ii

CHAPTER 1

INTRODUCTION

1.1 Background of the Internship

An internship is a process of working as an assistant or trainee to gain practical experience
in a work related to a one’s field of study or career of interest. Internship is also often
included in a course designed by a university, so it is a compulsory practical process that
should be performed by the student. An internship gives a student the opportunity for career
exploration and development, and to learn new skills. Furthermore, internship helps
bringing out the hidden capability of students and make them able to face various internal
as well as external environment challenges. Internship may be paid or unpaid it depends
upon the organization rules and regulation. The major objective of the internship is to
understand the working environment and make student familiar with the practical work
carried out by the organization.

This internship report has been prepared as requirement for the Bachelor of Business
Management (BBM) program of Tribhuvan University (TU). It is a four year course with
120 credit hours' comprehensive bachelor degree program. It is further divided into eight
semesters. In last semester student should complete their internship project which is
equivalent to 6 credit hours. Since the BBM program is an integrated set of practical and
theoretical set of learning. This emphasizes to provide student a practical knowledge. It
aims to prepare students to become competent, confident, skilled and socially responsive
professional who can effectively support managerial, entrepreneurial and leadership role
in business and social organization. It is student oriented course where students should be
actively participated. Its syllabus has been designed in such a way that it has tried to give
student knowledge from almost every field like management, psychology, sociology,
Information Technology(IT), business law, national and international business
environment and banking sector too.

Simply this study is used for the partial fulfillment of BBM course affiliated to T.U. The
FoM, Tribhuvan University has its ultimate objective of educating students for professional
pursuits in business, industry and government. Although the course design is very much
practical in all the semesters with field work, report preparation and presentations, the
internship at the last semester aims in providing the students with real world experience as
to how the jobs in the organizations are performed, what are the issues the business firms
need to address and many others. The primary goal of this internship is to provide a one
the job exposure to the student and an opportunity for translation of their theoretical
knowledge in real life situation.

This internship report is mainly focus on audit at A.S.U.S. Associates, Kupondole Lalitpur.
It is one of the growing firms in Nepal. This firm provides auditing, tax calculation,
accounting activities, and consulting and advisory services to individuals and business
entity in a timely and cost effective fashion.

1.2 Objective of the Internship

The objective of an internship can vary depending on the type of internship, the field, and
the individual’s goals. However, there are both general objectives that apply to most
internships, and specific objectives that are often tailored to the intern’s role or the
company’s needs.

1.2.1 General Objective

The general objective of this internship are as follow:

• To provide students who have gained a great deal of theoretical knowledge in the
relevant field of study with practical experience.
• To provide the chance to use communication, interpersonal, and management
skills in a real-world professional setting.
• To acquire important knowledge about the business sector, with a focus on the
banking sector.
• To provide students the chance to try out various positions and see whether they fit
with their long-term objectives and professional interests.
• To establish relationships with experts in their industry.
1.2.2 Specific Objective

The other specific objectives are mentioned below:

• The main objective of the report is to get practical knowledge about auditing and
accounting activities in Nepal.
• To incorporate theoretical knowledge into practice.
• To understand the nature of real life problems arising in the organizational setting.
• To fulfill the partial requirements for the Bachelor of Business Management (BBM)
program of Tribhuvan University.

1.3 Methodology of the Internship

Following methodologies are used to study the organization:

1.3.1 Organization Selection

The organization selection is one of the important decision to be taken in the first phase of
the internship as the whole learning process depends upon the organization selected. It is
the basis from which interns get the platform to learn something and analyze the practical
implication of the theoretical aspects learnt in the academic session. Most of the students
choose financial institutions and manufacturing organizations for organizations. But unlike
others, intern chose an audit firm A.S.U.S. Associates for internship program because
intern wanted to have general ideas on audit firms and their activities. Recommendation
letter was provided by campus to a particular firm. Interne joined A.S.U.S. Associates to
get exposed to the real world of accounting and to have firsthand experience as a
management student intern wanted to know how business firms do accounting activities.

1.3.2 Placement

On 1st December 2024 intern was placed to A.S.U.S. Associates to start the internship.
During the internship period, the intern was assigned the basic task of auditing. Every staff
and managers was supportive and friendly. The supportive and friendly environment in the
organization helped the intern to complete the internship period through the proper
guidance of the staffs of various departments.
1.3.3 Duration

The duration of the internship was supposed to be at least 48 days which carries 6 credit
hours according to Faculty of management (TU). The intern worked for two months. The
intern started internship from 1st December, 2024 to 31st January, [Link] intern had to
work from Sunday to Friday except holiday. The intern had to reach there around 10:30
A.M. and work till 5:00 P.M.

1.3.4 Major activities performed

The following activities were performed by the intern during two months' period:

• Assisting in the preparation of financial statements for SMEs.

• Conducting audits under the supervision of senior associates.
• Supporting for audit documentation.
• Coordinating with team members on audit engagements.

1.3.5 Source of Data

Data required for the preparation of this report are collected by using both primary and
secondary sources:
a) Primary source of data
Primary data are those data which are collected in the field during the report writing.
The required information for the preparation of internship report was collected
through the discussion, observation and information provided by the manager of
A.S.U.S. Associates.
b) Secondary source of data
The secondary data was collected from the secondary sources like: annual report,
Boucher, related websites and other publication.

1.3.6 Limitation

It is obvious that there arises some kind of limitation in everything, so in the case of this
internship report as well. There are some limitations that are faced at the time of this
internship report preparation and they are as follows:

i. The study is limited to only one firm.

ii. Lack of adequate time to learn, complete and detailed works in just two months.
iii. This report is prepared on the basis of available data and the information provided
by the particular firm and some data are collected through personal experience.
iv. The firm staffs were preoccupied with their work so they had a little time to interact
with intern.
 CHAPTER II

INTRODUCTION OF THE INDUSTRY

2.1 Introduction of Audit firm

An audit is a systematic and independent examination of books, accounts, statutory records,
documents and vouchers of an organization to ascertain how far the financial statements as
well as non-financial disclosures present a true and fair view of the concern. It also attempts
to ensure that the books of accounts are properly maintained by the concern as required by
law. Auditing has become such a ubiquitous phenomenon in the corporate and the public
sector that academics started identifying an "Audit Society". The auditor perceives and
recognizes the propositions before them for examination, obtains evidence, evaluates the
same and formulates an opinion on the basis of his judgment which is communicated
through their audit report.

The word audit is derived from a Latin word "audire" which means "to hear". During the
medieval times when manual book-keeping was prevalent, auditors in Britain used to hear
the accounts read out for them and checked that the organization’s personnel were not
negligent or fraudulent.

Audit is the systematic and scientific examination of the books of 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.

Audit firms are those which performs auditing activities. Thus, audit firms perform those
activities for private organization, government organization and for individuals too. It helps
to know the financial position of the business and fraud and error if done by the concerned
organization. The Institute of Chartered Accountants of Nepal (ICAN) was established
under a special act, The Nepal Chartered Accountants Act, 1997 which formulate the
accounting standards in Nepal and regulate the audit firms and Chartered Accountant (CA)
firms. Besides that, Auditors Association of Nepal also provides guidelines to the auditors.
2.1.1 History of Audit Industry in Nepal

Without already kept accounts or records, auditing word doesn’t exist. So, the history of
auditing is concerned with the accounts kept. The starting of scientific accountancy is done
by lucaPacioci of Italy in 1414AD but in Nepal, it was introduced only after 220 years i.e.
Only on 1771 BS on “LalAdda” and 1779 on “Mod Adda”. Before that time, the concept
of auditing was not even in the thoughts of any person. After the beginning of accounts
keeping, we can say that auditing was introduced legally only after the establishment of
“Kumari Chowk” in the period of Prithivi Narayan Shah. “Kumari Chowk Adda” used to
keep the accounts of governments department and employees. In Nepal, after the
establishment of Department of Auditor General in 2016 BS, the work of auditing was
started as a continuous and compulsory process. It audited only the governmental offices
and state owned corporations as per the provision of it but later, after the implementation
of Company Act 2021BS, it audits the private companies compulsorily.

At present, offices of government of Nepal and state owned corporations are audited by the
Department of Auditor General or the person appointed by it. But, for the other private
sectors, auditing is done by the Registered members of Institute of Chartered Accountants
of Nepal(ICAN).The Institute of Chartered Accountants of Nepal (ICAN) was established
under a special act, The Nepal Chartered Accountants Act, 1997 to enhance social
recognition and faith of people at large in the accounting profession by raising public
awareness towards the importance of accounting profession as well as towards economic
and social responsibility of the accountants, and to contribute towards economic
development of the country. The Institute is an autonomous body, and the Council is fully
authorized by the Act to undertake accountancy profession in Nepal.

The history of auditing practices according to ICAN is listed below in the table

Table 1: History of Auditing in Nepal

Date Description
1934 The first ever Companies Act in Nepal legislated
1956 New Companies Act enacted. Books of accounts to be maintained specified.
Accounts to be audited by an auditor licensed by the Department of Industries
1974 Auditors' Act legislated, which entrusted the Office of Auditor General (OAG)
to issue auditor's license and set qualification of auditors in four different classes
of Registered Auditors. Chartered Accountants with five years' experience given
Class A license with unlimited authority to audit any organization. Others are
given license of Class B, C, and D depending upon the education and experience
as specified in the Auditors' Act. Disciplinary powers vested upon the Auditor
General who was to receive recommendation from a Disciplinary Committee.
1978 Formation of the Association of Chartered Accountants of Nepal (ACAN) as a
voluntary social organization with an initial membership of 15 Nepali chartered
accountants. ACAN applied for registration under the Societies Registration Act
1979 New Companies Act enacted.
1982 ACAN registered under the Societies Registration Act. ACAN formally
inaugurated by the Minister of Finance
1984 1984 ACAN invited to participate in the South Asian Federation of Accountants
(SAFA) as an Observer.
1986 SAFA formed a Committee to assist ACAN in recommending to the
Government for the formation of an accounting body in Nepal. SAFA
committee submitted a report.
1988 HMG formed a high level study group to recommend on the formation of an
autonomous self-regulatory accounting body in Nepal
1990 ACAN held a SAFA international seminar, which was inaugurated by the Prime
Minister who committed the formation of an accounting body in Nepal.
Accounting profession's image was uplifted.
1997 Nepal Chartered Accountants Act, 1997 received the royal seal on 30 January
1997. The Institute of Chartered Accountants of Nepal (ICAN) established.
ICAN to have two classes of members: Chartered Accountants and Registered
Auditors' Act to be repealed upon the notification in the Official Gazette. All
Registered Auditors holding audit license invited to apply for the membership
of ICAN. First Council of ICAN formed on 1 August 1997. Membership of the
South Asian Federation of Accountants (SAFA) New Companies Act enacted
with revised provision on accounting and auditing.
1998 MOU on technical cooperation signed with the Institute of Chartered
Accountants of India. Membership of the Confederation of Asian and Pacific
Accountants (CAPA)
1999 Nepal Chartered Accountants Regulation 1999 came into effect on 29
September 1999 Launching of ICAN along with an international seminar HMG
signed technical assistance agreement with ADB for capacity building of ICAN
for a project of 12 months period.
2000 First CA Examination held in November
2002 First Amendment of Nepal Chartered Accountants Act, [Link] was made
the only regulating authority in accounting profession when the Act was
amended.
2003 ICAN became Associate Member of IFAC
2004 ICAN signed second MOU with ICAI in July
2008 ICAN became full Member of International Federation of Accountants (IFAC)
in November
2009 Government of Nepal provided land to ICAN on 09 November
2013 ICAN signed MOU with Malaysian Institute of Accountants (MIA) in 10 May
2014 Building Inauguration by Rt. Honorable president of Nepal on 13 July
2015 ICAN signed MoU with ADB in April 2015 for piloting Audit Quality
Assurance Systems Road Map.
2016 ICAN signed Membership Pathways Agreement with CPA Australia in March
2016.
ICAN signed Mutual recognition Agreement with ICAEW in October 2016.
2017 ICAN signed Technical Cooperation MoU with ICAI in August 2017.
2018 ICAN signed MoU with CIPFA in January 2018 for advancement of High
Quality Public Financial Management.
ICAN signed Mutual Recognization Agreement with CA ANZ in March 2018.
ICAN opened its First abroad Chapter in Australia in March 2018.
2019 Signed Mutual Collaboration Agreement with ACCA
Signed MOU with AICPA
2020 Signed Mutual Recognition Agreement with ICAI
2021 Signed Memorandum of Understanding with The Institute of Internal Auditors,
India (IIA, India)
 2022 Signed Memorandum of Understanding with The Institute of Chartered
Accountants of Sir Lanka
Signed MoU with SEBON Signed MoU with NIA
2023 Signed MoU with Pokhara University
Signed MoU with Office of Company Registrar (OCR)
Signed Reciprocal Membership Agreement with CA ANZ
2024 Launched Certification course on Public Financial Management (PFM)
developed by ICAN
Source: Institute of chartered accountants of Nepal (ICAN)

2.1.2 Present Scenario of Audit industry in Nepal

The present scenario of audit firms under ICAN is very good because its role and
importance is increased. The need and importance of audit firms is increasing due to
increase in the number of business firms who pays tax to the government of Nepal. The
number of CA firms and audit firms are also increasing day by day because it acts as a
mediator between the tax authorities and the tax payers. The Institute of Chartered
Accountants of Nepal (ICAN) had a total of 9,278 members as of Fiscal Year 2079/80
(2022/2023). This included 2,054 Chartered Accountants (CA) members and 7,224
Registered Auditors (RA) members. Within the Registered Auditors category, there were
3,421 'B' Class, 1,559 'C' Class, and 2,244 'D' Class members.

2.1.3 Classification of Audit frim in Nepal

The CA industry in Nepal can be classified based on the size and scope of firms:

• Sole Proprietorship Firms: Operated by individual CAs offering personalized

services.
• Partnership Firms: Comprising multiple partners, these firms handle a broader
range of services and clients.
• Large Firms: Though Nepal lacks the presence of global "Big Four" firms, some
domestic firms have expanded significantly, offering comprehensive services
across various sectors.

2.1.4 Function of audit firm

Chartered Accountancy firms in Nepal perform several critical functions:

 • Auditing: Examining financial statements to ensure accuracy and compliance with
laws.
• Taxation Services: Helping clients with tax planning, preparation, and filing of
returns and representing clients in tax matters.
• Financial Advisory: Offering strategic financial planning and investment advice.
• Consultancy Services: Assisting businesses with financial management, mergers,
acquisitions, and restructuring.
• Financial reporting: preparing balance sheets, profit & loss accounts, and other
reports in accordance with accounting standards.
• Regulatory Compliance: Ensuring adherence to financial regulations and
standards.

2.1.5 Future of Audit firm in Nepal

The future of the Chartered Accountancy industry in Nepal is promising and dynamic, with
increasing demand for financial transparency and accountability. With rapid advancements
in technology and increased regulatory requirements, demand for CA professionals will
continue to rise and CA professional will continue to play a vital role in shaping the
financial and economic landscape of the country. Emerging areas such as forensic
accounting, international taxation and sustainability reporting are expected to open new
opportunity for CA professionals in the country.
 CHAPTER III

ABOUT THE ORGANIZATION

3.1 Background
After the end of seventh semester we are entitled to fulfill the internship report for
undergraduate level BBM course of Tribhuvan University. Most of the intern friends
selected financial institution, and manufacturing organization. But unlike others, the intern
wanted to do something different, something not just limited to single sector and also that
would go hand in hand with my undergoing degree simultaneously.

The intern chooses A.S.U.S. Associates (an audit firm) for the internship program because
the intern wanted to have general ideas on audit firms and their activities. The intern joined
A.S.U.S. Associates to get exposed to the real world of accounting and to have first
experience on the same since the intern is a student of Management faculty. The intern
wanted to know how business firms do accounting and what role does it play in the growth
and development of business activities.

A.S.U.S Associates is a partnership firm established in 2078/08/07. It is located in

Kupondole, Lalitpur. It is owned by four experienced Chartered Accountants. Each
partners had independently operated their own firm, serving a variety of clients in areas
such as auditing, accounting, taxation and business advisory services. Overtime,
recognizing the growing need for collaboration, shared resources and broader service
offerings, they decided to merge their individual firms into one unified entity. They have
around 27 articleship trainee working under them and more than 150 clients including
government organizations (i.e. Employment Provident Fund and Nepal Tourism Board)
Inland Revenue Department of Nepal provides this firm a PAN number. It acts as
coordinators and mediators between the tax authorities and the tax payers. In its working
as professional firm, it never encourages tax evasion and tax avoidance but does tax
planning to help their clients pay what they deserve in efficient and timely manner to ensure
maximum compliance to the laws. The firm provides auditing services including financial
audit, vat audit, tax audit, due diligence, account outsourcing, and consulting services. For
their services they charged certain fees to their clients. The firm specializes in consulting
services in areas of property analysis, business plan, accounting training to their parties etc.

3.1.1 Organization Vision

A.S.U.S. associates vision is to always strive for excellence in providing accounting,

auditing and consultancy service through superior value creation and technology, create
rewarding career opportunities and maintain sound professional and financial standards.

3.1.2 Organization Mission

The mission on A.S.U.S Associates is to steadily increase the value of their firm and their
portfolio of diversified clients by exceeding client's expectations and achieving market
leadership and operating excellence, in every segment of their firm.

3.1.3 Organization Objective

The objectives of A.S.U.S Associates are as follows:

1) The overall objective is to focus the activities towards improving the quality and
quantity of its specialized services (auditing, accounting, tax and business
consulting) and to become a leading audit firm in this region.
2) To expand and growth of the business at a rate that is both challenging and
manageable, serving the market with innovation and adaptability.

3.2 Organization Structure

The firm’s organizational structure is more of a functional organization structure. Since,
the firm is jointly owned by partners. Each partner has equal ownership rights, equal
responsibility and equal authority in the management and decision making processes.
There are no department. The partners collectively oversee client relationships, strategic
planning, and firm operations. Major decisions (such as client acceptance, major hiring,
new service lines) are taken jointly or based on mutual agreement among all four partners.
The staff consist entirely of articleship trainees who are pursuing their Chartered
Accountancy education. They perform tasks like audit fieldwork, vouching, ledger
examination, tax filing support, bank reconciliations, and preparation of financial
statements. Staffs report directly to the partners. Partners supervise the work, review, the
performance and guide the trainees in both technical and ethical aspects of work. The
organization structure of A.S.U.S. Associates is presented in the following diagram:

Partner Partner partner partner

Staffs

Figure 1: organization structure

3.3 Major Product and Services of the Organization

The main services provided by A.S.U.S. Associates are auditing, due diligence, account
outsourcing and consulting services which are as follows:

1. Auditing:
Audit is an official examination and verification of accounts and records, especially
of financial accounts of the organization. It also attempts to ensure that the books
of accounts are properly maintained by the concern firm as required by law. The
various types of auditing services provided by the organization are Financial Audit,
VAT Audit, Tax Audit, Due Diligence, etc. The most common types of audit are
briefly explained below:
• Financial Audits: In a financial audit, the assertions about which the
auditor seeks objective evidence relate to the reliability and integrity of
financial and, occasionally, operating information. This type of audit
usually covers the basic set of financial statements (Balance Sheet, Income
Statement, Statement of Cash Flows, Statement of Changes in Equity and
notes to the financial statements).
• VAT Audits: In a VAT audit, value added tax is calculated through the
evaluation of books of accounts like purchase book and sales book by
identifying the VAT able items and VAT free items of the concerned firm.
 • Tax Audits: In Tax audit, the evaluation and analyze of financial statement
and other concerned documents are made and final tax liability of individual
and firm are calculated which is payable to [Link] firm also helps in tax
management for organizations. Organizations can acquire services like
calculation of income tax, management of Value Added Tax (VAT), Tax
Deducted at Source (TDS), timely filing and payment of tax to Inland
Revenue Department, etc.
2. Due Diligence: Due Diligence is an extensive look at a company in order to make
the best informed business decision about a company. Due Diligence is that audit
which is carried out in order to find/estimate the actual financial position of the
organization before a large decision is about to take place like mergers and
acquisitions, loan agreement, or when the company's financials are going to be
presented to the public. Due diligence audit includes thorough investigations of the
books and records that can range from asset appraisals to day to day transactions.
A thorough understanding of internal controls and its effectiveness also become
necessary to ensure the risk for the business is as low as possible.
3. Accounting & Bookkeeping: Accounting and bookkeeping are fundamental
processes in every business. Bookkeeping involves the systematic recording of
financial transactions on a day-to-day basis, while accounting is the broader process
of summarizing, analyzing, and reporting these financial transactions. These
processes help businesses track income and expenses, ensure compliance, and make
informed financial decisions.
4. Outsourced Payroll Management: Payroll management includes calculating
salaries, deductions, taxes, and ensuring timely employee payments. The firm assist
their clients to develop and implement performance improvements corrective plans,
programs and processes.
5. Raising Bank Finance: the firm helps their clients prepare documentation and
negotiate with banks for loans or working capital. Being trusted advisors of more
than hundreds of clients over the last 5 years, the firm have learnt to deal with banks
in the region effectively, and focus on obtaining bank financing with the best
possible terms and conditions for their clients. They are networked with the right
 senior level resources in order to ensure that their client’s applications get the
attention they deserve.
6. Outsources CFO Service: While most small and mid-sized businesses in Nepal
recognize the value of high-caliber finance professional in-house, there are few that
can afford such a resource. The firm provide CFO services where client can get
both options: skill sets of an experienced CFO, and custom- tailored CFO services
– at a fraction of the price. They provide financial professionals with extensive
experience in the CFO environment who are results-driven business partners.
7. Consulting Services: The firm also offers advising and counseling services on
matters relating to accounting system, tax procedures, company establishment, and
numerous other financial matters to their clients.

3.4 SWOT Analysis

The word SWOT stands for Strength, Weakness, Opportunities and Threats. It is done
to understand the internal as well as external environment of an organization. The
SWOT analysis of A.S.U.S. are as follow:

3.4.1 Strengths

▪ Highly qualified professionals (CA, CPA)

▪ Strong knowledge of tax, audit, and compliance laws
▪ Loyal and diverse client base
▪ High ethical standards and confidentiality
▪ Broad range of services (audit, taxation, advisory, etc.)

3.4.2 Weakness

▪ Weak online presence and marketing strategy

▪ Limited adoption of new technologies
▪ Overdependence on a few major clients

3.4.3 Opportunities

• Digital tools like AI, cloud accounting, automation

• Growing demand from startups and SMEs
 • Expansion into financial consulting and advisory
• Outsourcing services for global clients
• ESG and sustainability reporting services

3.4.4 Threat

• Constant changes in tax and financial regulations

• High competition from both big firms and tech startups
• Increasing cybersecurity threats
• Economic slowdowns affecting client budgets
• Talent leaving for larger or tech-driven firms
 CHAPTER IV

ANALYSIS OF ACTIVITIES DONE AND REFLECTION

4.1 Activities done

Intern was inducted as a team member in various audit and consulting assignment where
interns’ job and responsibility included vouching or entry of books of account with the help
of accounting software; tally, preparation of working papers, preparation of preliminary
trial balance and financial statement like profit and loss account, balance sheet, cash flow
statement, etc.

1 Vouching/entry of Books of account

Vouching is the act of checking evidential documents to find out errors and frauds and
to know the authenticity, accuracy and reliability of books of accounts. The intern
performed vouching or entering the books of accounts of different firms. Thus, now
days various accounting software are used to do vouching, the intern used tally software
to perform vouching.
The main objectives of vouching are:
• To examine the accounting entries recorded in the books of accounts with
reference to documentary evidence known as vouchers.
• To examine the authenticity of the transactions recorded in the books of
account.
• To examine the adequacy and reliability of documentary evidence.
Thus, it is important for an auditor due to the following reasons:
• Vouching is the backbone of auditing:
Main aim of auditing is to detect errors and frauds for proving the true and
fairness of results presented by income statement and balance sheet. Vouching
is only the way of detecting all sorts of errors and planned frauds. So, it is the
backbone of auditing.
• Vouching is the essence of auditing:
 Auditing not only checks the accuracy of books of accounts but also checks
whether the transactions are related to business or not. All the transactions are
performed after the prior approval of concerned authority or not, transactions
are real or not because an accountant may include fictitious transactions to
commit frauds. All these facts can be found with the help of vouching. So,
vouching is essential for auditing.
• Vouching is important to see whether evidences are correct or not:
An auditor checks the books of accounts to detect errors and frauds. Frauds
maybe committed presenting duplicate vouchers. All the small and big amounts
of frauds can be detected with the help of vouching. So, all the evidential
documents and records are to be checked carefully and in detail by an auditor
which is the scope of vouching. Therefore, it can be said that vouching is the
heart of auditing because without the work of vouching, the work of auditing
cannot be performed.
2 Preparation of Preliminary Trial Balance
The intern was assigned to prepare the preliminary trial balance and financial
statements. Preliminary trail balance is a summary of the balance of all accounts in the
chart of accounts to, firstly, make sure the books are balanced. Then, these account
balances are used to prepare financial statements such as Profit and Loss Account,
Balance Sheet and Cash Flows Statement. The trial balance is a worksheet on which
all the general ledger accounts with their debit or credit balance are listed. It is a tool
that issued to alert errors in the books of account. The total debits must equal the total
credits. If they don't equal, there is an error that must be tracked down.
3 Preparation of Financial Statements
Financial Statement is the statement prepared by the entity which records the financial
activities. It basically includes income statement, balance sheet and cash flow
statement. The intern was assigned to prepare the preliminary trial balance and financial
statements and analyze it.
• Income Statement
It is also known as a statement of financial performance or profit and loss
statement. It measures the profit or loss of business over a specified period. A
 profit and loss statement summarizes the income for a period and subtracts the
expenses incurred for the same period to calculate the profit or loss for the
business. It reflects the past performance of the business and is the report most
often used by small business owners to track how their business is performing.
• Balance sheet
It is a financial statement that summarizes a company's assets, liabilities, and
shareholders' equity at a specific point in time. The balance sheet gives
investors an idea of what the company owns and owes as well as the amount
invested by the shareholders. The balance sheet follows the formula assets =
liabilities + shareholders' equity. Each of the three segments of the balance sheet
has many accounts within it, documenting the value of each one. Accounts such
as cash, inventory, and property are on the asset side of the balance sheet, and
accounts such as accounts payable and long-term debt fall on the liability side.
Accounts on a balance sheet differ by company and by industry, as there is no
set template that accurately accommodates the differences between different
types of businesses.
• Cash Flow Statement
It is that financial statement, which provides aggregate data regarding all cash
inflows a company receives from both its ongoing operations, financing and
external investment sources, as well as all cash outflows that pay for business
activities and investments during a given quarter. Income statement uses
accrual accounting method and its benefit is that it strives to show a more
accurate picture of the companies’ profitability. However, focusing on accrual
based profitability without looking at cash inflows and outflows is very
dangerous, not only because companies can more easily manipulate accounting
profits than they can cash profits, but also because not having a handle on cash
can potentially make even a healthy company go bankrupt. The key to financial
analysis is to use both statements together. If there is incredibly high net
income, such net income should be supported by strong cash flow from
operations and vice versa. If this is not the case, then investigation and follow
up on such discrepancies should be done.
4 Prepare the Application of Tax Clearance
It is the application prepared by the owner of the firm to the Inland Revenue
Department (IRD) for Tax Clearance. Usually audit firm makes it on behalf of owner
of concerned firm. The intern was assigned to write the preliminary draft of tax
clearance application.
5 Filing of e-returns for tax purpose:
The intern has also filled up the forms of e-returns on the website of Inland Revenue
Department, Government of Nepal. In order to know what is filing of e- returns we
have to know the provision for payment of tax under Income Tax Act 2002.
6 Filing of Estimate Income Tax Returns:
Taxpayers who derive or expect to derive any assessable income from a business or
investment shall pay tax for the year by three installments. Therefore, they are called
installment payers. Taxpayers with income solely from employment are not obliged to
pay tax in installments because their tax from employment income is collected by
withholding. Similarly, presumptive taxpayers are also not obliged to pay tax in
installments. Payment of tax by installments is fundamentally different from payment
of tax by withholding. Withholding requires a person’s tax to be paid by a third party,
whereas under an installment system the person pays his or her own tax. Every
installment payer has to submit for the income year ahead an estimate of his tax
payable. For that the estimated tax returns are to be utilized. The submission is due to
be made by the date for payment of the first installment, i.e. it shall be filed together
with the first installment. Since the first estimate has to be submitted after the income
year is half, the estimate should include the actual taxpayer’s facts of the first half of
the income year so that there is some thorough basis for the estimation of the possible
profit of the second half of the income year. In this estimate the following amounts are
to be specified:
• The assessable income to be derived for the income year from employment,
business, and investment.
• The source of this income.
• The taxable income to be derived for the income year. The tax to become
payable calculated without reduction for any medical tax credit.
 The installments have to be paid as follows:
• 40 percent of the tax as estimated for the current income year less paid tax, i.e.
less amounts that have already been paid by the end of the month Poush
• 70 percent of the tax as estimated for the current income year less paid tax, i.e.
less amounts that have already been paid by the end of the month Chaitra
• 100 percent of the tax as estimated for the current income year less paid tax, i.e.
less amounts that have already been paid by the end of the month Ashad
If the amount of an installment calculated as above is less than Rs. 2000, the installment
is not required to be paid. If at the end of the year a final tax liability remains to be paid,
as, for example, a result of the income tax return filed at the end of the year the income
tax paid by installments is credited against this liability.

4.2 Reflection of the Internship

During the internship at A.S.U.S. Associates, the intern gained real-world experience in
accounting, auditing, and taxation, which helped the intern connect what the intern had
learned in the intern’s BBM course with practical work. The intern learned how different
firms maintain their accounts and how audits are done in actual situations. The intern got
the chance to work with accounting software like Tally and helped in preparing trial
balances, financial statements, and tax-related documents.

This internship helped the intern to improve technical knowledge as well as soft skills like
teamwork, communication, and problem-solving. The intern got to understand how
important accuracy and attention to detail are in financial work. The intern also learned
how tax laws are followed and how audit firms guide clients properly within legal
boundaries.

Overall, the internship was a great learning experience, and it has increased the intern
interest in the field of accounting and auditing.

4.3 Problem Solved

Intern was assigned to solve various problems regarding accounting and auditing of various
business firms. While performing the task some problems are encountered. Some of the
general mistakes encountered are as below:
 • The clients brought only the copy of the required documents without original.
• Most of the times firm’s documents were presented without the stamp.
• Sometimes signature of Registered Auditor is missed.
• Internet breakdown occurred during e-filing of tax.

Intern had to deal with various kinds of problems. Almost all problems, which could be
solved by the intern were solved with the support and proper guidance by the manager and
auditors. Intern was assigned as an assistant for financial auditor and assigned to performed
entry of books of account, identifying vatable items and vat free items, prepare financial
statement of the clients assist to the intern. The intern helped to point out a calculation
mistake which was overlooked by the auditors as well as by managers during report review
and verification besides many numerous typing mistakes.

4.4 Felt Observed Gaps

While working at the firm, the intern also noticed some areas where things could be
improved. These are the gaps the intern observed:

• Sometimes clients did not provide original documents, which made the work slower
and more difficult.
• Documents were often missing stamps or signatures, which created confusion
during auditing.
• The internet connection was sometimes unstable, especially while filing e-returns,
which caused delays.
• I also saw that the firm relies a lot on manual checking, and small calculation or
typing errors were sometimes missed.
• There was less use of modern technology or advanced accounting tools like cloud
accounting software.

Even though these issues existed, the team always tried to solve them with good
cooperation and guidance. The intern learned that identifying and fixing such small errors
is a very important part of auditing work.
 CHAPTER V

CONCLUSION AND LESSON LEARNED

5.1 Conclusion
This internship helps to learn that auditing is very crucial to every organization. Auditors
prepare and present the financial statements in accordance with an applicable financial
reporting framework, including the design, implementation and maintenance of internal
controls relevant to the preparation and presentation of financial statements that are free
from material misstatements, whether from error or fraud. A.S.U.S Associates as an audit
firm plays a role of mediator between IRD and tax payers. Therefore, the intern concludes
that audit firm plays a vital role like auditing, accounting, etc. of the firm. Number of audit
firms also increasing due to its need. During the internship period the intern had a good
experience at A.S.U.S. Associates. The internship did not just provide with the opportunity
to be an intern of A.S.U.S. Associates and learn its work activities for a career, but also
helped to identify the strengths and potentiality as a part of personal development.

5.2 Lesson Learned

Internship program proved to be a valuable opportunity to learn and get acquainted with
real world first hand workplace experience. It proved to be a valuable platform where we
could use the knowledge gained during our classroom in the practical world. Through
internship program, the intern got an opportunity to expose themselves to the working
environment and unleash the intern’s potential. The past two months at A.S.U.S. Associates
was an excellent opportunity for the intern to gain valuable experience in the auditing and
accounting field. The major skills and lesson that the intern was able learn during internship
period are as follows:

1. Practical knowledge of auditing and accounting

Our education system is more of parrot learning. Rather than doing real world
examples, we stick to typical traditional theoretical system of learning even in
practical courses like accounting. We were taught same sorts of practical problems.
So when The intern was exposed to the financial statements, the intern was totally
 shocked. We were used to the hypothetical financial statements with limited
number of items in trial balances and other financial statements like income
statement, balance sheet etc. But when I got exposed to the real ones, I found huge
differences and contrasts with the hypothetical ones that we are taught. So I got the
opportunity to get acquainted with the real world auditing and accounting practices.
2. Get idea about taxation system in Nepal
Another important thing I learnt during my internship was about the general
taxation system. I got familiar with various kinds of taxes like Income tax for
individuals and corporate organizations, Value Added Tax (VAT), Tax Deducted
at Source (TDS) that are prevalent in the country. In addition, I became aware about
the installment method of payment of taxes and filing of advance tax and tax returns
for the same.
3. Learn to work in a Team
I work in a team. It taught me how activities are to be performed in a team and
impact of behavior of one on the work and performance of the other team member.
I realized what we studied was real. The proper team work lead to various benefits.
On the contrary, loafing by some team members could lead to negative impacts on
the overall team performance. The intern learned the importance of team work and
learn how to work in a team.
4. Knowledge on general operating procedures of audit firms:
Previously, the intern was unaware of general operating procedures of audit firms.
But after completing internship period, I got to learn the general views and
guidelines regarding working procedures of audit firm.