Work Attachment Report Internship period: 28 Nov 16 16 Jun 17
Transcript of Work Attachment Report Internship period: 28 Nov 16 16 Jun 17
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Work Attachment Report
Internship period: 28 Nov 16 – 16 Jun 17
Done by:
TAY YANGJUN JASMIN
J1481027
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Contents Summary ......................................................................................................................................... 3
Background of Host Organisation – CA Practice PAC .................................................................. 4
Internship experience at CA Practice PAC ..................................................................................... 7
Task 1: Money changer audit (Special audit) ............................................................................. 7
Background and objectives ..................................................................................................... 7
Challenges and Actions taken ................................................................................................. 7
Results and Reflection ............................................................................................................ 9
Task 2: Audit of an active trading group of companies (Financial statement audit) ................ 10
Background and objectives ................................................................................................... 10
Challenges and Actions taken ............................................................................................... 10
Results and Reflection .......................................................................................................... 11
Task 3: Audit of an engineering construction company (Financial statement audit) ............... 13
Background and objectives ................................................................................................... 13
Challenges and Actions taken ............................................................................................... 13
Results and Reflection .......................................................................................................... 14
Corporate Social Responsibility (CSR) .................................................................................... 16
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Summary
I was attached to CA Practice PAC from 28 November 2016 to 16 June 2017. I was given the role
of an audit intern and spent most of my time assisting in audit and assurance engagements. I was
also exposed and assigned several corporate taxation and secretarial tasks during my internship.
The key tasks and assignments which I have contributed during my internship period are as follows:
Conducted and completed a financial statement audit engagement of a dormant company
individually.
Assisted and actively contributed as a key team member in the financial statement audit for
a group of companies in the business of engineering and marine equipment over the period
of 1 month.
Assisted and actively contributed as a key team member in the financial statement audit for
an engineering company over the period of 2 weeks.
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Background of Host Organisation – CA Practice PAC
CA Practice PAC is considered as an SME which is in the business of providing audit and
assurance, taxation, compilation, accounting and corporate secretarial services. CA Practice PAC’s
mission is to provide outstanding service to clients with due attention to its three underlying
principles namely, Reliability, Competence and Integrity. The main objectives of CA Practice
PAC are to build on human resource development and focuses on being customer-oriented,
mission focused, value-centred and performance-driven while staying relevant and competent.
There are4 main departments in CA Practice PAC. The 3 departments are audit and assurance,
taxation, accounting and secretarial as shown in the organisational chart below.
CA Practice PAC
Audit & Assurance
Taxation Accounting Secretarial
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I was mainly assigned to the Audit & Assurance Department. However, over the course of my
internship period at CA Practice PAC, I had the opportunity to be exposed to different business
areas such as corporate tax and secretarial matters. In the Audit & Assurance department, the
department not only handles financial statements audits but also special audits such as money
changer audits in the regulation of the rules and regulations specified by the Monetary Authority
of Singapore (MAS) and government related audits.
For the taxation department, the department mainly deals with corporate tax, GST and claiming of
PIC and advisory taxation services. The tax department also handles individual tax, however; it
does not constitute to a huge component of the services provided.
The accounting department mainly provides services for bookkeeping and the preparation of
yearly accounts through the Microsoft Excel and accounting software. Microsoft Excel is used for
bookkeeping for those companies with little transactions during the year while the accounting
software is used for bigger companies with more accounting transactions. The accounting
department also provides the compilation of financial statements (unaudited financial statements)
service to exempt private limited companies, which can opt for exemption from audit and XBRL
filing.
The corporate secretarial department provides services such as incorporation of Singapore
company, preparation of minutes of meetings, submission of annual returns, updating and
maintaining the statutory registers, de-registration of company and provision for a local registered
address.
There is about 20 full-time staff working in CA Practice PAC. I was initially assigned to a fixed
senior and followed my senior for one audit job. During my internship, I had the opportunity to
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embark on several audit assignments with different seniors. Thus, increasing my exposure and
knowledge in the different business sectors and learning from different seniors.
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Internship experience at CA Practice PAC
Task 1: Money changer audit (Special audit)
Background and objectives
I was assigned to do a special audit for a money changer business as my very first audit assignment
in the beginning of January. It was considered as a special audit as it was more of compliance audit
to ensure that the money changer business complies with the rules and regulations which are set
by the Monetary Authority of Singapore (MAS).
Although it was rather different from financial statement audit, there were certain elements that
remained the same such as, the need to gain reasonable assurance that the amounts are fairly stated
and free from material misstatement. At the end of the special audit, I was tasked to come up with
an auditors’ report on the statement of transactions and profit or loss for the money changer
business. The timeframe allocated to this special audit was rather tight as the money changer
business had to submit the auditors’ report to MAS by the end of January.
Challenges and Actions taken
Firstly, I was unfamiliar and did not have the technical knowledge on how to go about doing an
audit. I was assigned to this money changer special audit as an individual audit assignment. Thus,
there was no senior that was assigned on the same job which could provide me with some guidance
into doing the audit procedures.
My supervisor had given me a short briefing for me to better understand what were the tests I had
to conduct for the MAS audit and how the MAS audit differs from a normal financial audit.
However, most of the time I had to do independent learning to get the general gist on the
appropriate way to conduct an audit.
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For this audit, I had to familiarise myself with the requirements that a money changer business had
to comply with as per MAS regulations. Thus, I read up on all the existing MAS regulations on
money changing and remittance and the notices on prevention of money-laundering and countering
the financing of terrorism.
After reading up and familiarising myself with the specified requirements, I started with the audit
test of compliance. Under the test of compliance, I had to select samples for sales and purchases.
After selecting the samples, I had to vouch to the client source documents to ensure that proper
records were kept for all transactions in English, customer details were kept for transactions
exceeding S$5,000 and traced the receipt to the daily transactions report provided.
I also conducted the test of transaction for sales and purchases. Under the test of transactions, I
had selected 2 samples per month. For each sample selected, I had to ensure that there were proper
records kept. The transaction listing should include the transaction date, type and amount of
currency exchanged, the exchange rate and the equivalent amount in SGD. In addition, I had
checked against the receipts to ensure that the business contact details of the money changer,
transaction date and amount in foreign currency, exchange rate and an equivalent amount in SGD
were provided.
I also prepared a schedule for the breakdown of currencies for sales and purchases. This was to
check the completeness and accuracy of the transactions occurred during the year. Furthermore,
the schedule prepared for sales and purchases was used to facilitate the preparation of the audited
statement of transactions and profit and loss for submission to MAS.
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Results and Reflection
At the end of the audit testing conducted, I could gain reasonable assurance that the client had
complied and had kept proper records of transactions as per MAS regulations. Additionally, I was
able to come up with the auditors’ report and audited statement of transactions and profit or loss.
I finished up the fieldwork and prepared the draft auditors’ report within 2 weeks for review by
my supervisor and my audit partner. Thus, I was able to meet the tight deadline set for the
submission of auditors’ report to MAS.
This experience allowed me to gain more exposure in the different areas and types of audit. It also
allowed me to gain more experience and knowledge in conducting an audit. I found it rather
challenging as I did not have much guidance or training beforehand. However, I was able to prevail
over the challenge by reading up and familiarising myself with the auditing steps and MAS
regulations.
Through this experience, I also learnt the importance of being an independent learner and being
adaptive to situations as it is likely that I would not have much formal training before I will be
assigned to challenging tasks in the future. Furthermore, time management is also important as in
this case, I had a tight deadline to meet and it was crucial that I finished the audit fieldwork as
soon as possible so that the reviewers could review my work earlier, and if necessary, I would be
able to have sufficient time to make any amendments.
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Task 2: Audit of an active trading group of companies (Financial statement audit)
Background and objectives
One of the main highlights of my audit experience at CA Practice was being assigned as an audit
assistant to the financial statement audit for an active trading group of companies (P group). P
group consisted of 3 companies which were in the business of marine equipment, design and
fabricate electrical switchboards and distribution panels.
Out of the 3 companies which were considered collectively as P group, I had assisted with the
audit fieldwork for 2 companies namely – Company PE and Company PS. Company PE is the
main holding company. Company PS is a wholly owned subsidiary owned by Company PE. The
timeframe for the group audit was about a month due to the sheer volume of transactions each
company had. Furthermore, the entire group had a financial year end of 31 December. Thus, the
audit fieldwork had to be completed as soon as possible in order to meet the reporting deadlines.
Challenges and Actions taken
This was the first financial statement audit that I was assigned to for an active trading company.
Beforehand, I was assigned to do the financial statement audit for a relatively dormant company.
As such, there were many differences in the audit tests to be done and the volume of transactions.
I was relatively unfamiliar with many sections of the financial statement audit such as PPE and
trade receivables/payables as the other audits I have done and assisted in did not have such sections.
There was a rather steep learning curve I had to overcome quickly in order to contribute to the
team more effectively and efficiently, as P Group was located in Tuas and the client’s employees
do not have the practice of doing overtime.
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For this audit, I was assigned to a senior who patiently guided and gave me explanations for me to
better understand the reason behind the audit testing and how it is important. I had also taken the
initiative to refer to last year’s audit working papers to gain a better understanding and read up on
some of the FRS.
I assisted in the following sections for both Company PE and PS: calculation of materiality &
sampling, test of opening balances, test of closing balances, test of transactions – operating
expenses, test of transactions – other income, test of controls and transactions – purchases, cut off
test for purchases, trade receivables, deposits and prepayments, trade creditors, cash and bank
balances, amount due to director and tax computation.
One of the challenges faced was when I was doing the test of transactions for purchases. As P
Group is a trading company, most of its purchases were bought from overseas suppliers that were
delivered either through air or sea. Thus, the Incoterms which stated the timing of when the risks
and rewards are transferred played a crucial role in determining if the purchases were fairly stated.
I had to read up and understand more on the Incoterms to determine the timing when the risks and
rewards are transferred and the corresponding source document to vouch to. This could be rather
tricky at times when the client does not have sufficient supporting documents or when the supplier
uses delivery services such as DHL.
Results and Reflection
I had managed to complete the assigned sections of the audit for both Company PS and Company
PE within the timeframe of 1 month. I had also helped in doing up the tax computation to facilitate
the calculation of provision for taxation as one of the last few tasks.
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It was a good experience for me as I learnt how to do up the various sections of a financial
statement audit. After this experience with assisting in a financial statement audit for an active
trading company, I could relate the auditing theories which were taught in class and the real-life
applications of it. One example would be the application of audit assertions. The audit assertions
were crucial in determining the type of evidence to be collected and the type of work done which
would enable the auditor to determine if the balances were fairly stated. Furthermore, the auditor
must also keep in mind the assertions that he wishes to fulfil per audit section in the planning
stages.
I also gained a better understanding of the current tax rules and tax schemes in place through
assisting with the tax computation. I am aware that tax is not my strongest forte. However, I am
glad that I had the opportunity to prepare the tax computation for an active company as it allowed
me to recap my knowledge and apply many of the tax-reducing schemes such as capital allowances
and PIC enhanced deductions to reduce the corporate tax payable. In addition, I was able to better
identify and extract the relevant information for transactions with tax implications such as PPE
expensed off.
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Task 3: Audit of an engineering construction company (Financial statement audit)
Background and objectives
One of my last audit assignments I was assigned to was the financial statement audit for Company
S. Company S is in the business of performing engineering activities. It has similarities with a
construction company whereby the job is done in stages and can have many ongoing jobs at the
same time. As such, revenue and purchases were considered as a high-risk area for this company.
The timeframe for this audit was 2 weeks. This is relatively shorter compared to the previous audit
assignment. This was because the audit was only for one company. Even though the audit was for
only one company, the time allocated was 2 weeks due to the large volume of transactions
Company S had and that the company had a financial year end of 31 December.
Challenges and Actions taken
For this audit assignment, I was assigned to most of the balance sheet sections, which were slightly
less risky and complex. I found this experience to be slightly challenging but a good opportunity
to learn nonetheless. It was challenging as I had not been assigned to so many balance sheet
sections before, thus I was rather inexperienced and unfamiliar with some of the sections such as,
dividends.
Another challenge was time management as similarly to the P group audit, the client does not have
the practice of doing over time. Thus, we had to adhere to their working hours which meant that
we had to finish the audit fieldwork at a faster rate. Furthermore, there were a few days whereby
the head accountant was not around for us to ask queries. As a result, I had to do some
reorganisation and planning to prioritise and attempt those sections which I would require
information from the head accountant.
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I had referred to the prior year audit working papers to gain a better understanding and to
familiarise myself with the relevant balance sheet sections. I had also asked my senior for some
guidance on the sections which I was not so familiar. I had also referred to the FRS for guidance
on the recognition criteria. One example would be in determining the cost of PPE to be recognised.
As the company had purchased an office building during the year, the company had incurred costs
such as, stamp duty, property tax and the purchase price of the building. The company had
recognised all of the initial costs relating to the purchase of the building as the cost of the office
building in accordance with FRS 16.
Results and Reflection
I managed to finish my assigned sections earlier than expected which gave my senior sufficient to
review my work and give me feedback to amend and improve on selected working papers. Through
this audit experience, I gained more insights and knowledge on the different aspects of auditing by
focusing more on the balance sheet items instead. The balance sheet items have a different set of
assertions that need to be fulfilled when doing the audit fieldwork. Furthermore, there is a need to
find out the movement of the balance sheet items during the year and reconcile to the ending
balance as per client’s accounts to better understand the transactions that have taken place during
the year which affects these balances.
I learnt that time management is really crucial when it comes to audit. There are tight deadlines to
be met due to the reporting requirements the company has to adhere to ACRA. Thus, it is essential
that the audit fieldwork can be completed on time or earlier to facilitate the reviewer and
preparation of auditors’ report to meet the reporting requirements.
I also learnt that it is important to be an independent and fast learner in order to be able to survive
in the audit industry. Most of the time, the seniors do not have sufficient time to go through and
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brief of the tasks which would be assigned to juniors. The training given would only be on the job
training which would highly differ depending on the industry that the client company is in and the
teaching style of the senior. Thus, being flexible and adaptable to situations is also a mutually
exclusive attribute to being an independent and fast learner.
Through this work attachment experience, I also had the opportunity to improve my
communication skills. Communication skills are essential when doing audit work as I have to
constantly rely on information from the client and ask queries to get further details. It is also
important to have good communication skills to be able to communicate effectively such that the
client will be willing to cooperate with auditors.
This work attachment experience has allowed me to gain more knowledge and hands on experience
on auditing that would allow me to remain competitive among other competitors. As I chose to go
to an SME company, I had the opportunity to be exposed and learn more technical skills other than
audit and assurance such as, corporate tax and bookkeeping, which will allow me to differentiate
myself from other competitors.
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Corporate Social Responsibility (CSR)
Corporate social responsibility is a company’s initiative to give back to the society based on the
company’s effects on the environment and society. In CA Practice PAC, there is a corporate social
responsibility policy in place. The CSR policy is that every staff will make it a point to donate $1
for every beverage made with drinks obtained from the pantry. The office pantry is well stocked
up with beverages for this purpose. Furthermore, the partners also help to fundraise for its CSR
efforts during the annual company Chinese New Year dinner. All proceeds generated from the
fundraising and donations made during the year will be donated to an old folks home.
I think that the CSR policy currently in place is rather practical and easy for the staff to contribute
actively, without taking too much time and effort. It is sustainable over the long run. However, it
can be difficult to monitor and is heavily reliant on an individual’s honesty as some may not donate
the money after making a beverage.