Core Areas of a Chartered Accountant

Interlinked with Computers

ROLL NO.

NAME REGISTRATION NO.

30 Shikha Gupta NRO 0302325

38 Ashish Bisht NRO 0315206

48 Juhi Kapoor NRO 0300927

47 Ajay Gupta NRO 0318658

45 Sahil Kapahi NRO 0310879

39 Vikas Kumar NRO 0315859

49 Ankit Kaushal NRO 0322082

50 Ishneet Singh NRO 0336036

Group Introduction

Acknowledgement

We would like to express our gratitude towards Mr. Ashwini Bansal and Vikas Sir for their continuous support and guidance that ensured the optimal efforts in not only completion of the project but also in broadening our horizons about computers.

Contents

I

II

III

IV

Core Areas of CA – An Introduction

How does Computer assists CA’s?

Usage of Internet in CA Profession

Summary

Core Areas of a Chartered Accountant

Accountancy

Taxation

Taxation(depositing a part of our income to government authorities) is a critical part of your role as Chartered Accountant and relevant to all aspects of life – both business and personal. All business decisions have tax implications.

This includes the writing up of accounts and the preparation of financial statements. It encompasses a wide area ranging from simple Book keeping to complex financial analysis.

Advisory/Financial Services

Audit

Auditing refers to independent examination of data, statement, operations and records (financial information) of any entity whether profit making or not, irrespective of its size and legal structure with a view to express an opinion thereon through the audit report.

Financial services are the economic services provided by the finance industry, which encompasses a broad range of organizations that manage money. These include banking, insurance, housing finance, stock broking and investment services.

Usage of Computers in Accountancy

Because of the minute by minute change in finances, accurate record keeping is critical. Computerizing a business general ledger, payroll, and other accounting tasks increases office efficiency. With a computer, you can request and receive an in house balance sheet, an income statement, or other accounting reports at a moment notice. While keeping your checkbook on a computer may not be practical, computers are great for handling complex home financial records. You can get statements on net worth and year tax deductible expenses within minutes.

1. Spreadsheets2. General ledger3. Inventory Control4. Point of sale/Time and billing5. Account Receivable/Payable

O Expedite the accounting function.O Eases recording in Journal, posting in ledger with the help of Special

Purpose Modules like Account or Account Receivable.O Automatically prepares Balance Sheet/Profit and Loss A/C and other

reports.O Unskilled workers can easily perform day to day data entry function.

Advantages of using computer in Accounting

Disadvantages of using computer in Accounting

• Loss of data due to hardware/software damage.• Inaccurate data due to clerical errors/mistakes in

programming.• Fraud and embezzlement can be done by loitering

data.• Total security is unachievable and some failure must

be expected.

Tally.ERP : Accounting Package

Preparation of Balance Sheet, Profit & Loss Statement, Cash Flow Statement, Bank Reconciliation Statement and calculation of ratios, variance etc.

Statutory & Taxation: Excise, Value Added Tax, Service Tax, Tax deducted/collected at source, Fringe benefits tax, Payroll etc.

Inventory features : General, Storage & Classification, Order Processing, Invoicing, Purchase/ Sales Management

.Accounting features: General, Outstanding Management, Cost/Profit Centres Management, Invoicing and Budgets/ Scenario Management etc.

Example: Generating Balance Sheet through Tally

Prevents duplication of work as by data entry into vouchers automatically Balance Sheet, Profit and Loss Account etc. are generated.

Tally.ERP 9 provides remote capabilities to its users to access data from anywhere. Using Tally.NET features, the user can create remote users (ids), authorize & authenticate them to access company remotely. Currently, the remote connectivity allows the user to view/display the required information on his system instantly.

The process for remote access is as follows:Enter the remote user ID at the remote login location to access company data from Tally.ERP 9Requirements for Remote Connectivity:1. At the Customer’s Location:2. At the Remote Location:

Tally.ERP : Accounting Package

1. Customer can allow / disallow access to the Company Data for remote users at any point of time.

2. Data resides on the Customer’s Computer only.3. Encrypted Data is transferred between two computers on

request.4. The customer can assign Security controls to remote

users depending upon what access to be given.

Data Security in Tally

Disadvantages of Tally

1. Requires technical competence.2. Graphical User Interface – unconformable to

many.3. Expensive

Usage of Computers in Auditing

.The auditor can check voluminous data in lesser time. Exhaustive examination is possible by using computerized advanced techniques.

Generally audit software have embedded sampling routines. Thus, it is easy for the auditor to choose appropriate sample as per stated criteria.

Various internal controls embedded within the system can be checked whereas manual audit procedures are not effective for this.

Performing analytical review procedures through audit software can easily trace unusual fluctuations and hard copy can be generated for auditor’s ready reference.

• Data analysis software• Network security evaluation

software/ utilities• OS and DBMS security

evaluation software/utilities• Software and code testing tools

Techniques Description

Audit Software Software used by auditor to read data on client’s files, to provide information about the audit and/or to re-perform procedures carried out by the client’s programs.

Core Image Comparison Software used by the auditor to compare the executable version of a program with a secure master copy.

Database Analysers Software used by auditor to examine the rights associated with terminals and the ability of users to access information on a database.

Embedded Code Software used by the auditor to examine transactions passing through system by placing his own program in the suite of programs used for processing.

Mapping Software used by auditor to list unused program instructions.

On-line testing Techniques whereby the auditor arranges or manipulates data either real or fictitious, in order to see that a specific program or screen edit test is doing its work.

Log Analysers Software used by the auditor to read and analyze records of machine activity.

Step 1: Construct a master list

Step 2: Decide on sample size

Step 3: Select Clients

Step 4: Document your sample

Techniques DescriptionProgram Code Analysis

An examination by auditor of source code of a particular program with a view to following logic of the program so as to satisfy himself that it will perform according to his understanding.

Program Library Analyzers

Software used by auditor to examine dates of changes made to executable library and the use of utilities to amend programs.

Tracing Software used by the auditor to identify which instructions were used in program and in what order.

Test data-Live/Dead : Integrated Test Facility/Base Case System Evaluation

Fictitious data applied against the client’s programs either whilst they are running or in an entirely separate operation. The results of processing the fictitious data are compared with the expected results based on auditors understanding of programs involved.

Snapshots Software used by the auditor to take a ‘picture’ of a file of data or a transaction passing through the system at a particular point in time.

Random Sampling

Examination of Audit Trail

• Identity of the would be user of system

• Authentication information supplied.• Resources requested.• Action privileges

requested/allowed/denied.• Terminal identifier.• Start and finish time.• Number of sign-on attempts.

The following data associated with an event can be kept:

The data allows management or auditors to re-create the time series of events

that occurs when a user attempts to

gain access to and employ system

resources.

Periodically the audit trail should be analyzed to detect

any control weaknesses of the

system. Manual/automated

analysis can be undertaken.

Services purpose of operations audit

trail. E.g. Recording start and finish times and the

resources requested

facilitates analysis of resources usage within sub-system.

Resource consumption forms basis for detecting

unauthorized activities. E.g.

Intrusion detection system monitors

amount of processor time consumed by

user to detect unusual deviations

from amount of processor time

requested in the past.

Audit by simulation of errors, fraud

Fraud could be in the form of fictitious vendors, altered or duplicate invoices, purchases kickbacks, fixed bids, inflated prices, duplicate payment, excess purchase quantities, payroll fraud etc.

Traditional Approach

Modern Approach

Transactional Analysis Data Analysis Techniques

Organizations have traditionally sought to prevent and detect fraud by implementing appropriate internal controls. Internal audit tests validate these controls during regular audit processes. It does not however, usually have direct responsibility for ensuring that fraud does not occur. Even when frauds do come to light, many detection methods occur after the fraud has taken place. The problem is that the longer the period the fraud remains undetected, the larger the financial loss is likely to be and smaller the chance of recovering the losses from the perpetrator.

Includes continuous monitoring basis andcomprehensive series of tests designed to detect indicators of a wide range of fraud.• Indicators of potential fraud-taking into

account both the most common fraud schemes which relate specifically to unique risks of particular organization.

• Analyze transactions within a given area and test them against parameters that highlight indicators of fraud.

• Calculation of statistical parameters such as averages, standard deviations.

• Finding patterns and associations among groups of data.

• Digital analysis using Benford’s Law.

• Duplicate and gap testing.

Analyzing the data with IDEA

Mechanical Accuracy : Totaling the file performed by field statistics function to prove accuracy of calculations. By adding a calculated field using Field Manipulation option or by an exception test of miscalculations.Analytical Review: Preparation of figures for an analytical review using file stratification function, Chart Data to obtain figures for comparison with last year.Completeness: The Gap detection options (Numeric, Character, Date) can be used to test for completeness. E.g.: Bin card no's for inventory, dispatch note no's for sales.Validity (Exception Testing, Compares and Duplicates To detect unusual and strange items. These may be large items or where relationship between two pieces of data doesn't correlate.Cut-off : Year end ledger, inventory files or transaction files can be tested for cut-off by testing for items with dates or sequence no’s above/below year end cutoff.

Project Summary

Usage of Computers in Taxation

Taxpayers and professionals are use computers and internet for filing tax returns . CA’s use computer software for filing tax return of their clients.

Efficient and effective document management system or backup or restoration of data.

Preparation of computation of income tax liability, using iterative techniques for calculating hypo tax , tax perquisite etc. and macro’s in ITR forms.

Using TRACES Portal for downloading Form 16, Form 26 AS, TDS Return (Quarterly), Challans, Rectification Statement, etc.

A complete software solution for preparation of filing of new Income Tax-Com-Fringe-Benefit Tax Returns for companies.

Convenient online tax payment/physical challan generation. Pan search facility /Facility for Import Balance sheet & P& L A/C from TALLY.

Computation of Income Tax (HRA , NRC , Rebate u/s89, interest u/s234A , 234B , 234C)Generation of Tax Audit Report in form 3CD.

Facilitates preparation & filing of new ITRs 1,2,3,4,5,6 and revised returns electronically as per e-filing scheme of Income Tax Department.

Import of ITR XML prepared from other software. Report of Return Filed , Return Pending , List/Detailed of Assesse etc.

Salient features of Web-e-Tax

Types of e-filing

Use digital signature in which case no paper return is required to be submitted.

Option I

File without digital signature in which case ITR-V form is to fed with the department.

Option II

File through an e-return intermediary who wou7ld do e-filing and also assist the assesse in filing the ITR-V form

Option III

E-filing

The process of electronically filing your income tax return through the internet is known as e-filing.

Select appropriate type of Return Form.

I Download Return Preparation Software for selected Return Form

IV

Fill your return form offline and generate a XML file.

IIRegister and create login/password on www.incometax.gov.in. Select the option submit return.

V

Browse to select XML file and click ”Upload” button.

IIIOn successful upload acknowledgement details will be displayed. Generate print out of ITR V form.

VI

Incase the return is not digitally signed, then the duly filled IT-V needs to be submitted to ITR office within 15 days.

VII

ITR Form

Financial services are the economic services provided by the finance industry, which encompasses a broad range of organizations that manage money. These include banking, insurance, housing finance, stock broking and investment services.

Financial Services is a essential part of financial system.

Financial System

Financial Services

Financial Market

Financial Institutions

Financial Instruments

Usage of Computers in Financial Services

Merger and AcquisitionsTakes care of the growth and ensures smooth running of the business

Commercial Law ServicesClients are assisted to get permissions, licenses, authorizations under Companies act, FEMA, Income Tax, Contract Act.

Legal Advisory ServicesLegal issues and matters are analyzed to keep clients away from legal hassles

Valuation of Shares/BusinessCAs undertake valuation of shares of public and private companies at the time of amalgamation and re-organization

Loan ArrangementsAdvice their clients about cash credit limits, term loans & project loans

Varied services provided by CA’s

Companies and firms create their own website subject to overall guidelines laid down by the council to provide online services to their clients and ensure that their websites run on a pull method not push method

Examples

1) Financial markets- NSE BSE MCX NCDEX UCX for commodity trading and portfolio management.

Practical Insight : Example

Portfolio/Investment/Asset Management

1) Excel- data analysis (Slicers, pivot chart, financial formulas, loan sheet etc.)

Financial Modelling/Data Analysis

Internet and CA’s

Using TRACES Portal for downloading Form 16, Form 26 AS, Rectification Statement, etc.

Assisting and Resolving extensive queries on obtaining PAN Application, Status- checking , Affidavits, No-Objection-Certificate(ITCC) etc.Electronic filing of tax returns , generating ITR Verification Acknowledgement , digital signature (clients) and online deposition of challans etc. through net banking etc.

Using Microsoft Access for effective Database Development , interlinking it with mail merge and using it for sending bulk customized mails.

SummaryThe impact of Information Technology (IT) on several aspects of accounting profession and practice has been pronounced over the last two decades. The revolutionary developments of various IT tools and techniques have a far reaching impact on the organizations. The survival and growth of a dynamic profession such as chartered accountancy depends to a large extent, on adoption of new techniques/methods and equipping CA’s to face emerging challenges in the global business environment. Functionalities of core areas- Accountancy, Taxation, Audit and Advisory are expedited through optimal usage of computer software.

Bibliography

I WWW.GOOGLE.COM

III

II WWW.WIKIPEDIA.ORG

WWW.MICROSOFT.COM