness, and develop innovative technologies, rather than to acquire knowledge for
knowledge's sake.

For example, applied researchers may investigate ways to:

 Improve agricultural crop production

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  Treat or cure a specific disease
 Improve the energy efficiency of homes, offices, or modes of transportation

3) Problem oriented research-Research is done by industry apex body for sorting out
problems faced by all the companies.

E.g. - WTO does problem oriented research for developing countries, in India agriculture
and processed food export development authority (APEDA) conduct regular research for
the benefit of agro-industry

4) Problem solving-This type of research is done by an individual company for the

problem faced by it. Marketing research and market research are the applied research.
For i.e. - Videocon international conducts research to study customer satisfaction level, it
will be problem solving research. In short, the main aim of problem solving research is to
discover some solution for some pressing practical problem.
5) Quantitative Research-This research is based on numeric figures or numbers.
Quantitative research aims to measure the quantity or amount and compares it with past
records and tries to project for future period. In social sciences, “quantitative research
refers to the systematic empirical investigation of Quantitative properties and phenomena
and their relationships.” The objective of quantitative research is to develop and employ
mathematical models, theories or hypothesis pertaining to phenomena.

Quantitative research is generally made using scientific methods, which can include:

1) The generation of models, theories and hypotheses

2) The development of instruments and methods for measurement

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3) Experimental control and manipulation of variables

4) Collection of empirical data

5) Modeling and analysis of data

6) Evaluation of results

Advantages
1) Quantitative research allows the researcher to measure and analyse data.

2) The researcher is more objective about the findings of the research.

3) Quantitative research can be used to test hypotheses in experiments because of its

ability to measure data using statistics.

Disadvantages

1) The main disadvantage of quantitative research is the context of the study or

experiment is ignored.

2) Quantitative research does not study things in a natural setting or discuss the meaning
things have for different people.

3) A large sample of the population must be studied for more accurate results.

6) Qualitative Research-Qualitative research presents non-quantitative type of analysis.

Qualitative research is collecting, analyzing and interpreting data by observing what

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people do and say. Qualitative research refers to the meanings, definitions,
characteristics, symbols, metaphors, and description of things. Qualitative research is
much more subjective and uses very different methods of collecting information, mainly
individual, in-depth interviews and focus groups.

Advantages

1) It enables more complex aspects of a persons experience to be studied

2) Fewer restriction or assumptions are placed on the data to be collected.

3) Not everything can be quantified, or quantified easily, Individuals can be studied in

more depth

4) Good for exploratory research and hypothesis generation

5) The participants are able to provide data in their own words and in their own way

Disadvantages

1) It is more difficult to determine the validity and reliability of linguistic data

2) There is more subjectivity involved in analysing the data.

3) “Data overload” - open-ended questions can sometimes create lots of data, which can
take along time to analyse!

4) Time consuming

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7) Descriptive research= Descriptive research refers to research that provides an
accurate portrayal of characteristics of a particular individual, situation, or group.
Descriptive research, also known as statistical research.

These studies are a means of discovering new meaning, describing what exists,
determining the frequency with which something occurs, and categorizing information.

In short descriptive research deals with everything that can be counted and studied, which
has an impact of the lives of the people it deals with.

For example, finding the most frequent disease that affects the children of town. The
reader of the research will know what to do to prevent that disease thus; more people will
live a healthy life.

Advantages

1) The people individual studied are unaware so they act naturally or as they usually do in
everyday situation;

2) It is less expensive and time consuming than quantitative experiments;

3) Collects a large amount of notes for detailed studying;

4) As it is used to describe and not make any conclusions it is to start the research with it.

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Disadvantages

1) Descriptive research requires more skills.

2) Does not identify cause behind a phenomenon

3) Response rate is low in this research.

4) Results of this research can change over the period of time.

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3.2 RESEARCH PROCESS

DEFINITION

It is the systematic manner in which a researcher approaches their area of study to

produce knowledge which the community will consider to be worthwhile within the field.

There are four principles stages in the research process that we will cover here:
 Inquiry

 Collection

 Organization

 Presentation

STEPS/PROCESS OF RESEARCH

Steps of the Research Process

1. Formulating the research problem

2. Extensive literature survey
3. Development of working hypotheses
4. Preparing the research design
5. Determining sample design

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 6. Collecting of data
7. Execution of the project
8. Analysis of data
9. Hypothesis-testing
10. Generalization and interpretation
11. Preparation of the report or the thesis

STEP 1) Establishing the needs for market research

1) This step involves identification of a few problems and selection of one out of them,
after evaluating the alternatives against certain selection criteria.

2) Market research is not needed when:

a) Required information is already available.

b) Decision need to be made now.

c) Organization.

d) Cost outweighs the value of research.

STEP 2) Defining the problem

Here are two types of research problem,

1) Those relate to states of nature

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2) Relationship between variables.

Essentially two steps are involved in define research problem:

1) Understanding the problem thoroughly and

2) Rephrasing the same into meaningful terms from an point of view.

PROCESS INVOLVED IN DEFINING THE PROBLEM

1) Steps of the problem involved in a general way.

2) Understanding the nature of the problem.

3) Surveying the available literature.

4) Developing ideas through discussions.

5) Rephrasing the research problem.

Modes of problem identification

There are 3 modes of problem identification:

1) Extraction from a practical problem in a dialogue.

2) Cognitive identification of an experienced researcher in the area of his expertise.

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3) A two-step research process by a novice (scholar): literature search & pilot study.

STEP 3) Formation and Development of working hypothesis

1) Assumptions are drawn to test its logical sequence.

2) Hypothesis is guiding force of researcher.

3) Outcome of researcher is deep thinking of research.

Preparation of research Design

1) Outline or a conceptual structure

2) Collecting relevant data.

3) Methods for preparation of research design

STEP 4) Determining research design

1. EXPLANATORY RESEARCH: Collecting information in an unstructured & informal

manner.

2. DESCRIPTIVE RESEARCH: Refers to a set of methods & procedures describing

research variables.

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3. CASUAL RESEARCH: (Experiments & other approaches) allows isolation of causes
& effects.

STEP 5) Identifying information type and source

STEP 6) Defining method of accessing data

1) SECONDARY DATA:

Information that has been collected for some purpose other than the research at hand.

Secondary data is the data that have been already collected by and readily available from
other sources. Such data are cheaper and more quickly

Obtainable than the primary data and also may be available when primary data cannot be
obtained at all.

Advantages of Secondary data

1. It is economical. It saves efforts and expenses.

2. It is time saving.

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3. It helps to make primary data collection more specific since with the help of secondary
data, we are able to make out what are the gaps and deficiencies and what additional
information needs to be collected.

4. It helps to improve the understanding of the problem.

5. It provides a basis for comparison for the data that is collected by the researcher.

Disadvantages of Secondary Data

1. Secondary data is something that seldom fits in the framework of the marketing
research factors. Reasons for its non-fitting are:-

a. Unit of secondary data collection-Suppose you want information on disposable

income, but the data is available on gross income. The information may not be same as
we require.

b. Class Boundaries may be different when units are same.

Before 5 Years After 5 Years

2500-5000 5000-6000
5001-7500 6001-7000
7500-10000 7001-10000

c. Thus the data collected earlier is of no use to you.

2. Accuracy of secondary data is not known.

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3. Data may be outdated.

Evaluation of Secondary Data

Because of the above mentioned disadvantages of secondary data, we will lead to

evaluation of secondary data. Evaluation means the following four requirements must be
satisfied:-

1. Availability- It has to be seen that the kind of data you want is available or not. If it is
not available then you have to go for primary data.

2. Relevance- It should be meeting the requirements of the problem. For this we have two
criterions:-

a. Units of measurement should be the same.

b. Concepts used must be same and currency of data should not be outdated.

3. Accuracy- In order to find how accurate the data is, the following points must be
considered: -
a. Specification and methodology used;
b. Margin of error should be examined;
c. The dependability of the source must be seen.

4. Sufficiency- Adequate data should be available.

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Robert W Jocelyn has classified the above discussion into eight steps. These eight steps
are sub classified into three categories. He has given a detailed procedure for evaluating
secondary data.

1. Applicability of research objective.

2. Cost of acquisition.

3. Accuracy of data.

There are many sources of data and most people tend to underestimate the number of
sources and the amount of data within each of these sources.

Sources can be classified as:

1) paper-based sources books, journals, periodicals, abstracts, indexes, directories,

research reports, conference papers, market reports, annual reports, internal records of
organizations, newspapers and magazines

2) Electronic sources CD-ROMs, on-line databases, Internet, videos and broadcasts

2) PRIMARY DATA:

Information that has been gathered especially for the research objectives at hand.

Some Advantages of using Primary data:

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1. The investigator collects data specific to the problem under study.

2. There is no doubt about the quality of the data collected (for the investigator).
3. If required, it may be possible to obtain additional data during the study period.

Some Disadvantages of using Primary data (for reluctant/ uninterested investigators):

1. The investigator has to contend with all the hassles of data collection

 Deciding why, what, how, when to collect

 getting the data collected (personally or through others)

 getting funding and dealing with funding agencies

 Ethical considerations (consent, permissions, etc.)

2. Ensuring the data collected is of a high standard

 all desired data is obtained accurately, and in the format it is required in

 there is no fake/ cooked up data

 unnecessary/ useless data has not been included

3. Cost of obtaining the data is often the major expense in studies

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Primary data is the data collected by the researcher themselves: For e.g.

1. Interview

2. Observation

3. Action research

4. Case studies

5. Life histories

6. Questionnaires

7. Ethnographic research

8. Longitudinal studies

STEP 7) Design data collection forms

1) The design of data collection form that is used to ask or observe projects is critical to
the success of the project.

2) It is easy to write a set of questions but very difficult to construct questionnaire.

3) General types “instruments” (forms) & record information in research.

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OBJECTIVES OF THE RESEARCHER

1. To review the audit planning of different firms of auditors.

2. To understand and evaluate the audit planning measures adopted by the firms.

3. To know whether the audit planning is in accordance with the standard ISA 300.

4. To know the difference between the audit planning of different firms.

5. To know the procedure of a proper audit planning

The purpose of this study is to gather information about the ways in which the auditors do
the audit planning of the firm. First, is to know the way in which such firms perform the
audit planning. Second, is how the audit planning is done differently by each firm's i.e.
how do they differ. And lastly, to know whether they have followed the rules of
international standards on auditing (ISA300).

Questionnaires

A Questionnaire is a structured form, either written or printed, consists of a

Formalized set of questions designed to collect information on some subject or subjects
from one or more respondents. In other words, a data collection
technique wherein the respondents are asked to give answers to the series of
questions, written or verbal, about a pertinent topic is called as a questionnaire.
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Typically, a questionnaire is one of the data collection techniques that includes :

 Fieldwork procedures such as instructions for approaching, selecting and asking

questions from the respondents.

 Gifts or rewards or payments offered to the respondents.

 Communication Aids, Viz. Pictures, advertisements, maps, products, etc.

The questionnaires possess three specific objectives, these are:

1. The information needed must be translated into a set of questions that can be answered
by the respondents. Constructing the right type of questions that yields the desired
information from the respondents is quite difficult. Thus, this objective is a challenge for
the researcher.

2. It must be designed in such a manner that respondents are uplifted, encouraged and
motivated to get involved in the interview and fill in the complete details. Since the
incomplete questionnaire reduces the usefulness of the research. A researcher, while
designing the questionnaire must strive to reduce respondent boredom, fatigue, non-
response and incompleteness.

3. The questionnaire must strive to minimize the response error. The response error is an
error arising out of wrong information given by the respondent or the answers being
wrongly recorded or analyzed.

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Thus, the purpose of a questionnaire is to convert the information needed into a
formalized set of questions and present these to one or more respondents to collect the
desired responses and then finally interpret and analyze the data being collected.

The researcher and the respondents do come in contact with each other if this method of
survey is adopted. Questionnaires are mailed to the respondents with a request to return
after completing the same. It is the most extensively used method in various economic
and business surveys. Before applying this method, usually a Pilot Study for testing the
questionnaire is conduced which reveals the weaknesses, if any, of the questionnaire.
Questionnaire to be used must be prepared very carefully so that it may prove to be
effective in collecting the relevant information.

Observation study forms (protocols)

This method implies the collection of information by way of investigator‟s own

observation, without interviewing the respondents. The information obtained
relates to what is currently happening and is not complicated by either the past
behavior or future intentions or attitudes of respondents. This method is no
doubt an expensive method and the information provided by this method is also
very limited. As such this method is not suitable in inquiries where large
samples are concerned.

Personal interview

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A personal interview can refer to a few different things. It may refer to a job interview in
which an individual meets one on one with a hiring manager or human resources
personnel. More commonly, a personal interview refers to an interview with someone
from admissions from the college or university to which an individual has applied; this
gives the interviewer a better idea of the student and his or her personality. It may also
refer to a type of research in which the researcher meets individually with participants.

The hallmark of a personal interview is that it is typically conducted one on one; at most,
one other person asking interview questions or simply observing may be present, but
generally it is more individualized. A job interview may be considered a type of personal
interview, since the interviewer will be asking the job candidate questions about himself
or herself in the interest of determining if he or she would be a good fit for the position.
"Personal" does not necessarily mean personal questions, particularly in a job interview
in which certain types of questions are illegal; it may simply mean questions regarding
one's individual working style and experiences.

The investigator follows a rigid procedure and seeks answers to a set of preconceived
questions through personal interviews. This method of collecting data is usually carried
out in a structured way where output depends upon the ability of the interviewer to a
large extent.

Telephone interviews

A telephone interview is an interview for employment conducted on the phone.

Telephone interviews are often used to screen candidates in order to narrow the pool of
applicants who will be invited for in-person interviews.

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This method of collecting information involves contacting the respondents on telephone
itself. This is not a very widely used method but it plays an important role in industrial
surveys in developed regions, particularly, when the survey has to be accomplished in a
very limited time.

STEP 8) Determine sample plan & size

SAMPLE PLAN AND ITS CHARACTIRISTICS

Refers to the process used to select units from the population to be included in the
sample.

1. Representativeness.

2. Adequate.

3. Independence.

4. Homogenous.

5. Lack of bias.

6. Accurate and complete.

SAMPLE SIZE AND ITS DETERMINATION

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Refers to determining how many elements (units) of the population should be included in
the sample.

1. Nature of Universe.

2. Number of classes proposed.

3. Nature of study.

4. Type of sampling.

5. Standard of accuracy.

6. Availability of finance.

STEP 9) Data collection

Sound data collection is very important because regardless of the data analysis methods
used, data analysis cannot “fix” bad data.

Sampling error may occur based purely on chance

Sampling Error denotes a statistical error arising out of a certain sample selected being
unrepresentative of the population of interest. In simple terms, it is an error which occurs

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when the sample selected does not contain the true characteristics, qualities or figures of
the whole population.

The main reason behind sampling error is that the sampler draws various sampling units
from the same population but, the units may have individual variances. Moreover, they
can also arise out of defective sample design, faulty demarcation of units, wrong choice
of statistic, substitution of sampling unit done by the enumerator for their Convenience.
Therefore, it is considered as the deviation between true mean value for the original
sample and the population.

Non sampling errors may occur during data collection. They are related to poor design
&/or execution of the data gathering.

Non-Sampling Error is an umbrella term which comprises of all the errors, other than the
sampling error. They arise due to a number of reasons, i.e. error in problem definition,
questionnaire design, approach, coverage, information provided by respondents, data
preparation, collection, tabulation, and analysis.

There are two types of non-sampling error:

 Response Error: Error arising due to inaccurate answers were given by
respondents, or their answer is misinterpreted or recorded wrongly. It consists of
researcher error, respondent error and interviewer error which are further
classified as under.

 Non-Response Error: Error arising due to some respondents who are a part of the
sample do not respond

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Key Differences between Sampling and Non-Sampling Error

The significant differences between sampling and non-sampling error are mentioned in
the following points:

1) Sampling error is a statistical error happens due to the sample selected does not
perfectly represent the population of interest. Non-sampling error occurs due to sources
other than sampling while conducting survey activities is known as non-sampling error.

2) Sampling error arises because of the variation between the true mean value for the
sample and the population. On the other hand, the non-sampling error arises because of
deficiency and inappropriate analysis of data.

3) Non-sampling error can be random or non-random whereas sampling error occurs in

the random sample only.

4) Sample error arises only when the sample is taken as a representative of a population.
As opposed to non-sampling error which arises both in sampling and complete
enumeration.

5) Sampling error is mainly associated with the sample size, i.e. as the sample size
increases the possibility of error decreases. On the contrary, the non-sampling error is not
reduced.

STEP 10) Analyze data

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Data Analysis is the process of systematically applying statistical and/or logical
techniques to describe and illustrate, condense and recap, and evaluate data.

While data analysis in qualitative research can include statistical procedures, many times
analysis becomes an ongoing iterative process where data is continuously collected and
analyzed almost simultaneously. Indeed, researchers generally analyze for patterns in
observations through the entire data collection.

An essential component of ensuring data integrity is the accurate and appropriate analysis
of research findings considerations/issues in data analysis.

There are a number of issues that researchers should be cognizant of with respect to data
analysis. These include:

1. Having the necessary skills to analyze

2. Concurrently selecting data collection methods and appropriate analysis
3. Drawing unbiased inference
4. Inappropriate subgroup analysis
5. Following acceptable norms for disciplines
6. Determining statistical significance
7. Lack of clearly defined and objective outcome measurements
8. Providing honest and accurate analysis
9. Manner of presenting data
10. Environmental/contextual issues
11. Data recording method
12. When analyzing qualitative data
13. Training of staff conducting analyses

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14. Reliability and Validity
15. Extent of analysis

STEP 11) Prepare and present the final research report

1. Findings are presented, often by research objective in a clear & concise way.
2. The need for a good report cannot be over lased. It is the report, & for its presentation,
that properly communicates the results to the clients.

The last step in the project is to summarize the different stages into a final report. It is
very important that the final report contains all the necessary information regarding your
project. Try to keep in mind that you should write the report so that the reader would be
able to recreate all of your steps, if they so desire. The report will need to consist of at
least all of the following sections:

(1) Abstract

(2) Introduction

(3) Project Design

(4) Implementation of the Project Design and Data Summary

(5) Data Analysis and Inference

(6) Results and Discussion

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(7) References

The Abstract is a one page summary of your project that explains your research question
and the most significant findings of your project

The Introduction should describe and discuss the research question you seek to explore.
In this section you should propose a study, state its purpose and explain what questions
you hope to answer and why these particular questions are of interest.

Make sure to include all the methods you used and all relevant graphs. In the Results and
Discussion section you should give a detailed interpretation of the major findings of your
study.

Finally, at the end of the report, it is important that you include all the relevant references
you used in conducting the project in a separate Reference section.

STATEMENT OF THE PROBLEM

The statement of the problem for the study of Audit planning of firms of
auditors is as folloes:-

1. An analythical study is essential for the insiders as well as the outsiders. The audit
firms are able to focus more on the foundation of complete audit process i.e. audit
planning resulting in better results of the audit.

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2. The firms that are to be audited have a clear and detailed knowledge of audit
procedure, this enables them to facilitate the auditors do their work more efficiently,
resulting in better audit results.

3. The information is helpful for insiders in the formulation of better procedures and
adapts better policies, which is beneficial for the audited organization or business as a
whole.

4. The study of audit planning helps auditors identify and devote appropriate attention to
important areas of the audit. Assisting in the selection of engagement team member with
appropriate levels of capabilities and competence to respond to anticipated risks and
allocating team member responsibilities.

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3.3 HYPOTHESIS

DEFINITION OF HYPOTHESIS

1) “Hypotheses are single tentative guesses, good hunches-assumed for use in devising
theory or planning experiments intended to be given a direct experimental test when
possible.”

(Eric Rogers, 1966 ).

2) “A hypothesis is a conjectural statement of the relation between two or more

variables.”

The hypothesis is generated via a number of means, but is usually the result of a process
of inductive reasoning where observations lead to the formation of a theory. Scientists
then use a large battery of deductive methods to arrive at a hypothesis that is testable,
falsifiable and realistic.

A hypothesis should always:

 Explain what you expect to happen

 Be clear and understandable
 Be testable

64 | P a g e
  Be measurable
 And contain an independent and dependent variable

HYPOTHESIS

The hypothesis for the study of audit planning of the firms of auditors is as follows:-

1. Audit planning acts as a tool of improving the result of audit. It acts as the foundation
of complete audit procedure. An efficient and effective audit can only be performed if the
audit has been thoroughly and properly planned.

2. Adequate audit planning will ensure that appropriate attention is given to crucial areas
of the audit and that potential problems are identified on a timely basis

3. Auditing is a means of valuating the effectiveness of a company‟s internal controls is

vital for achieving a company‟s business objectives, obtaining reliable financial reporting
on its operations, preventing fraud and misappropriation of its assets, and minimizing its
cost of capital.

4. Both internal and independent auditors contribute to a company‟s audit system in

different but important ways.

5. Well-planned audit systems can reduce varios forms of risk in an enterprise, including
its information risk (the risk of material misstatement in financial reporting), the risk of
fraud and misappropriation of assets, as well the risk of suboptimal management due to
insufficient information on its operations.

65 | P a g e
3.4 AIMS AND OBJECTIVES

MEANING

It is often useful to consider your research questions in terms of aim(s) and objectives.

The aim of the work, i.e. the overall purpose of the study, should be clearly and concisely
defined.
Aims:

1) Are broad statements of desired outcomes, or the general intentions of the research,
which 'paint a picture' of your research project
2) emphasize what is to be accomplished (not how it is to be accomplished)
3) Address the long-term project outcomes, i.e. they should reflect the aspirations and
expectations of the research topic.

Once aims have been established, the next task is to formulate the objectives. Generally,
a project should have no more than two or three aims statements, while it may include a
number of objectives consistent with them.

To critically assess the collection and disposal operations for bulky household waste in
order to identify factors, which contribute to performance and technical efficiency

66 | P a g e
Objectives

1) To critically assess bulky waste operations by local authorities, including

volumes/types of materials arising and current disposal/recovery routes.
2) To classify and evaluate the operation of furniture recovery schemes nationally.
3) To make recommendations to improve the operational effectiveness of, and to
maximize recovery opportunities of bulky waste collection.
4) Should read as an 'individual' statement to convey your intentions

Objectives are subsidiary to aims and:

1) Are the steps you are going to take to answer your research questions or a specific list
of tasks needed to accomplish the goals of the project
2) Emphasize how aims are to be accomplished
3) Must be highly focused and feasible
4) Address the more immediate project outcomes
5) Make accurate use of concepts
6) Must be sensible and precisely described

Aims and Objectives should

1) Be concise and brief.
2) Be interrelated; the aim is what you want to achieve, and the objective describes how
you are going to achieve that aim.
3) Be realistic about what you can accomplish in the duration of the project and the other
commitments you have
4) Provide you and your supervisor(s) with indicators of how you intend to:

67 | P a g e
 Approach the literature and theoretical issues related to your project.
Access your chosen subjects, respondents, units, goods or services.
Develop a sampling frame and strategy or a rationale for their selection.
Develop a strategy and design for data collection and analysis.
Deal with ethical and practical problems in your research.

Aims and Objectives should not:

1) Be too vague, ambitious or broad in scope.

2) Just repeat each other in different terms.
3) Just be a list of things related to your research topic.
4) Contradict your methods - i.e. they should not imply methodological goals or
standards of measurement, proof or generalizability of findings that the methods
cannot sustain.

At the conclusion of your project you will need to assess whether or not you have met
your objectives and if not, why not. However, you may not always meet your aims in full,
since your research may reveal that your questions were inappropriate, that there are
intervening variables you could not account for or that the circumstances of the study
have changed, etc. Whatever the case, your conclusion will still have to reflect on how
well the research design, which was guided by your objectives, has contributed to
addressing your aims.

68 | P a g e
AIMS AND OBJECTIVE OF THE RESEARCHER

“A target is something I am for and a goal is something I expect to achieve”

The objectives of this project are understated:

I. To study audit planning of audit firms and identifies the key process, crucial areas,
potential problem etc. to analyze the dependency of audit planning upon final audit result.

II. To stays the audit plans adopted by the auditor of firm for their various clients.

III. To study the dependency of the audit programme adopted by the auditor for the
completion of the auditing of a firm.

IV. To study the effectiveness of audit planning while achieving the effectiveness of
reporting.

V. To identify the significant of audit planning in the completion process of audit by

critically examining different audit cases of clients with various profiles.

69 | P a g e
AIMS AND OBJECTIVE OF THE FIRMS

Aims and Objective of the Kailas R Malpani & Co.

I. They commit to create and sustain long-term relationships which drawn by their
experience and expertise to help their clients to achieve their real success.
II. They are passionate about helping their clients to achieve their ambitious and set their
aims and objective with this in mind.
III. They seek to become leading provider of accounting, taxation and business advisory
services to owner managed and family owned business in their region.
IV. Their objective is to remain „client centered‟ at all times and provide a personal,
caring to all clients.
V. They go „extra mile‟ to solve problems and provide solutions, and deliver outstanding
results for their clients all times.
VI. To maintain a strategic long-term audit plan based on a comprehensive and logical
assessment of relative risk that is approved by the director of corporate resources and is
supported by the Corporate Governance Committee.
VII. To produce an annual palm of work based on the strategic plan and subject to
consultation with department, which is soundly based and achievable.
VIII. To carry out the audit within the time allowances indicated by the agreed annual
plan, and to monitor and control any variations to planned time.
IX. To maintain complete and accurate working documents that supports the work done
and conclusions reached.
X. To produces reports with practical recommendations, promptly and in a clear
constructive style and to produce either an overall establishment rating or a level of
assurance statement.

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Aims and Objective of Brijesh Chandak & Co.

I. To ensure that recommendation is duly considered at appropriate management level &

either agreed & acted upon by management or reason for rejections are given & potential
risks are accepted.

II. To give an audit viewpoint on rules & controls in response to corporate &
departmental request & in response to changing circumstances specially on relation to
technology, governance & legislations.

III. To add managers develop their own understanding of their services, potential risk
exposure, & methods of reducing it by using techniques such as self-assessment
questionnaires & computer interrogation.

IV. To produce regular reports against annual plans, highlighting any significant areas of
concern & the consequences of approved unplanned works.

V. To provide head of audit certification, if mandated by government departments or

other funds and be qualified to undertake financial management standards.

VI. To provide head of audit opinions on the adequacy of the internal control
environment.

VII. To advice departmental in cases of suspected frauds or financial malpractice.

VIII. To review & amend audit practices in the light of changes in the priorities,
technology professional guidance, and other external developments.
71 | P a g e
IX. To co-ordinate work with external audit and other outside agencies to ensure best use
of auditors and audit fees resources.

X. Actual information addressing the needs of its users and support good governance if it
is relevant, transparent, complete, communicate comprehensively.

Aims and Objevtive of Pushpak B Mundada & Co.

I. Maintain a scope & authority.

II. Maintain of conceptual framework to guide the setting of relevant actuarial standards,
including the explicit objectives & characteristics of such standards.
III. Use the actuarial quantity framework as a guide, maintaining consistency across the
work of the organization and its stakeholder.
IV. To provide clear and concise audit reporting to facilitate management assessment of
risk and decision-making.
V. To provide timely, accurate, accessible informative and responsible advice and
support to service management.
VI. To promote good practice and continuous challenges.
VII. To promote the efficient and effective use of resources through efficiency and VFM
reviews.
VIII. To assist all management level with information about the establishment and
maintenance or adequate internal control over all activities and to ensure that these
activities can be carried out efficiently and effectively.
IX. To assist the management to meet its responsibilities effectively by evaluation
financial, managerial & operating information, making recommendations for the

72 | P a g e
improvement of system & procedures & providing other information aimed at promoting
effective control by reducing risk at reasonable cost.
X. To assist in the significant proposed changes in the internal control system & the
implementation of new systems & make recommendations on the standards of control to
be applied.

73 | P a g e
 CHAPTER 4

DATA ANALYSIS & INTERPRETATION

74 | P a g e
4.1 DATA ANALYSIS & INTERPRETATION

1. Does your investigation is taken up only on behalf of the owner of the entity?
1. YES
2. NO

PARTICULARS RESPONSE RESPONSE

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associates

NO
YES

Kailas R Malpni Brijesh Pushpak B

&Co. Chandak & Co. Mundada &
Co.

Fig: (1) Investigation taken in presents of entity.

Interpretation:
The response of three auditor of the firm regarding the investigation of the owner entity is
very positive. They only do investigation when the owner requests them. They said that
investigation is necessary for the audit without it correct information is unable to generate

75 | P a g e
2. Being an auditor, can you prepare the accounts of the company also?
1) SOMETHING
2) NEVER
3) IF NEEDED

Particulars Sometimes Never If Needed

Kailas R NA YES NA
Malpani & Co.

Brijesh Chandak NA YES NA

& Co.

Pushpak B NA YES NA
Mundada &
Associates

Sometimes
Never
If Needed

Kailas R Brijesh Pushpak B

Malpani & Co. Chandak & Co. Mundada &
Associates

Fig: (2) Accounts of the auditor

Interpretation:
All auditors of the firms have given the same response that they never prepare the
accounts of the company being an auditor because it is not the duty of the auditor to
prepare it. If they are maintaining the accounts of the company then they have not right to
do audit of that company.

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3. Does investigation of accounts is not compulsory but audit is necessary?
1) YES
2) NO

Partucular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. NA NO

Pushpak B Mundada & YES NA

Co.

YES
NO

Kailas R Malpani & Brijesh Chandak & Pushpak B Mundada

Co. Co. & Co.

Fig (3) Audit is necessary

Interpretation:
The three firms answer is different. Firm a said audit is more important while Firm B said
that investigation is also the part of audit so it quality help during audit done by the
auditor.

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4. Is window dressing is done to avoid or reduce tax liability?
1) NEARLY
2) SOMETIMES
3) NEVER

Particular Nearly Sometimes Never

Kailas R  NA NA
Malpani & Co.

Brijesh NA NA 
Chandak & Co.

Pushpak B NA  NA
Mundada &
Associates

Nearly
Sometimes
Never
Kailas R
Malpani & Brijesh
Chandak & Pushpak B
Co. Mundada &
Co.
Associates

Fig: (4) Reduce tax liability

Interpretation:
All the company do window dressing to avoid or to reduce tax liability, but the auditor
opinion on that is different. Firm Kailas R Malpani & Co auditor say that they nearly do,
Firm Brijesh Chandak & Co. auditor say that never they do such activity, and Pushpak B
Mundada & Associates auditor say that it is done by the company.

78 | P a g e
5. Is the main object of auditing is to detect frauds from the books of accounts?

1) YES
2) NO

Particular Response Response

Kailas R Malpani & NO NA

Co.

Brijesh Chandak & Co. NA YES

Pushpak B Mundada & NA YES

Associates

NO
YES YES

NO
Kailas R Malpani
& Co. Brijesh Chandak
& Co. Pushpak B
Mundada &
Associates

Fig (5) Detect fraud from the books

Interpretation:
As we know that, the auditor to find out the manipulation, misappropriation in the books
of the accounts the company does the audit. Some auditor agreed on this firm Brijesh
Chandak & Co and Pushpak B Mundada & Association.

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6. Have the investment physically verified by you.
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. NA NO

Pushpak B Mundada & YES NA

Association

YES
NO

Kailas R Malpani & Brijesh Chandak & Pushpak mundada &

Co. Co. Associates

Fig: (6) Investment physically verified

Interpretation:
Investment should physically verify or not decide by the auditor of the firm. During audit,
it is necessary to Check the investment done by the firm. Firm Kailas R Malpani and
Pushpak B Mundada & Associates do their job frequently while Brijesh Chandak & Co.
do their job according to the need.

80 | P a g e
7. Have you seen the statutory books like minute book, general meeting book during
audit?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associate

Fig. no. (7) Statutory books like minute book, general book during audit.
Interpretation:
Every company maintain their minute book, general auditing book etc. during the year.
All the books are present among the auditor while doing the audit and all these book are
check by them a that time. Here also the three auditor of the firm checked the book
during audit.

81 | P a g e
8. Is it compulsory to check whether the company is SMC (small and medium sized
company) or NON-SMC?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associates

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associates

Fig (8) SMC or NON-SMC

Interpretation:
Check whether the company is SMC or NON-SMC is compulsory because it hide their
tax limit and the rules and regulation are also different. The auditor the firm also checks
this thing during audit.

82 | P a g e
9. Have you checked that the accounting standard applied properly according to the
company type during audit?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associates

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associates

Fig: (9) Accounting standard applied properly according the com.

Interpretation:
Every company has to make their account according to the accounting standard issued by
the ICAI and every auditor has to check it during the audit. The three firms of auditor
also check which accounting standard are following by the company and they maintained
it whole of the year or not

83 | P a g e
10. Is the entity under audit required to get through TAX audit?
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & NA NO

Co.

Brijesh Chandak & Co. NA NO

Pushpak B Mundada & YES NA

Association

NO
YES

Kailas R Malpani & Brijesh Chandak & Pushpak B Mundada

Co. Co. & Associates

Fig: (10) under audit required to get through TAX audit

Interpretation:
Tax audit is fully separated from the general audit. Therefore, the view of the auditor also
varies from firm to firm. Some auditor think that it is necessary because it will help them
to know the tax liability of the firm. Firm A and Firm B think it is not necessary but Firm
C auditor think it is necessary because it gives the true view of tax liability of the
company.

84 | P a g e
11. When a company has to keep a company secretariat?
1) When paid up capital is Rs.02 crore or
2) When paid up capital is less than Rs.02 crore

Particulars Paid up capital Rs. Paid up capital is less

02crore than Rs. 02crore

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & NA NO

Associates

PAID UP CAPITAL Rs. 02

CRORE
PAID UP CAPITAL IS LESS
THAN Rs.02CRORE

Kailas R Malpani Brijesh Chandak Pushpak B

& Co. & Co. Munadada &
Associates

Fig. no (11) Company keep secretariat

Interpretation:
The company appoints the company secretariat and they have to appoint if their limit
exceeds. Auditor have their own opinion while Firm C has different opinion. However,
the limit is same for the company.

85 | P a g e
12. Is it necessary to check the fixed asset register during audit?

1) YES
2) NO

Particulars Response Response

Kailas R Malpani & Co YES NA

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associates

NO
YES

Kailas R Malpani & Brijesh Chandak & Pushpak B Mundada

Co. Co. & Associates

Fig. no. (12) necessary to check the fixed asset register during audit.
Interpretation:
In every audit, the auditor has to check the fixed asset register during the audit to know
the position of the fixed assets. Therefor the three firms auditors is also doing same thing
during the audit of the company. Therefor there response is also same.

86 | P a g e
13. Is it necessary to obtain information regarding the appointment of auditors
previously?
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & Co YES NA

Brijesh Chandak & Co YES NA

Pushpak B Mundada & YES NA

Associates

YES

NO NO

Kailas R Malpani & YES

Co Brijesh Chandak &
Co Pushpak B
Mundada &
Associates

Fig. no. (13) obtain information regarding the appointment of auditors previously.
Interpretation:
Every auditor wants to see the audit report of the previous auditor to get an overview of
the report. It helps them in taking out difference with the current report prepared by them.
Therefor the response of auditors of three firms in this case is same.

87 | P a g e
14. Have you obtained details of all suits filed for and against the company and
scrutinized them for any notes?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. NA NO

Pushpak B Mundada & YES NA

Associates

33%

YES
67% NO

Fig. no. (14) scrutinized for any notes.

Interpretation:
If there, any suit filed by the company, then the auditor has to make their audit report
according to it. For this, the auditor has to gather all suit documents so that they make a
good report. In this case, Firm C take interest to gather the files while Firm B least
interest in it.

88 | P a g e
15. Do you copies of internal audit report and obtained detailed comments on
internal control?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associate

Fig. no. (15) Internal audit report and on internal control.

Interpretation:
Internal audit is also an important part of audit and comments received on it helps in
making analysis of different view of the auditor. All the three firms try to gather this
information to making report on the internal control of the audit and generating
comments on it.

89 | P a g e
16. Do you obtain all details in respect of dealing with group of companies, where
directors are interested?
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & Co NO NA

Brijesh Chandak & Co. NA YES

Pushpak B Mundada & NA YES

Associate

NO
YES

Kailas R Malpani & Brijesh Chandak & Pushpak B Mundada

Co. Co. & Associate

Fig. no. (16) Respect of dealing with group of companies.

Interpretation:
Company deal with various group of companies in a year, and for this reason they made
separate book for each company so that their books will collapse with other company.
Auditor has to take care all this material during the audit. In above data only one firm i.e.
Firm A will not give more importance to this thing while other two firm take care of all
this transaction in the company.

90 | P a g e
17. Is it necessary to check the provision of income tax, dividend, and transfer of
reserve while doing the audit?
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associate

Fig. no. (17) Provision of income tax, dividend and transfer of reserve
Interpretation:
In every audit the auditor, check the provision of income tax, dividend, and transfer of
general reserve ect. So that they come to know the true picture of the firm at the end of
the year. Moreover, three firms do the above check during their audit time.

91 | P a g e
18. Is it necessary to obtain documented policy of credit control during audit?

1) YES
2) NO

Particulars Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & NA NO

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associate

Fig. no. (18) Obtain document policy of credit control.

Interpretation:
Credit control document is a proof of credit maintain by the firm in a year. This
document helps auditor in knowing the financial stability of the firm. In above two firm
find important to check it while Firm C do not find it important.

92 | P a g e
19. Is checking of original invoice is compulsory during audit?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associate

NO
YES

Kailas R Malpani & Brijesh Chandak & Pushpak B mundada

Co. Co. & Associate

Fig. no. (19) Original invoice is compulsory during audit.

Interpretation:
Original document is proof of all the entries done by the account of a company. This
document helps an auditor to decide whether there is any fraud entry done by the
accountant or not. Therefore, its checking is compulsory. Above three firm, also check
the original documents the period of a company.

93 | P a g e
20. It is the duty of the auditor to check the terms and condition of the contract of
the company with other company?
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & YES NA

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associate

NO
YES

Kailas R Malpani & Brijesh Chandak & Pushpak B Mundada

Co. Co. & Associate

Fig. no.(20) Contract of the company with other company.

Interpretation:
The auditor has to check the terms and condition of the contracts with other company
because the company may misguide the auditor with their words but the document reveal
the truth. The above three firm also check the agreement among two company and their
terms and condition.

94 | P a g e
21. During audit, is it necessary to check their budgetary control on various sectors?
1) YES
2) NO

Particulars Response Response

Kailas R Malpani & NA NO

Co.

Brijech Chandak & Co. NA NO

Pushpak B Mundada & NA NO

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associates

Fig. no. (21) It is not necessary to check the audit control.

Interpretation:
According to the view of the three firms of the auditors, it is not necessary to check the
budgetary control of various sectors. The work of the auditors to check that whole budget
is use properly to the allotted sector and to check that the company does not misused the
fund. The auditor job is not to check the budgetary control.

95 | P a g e
22. Is it the duty of the auditor to check the book stock with physical stock during
audit?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & YES NO

Co.

Brijesh Chandak & Co. YES NO

Pushpak B Mundada & YES NO

Associate

NO
YES

Kailas R Malpani & Brijesh Chandak & Pushpak B Mundada

Co. Co. & Associate

Fig. no. (22) Check the book stock with physical stock during audit.
Interpretation:
It is the duty of the auditor to check the book stock with the physical stock because the
company mostly manipulate their account with stock value. They sometimes do fraud
transaction like destroy due low maintenance etc. that effects the financial statement
amount. The above firm‟s auditor agrees that it is compulsory to check the physical stock.

96 | P a g e
23. Do you think that internal audit job is like a detective job?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & NA NO

Co.

Brijesh Chandak & Co. YES NA

Pushpak B Mundada & YES NA

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associate

Fig. no. (23) Internal audit job is like detective job?

Interpretation:
Detective job is like to find each small clue regarding the incident. Same the auditor has
to find out each small error from the account. So it said as the detective work. On this
Firm A disagree while Firm B and Firm C agree on it.

97 | P a g e
24. Do you think that test checking helps in saving in terms of time, cost, and
energy?
1) YES
2) NO

Particular Response Response

Kailas R Malpani & NA NO

Co.

Brijesh Chandak & Co. NA NO

Pushpak B Mundada & YES NA

Associate

YES

NO NO

Kailas R Malpani & YES

Co. Brijesh Chandak &
Co. Pushpak B
Mundada &
Associate

Fig. no.(24) Test checking helps in saving in terms of time, cost and energy
Interpretation:
Test checking means that examination of some of the transaction in depth means small
starting to end. It takes more time, and the expense is there. The auditor does not have so
much of time to check in detail. Firm A and Firm B disagree with the statement while
Firm C agree with it. Firm C auditor view is that it‟s an one time investment and it helps
in near future a lot as we know the each pause and cause of the statement.
98 | P a g e
25. How much surprise checks help you in framing an audit report of a company.

1) LESS
2) MODERATE
3) HIGH

Particular Less Moderate High

Kailas R  NA NA
Malpani & Co.

Brijesh Chandak NA  NA
& Co.

Pushpak B NA NA 
Mundada &
Associate

LESS
MODERATE
HIGH HIGH
MODERATE
LESS
Kailas R
Brijesh
Malpani & Co. Pushpak B
Chandak &
Co. Mundada &
Associate

Fig. no. (25) Surprise check help you in framing the audit report.

99 | P a g e
Interpretation:
Surprise check only helps in knowing the actual situation of the firm works and their
account position. It does not help properly in maintaining an annual report of a firm. Firm
A view is that it will help very less, while Firm B view is that its effect is moderate, and
Firm C views it helps a lot in making the audit report at the end of the year.

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 CHAPTER 5

SUGGESION, OBSERVATION, RECOMMENDATION

AND CONCLUSION

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5.1 SUGGESTION

Following Suggestion I have made for the firms:

1. The checklist should be exhaustive or only indicative, incomplete but detailed checklist
leads to increased so that chances of errors as auditor tends to assume the checklist to be
exhaustive.
2. The extent of checking should not be pre= defined while audit planning. It should
rather be indicative at the beginning and should be set during the process of audit
depending upon the data coming in the audit.
3. Audit planning team should have a member who understands the product or service of
the client during audit very well. Barrier of lack of knowledge about product or service of
the client offer is felt. It will increase the coordination and smooth flow of audit planning.
4. Critical points, curtail issues should be visited independently by two different audit
teams. It was observed repetitively that different team of same competence was able to
dig out major concerns while the first team was not able to highlight the same issue.

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5.2 OBSERVATION

Following are the points observed during my research:

1. It is observed that in case where audit planning is done properly the results of audit are
very good. Complete and accurate audit report were delivered for these cases.
2. It is further observed that in case of Kailas R Malpani & Co. and associated the
planning was done according to the laid down procedure and checklists were not
exhausting and audit procedure miss some major concern.
3. Audit planning is the base of complete audit programme.
4. From the study of various audit cases and analysis of the effect of audit planning upon
audit reports, I observe that the audit planning ensure that appropriate attention is devoted
to important areas of the audit; it also ensure that potenstial problems are promptly
identified; it also ensure that the work is completed expeditiously; they utilize the
assistants properly; and co-ordinate the work done by other auditors and experts.
5. It is observed that the auditor obtain sufficient appropriate evidence for the
circumstances. It is helps to keep audit costs at a reasonable level. It helps to avoid
misunderstanding with the costs.
6. The audit planning act as a tool of improving the result of audit. It acts as the
foundation of complete audit procedure. An efficient and effective audit can be
performed if the audit has been thoroughly and properly planned.
7. Incomplete and improper audit planning will ensure that appropriate attention is given
to the crucial areas of the audit and the potential problems are identified on a timely
basis.
8. It is also observed that they evaluate the effectiveness of internal control of the
company during the audit. Maintaining an effective system of internal control is vital for
achieving a company‟s business objectives, obtaining reliable financial reporting on its
operations, preventing fraud and misappropriation of its assets and minimizing its cost of
capital.
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5.3 RECOMMENDATION

After doing whole of the research work on “Audit Planning of three firms of an Auditor”
I recommend that:

1. While doing the audit of a public company the auditor should check whether the
management has manipulated the account by showing more or less stock-in-trade then
what actually it is.
2. He should check the calculation, addition, and castings in the stock-sheets
3. It is suggested that the auditor should be present at the time of taking stock to see that
it is being properly taken.
4. The auditor should scrutinize the payment side of the cash book after the financial year
is over to find out what were the outstanding expenses for the previous tear.
5. If the auditor does not go on the last working day to verify cash, he should check the
cash transactions from the date of the balance sheet and the date on which he pays the
visit in order to find out the accuracy of the cash in hand on the closing day of the year.
6. If the auditor is going for the first time of an audit of a newly company then he should
check that the minimum subscription had been applied for before the shares were allotted
7. The auditor can request the company‟s bankers to find out whether the securities,
stock and shares, which are alleged to have been lodged with the bankers, are really with
them and that are free from any charge.
8. He should check that the bills receivable discounted with the bank have been
dishonored to find the contingent liabilities.
9. He should first check that the return submitted by the branch are adequate for the
purpose of this audit, the returns have been sent at an interval of not more than three
months and the returns are properly incorporated in the books of accounts of the head
office.

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10. The auditor should check that whether the auditor of holding company has audited the
accounts of subsidiary company, if not, then he should examine the statement of the
subsidiary company and pay attention to the qualification of the report by the auditor of
the subsidiary company.
11. The auditor should review major accounts for the adequacy of documentation, proper
credit appraisal, disbursement and follow-up of account.
12. The auditor before giving any opinion must ensure the truth, fairness and adequate
disclosure of financial information in the financial statement.

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5.4 LIMITATION OF THE RESEARCH

The extent of audit is always limited and thus chances of errors from beyond the scope of
audit can come. Following are the limitation of the research:

1. The study was only of the three frims which limits the scope of the research.
2. There is no any secondary data available regarding the information of the work of the
firms.
3. They do not publish their journal or magazines of their audit planning work in various
field of audit.
4. One of the firms provides their audit work only on their territory, which limits their
work function.
5. The employee at the firm hesitates to share information as they thought that the risk is
very high.
6. There is not proper audit programme made by the auditor of the firm before doing the
audit of a company.

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5.5 LIMITATION OF RESEARCHER

Being a researcher, I have to face many difficulties for my project and it limits my work.
Some of the limitations are as follows.

1. I have not allowed seeing the full documents used by the firm for audit planning.
2. The answer given by the people of the firm are not appropriate which creates problem
while doing analyzing and interpretation of those questionnaires.
3. The research work is not on the national level so it‟s not give true picture of audit plan
used by the different auditor on a common path.
4. The time limit is also creating a problrm while doing research work because the
research done according to the availability of time of the auditors of the firm.
5. As the research, nature was longitudinal designing it suffers from the limitation of
conditioning effect. The response given by the respondents are not properly. In addition,
it shows that they lose their interest in the enquiry.

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5.6 CONCLUSION

Based on discussion with all Chartered Accountants of three audit firms, I understand that
„Planning‟ is mandatory and an integral part of any audit. Irrespective of the type of audit
i.e. audit of financial statement, internal audit of business process, inventory audits, stock
audit etc. all audit firms ensure that all audits are adequately plan the audit and the client
signs the documents in present of all the member of the client. The planning helps the
auditor in achieving the following:

1. Help in obtaining sufficient appropriate evidence for the audit work.

2. Help in keeping audit costs at a reasonable level.
3. Help in avoiding misunderstanding with the client.
4. Audit planning ensures that appropriate attention has given to the crucial areas of the
audit and the potential problems has identified on a timely basis. It is a means of
evaluating the effectiveness of a company‟s internal controls.

Maintaining an effective system of internal controls is vital for achieving a company

business objective. It help in obtaining reliable financial reporting on its operations, help
in preventing fraud and misappropriation of assets and a last it help in minimizing its cost
of capitals.

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5.7 BIBLIOGRAPHY

I. Contemporary Auditing: Kamal Gupta, Tata Mc-Graw Hill, New Delhi

II. A Hand Book of Practical Auditing: B.N. Tandon, [Link] and Company, New Delhi
III. Fundamental on Auditing: Kamal Gupta and Ashok Arora, Tata Mc-grew Hill, New
Delhi
IV. Internet search engines like:
[Link]
[Link]
[Link]
[Link]

Are used to get required sample documents, clarifications etc.

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5.8 ANNEXURES

Annexures 01:

Willingness Letter Format

[Date]
[Partner Name]
Partner
Chartered Accountants
[office Address]
Subject: Appointment as Statutory Auditors

Dear ,

It is proposed to appoint you as the auditor of the company at next annual general
meeting of the company, We therefor request you to please confirm that the appointment,
if made, will be in accordance with the limits specified in sub-section (1B) of section 224
of the companies Act, 1956.

Thanking You
Yours truly

[Company Name]

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Annexure 02:
Format of Board resolution for Appointment

(On Company’s Letter Head)

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED IN THE ANNUAL

GENERAL MEETING HELD ON ………………………… APPOINTMENT OF
STATUTORY AUDITORS [ Audit Firm Name], PUNE, CHARTERED
ACCOUNTANT.

“RESOLVED that [Audit Firm Name], Chartered Accountants, Pune, India, be and are
hereby appointed as auditor of the company from conclusion of this Annual General
Meeting until the conclusion of the next annual general meeting on the remuneration as
may be agreed between the said auditirs and the board of directors.

Certified True Comoany

[Company Name]

(Authorized Signatory‟s Name and Designation)

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Annexure 03:
Format of Appointment Letter

[On your letterhead]

Date:

Firm Name:

Chartered Accountants

Address

Subject: Appointment as Statutory Auditors

Dear ,

We are pleased to inform you that vide resolution passed at annual general meeting of the
company held on , [Audit Firm Name] have been reappointed as a statutory
Auditor of the Company for the year to hold office, as such until the
conclusion of the next annual general meeting.

Kindly note that is an limitation of your appointment pursuant to the provisions of section
224(I) of the companies Act, 1956.

Yours Truly
Company Name

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5.9 QUESTIONNAIRES
“A SURVEY ON AUDIT PLANNING OF THREE FIRMS OF
AUDITOR”

NAME OF THE COMPANY:

NAME OF THE RESPONDENT:
SEX:

MALE: FEMALE:

1. Does your investigation is takes up only on behalf of the owner of the entity?

1) YES

2) NO

2. Being an auditor, can you prepare the accounts of the company also?

1)SOMETIMES

2)NEVER

3)IF NEEDED

3. Does investigation of accounts is not compulsory but audit is necessary?

1) YES

2) NO

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4. Is window dressing is done to avoid or reduce tax liability?

1)NEARLY

2)SOMETIMES

3)NEVER

5. Is the main object of auditing is to detect frauds from the books of accounts?

1)YES

2)NO

6. Have the investments physically verified by you.

1) YES

2) NO

7. Have you seen the statutory books like minute book, general meeting book
during audit?

1) YES

2) NO

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8. Is it compulsory to check whether the company is SMC (small and medium sized
company) or NON-SMC?

1) YES

2) NO

9. Have you checked that the accounting standards applied properly according to
the company type during audit?

1) YES

2) NO

10. Is the entity under audit required to get through TAX audit?

1) YES

2) NO

11. When a company has to keep company secretariat?

1) When paid up capital is RS.02

crore or

2) When paid up capital is less

than RS.02 crore

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12. Is it necessary to check the fixed asset register audit?

1) YES

2) NO

13. Is it necessary to obtain information regarding the appointment of auditors

previously?

1) YES

2) NO

14. Have you obtained details of all suits filled for and against the company and
scrutinized them for any notes?

1) YES

2) NO

15. Do you get copies of internal audit report and obtained detailed comments on
internal controls?

1) YES

2) NO

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16. Do you obtain all details in respect of dealings with group of companies, where
directors are interested?

1) YES

2) NO

17. Is it necessary to check the provision of income tax, dividend, and transfer of
reserve while doing the audit?

1) YES

2) NO

18. Is it necessary to obtain documented policy of credit control during audit?

1) YES

2) NO

19. Is checking of original invoice is compulsory during audit?

1) YES

2) NO

20. During audit, is it necessary to check their budgetary control on various sectors?

1) YES

2) NO

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21. Is it the duty of the auditor to check the terms and condition of the contract of
the company with other company?

1) YES

2) NO

22. Is it the duty of the auditor to check the book stock with physical stock during
audit?

1) YES

2) NO

23. Do you think that internal audit job is like a detective job?

1) YES

2) NO

24. Do you think that checking helps in saving in terms of time, cost and energy?

1) YES

2) NO

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25. How much surprise checks help you framing an audit report of a company?

1) LESS

2) MODERATE

3) HIGH

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