“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

FIELD PROJECT

ON

“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANCY FIRM”

SUBMITTED

BY

MR ARYA MAHESH MESTRY , MR SOM SANTOSH MADDI ,

,PRANAY SUHAS PAWAR & MS LAVANYA SUNDAR PATANKAR

Roll No. 12 , 33 , 51 , 46 Respectively

S.Y. B.Com. Semester III (2025 – 26)

UNDER THE GUIDANCE OF

Dr Supriya Yadav , Assistant Professor (Accountancy)

DEPARTMENT OF ACCOUNTANCY,

GOKHALE EDUCATION SOCIETY’S

DR. T. K. TOPE ARTS AND COMMERCE NIGHT COLLEGE,

PAREL, MUMBAI 400012

OCTOBER , 2025

Page | 1
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

DEPARTMENT OF ACCOUNTANCY, GES’S DR T K TOPE ARTS AND

COMMERCE NIGHT COLLEGE

Certificate

I hereby certify that Mr Arya Mahesh Mestry , Roll No. 12 &Mr Som
Santosh Maddi , Roll no 33 ,MR Pranay suhas Pawar Roll No 51 & MS
Lavanya Sundar Patankar Roll No 46 ,Student of GES’s, Dr T K Tope Arts
and Commerce Night College studying in S.Y.B.Com.
Semester III, has completed a project titled “Audit Process In Local
CHARTERED ACCOUONTANCY Firm ” in the area of Accountancy
specialization for the academic year 2025-26. To the best of my knowledge the
work of the student is original and the information included in the project is
correct.

Dr Supriya Yadav Dr Pankaj Pandagale Prof. Dr. S.B.Karande

Internal Guide Head of the Department Principal

Place: Mumbai

Date: 3 October, 2025

Page | 2
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

DECLARATION

WE Mr. Arya Mahesh Mestry Roll No.12 , Mr Som Santosh Maddi,

Roll No 33 , Mr Pranay Suhas Pawar , Roll no 51 & Ms Lavanya Sundar
Patankar , Roll no 46 student of GES’s, Dr T K Tope Arts and Commerce
Night College studying in S.Y.B.Com. Semester III, hereby declare that I have
completed the field project entitled “Audit Process In Local
CHARTERED ACCOUONTANCY Firm” during the academic year
2025-2026.

The report work is original and the information/data included in the

report is true emerging from the primary and/ secondary data gathered and
analyzed as part of this project.

Due credit is extended on the work of Literature/Secondary Survey by

endorsing it in the Bibliography as per prescribed format.
recommending improvements in financial practices.

NAME OF STUDENT SIGNATURE OF STUDENT

Arya Mahesh Mestry

Som Santosh Maddi

Pranay Suhas Pawar

Lavanya Sundar Patankar

Page | 3
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

Table Of Content

SR NO PAGE NO

1 Introduction 6-9
2 Literature Review 10-12
3 Methodology 13-15
4 Field Work Description ,Observation, 16-18
analysis
5 Conclusion & Recommendation 19-20
References 21
Appendices

Page | 4
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

CHAPTER 1 : Introduction

 Purpose Of Visit

The primary objective of the field visit was to gain firsthand exposure to the
audit practices followed by a local Chartered Accountant (CA) firm. This
included understanding the step-by-step audit process, observing the application
of auditing standards, and analyzing how client engagements are managed in
real-world scenarios.The expected outcome was to bridge the gap between
theoretical knowledge and practical implementation, enabling a deeper
appreciation of audit documentation, risk assessment, and reporting procedures.

The primary purpose of the field visit was to gain practical exposure to the audit
process as conducted by a local Chartered Accountant (CA) firm. While
textbooks and classroom learning provide theoretical frameworks, this visit
aimed to bridge that gap by offering a real-world understanding of audit
execution.

The objective was to observe how audits are planned, conducted, and reported
in a professional setting, and to understand the nuances of client interaction,
documentation standards, and compliance procedures.

Through this visit, the goal was to:

 Witness the application of auditing standards and procedures in live

engagements.

 Understand the workflow and division of responsibilities within the audit

team.

 Learn how auditors assess risk, materiality, and internal controls.

Page | 5
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

 Background Information

The site visited was a mid-sized CA firm

known for its long-standing reputation in statutory and internal audits.

Established over two decades ago, the firm has served a diverse clientele
ranging from small enterprises to mid-level corporations.

The office environment reflected a blend of traditional accounting practices

and modern digital tools, showcasing the evolution of audit methodologies
over time. Culturally, the firm emphasized ethical conduct, professional
integrity, and continuous learning—values deeply rooted in the legacy of the
Indian accounting profession and the standards set by the Institute of
Chartered Accountants of India (ICAI).

Historically, the firm was founded by a senior CA with deep roots in the
local business community, and it has grown organically through referrals and
long-term client relationships.

Its evolution mirrors the broader transformation of India’s accounting

profession—from manual bookkeeping to digital audits and cloud-based
documentation. The firm’s legacy is reflected in its commitment to
mentorship, with senior partners actively guiding junior staff and interns,
fostering a culture of continuous learning.

Culturally, the firm embodies the values of professional integrity,

transparency, and accountability. It operates in a region with a rich
commercial heritage, where traditional business practices intersect with
modern financial regulations. This duality is evident in the firm’s audit
approach, which balances regulatory rigor with practical adaptability to
client needs.

The site visit offered a unique opportunity to observe how such firms serve
as the backbone of financial governance in local economies.It also
highlighted the importance of trust, discretion, and precision in the auditor-
client relationship—principles that are not just procedural, but deeply
cultural in the Indian context.

Page | 6
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

 Scope Of Report

This report is centered on the audit process as practiced within a local

Chartered Accountant (CA) firm, offering a comprehensive view of how
statutory audits are conducted in a real-world setting. It aims to translate
theoretical concepts into practical understanding by documenting the
procedures, tools, and professional standards observed during the field
visit.

The scope includes:

 Audit Planning: How the firm initiates engagements, assesses client

needs, and identifies key risk areas.
 Fieldwork Execution: Techniques used for evidence collection, sampling,
and testing of financial records.
 Internal Controls Evaluation: Methods for assessing the reliability and
effectiveness of client systems.
 Compliance Frameworks: Application of standards such as the
Companies Act, 2013, ICAI guidelines, and relevant auditing standards.
 Audit Documentation: Formats, checklists, and working papers used to
support audit conclusions.
 Reporting Process: How audit opinions are formed, reviewed, and
communicated to stakeholders.

The report specifically focuses on statutory audit procedures and excludes

other services offered by the firm such as tax advisory, financial
consulting, or forensic audits. It also does not cover industry-specific
audit variations or large-scale corporate audits conducted by Big Four
firms.

By narrowing the scope to a local CA firm, the report highlights the

practical challenges, resource constraints, and personalized approaches
that define auditing in smaller professional settings—making it especially
relevant for students and professionals seeking to understand grassroots-
level audit operations.

Page | 7
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

 Importance of study

This study holds significant value as it bridges the gap between academic
understanding and practical application of auditing principles. In the
context of a local Chartered Accountant (CA) firm, the audit process is
not just a regulatory requirement—it is a cornerstone of financial
transparency, accountability, and governance for small and medium-sized
enterprises (SMEs).

By examining the audit process in a real-world setting, the study

provides:

 Practical insights into how auditing standards are implemented beyond

textbooks, especially in resource-constrained environments.
 A deeper understanding of client-auditor dynamics, including
communication, trust-building, and ethical considerations.
 Exposure to documentation practices, risk assessment techniques, and
internal control evaluations, which are critical for aspiring auditors and
finance professionals.
 A contextual appreciation of how local CA firms contribute to economic
stability by ensuring compliance with laws such as the Companies Act,
2013 and ICAI guidelines.
 A foundation for developing professional skepticism, analytical thinking,
and procedural discipline, which are essential traits in the auditing
profession.

In essence, this study empowers learners to move beyond theoretical

constructs and engage with the real challenges, decisions, and judgments
that define the audit profession. It also highlights the pivotal role local
CA firms play in upholding financial integrity at the grassroots level—
making the study not only educational but socially and professionally
relevant.

Page | 8
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

CHAPTER 2 : LITERATURE REVIEW

The audit practices of local Chartered Accountant (CA) firms in India

have been the subject of increasing academic and professional interest,
particularly in the context of their role in supporting small and medium-sized
enterprises (SMEs) and ensuring grassroots-level financial compliance.

One key study by CA Sreenivasan P.R. explores the networking and

growth models of Indian CA firms, highlighting that over 70% operate as
proprietary firms, with limited scalability due to resource constraints and client
retention challenges.

The study emphasizes that firms which adopt collaborative models—such

as alliances or networks—tend to scale more effectively and offer diversified
services, including ESG reporting and forensic accounting.

Another critical analysis from IFCCL outlines the challenges faced by

local CA firms, especially in competing with multinational accounting firms
(MAFs) for high-value assignments.

The literature points to systemic barriers in government tenders and

regulatory preferences that often sideline smaller firms, leaving them with low-
margin, high-effort engagements. This has sparked calls for policy reforms to
level the playing field and promote indigenous firms.

Technological adaptation is also a recurring theme. A study conducted in

Bangalore examined the adoption of cloud-based accounting in sole-proprietor
CA firms, revealing that cost and unfamiliarity were major deterrents. Despite
the potential for increased efficiency and client capacity, many firms remain
hesitant due to lack of training and infrastructure.

Page | 9
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

Collectively, these studies underscore the historical significance of local

CA firms as custodians of financial integrity in India’s evolving economy. They
also highlight the literary relevance of documenting their practices—not just as
technical procedures, but as reflections of broader socio-economic dynamics,
professional ethics, and institutional resilience.

The audit practices of local Chartered Accountant (CA) firms in India

have been the subject of growing scholarly and professional interest,
particularly in the context of their role in supporting small and medium-sized
enterprises (SMEs), ensuring statutory compliance, and maintaining financial
discipline at the grassroots level.

1. Structural Landscape of CA Firms

According to a detailed study by CA Sreenivasan P.R., over 70% of

Indian CA firms operate as sole proprietorships, with limited scalability due
to resource constraints and client retention challenges. The study emphasizes
that firms adopting collaborative models—such as alliances or networks—are
better positioned to scale and diversify their services. These models enable
shared infrastructure, standardized procedures, and collective branding, which
are crucial for competing in a rapidly evolving financial ecosystem.

2. Challenges in Competitive Environments

A critical analysis by IFCCL highlights the systemic challenges faced by

local CA firms, especially in securing high-value assignments. The report
points out that government tenders and regulatory contracts often favor
multinational accounting firms (MAFs), leaving local firms with low-margin,
high-effort engagements. Entry barriers such as restrictive tender conditions and
lack of institutional support have created an uneven playing field, limiting the
growth potential of indigenous firms. This has sparked calls for policy reforms
to promote fair competition and strengthen domestic audit capabilities.

Page | 10
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

3. Technological Adaptation and Innovation

A study published by Amity University explores the adoption of cloud-

based accounting in sole-proprietor CA firms in Bangalore. It reveals that
unfamiliarity with technology and high implementation costs are major
deterrents to adoption. Despite the potential for increased efficiency and client
capacity, many firms remain hesitant due to lack of training and infrastructure.
The study suggests that targeted awareness campaigns and cost-effective
solutions could accelerate digital transformation in the sector.

4. Historical and Cultural Significance

Local CA firms have historically played a pivotal role in India’s financial

governance, especially in regions with rich commercial traditions. Their
practices reflect a blend of traditional values—such as integrity, discretion,
and mentorship—with modern regulatory demands. These firms often serve
as trusted advisors to family-owned businesses and SMEs, contributing not just
to compliance but also to strategic financial planning.

This literature review underscores the importance of studying local CA

firms—not merely as audit service providers, but as dynamic institutions
navigating structural, technological, and regulatory challenges. Their evolution
offers valuable insights into the resilience and adaptability of India’s accounting
profession in a globalized economy.

Page | 11
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

CHAPTER 3: Methodology

 Approach and Tools Used for Data Collection

To gain a comprehensive and authentic understanding of the audit process

within a local Chartered Accountant (CA) firm, a qualitative, field-based
research approach was adopted. This method allowed for direct engagement
with the audit environment and facilitated the collection of rich, contextual data.
The following tools and techniques were employed during the field visit:

 Observational Methods
Non-participant observation was conducted throughout the visit. This
involved closely watching the day-to-day operations of the audit team,
including how they reviewed financial documents, interacted with clients,
and used audit software. Attention was paid to workflow patterns, team
coordination, and the practical application of auditing standards.
Observations were recorded systematically in field notes to capture both
procedural and behavioral aspects of the audit process.

 Semi-Structured Interviews
Interviews were conducted with various personnel, including junior
auditors, senior partners, and administrative staff. These interviews were
guided by a flexible set of questions, allowing for spontaneous insights
and deeper exploration of individual experiences. Topics covered
included audit planning, client communication, documentation practices,
and challenges faced during fieldwork. The semi-structured format
enabled a balance between consistency and adaptability in data collection.

Page | 12
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

 Archival Research
Internal documents such as audit checklists, engagement letters, working
papers, and sample audit reports were reviewed with permission. These
materials provided concrete evidence of the firm’s adherence to
professional standards and regulatory frameworks. Archival research also
helped trace the evolution of audit practices within the firm over time.

 Field Notes and Reflective Journaling

Throughout the visit, detailed notes were maintained to document
observations, interview responses, and personal reflections. These notes
were later analyzed to identify recurring themes, patterns, and insights
relevant to the audit process.

 Rationale Behind the Chosen Methods

The selected methods were chosen to ensure a multi-dimensional

understanding of the audit process, capturing both the technical procedures and
the human elements involved. Observational techniques offered real-time
insights into how audits are conducted, revealing nuances that are often missed
in theoretical study. Interviews added depth by incorporating the lived
experiences and professional judgments of those directly involved in audit
execution.

Archival research provided a factual basis for evaluating compliance and

procedural rigor, while reflective journaling allowed for critical analysis of the
visit itself. This combination of methods was particularly suited to studying a
local CA firm, where informal practices, interpersonal relationships, and
contextual adaptability play a significant role in shaping audit outcomes.

By integrating these approaches, the methodology ensured that the study

was not only informative and accurate, but also empathetic and grounded in

Page | 13
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

real-world practice—making it highly relevant for students, researchers, and

aspiring professionals in the field of accounting and auditing.

This mixed-method approach was ideal for studying a local CA firm,

where nuanced practices, interpersonal dynamics, and informal workflows often
play a critical role. It also ensured that both explicit procedures and implicit
cultural elements were captured, making the findings more authentic and
applicable to real-world auditing scenarios.

Page | 14
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

CHAPTER 4: Field Work Descriptions, Observations and Analysis

The field work was conducted on one working days at a mid-sized local
Chartered Accountancy (CA) firm in Mumbai.
The purpose was to witness the complete audit cycle for one of the firm’s
regular clients—a medium-scale trading company subject to statutory audit
under the Companies Act, 2013.

an orientation meeting was held with the audit partner and senior staff.
They explained the scope of engagement, the client’s business model, and the
key regulatory requirements

During the subsequent days, the audit team performed:

 Verification of Ledgers and Vouchers: cross-checking purchase and sales

ledgers against supporting documents.
 Bank Reconciliation Review: comparing client-prepared reconciliations
with bank statements to detect timing differences or errors.
 Inventory Inspection: spot checks in the warehouse to verify physical
existence and condition of stock.
 Internal Control Testing: walkthroughs of processes such as purchase
approvals and cash disbursements to evaluate control effectiveness.

These tasks were carried out using a mix of manual vouching and audit
software.
The firm used a cloud-based documentation platform to store working papers
and maintain version control.

Page | 15
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

Page | 16
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

Page | 17
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

CHAPTER 5: Conclusion and Recommendations

This project confirms that auditing is not merely a statutory obligation,

but a vital mechanism for ensuring financial transparency and public
confidence.
Local Chartered Accountancy firms, despite operating with modest resources,
play a critical role in maintaining the integrity of financial reporting,
particularly for small and medium-sized enterprises.

By embracing technology, nurturing professional ethics, and continuously

upgrading skills, such firms can further strengthen their position as trusted
guardians of financial credibility in India’s rapidly evolving economic
landscape.

 RECOMMENDATION For the Chartered Accountancy Firm

 Invest in Continuous Training

Regular workshops on emerging accounting standards, forensic
techniques, and data analytics will strengthen staff capabilities and keep
the firm competitive.

 Expand Digital Infrastructure

Adoption of advanced audit management software and data visualization
tools can enhance accuracy and reduce time spent on repetitive tasks.

 Formalize Knowledge Sharing

Documenting best practices and creating internal reference manuals will
help in mentoring articled assistants and ensuring consistency across
audits.

 Enhance Client Education

Periodic client awareness sessions on internal controls and regulatory

Page | 18
“AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

updates will not only reduce audit difficulties but also improve overall
financial discipline.

 RECOMMENDATION For Academic Institutions

 Integrate Field Exposure Early
B.Com. and similar programs should incorporate mandatory field visits or short
internships to give students practical understanding of auditing and accounting.
 Case-Based Learning
Use of real-life case studies in classrooms can reinforce theoretical concepts and
improve students’ professional judgment.

 For Students and Aspiring Auditors

 Develop Professional Skepticism
Cultivate a questioning mindset and critical thinking skills to identify and
address potential misstatements or irregularities.
 Stay Updated with ICAI Standards
Regularly review updates in Standards on Auditing (SAs) and the Companies
Act to remain industry-ready.
 Enhance Soft Skills
Effective communication, teamwork, and time management are as important
as technical proficiency in an audit environment.

Page | 19
 “AUDIT PROCESS IN LOCAL CHARTERED ACCOUNTANY FIRM”

BIBLOGRAPHY

Institute of Chartered Accountants of India. (2013). Companies Act,

2013 with Rules and Allied Provisions. New Delhi: ICAI.

Institute of Chartered Accountants of India. (2021). Standards on

Auditing (SAs) – Compendium 2021. New Delhi: ICAI.

Sreenivasan, P. R. (2020). Growth models of Indian Chartered

Accountancy firms: Opportunities and challenges. Journal of Accounting &
Finance Research, 12(2), 45–56.

Indian Finance and Corporate Compliance League (IFCCL). (2021).

Challenges faced by local CA firms in India: A comparative study. IFCCL
Research Bulletin, 8(1), 10–25.

Amity University. (2022). Adoption of cloud-based accounting among

sole-proprietor CA firms in Bangalore. International Journal of Digital
Accounting, 9(3), 77–89.

Gupta, K., & Arora, N. (2019). Fundamentals of Auditing (8th ed.).

New Delhi: Tata McGraw Hill Education.

Spicer, E. E., & Pegler, E. C. (2018). Practical auditing (22nd ed.).

London: Houghton Press.

Government of India. (2022). Economic Survey 2021–22. Ministry of

Finance. https://www.indiabudget.gov.in

Page | 20