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Meaning and importance of Vouching Vouching, widely recognized as “the backbone of auditing,” is a component of an audit seeking to authenticate the transactions recorded in a firm’s book of accounts. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. It is the practice followed in an audit, with the objective of establishing the authenticity of the transactions recorded in the primary books of account. It essentially consists of verifying a transaction recorded in the books of account with the relevant documentary evidence and the authority on the basis of which the entry has been made; also confirming that the amount mentioned in the voucher has been posted to an appropriate account which would disclose the nature of the transaction on its inclusion in the final statements of account. Vouching does not include valuation. Importance Of Vouching Vouching is the act of checking evidential documents to find

Meaning and objectives of Vouching Vouching, widely recognized as “the backbone of auditing,” is a component of an audit seeking to authenticate the transactions recorded in a firm’s book of accounts. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. It is the practice followed in an audit, with the objective of establishing the authenticity of the transactions recorded in the primary books of account. It essentially consists of verifying a transaction recorded in the books of account with the relevant documentary evidence and the authority on the basis of which the entry has been made; also confirming that the amount mentioned in the voucher has been posted to an appropriate account which would disclose the nature of the transaction on its inclusion in the final statements of account. Vouching does not include valuation. Objectives: Main objective of vouching is to find out the regularity or irregularity of

Types of Assessment under Income Tax Act 1961 Every taxpayer has to furnish the details of his income to the  Income-tax Department. These details are to be furnished by filing up his return of income. Once the return of income is filed up by the taxpayer, the next step is the processing of the return of income by the Income Tax Department. The Income Tax Department examines the return of income for its correctness. The process of examining the return of income by the Income-Tax department is called as “Assessment”. Assessment also includes re-assessment and best judgment assessment under section 144. Under Income Tax Act, 1961, there are four types of assessment as mentioned below: Assessment under section 143(1) This is a preliminary assessment and is referred to as summary assessment without calling the assessee (i.e., taxpayer). Scope of assessment under section 143(1) Assessment under section 143(1) is like preliminary checking of the return of income. At this stage no

Remuneration of Auditor If the auditor has been appointed by the Board of Directors, is is the Board which fixes his remuneration. If the auditor has been appointed by the central government then the central government fixes his remuneration. If the auditor has been appointed by the shareholders at the general meeting, it is the company which determines his remuneration unless the company in general meeting may delegate the power of fixing his remuneration to someone else. It is not necessary that the remuneration be fixed at the same meeting at which his appointment has been made. The retiring auditor who is automatically reappointed at the general meeting, unless a resolution is passed re-fixing his remuneration, is entitled to get the same remuneration as he was getting earlier. If an auditor is asked to do any other work over and above his normal work of audit, he is entitled to get extra remuneration. Any sum paid by the company in respect of the auditors expenses sha

Removal Of Auditor No new auditor can be appointed in place of an existing auditor unless the latter has been given a due notice according to the companies Act. The companies Act does not lay down anything as to what will be the consequences if a due notice is not given to the retiring auditor or the members. However, according to law if a due notice has not been given the resolution regarding the removal of the auditor cannot be put before the general meeting. If still the auditor has to be removed, again a general meeting must be held to remove the auditor. An auditor can be removed only by the general meeting, with the approval of the central government but the first auditor van be removed by the general meeting. The first auditor who is appointed by the directors to hold the office till the conclusion of the first annual general meeting may be removed before the expiry of  his term by the general meeting even without the approval of the central government, provided at-l

Levy of and exemption from custom duty: Dutiable goods. - Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government. Duty on pilfered goods. - If any imported goods are pilfered after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage. Valuation of goods for purposes of assessment . - .For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other la

INCOME TAX RETURN DEADLINE The government mandates that individuals who earn a specified amount of annual income must f ile income tax return (ITR)  within a pre-determined due date. For the assessment year 2018-19 (financial year 2017-18), August 31, 2018 is the  deadline for individuals  to file income tax return. Income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs. There are three categories of individual taxpayers- individuals (below the age of 60 years) which includes residents as well as non-residents, resident senior citizens (60 years and above but below 80 years of age) and resident super senior citizens (above 80 years of age).  In the general category (below 60 years) ,  1. Individual with annual income up to Rs. 2.5 lakh is not liable to pay income tax 2. Individual with an income between Rs. 2.5  lakh and Rs. 5 lakh, the five per cent slab is applicable - meaning inco

Appointment of FIRST AUDITOR in case of every company except govt. company or company owned/ controlled by CG/SG/CG and SG [139(6)]:- The First auditor of a company, other than a Government Company, shall be appointed by the BOARD OF DIRECTORS WITHIN THIRTY DAYS OF THE DATE OF INCORPORATION of a company. The auditor so appointed, shall hold office until the conclusion of the first annual general meeting.IF THE BOARD FAILS to appoint the first auditor, it shall inform the MEMBER of company, who shall within 90 days at an Extra Ordinary General Meeting shall appoint auditor. If the Board fails to appoint the First Auditor, an Extra Ordinary General meeting will be called by the Board to appoint the first auditor within 90 days of incorporation. In case of appointment of First auditor by Board of Director of company pursuant to section 139(6), company is under no obligation to give notice to appointment of First Auditor to the Registrar. For the company incorporat

The Shannon Weaver model actually preceded the Berlo's Model of communication. This model has following important components: Information source –  Sender is the person who makes the message, chooses the channel and sends the message. Transmitter – Encoder is the sender who uses machine, which converts message into signals or binary data. It might also directly refer to the machine. Channel – Channel is the medium used to send message. Receiver – Decoder is the machine used to convert signals or binary data into message or the receiver who translates the message from signals.. Destination – Receiver is the person who gets the message or the place where the message must reach. The receiver provides feedback according to the message. The sender encodes the message and sends it to the receiver through a technological channel like telephone and telegraph. The sender converts the message into codes understandable to the machine. The message is sent in codes through a medium.

David Berlo's SMCR Model One of the most widely used communication model is SMCR model developed by Berlo. Although it is simple and versatile yet it presumes enormous background of behavioural science. This model illustrates the four basic concepts  (a) Source (a) Messages (c) Channels (d) Receivers. All these concepts are interrelated and shouldn't be misunderstood. The elements are discussed below: Source Sender is the source of the message or the person who originates the message. The person or source sends the message to the receiver. The following are the factor related to sender and is also the same in the case of receiver. Communication Skills Communication skills of a person is a factor that affects the communication process. If the sender has good communication skills, the message will be communicated better than if the sender’s communication skills are not good. Similarly, if the receiver can not grasp the message, then the communication will not be effe

The difference between Investigation and Auditing is given below: Audit is considered on behalf of the shareholders or propriteors, while investigation is usually carried out on behalf of outsiders who intend to purchase the business or who wish to lend money and thus want to know the earning capacity or the financial position of the concern. However it may be carried out by the proprietor where they suspect any fraud or by the central government at the instance of the shareholders or the court. Accounts of a Joint Stock Company must be audited according to law while investigation is not compulsory. Investigation may be conducted even though the accounts have been audited while audited accounts are not audited again except in the case of special audit under section 233A. The audit of accounts is usually for a year or six months, while investigation may cover a period extending over three to seven years. Audit is a kind of test checking while investigation is a thorough exa

GOODS AND SERVICE TAX Constitution (122nd Amendment) Bill, 2014 received the assent of the President of India on 8th September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of GST in India.                                             Constitution (101st Amendment) Act, 2016 was enacted on 8th September, 2016, with following significant amendments:  (a) Concurrent powers on Parliament and State Legislatures to make laws governing goods and services. It means there will be dual control of State and Central authorities for all assessees.  (b) As per Article 246A, the power to levy GST has been given to the Parliament as well as to   Legislature of every State.      CGST – enacted by Central Government of India.      IGST – enacted by Central Government of India.     SGST – enacted by respective State Governments      UTGST – enacted by Central Government of India  (c) IGST will be apportioned between Center a

Recent Amendments To The GST Regime The effective rate of GST for dealers opting for composition scheme revised The effective rate of GST for manufacturers and traders who have opted for composition scheme under Section 10 of the CGST Act, 2017 has been revised vide Notification No. 1/2018- Central Tax with effect from1 January 2018. The revised rates are: Dealers Revised provisions Earlier provisions Manufacturers 1% (0.5% CGST and 0.5% SGST) of the turnover 2% (1% CGST and 1% SGST) of the turnover Traders 1% (0.5% CGST and 0.5% SGST) of the turnover of  taxable supplies  of goods 1 % (0.5% CGST and 0.5% SGST) of the turnover Implementing a nationwide e-Way Bill system The Central Board of Excise and Customs (CBEC) vide notification no 74/2017-Central Tax has decided to implement a nationwide e-Way Bill system for the interstate movement of goods from 1 February 2018. The nationwide e-Way Bill system would be rolled out in two phases: Inter-state movement On a trial