SUMMER INTERNSHIP REPORT

On
Project:
Undertaken At
K.R Chhabra & Associates
Report Submitted in Partial Fulfillment of the Requirements
for Award Of
MASTERS IN COMMERCE (M.COM) (Hons.)
2022-2024

SUBMITTED BY
ANUSHKA MADAN
M.COM[HONS]

PANJAB UNIVERSITY CHANDIGARH

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2
DECLARATION
I Anushka Madan ,Roll No.4 M.Com (Hons), a full time bonafide student of M.Com
(Hons) Programme, Batch (2022-23) of University Business School, Panjab University
Chandigarh, hereby certify that this summer training carried out by me atK.R Chhabra&
Associates and the report submitted in partial fulfilment of the requirements of the
programme is an original work of mine and is not based or reproduced from any
existing work of any other person or on any earlier work undertaken at any other time
or for any other purpose, and has not been submitted anywhere else at any time .

Anushka Madan
Date: 1 August, 2023

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INTRODUCTION

This report is prepared corresponding to the 8 weeks internship as a part of the M.Com
(Hons) program at University Business School, Panjab University Chandigarh. The
report is focused on the internship project at K.R Chhabra & Associates from the period
of 1st June 2023 to 31st July 2023. The former part of the report gives a brief
introduction about the company and the domain in which the company operates. A
reference to the main service of the company is also provided in the report along with
mentioning about the management team of the company. The latter half of the report
gives and insight about the internship timeline and gives a week wise insight about the
different activities undertaken over the 8 weeks of the internship.

The major highlight of the report is the “how the bookkeeping and Annual accounting

insights into the field of Accounting.

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 Industry Profile

Accounting is the systematic process of identifying, recording, measuring,

classifying, summarizing, interpreting, and communicating financial information
about economic entities. It plays a crucial role in the business world by providing a
structured framework for tracking and analyzing financial transactions and events.
Accounting enables businesses, organizations, and individuals to keep track of
their financial activities, assess their financial health, make informed decisions,
and fulfill legal and regulatory requirements.

In simpler terms, accounting is the language of business. It involves capturing and

organizing financial information, such as revenues, expenses, assets, liabilities,
and equity, in a structured manner. This information is then used to create financial
statements and reports that provide insights into the financial performance and
position of an entity. Accounting also facilitates effective resource allocation,
planning, control, and compliance with financial regulations.

Definition of Accounting:

"Accounting is the process of identifying, measuring, recording, and

communicating economic information about an entity's financial activities. It
involves the systematic collection and analysis of financial data to provide accurate
and relevant information for decision-making, financial reporting, and performance
evaluation."

Objectives of Accounting

Recording Transactions:
The fundamental objective of accounting is to record all financial transactions of a
business entity systematically and accurately. This involves capturing information
about sales, purchases, expenses, revenues, investments, loans, and other
financial activities.

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Financial Information:
Accounting aims to provide relevant and reliable financial information to both internal and
external users. Internal users include management and employees who use this
information for planning, control, and decision-making. External users include investors,
creditors, regulators, and analysts who rely on financial statements to assess the financial
health and performance of a company.

Measurement of Performance:
Accounting helps in measuring the financial performance of a business entity over a
specific period. This involves preparing financial statements, such as the income statement,
balance sheet, and cash flow statement, which summarize the company's financial
activities and results.

Assessing Financial Position: Accounting provides a snapshot of a company's financial

position at a given point in time through the balance sheet. This statement shows the
company's assets, liabilities, and shareholders' equity, helping stakeholders understand the
company's financial stability and solvency.

Decision-Making: Accounting information aids in making informed business decisions.

Managers can use financial data to assess the profitability of projects, allocate resources
effectively, and determine the financial feasibility of various courses of action.

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 The history of accounting can be summarized as follows:

Ancient Civilizations (Around 4,000 BCE): Early forms of accounting emerged in Mesopotamia, using
clay tablets to record transactions. Ancient Egypt also had basic financial records on papyrus scrolls.

Ancient Greece and Rome (500 BCE - 500 CE): Basic financial recording continued, with rudimentary
systems in Greece and the emergence of the "double entry" system in Rome.

Medieval and Renaissance Periods (500 - 1500 CE): Informal accounting practices prevailed, focusing
on asset stewardship. Luca Pacioli introduced the double-entry bookkeeping system in the late 15th
century.

Industrial Revolution and Modernization (18th - 19th centuries): Industrialization spurred the need for
more sophisticated accounting. Universities started teaching accounting, and professional bodies
were established to promote standardized practices.

20th Century and Beyond: Global accounting standards and regulations were established.
Technological advancements, such as computers and software, transformed accounting practices.

Contemporary Accounting: Today, accounting includes various fields like financial, management, auditing, and
tax accounting. Cloud computing, AI, and data analytics are reshaping the profession.

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 Trends in Accounting

Several trends are shaping the field of accounting, driven by advancements in technology,
changes in regulations, and shifts in business practices. Here are some prominent trends in
accounting:

Technology Integration:

Cloud Computing: Cloud-based accounting software allows real-time collaboration, data

access, and automated updates, making financial information more accessible and secure.
Data Analytics: Advanced analytics tools help accountants analyze large datasets, uncover
insights, and support strategic decision-making.
Artificial Intelligence (AI): AI-powered algorithms automate routine tasks like data entry,
categorization, and reconciliation, freeing up accountants to focus on higher-value activities.

Automation and AI:

Automation of Repetitive Tasks: Routine tasks such as data entry, reconciliations, and basic
reporting are being automated, reducing human errors and increasing efficiency.
Predictive Analysis: AI algorithms can analyze past trends to predict future financial outcomes
assisting in forecasting and risk assessment.

Blockchain Technology:

Blockchain's distributed and secure nature is being explored for applications like transparent
supply chain tracking, audit trails, and secure transactions, reducing fraud risks.

Stringent Regulations:

Evolving accounting standards and regulations, such as International Financial Reporting

Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), require accountants
to stay updated to ensure compliance.

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 Challenges faced by Accounting
Technological Disruption:
Keeping Pace with Technology: Rapid technological advancements require accountants
to continuously learn and adapt to new software, tools, and data analytics techniques.
Cybersecurity: Protecting sensitive financial data from cyber threats and ensuring data
privacy is a constant concern.

Regulatory Complexity:
Evolving Standards: Frequent changes in accounting standards (e.g., IFRS and GAAP)
make compliance and reporting more challenging.
Multinational Operations: Companies with international operations must navigate
diverse regulatory environments, leading to complexity in financial reporting
.
Globalization:
Cross-Border Transactions: Dealing with transactions across different jurisdictions
introduces complexities in tax, transfer pricing, and currency conversion.

Data Management and Quality:

Data Accuracy: Ensuring the accuracy and reliability of financial data becomes
challenging with large datasets and manual data entry.
Data Integration: Integrating data from various sources into a coherent financial picture
can be difficult.

Ethical and Professional Issues:

Conflicts of Interest: Accountants must navigate potential conflicts of interest between
their roles as professionals and the interests of their clients or employers.
Fraud Detection: Detecting and preventing financial fraud requires advanced tools and
vigilance.

Talent Shortages:
Skill Gap: Finding accountants with the right mix of technical skills and business
acumen can be challenging, especially for specialized roles.
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 K.R Chhabra & Associates
The K..R Chhabra Chartered Accountant (CA) accounting firm is a professional service organization that
provides a range of financial and accounting services to businesses, individuals, and other entities. These
firms are staffed by Chartered Accountants, who are highly qualified professionals with expertise in
accounting, auditing, taxation, financial analysis, and advisory services. CA accounting firms play a crucial
role in helping clients manage their financial affairs, maintain compliance with regulations, and make informed
business decisions.

Introduction to a CA Accounting Firm:

Thisaccounting firm offers a wide array of services aimed at assisting clients in managing their financial
activities, complying with legal requirements, and achieving their business goals. These firms are typically
founded and managed by Chartered Accountants who have obtained the necessary qualifications and
licenses to provide professional financial services. Here's an overview of how a CA accounting firm operates
and the services it offers:

Accounting and Bookkeeping: Recording and organizing financial transactions, maintaining ledgers, and
preparing financial statements.

Auditing: Conducting independent assessments of financial records to ensure accuracy and compliance with
accounting standards and regulations.

Taxation: Advising on tax planning, preparing tax returns, and representing clients in dealings with tax
authorities.

Financial Advisory: Providing insights and recommendations for financial planning, investment decisions, and
strategic financial management.

Consulting: Offering specialized expertise in areas such as mergers and acquisitions, risk management, and
business valuation.

Forensic Accounting: Investigating financial discrepancies, fraud, and financial irregularities.

Client Base:
CA accounting firms serve a diverse clientele, including businesses of all sizes, nonprofit organizations,
government entities, and individuals.
Clients range from startups seeking financial guidance to established corporations requiring audit and
compliance services.

Continuous Learning and Compliance:

Given the dynamic nature of financial regulations, CA accounting firms stay updated on changes in accounting
standards, tax laws, and other relevant regulations.

Technology Adoption:
Modern CA accounting firms leverage advanced accounting software, data analytics tools, and cloud-based
platforms to streamline processes and enhance accuracy.
ACCA In India
Most of the ACCA qualified professionals in India are employed with the Big 4s or
MNCs. Employers in India have now become aware of ACCA qualification and are
hiring them eagerly. Main employers in India for ACCA are Price Waterhouse
Coopers, Ernst and Young, Deloitte, KPMG, TATA Communications, Embassy Group,
Grant Thornton, etc. CA and ACCA members are increasingly being offered similar
job profiles, designation and salary packages.
India has taken another step closer towards globalization by introducing Ind-AS
drafted and implementing on principles similar to IFRS. ACCA covers IFRS broadly in
its syllabus which would definitely give an edge to ACCA members in India.

With the presence of many financial KPOs in India, India has become a major

outsourcing hub
for accounting and financial functions and ACCA qualified professionals are preferred
by the
employers for handling these functions.

Services provided by K.R Chhabra & Associates:

Accounting Services
This firm has extensive experience of providing accounting and tax support. Our
dedicated personnel provide a reliable end-to-end solution for all business
accounting requirements alongside managing tax planning opportunities and
obligations effectively.
Accounts Payable – Purchase order and invoice matching, BACS payments and

supplier statement reconciliations.

Accounts receivable – debtor relationship management including provision of company
and statements
Account Reconciliation – reconciliation of financial ledgers and bank accounts to the
highest standards.
Weekly and monthly management reports – tailored reports to meet client requirements.

Preparation of interim and annual financial statements – available for all entity types
including PLCs, limited liability partnerships and privately owned companies.

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  Auditor liaison and monitoring – management of auditor interactions, including
resolution of findings, recommendations and reviews.

Annual Accounts preparation

We prepare Annual Accounts for every type of clients i.e. Painters & Decorators, IT
contractors, Electricians, Pharmacist, Cleaners, Restaurants, Carpenters, Salons,
Recruitment Agencies, sole proprietors & traders, partnerships and companies.

Our team is well versed with various filing software such as TaxCalc, SAGE, Taxfiler,
IRIS, CCH and others. They prepare year end journals and control accounts including
accruals, prepayments, payroll reconciliations and VAT reconciliations in the process.

We prepare draft accounts with necessary assumptions and notes based on which
accounting firms can finalize the working.

Bookkeeping
Bookkeeping involves maintaining accurate and updated records of all of the
company’s financial activity. Our team is well-versed with accounting software like
Quickbooks, Xero, Myob, Kashflow.

It includes the below mentioned:-

 Setting up of Chart of Accounts.

 Implementing Accurate VAT or GST Tax codes.
 Income and Expense Coding.
 AR and AP Tracking.
 VAT Return Preparation under MTD.
 Bank Reconciliations.

These records are essential to regulatory compliance. Proper bookkeeping makes other
accounting functions, such as audits, payroll, and tax preparation, much simpler and less time
consuming.

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Payroll
Our payroll team works to ensure timely preparation of staff payroll across all
regular and irregular payments. We pride ourselves on the quality and
confidentiality of our service, which is tailored to individual business requirements.

Our payroll services include:

 Setting up of New Employees – P45 & P46.

 Preparing P35, P11D & P60’s for End of financial Year.
 Pay As You Earn (“PAYE”) registration for companies employing staff in the UK
for the first time and other respective registrations for other countries.
 Complete calculation of Pay As You Earn (“PAYE”), National Insurance,
Statutory maternity pay, statutory sick pay, and pension contributions.
 Draft payroll for clients’ review.
 Distribution of tailored management reports.
 Facility to import and export payroll data into Excel and/or CSV formats.
 Reconciliation of yearly return forms.
 A dedicated helpline for payroll queries.

Taxation
Our specialist team assists clients in optimizing their tax position by providing
useful and practical business guidance on all taxation-related business.

This firm is able to provide the following:

 Computation of Corporate tax.
 Computation of VAT / GST Returns.
 Computation of Self-Assessment Tax Returns.
 VAT consultations to devise bespoke calculation methodologies.
 Personal Tax advice, including guidance for expatriates.

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 Various Software

QuickBooks Online:
Features: QuickBooks Online is a widely used cloud-based accounting software. It offers features for
invoicing, expense tracking, bank reconciliation, financial reporting, and more.
Benefits: It's user-friendly and suitable for businesses of various sizes. It integrates with bank
accounts and provides real-time data access from any device. There are different plans tailored for
different business needs, from self-employed individuals to larger companies.
Target Users: Small to medium-sized businesses, freelancers, self-employed individuals.

Xero:
Features: Xero is another popular cloud-based accounting software that provides invoicing, expense
tracking, bank reconciliation, payroll processing, and comprehensive reporting.
Benefits: It offers a clean and intuitive interface, and its mobile app allows users to manage their
finances on the go. Xero also supports multiple currencies and has a large ecosystem of
integrations.
Target Users: Small to medium-sized businesses, startups, accountants, bookkeepers.

Wave:
Features: Wave is a free cloud-based accounting software known for its simplicity. It offers basic
bookkeeping features, invoicing, receipt scanning, and simple financial reports.
Benefits: Wave is suitable for small businesses and freelancers looking for a free solution. It's easy
to use and provides essential tools for basic bookkeeping needs.
Target Users: Small businesses, freelancers, sole proprietors.

FreshBooks:
Features: FreshBooks focuses on invoicing, expense tracking, time tracking, and client
management. It's designed for service-based businesses and freelancers.
Benefits: It offers professional-looking invoices, integrates with popular payment gateways, and
includes time tracking features for billable hours.
Target Users: Freelancers, service-based businesses, consultants.

Zoho Books:
Features: Zoho Books provides invoicing, expense tracking, bank reconciliation, and financial
reporting. It integrates with other Zoho business applications.
Benefits: Zoho Books offers customizable templates, supports multi-currency transactions, and
provides collaboration tools for accountants and clients.
Target Users: Small businesses, startups, consultants.

Sage 50cloud (formerly Peachtree Accounting):

Features: Sage 50cloud is a comprehensive accounting software with features for invoicing,
inventory management, job costing, and financial analysis.
Benefits: It's suitable for small and midsize businesses, offering advanced features for industries
such as manufacturing and construction.
Target Users: Small and midsize businesses, accountants, industry-specific businesses.
Various Softwares

1. Quickbooks

Features of QB
Cloud Accounting
Access your account, manage your business, and stay organized anytime, anywhere
on your computer, mobile or tablet.

Invoicing
Create custom, professional invoices, sales receipts and estimates that you can send
in minutes.

Online Banking
With the QuickBooks Online Software banking integration feature your statements
and transactions will automatically update.

Accounting Reports
Instantly see how your business is performing with customizable reports and
dashboards.

Cash Flow Management

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 Enter bills from vendors, and pay them only when they are due. Schedule recurring
payments to save time.

Time Tracking
Clock employee time and billable hours. Track billable hours by client or employee
and automatically add them to invoices.

Accounting Reports
Mobile apps are included with your subscription to QuickBooks Online so you can
access information from your tablet or smartphone.
Multiple Users
Control your books with robust roles & permissions. Invite your accountant to
access your books for seamless collaboration.

Free unlimited support

If you need help, support is available with answers to your questions and
information on running your business.

2. Dext

Feature of Dext

 Demolish duplicates

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Our Insights feature can identify duplicate contacts quickly and easily using Precision's
machine-learning aided algorithm.

Clean up yourcodes

Precision can identify mis-coded invoices and transactions based on contact history,
to make sure everyone's keeping track correctly.

Check it off 

Integrate Precision into your processes by building a custom list of checks using
Focus, and assign them to a team member to run through and check off.

Slice and dicedata

Pivot, group, filter and sort client data using powerful pivot tables in our sandbox,
directly in your browser. Take action quickly - records in Precision have links
straight to the relevant spot.


Create custom reports

Save your sandbox configurations as Custom Reports, then share them with your
team. Run those reports across any of your clients, or export to excel on demand.


Lock in lock dates

Keep track of any Locked Period changes, and ensure upkeep of Lock dates ahead
of important reporting periods.


Regular suppliers

This AI-powered insight learns your payment patterns and identifies any unusual
transactions for checking.

Historical changes

Quickly and easily locate any changes made in a period since a certain date, to keep
those numbers adding up.

Key liabilities
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 Track Corporation Tax and VAT, run through checks on key VAT account
codes and make sure you're within your scheme thresholds.

How it works

Complete historical analysis.

Precision pulls a huge range of data from your accounting
history to gain insights and spot anomalies you may have missed.

Data, cleaned and checked. See at a glance what needs urgent attention, as well as identifying
common bookkeeping errors such as duplicates or mis-codings.

Real-time insight. Track your client’s activity to see their performance and accumulated
liabilities in one view.

Tools to help you do more

Client On-boarding

Run a client through Precision and get a thorough idea of their bookkeeping needs
and business size from the very beginning, for a fair quotation and no surprises
further down the line.

Tax Returns

When tax season rolls around, use Precision's VAT Return Checks to identify high
value transactions, review account and tax codes and performance against scheme
thresholds.

Practice Overview

Use Precision's Client List, Practice Dashboard and VAT Dashboard to view
information across all your clients at once. See at a glance health scores, cash
position, and who has paid VAT.

Health Score Review

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 The HealthScore is a great way to get ready for management reports or filing. Or
have a bit of fun and motivate your team and clients by rewarding high health
scores!

Monthly Check-Ins

Use Precision's workflow builder to set up a recurring check-in with your clients;
review their books, business performance and upcoming liabilities on a regular
basis to ensure success.

Pricing Review

You can view your clients activity updated on a daily basis; use client transaction
and sales performance to inform pricing reviews and make sure you're paid for the
work you do.

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The process of bookkeeping and preparing
annual accounts

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The bookkeeping process involves systematically recording and organizing financial
transactions:

Source Documents: Collect invoices, receipts, and statements.

Identify Transactions: Analyze documents to identify transactions.

Recording Entries: Record transactions in journals or software.

Double-Entry: Apply double-entry principles (debit and credit).

Chart of Accounts: Categorize accounts for organization.

Posting Entries: Transfer records to the general ledger.

Balancing: Reconcile and balance accounts regularly.

Trial Balance: Check balances for accuracy.

Adjusting Entries: Make adjustments for accruals, prepayments, etc.

Financial Statements: Prepare income, balance, and cash flow statements.

Closing Entries: Transfer temporary account balances.

Reporting: Analyze financial statements for insights.

Archiving: Keep records for auditing and compliance.

 Bookkeeping process in Detail
Bookkeeping process includes updating the books on regular basis. It involves the
recording of sales invoices, purchase invoices, bank account, matching the bank
transactions with the invoices, transfers etc.

There are various software like Quickbooks, Xero, Capium, Sage Online etc. All the
software are mostly similar. The work mechanism is same for the bookkeeping on any
software.
The below mentioned process is followed for sound bookkeeping.

1. Always check the list of filed accounts year end date and match the closing balances of
software with companies’ house to check if the figures are aligned.
2. If the figures are not aligned, ask/put the differential journal in the software to align
with balances.
3. Check the number of bank accounts that are in the software and when were they last
reconciled in the software.
4. Ask the client to send the bank statements from the last reconciled period to till date.
5. Check the dext - receipt section of the Quickbooks (QB) to publish all the invoices.
6. Carefully check the date, description, VAT part on the invoice.
7. Carefully check if there is duplicate invoice in the Dext/receipt section of QB.
8. Match the bank transactions with the invoices published.
9. Ask the client to send the missing invoices if there are a greater number of bank
transactions with/from the same customer / supplier.
10. Allocate the remaining bank transactions directly to the expense head as per the
previous trends.
11. Always check the VAT applicability with the previous trends.
12. Charge the VAT as per the invoices i.e., zero rated expense/invoices should be charged
under the head zero rated and not “no VAT”.
13. Always be aware about the VAT deadline and review the VAT of current quarter with
the previous quarter to find if there are any discrepancies.
14. Reconcile the bank balance in software with the statement. If there are transactions of
which the nature is unknown, then ask the client to provide the nature of those
transactions.

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 15. In case, there are invoices which are paid through some other mode which are not
related to the company, then clear those invoices through cash/DLA.
16. Always compare P/L on monthly basis.

Checklist for UK Annual Accounts Preparation

1. Arrange the documents received in the folder stating client documents.
2. Take a PDF of the information received on the Email and save it in client documents.
3. Check the documents and inform the Manager/Partner for the initial query, if any. Make
sure you have everything in written. Prepare notes as the first tab of your working paper.

4 Check if the annual accounts are manual or software.

. If the accounts are software based, extract the below mentioned documents
5 from the software
. a. Check if the opening balances are aligned with the companies’ house, then
extract
the closing trial balance.
b. If the opening balances are not aligned with the companies’ house, then
extract both opening and closing trial balances in order to prepare TTB i.e.,
movement for the
current year.
c. The customer balances and supplier balances report are required to be
extracted

6. from QB as well
d. The VAT returns for all the quarters falls in the current year.
e. General Ledger for the current year and for the last year are required.
Put in the opening balances extracted from the filing software in the
Extended Trial 28

Balance(ETB).
7 Put the TTB movements in the next tab mentioned in the working file.
. Start preparing the reconciliation tabs for each balance sheet heads used in
8 the annual account’s preparation.
.9. The below mentioned are the common balance sheet heads use in the annual
account’s preparation.
a. Fixed asset – Differentiate both Tangible and intangible asset in two tabs.
Prepare fixed asset register stating the list of fixed assets purchased, disposed,
etc. till date along with a summary on different tab stating the cost value,
accumulated
depreciation, brought forward balance and carried forward balances.
b. Closing stock for the current year and last year, if any.
c. Prepayments of the current year and last year if any with the calculation of
the
prepayment. Each balance should have a supporting in the working papers.
d. Other Debtors – This can include anything which is receivable by the
company but will not include the debtors. Therefore, a supporting statement
should be there in
the tab, if not, mention the same in the notes section.
e. Trade Debtors – It should reflect the true debtors at the year end. No debtors
will
carry forward which are outstanding since ling.
e.1 You can analyse by checking the received future date, if the bank
statement is available for the future period, otherwise mentioned the closing
balance in the notes
section and confirm the closing balances
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with the client.
e.2 Check if the debtors received are coded as direct sales instead of clearing it
with
 e.3 If the nature of the business involves heavy cash transactions, then
with your judgement, you can clear the outstanding debtors with
cash/debtor’s loan account (DLA).
f. Bank Account –

F.1 Check the closing balance of the bank account with the bank statement if
available.
F.2 If the statement is not available, you can check the closing balance in the
software i.e., reconcile>respective bank account>statement bank.
F.3 If suppose, there is variance, you can scroll down to the bottom of the
reconciliation report and figure out the transactions which are not in the bank
statement. You can reconcile the balance, by either clearing those with DLA if the
transactions are related to business nature, otherwise you can reverse those
transactions with the respective heads they previously allocated.
g. Credit Cards – Same as the bank account process.
h. Trade Creditors – Same as the trade debtor’s process.
i. Bank Loan/Hire purchase
I.1 Check if the loan statement is available
I.2 Check the previous year trend
I.3 Bifurcate the closing balance in short term (payment in < 12 months)
I.4 Prepare the detail circulation stating the number of instalment, interest prt and
principle part of the instalment.
j. Accruals – Current year and previous year.
k. Other Creditors – Same as other debtors.
l. DLA Analysis tab next to DLA control account.

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m. VAT Payable
 Prepare the VAT summary stating the output VAT, Input VAT, VAT Payable,
VAT Paid, VAT Outstanding and Paid date.

 Prepare VAT Control in which figure out the variance in the closing
balance as
 per software and VAT outstanding as per the returns
The possible reasons for the variances are – Cash basis VAT and accrual
basis annual accounts. Figure out the difference and adjust the VAT

 outstanding on the closing debtors and creditors.

Exception reports i.e., the transactions which are not filed in the last

 quarter
 VAT return
Opening variance – check the last year working file
Payments made to HMRC related to the different liability but coded to
VAT
n. PAYE/Pension/net wages payable –
head.
Prepare the Payroll summary stating the gross wages, PAYE deducted, EE
NIC, EE Pension, Net Wages, ER NIC, ER Pension, Employment
Allowance (£5000.00 for the TY 2022-23), PAYE payable and Pension
Payable and Paid Date.

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  Compare the payments made towards the above liabilities with the
payable amount and figure out the differences.
 Check the closing balance with HMRC portal
 Usually the closing balance will be the last month’s liabilities.
 If the wages are related to the director, then clear it with the DLA.

o. Corporation Tax –

 Show the liability circulation by adding back the depreciation, amortisation,

entertainment and deduct the AIA/ Super deduction @130%
 If there is loss, then show the current year loss, brought forward losses and
total losses carried forward.
10. After all the balance sheet items are prepared in the respective tabs with the
reconciliation. Now, analyse the GL from the P/L perspective i.e., check if any expenses
are wrongly coded to the different head, if so, reallocate them through journal entry.
11. Compare the P/L heads figure with the previous year and figure out if there are any
variances or if there are any missing heads and mention them in the notes section to ask
the list of the expenses missing.
12. Prepare the notes for each balance sheet head stating the closing balance figures, any
assumption taken while preparing the accounts or any think the preparer would like to
enlighten in the accounts for the reviewer.
13. The below mentioned points you should check after the preparation.
 Check if the closing balance of the DLA is in debit, if so, declare the dividend
to clear the balance otherwise the client may need to pay the tax on the over
drawn @32.5% i.e., S455 Charge.
 In case, there is no available reserves or the overdrawn amount if higher that the
reserves or the overdrawn amount if higher than the reserves, then we can avoid
charging the tax stating that the director will return the money within the 9
months from the year end date.
 If the above two are not satisfied, then we will charge the tax.
 Always compare the dividend declared within the last year.
 The NBV dates must be aligned with the YE in the fixed asset summary tab.

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 Check the tabs name with the heads in the control accounts so that the books
are align
The font must be in Calibri with the size 10
The column size must be 12
Match the closing balance sheet heads in the ETB with the respective control
account closing balance.
Check the numbering of the journals is in the correct order with the correct
narration. The space between the list items must be only one row and must be
consistent with all the heads.
 The remaining of the working file must be “Working Paper_Company
name_Y.E._31.03.2022” It should align with the client’s name and year end in
the entire working papers.

Record the use of home amounting to £312.00 through DLA in every working
year.

Always mention the time taken in the working file.

If the client does not maintain the bookkeeping on a software, then there will be a few
changes in the working paper process. The following changes are:-

1. Instead of the TTB movement, the preparer will put the journals for all the movements
from the bank accounts, sales invoices, purchase invoices, credit card, etc.
2. Usually, a limited company does the transactions from the bank account and credit card
and maybe from the cash if the business involves day to day cash transactions.
3. Prepare a bank receipt and bank payments tab and bifurcating the transactions in the
various heads according to the nature of the transactions. Recording all the heads with
the bank accounts through the journal entry which ultimately reflects in ETB.

4. If in case the client has provided the sales invoices, then record the sales through trade
debtors and match each invoice with the bank receipt. In case, invoices do not match,
they are considered as the closing debtors and the same is mentioned in the notes.
5. In case, the receipts do not match with the sales invoices, then there might be the case
that the customer has paid combined figures of few invoices. If this is also not a case,
then record those transactions as direct sales and mention the same in the notes as well.

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6. Same above process will be followed for the purchases.
7. If the nature of the purchases involves point of sales i.e., it should have paid on the spot
and the same is not reflecting in the bank, then it must be cleared through cash and
mention the same in the notes.
8. Prepare the credit card expenses a receipts respectively.
9. Those transactions which are not related to the business should be recorded as DLA.
10. In case, the preparer is not aware of the nature of an expense, he/she can google and
allocate accordingly. Still if there is confusion, the same should be mentioned in the
notes and directly asked from the client about its nature.

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References:

 https://shodhganga.inflibnet.ac.in/bitstream/10603/336152/9/09_chapter%201.pdf
 https://www.researchandmarkets.com/reports/5350402/accountancy-in-india-market-
summary
https://onlinedegrees.unr.edu/blog/accounting-
 trends/#:~:text=If%20the%20terms%20telecommuting%2C%20blockchain,%27%20j
obs%20easier%2C%20not%20harder.
 https://peakvisory.net/aboutus/
 https://dext.com/uk/products/precision/features
 https://quickbooks.intuit.com/in/features/

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