Applicability of Amendments for Nov 2016 Final Exams

Applicability of Standards/Guidance Notes/Legislative 
Amendments etc. for November, 2016 – Final Examination

Paper 1: Financial Reporting
 

I. Framework for the Preparation and Presentation of Financial Statements.
 

II. Accounting Standards

AS No. AS Title
1 Disclosure of Accounting Policies
2 Valuation of Inventories
3 Cash Flow Statements
4 Contingencies and Events Occurring after the Balance Sheet Date
5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
6 Depreciation Accounting
7 Construction Contracts (Revised 2002)
9 Revenue Recognition
10 Accounting for Fixed Assets
11 The Effects of Changes in Foreign Exchange Rates (Revised 2003)
12 Accounting for Government Grants
13 Accounting for Investments
14 Accounting for Amalgamations
15 Employee Benefits
16 Borrowing Costs
17 Segment Reporting
18 Related Party Disclosures
19 Leases
20 Earnings Per Share
21 Consolidated Financial Statements
22 Accounting for Taxes on Income
23 Accounting for Investment in Associates in Consolidated Financial Statements
24 Discontinuing Operations
25 Interim Financial Reporting
26 Intangible Assets
27 Financial Reporting of Interests in Joint Ventures
28 Impairment of Assets
29 Provisions, Contingent Liabilities and Contingent Assets

III. Guidance Notes on Accounting Aspects

1. Guidance Note on Accrual Basis of Accounting.
2. Guidance Note on Accounting Treatment for Excise Duty.
3. Guidance Note on Terms Used in Financial Statements.
4. Guidance Note on Availability of Revaluation Reserve for Issue of Bonus Shares.
5. Guidance Note on Accounting Treatment for MODVAT/CENVAT.
6. Guidance Note on Accounting for Corporate Dividend Tax.
7. Guidance Note on Accounting for Employee Share-based Payments.
8. Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961.
9. Guidance Note on Measurement of Income Tax for Interim Financial Reporting in the context of AS 25.
10. Guidance Note on Applicability of AS 25 to Interim Financial Results.
11. Guidance Note on Turnover in case of Contractors.
12. Guidance Note on the Schedule III to the Companies Act, 2013.
13. Guidance Note on Accounting for Expenditure on Corporate Social Responsibility Activities.
14. Guidance Note on Guidance Note on Accounting for Derivative Contracts.

IV. Applicability of the Companies Act, 2013 and other Legislative Amendments

The relevant notified Sections of the Companies Act, 2013 and legislative amendments including relevant Notifications / Circulars / Rules / Guidelines issued by Regulating Authority up to 30th April, 2016 will be applicable for November, 2016 Examination.

V. Applicability of Indian Accounting Standard (Ind AS)

Topic of “Introduction of Indian Accounting Standards (Ind AS); Comparative study of ASs vis-a-vis Ind ASs; Carve outs/ins in Ind ASs vis-à-vis International Financial Reporting Standards (IFRSs)” has been made applicable in place of “Overview of International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS), Interpretations by International Financial Reporting Interpretation Committee (IFRIC), Significant differences vis-a-vis Indian Accounting Standards; Understanding of US GAAPs, Applications of IFRS and US”.

Considering the significance and relevance of the Ind AS, the above topic has been included in the syllabus and the students are expected to have an overall knowledge of the contents covered therein. However, considering the extensive coverage of the contents covered in such topic, from the examination perspective, simple problems involving conceptual or application issues may be asked in the examination.

VI. Non-applicability of AS 30, 31 and 32 on the topic ‘Accounting and Reporting of Financial Instruments’

Ind AS 32 “Financial Instruments: Presentation”, Ind AS 107 “Financial Instruments: Disclosures” and Ind AS 109 “Financial Instruments” have been made applicable to the topic ‘Accounting and Reporting of Financial Instruments’ instead of AS 30 “Financial Instruments: Recognition and Measurement”, AS 31 “Financial Instruments: Presentation” and AS 32 “Financial Instruments: Disclosures”.

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Exemption(s) in a paper(s) granted in Intermediate (IPC) and Final examinations, valid for May, 2016. - (15-04-2016)

Exemption(s) in a paper(s) are granted to candidates of Intermediate and Final examinations,  in terms of Regulation 37C(8) and Regulation 38C(6), respectively, of the Chartered Accountants  Regulations 1988. The rules in this regard are provided in the Guidance Notes made available to the  candidates along with the examination forms and hosted on http://icaiexam.icai.org. The related  FAQs are also hosted on www.icai.org.  However, in spite of the information already made available, Click Here for Check it is seen that  some of the candidates carry a mistaken  notion that they enjoy an exemption in a paper(s) whereas in reality they do not and end up absenting  themselves in the said paper, resulting in avoidable hardships.  To avoid this kind of situation, exemption(s) granted in a paper(s) which are valid for May 2016 examination  are hosted on http://exemptions.icaiexam.icai.org, so that candidates can check their exemption status  before the exams and take necessary action.  Date of hosting the exemption data : 15th April, 2016 Last date for emailing discrepancy, if any : 25th April, 2016  Hence, candidates are advised to check the details more particularly, the month and year of exam and roll  number indicated on the said site, with those contained on the relevant Statement of marks issued to them.  Exemptions granted in a paper(s) are indicated by way of “#” against the marks awarded thereon and the  Result of the relevant Group is indicated as “F-EX”, in the Statement of Marks.  In case of discrepancy, if any, candidates are advised to write to Exam Dept. immediately, in any case not  later than 25th April, 2016, at the e-mail address provided herein below, enclosing scanned copy of the  relevant mark sheet in which exemption was granted.  Final candidates : final.exemption@icai.in  Intermediate(IPC) candidates : inter.exemption@icai.in  Exam Dept. will respond, within 7 days of the receipt of the e-mail. In case you do not receive any response  within 7 days, write to:  Final candidates : final2@icai.in Intermediate(IPC) candidates : inter7@icai.in

Examination Department

NPA effect: Norms for Chartered Accountants, advocates soon

Public sector banks, saddled with a pile of non performing assets—loans that do not fetch returns—could soon frame stringent rules allowing them to take action against service providers such as chartered accountants and advocates if required. The Central Vigilance Commission (CVC) has asked banks to look into the issue and come up with appropriate guidelines as bank officials should not be solely held responsible for the rise in bad loans, which rose by Rs 94,666 crore in the April to December period of 2015-­16. Sources said two out of 10 loan applications are being rejected due to the NPA pressure even as finance minister Arun Jaitley has asked banks not to adopt an over cautious approach. “At present, the bank officials are taking the entire responsibility (over the issue of NPA) but this is a narrow way of dealing with the problem and the role of the CAs, lawyers must be scrutinised and a framework needs to be designed so that they are accountable too,” said an official source. The CVC has also raised the issue with the Institute of Chartered Accountants of India (ICAI)

Responsibilities of the Company Secretary

Company Secretary:

A Company Secretary is basically a person who holds the senior position in a company, both private and public. Having the position is equivalent to that of a manager, a Company Secretary ensures smooth and efficient administration of their company.

Qualification:

1. Belonging to a recognised professional accountant’s organisation.
2. Belonging to a recognised Corporate/ Chartered secretaries.
3. Degree in Master of Business Administration or Commerce.
4. Graduate in Law, from a recognised university with work experience in the same.
5. For single member Company – having bachelor’s degree from a known university.

Powers and Rights:

A Company Secretary has the power to sign the statutory returns and applications. He/she has no special right but is limited to their tenure of contract.

Duties of the Company Secretary:

The “employment contract” states the duties of a company secretary which are as follows:

1. Secretarial duties:

• To ensure if all the rules and laws made by the company are strictly followed.
• To check business done by the company, as well as other affairs, adhere to the objectives mentioned in its Memorandum of association.
• Consulting the Chairman and setting the agenda for all the meetings of the board of directors, including the general, annual and the extraordinary general meetings.
• To organise and attend meetings of the board and preparing accurate documentation of proceedings, fulfilling all legal requirements.
• Conduct matters related to the allotment of shares and issuing of share certificates. This will also include maintaining the statutory Share Register and carrying out activities associated with share transfers.
• Preparation, approval and signing and sealing of agreements leases, and other official documents including the legal forms. This duty is given by the executive of the company.
• To give advice in legal matters to the executives of the company.
• Defending the rights of the company in the Court of Law by seeking help from legal advisors.
• Take custody of the seal of the company.

2. Legal obligations:

• To fill forms and returns as per the norms and requirement of the Companies Law.
• Cross-check the legal requirements required for the allotment, issuance and transfer of share certificates.
• Not only discussing various matters with the directors but also implementing the policies framed by them.
• Handle dealings done between the company and shareholders.
• Ensuring timely payment of the dividend adhering to the provisions mentioned in the Companies Law.

3. Maintenance of statutory books:

The Secretary maintains registers that include information of members, directors, shares, contracts, investors and share-holders, mortgage, deals etc. and such data that is important for the company.

Empanelment of Forensic Auditors With PNB

PUNJAB NATIONAL BANK invites applications for empanelment of Forensic Auditors for the period 2016-2017. Criteria ofqualifications, experience, scope of work, application forms, undertakings, addresses of the Zonal Offices etc. are enclosed.

Please note that applications and copies of the qualification, experience, undertakings etc. be submitted to nearest Zonal Office (list of the Zonal Offices is also attached) of the Bank till 27.04.2016 (5.00 pm).

Fee Structure Payable To Forensic Auditors

Forensic Audit is to completed within a maximum period of 2 years from the date of authorizing the audit.

The Forensic Auditor will be paid fee as under:

S. No.	Account having exposure Solo/consortium basis	Maximum Fee Payable* ( in Rupees)
2.	Upto ₹ 100 crore	₹1,50,000/-
3	Above ₹ 100 crore – ₹250crore	₹2,50,000/-
4.	Above ₹250 crore – ₹500 crore	₹3,50,000/-
5.	Above ₹ 500 crore – ₹ 1000 crore	₹4,00,000/-
6.	Above ₹ 1000 crore	₹ 5,00,000/-

*(Service Tax will be payable over and above fee. TDS as applicable will be deducted.)

Travelling & lodging expenses may be considered over and above the aforementioned fee. However, total travelling & lodging expenses should not exceed 15% of the fee payable in respect of the Forensic Audit subject to submission of travelling and lodging bills.

Scope of Forensic Audit

The scope of Forensic audit will extend to following aspects relating to a borrower:

• Capacity to pay: Examine as to if the borrower has defaulted in meeting its payment / repayment obligations to the bank even when it has the capacity to honour the same
• Money trail & End use of funds financed by the Bank/lenders.
• Diversion of funds:diversion of funds on the part of borrower would be construed in any of the undernoted occurrences:
• Utilization of short term working capital funds for long term purposes not in conformity with the terms of sanction;
• Deploying borrowed funds for purposes / activities or creation of assets other than those for which the loan was sanctioned.
• Transferring borrowed funds to the subsidiaries / group companies or other Corporate by whatever modalities.
• Routing of funds through any bank other than the lender bank or members of consortium without prior permission of the bank/lenders.
• Investment in other companies by way of acquiring equities / debt instruments without approval of lenders.
• Shortfall in deployment of funds vis-à-vis the amounts disbursed / drawn and the difference not being accounted for.
• Siphoning off funds:siphoning off funds on the part of borrower would be construed to occur if any funds borrowed from bank are utilized for purposes un-related to the operations of the borrower, to the detriment of the financial health of the entity and/or the lender.
• Capital Structure:Tracing the source of contribution by promoters by analyzing equity / debt infused by promoters / partners.
• Abnormal trade transactions: Commenting on transactions of substantial amount, which seem not to be normal trade transactions at arm’s length.
• Sales: Verifying revenue from operations including checking sale order, invoices and controls in billing process. The focus should be on inflated turnover / fictitious sales and / or Sales on Return (SOR) basis where profit has been booked and sales returned in the subsequent accounting period leading to writing off of stocks / debtors and reversal of booked profits. The sustainability of sales in future years should be co-related with Technical and Viability (TEV) study.
• Escrow / Trust & retention Account (TRA):Commenting on adherence to escrow / Trust & Retention Account (TRA) arrangements made with various Details of all transactions with banks outside the consortium / other than nominated account.
• Concentrating transactions – sole customer, sole supplier, major transactions with related parties / group companies, analysis of relationship in two-way deals with the same party or indirect payments made by customers of the borrower to the vendors of borrower,
• Movements in unsecured loans during specified period
• Details of substantial debts raised in sister / associate / group companies either through corporate guarantee of borrower or against security of promoters or promoters’ family assets.
• Verifying receivables thoroughly as there have been cases where the units have shown reciprocal receivables against each other, especially in case of related parties.
• Finding details of assets of unit / its promoter (s) / partners to ensure recovery of loans granted by banks as there would be cases where some assets are not reported in financials of the unit / promoters / partners.
• Examining chain of transactions pertaining to unit / promoters / partners to ensure genuineness of the dealings as there could be cases of bogus family/other transactions.
• Examining stocks / inventory & purchase transactions in particular with related parties / sister concerns.
• Identifying the type of fraud that has been operating, how long it has been operating for, and how the fraud has been concealed.
• Identifying the fraudster(s) involved.
• Quantifying the financial loss suffered by the bank.
• Gathering evidence to be used in court proceedings.
• Providing advice to prevent the reoccurrence of the fraud.

The list is indicative only and a Forensic Auditor may be assigned other jobs also within the ambit of Forensic Audit.

Qualifications required for empanelment of Forensic Auditors

Check list for selection of Forensic auditor firm/ company:

a) Firms/Corporates who display exceptional professional competence in Forensic Auditing of the accounts with exposure of ₹ 50 cr and above.

b) Having in-depth knowledge and extensive experience in accounting and should be aware of the various practices existing in cross section of industries.

c) At least 2 qualified Fellow of Chartered Accountants (i.e. experience of 10 years) as Members & must be registered with Institute of Chartered Accountants of India (ICAI). At least one Partner/Director with experience of minimum 10years, preferably having exposure in banking sectorlaw and practice. The firm/Corporate should be at least 10 years old.

d) The firm should be empaneled with RBI for conducting bank audits.Average professional receipt from audit as shown in the income tax return should be ₹50 lacs in last three years.

e) One of the partner/director of the firm /corporate should be Certified Fraud Examiner (CFE) or has done Forensic Audit and Fraud Prevention (FAFP) course of The Institute of Chartered Accountants of India (ICAI).

f) Proven track record of conducting a number of Forensic and Investigative audits and exposed/established frauds and malpractices.

g) Firm should preferably have at least 5 years’ experience of doing statutory or internal Audit of organization covered below-

(i) listed companies; or

(ii) unlisted public companies having a paid-up share capital of INR 10 crores or more; or

(iii) all private limited companies having a paid-up share capital of INR 20 crores or more; or

(iv) all companies (private and public) which do not meet the thresholds mentioned in (ii) and (iii) above, but have public borrowings from banks / financial institutions or public deposits of more than INR 50 crores

h) Reputation beyond reproach. Unblemished track record, with no unsatisfactory conduct in the past and should not have been blacklisted by any financial institution/other organizations/any government department. The firm/company should furnish self-attested affidavit on stamp paper in this regard.

i) The name of the Firm/Company or its promoter/partner etc. should not be in the defaulters/barred/caution list published/displayed at websites of public bodies such as by RBI/IBA/ECGC/SEBI/CICs etc.

j) Forensic auditor not working as auditor of the borrower company for last

k) The Forensic Auditors who were associated with any NPA account as auditor / concurrent auditor in the past will not be allocated Forensic Audit in that NPA account

l) Usual KYC norms like Identity and address proof of Firm/Company are mandatory.

m) PAN Number and Registration Number with Institute of Chartered Accountant of India is also mandatory for applicant and its CA Partners/Directors.

n) In the event of gross negligence/malpractices noticed by the Bank in Forensic Auditor’s conduct/scope of work, apart from de-paneling the firm/company, the Bank reserves the right to include their names in the caution list for circulation to all the Banks through IBA.

o) Forensic Auditor will be evaluated on the basis of their performance and usefulness to the Bank during review of empanelment at annual interval or as convenient to the bank.

p) Bank reserves the right to reject any or all applications for empanelment without assigning any reasons there for.

q) The firm/company should have a fixed office premises with reasonable space and adequate infrastructure.

r) The firm/company should have specialist staff on the rolls of employment or available on retention basis, with minimum CA/ICWA/legal and certificate from ICAI (Forensic Audit and Fraud detection) in the field of service offered. Technical/ professional staff should be a minimum of 10 and include finance professionals. The firm should provide a dedicated team for timely completion of forensic audit.

s) The terms of reference for forensic audit should be in such a way so that forensic auditors may not have any leeway.

Download Full Details with Application Forms

Secretarial Audit limit wef FY 2016-17 ........

The Council of the Institute of Company Secretaries has recently reviewed the existing limits in respect of issuance of the issue of Secretarial Audit Reports and has decided as below:

• 10 Secretarial Audits per partner/ PCS, and
• an additional limit of 5 secretarial audits per partner/PCS in case the unit is peer reviewed.

These limits will be applicable for the Secretarial Audit Reports to be issued for the financial year 2016-17 onwards.

FAQs on limits of Secretarial Audit

1. What is the limit for the issue of Secretarial Audit Reports for financial year 2016-17?

The Council of the Institute at its 235th meeting held on February 11, 2016 reviewed the existing limits for the issue of Secretarial Audit Reports and decided as below:

• 10 Secretarial Audits per partner/ PCS, and
• an additional limit of 5 secretarial audits per partner/PCS in case the unit is peer reviewed.

These limits will be applicable for the Secretarial Audit Reports to be issued for the financial year 2016-17 onwards.

2. To whom is the peer reviewed certificate is granted – Individual or Practicing Unit?

The peer review certificate is issued to the Peer Reviewed Practice Unit. Practice unit means, “members in practice, whether practicing individually or as a firm of Company Secretaries.” Accordingly, peer review certificate may be granted to an individual or to a firm, as the case may be.

3. What is the date on which Peer Reviewed Unit (PRU) can say, I am Peer Reviewed?

A Practice Unit (PU) is said to have been peer reviewed from the date of issue of peer review certificate by the Peer Review Board of the Institute. Accordingly, PRU can take up additional 5 Secretarial Audits on the basis of being peer reviewed, only from date of issue of the certificate.

4. What is the period for which Practice Unit is certified as PRU?

In terms of para 13 of the Guidelines for Peer Review of Attestation Services by Practicing Company Secretaries (Peer Review Guidelines), the peer review of every practice unit should be mandatorily carried out atleast once in a block of five years.

Accordingly, for the purposes of taking up additional five secretarial audits, the validity of peer review certificate should be five years from the date of issue of certificate.

5. How can it be identified whether a practicing unit is peer reviewed?

The list of peer reviewed practice units is available on the ICSI website at the link: www.icsi.edu/prb/ListofPeerReviewedUnits.aspx

6. To whom is the issue of 5 additional secretarial audit reports allowed: individual partners or the practice unit as a whole (on the basis of certification of peer reviewed firm)?

The limit of 5 additional secretarial audits of Peer Reviewed Unit is to be considered as 5 secretarial audits for each individual partner, subject to overall limit of 15 secretarial audits per individual.

7A. If a person is a partner in two firms out of which one is not peer reviewed and another is peer reviewed, what should be the limit?

The limit per individual is 10 secretarial audits in each year. He may carry out 5 additional secretarial audits in respect of the firm which is peer reviewed.

7B. If the partner of peer reviewed firm is also practicing in individual capacity/ partner of another firm then whether eligibility of 5 additional Secretarial Audits can be used as a partner of peer reviewed firm or in individual capacity/partner of firm?

The additional limit of 5 secretarial audits can be used in the capacity of partner of peer reviewed firm only.

7C. Whether the answer to the above will be different if the individual is partner of another firm which is also peer reviewed?

Since, the overall limit for each individual/ partner is 15 Secretarial Audits (10 +5). The individual can utilise the additional 5 audits in the capacity of partner of any of the peer reviewed firm.

8. Can this additional limit of 5 secretarial audits be transferred from one peer reviewed firm to another firm on the basis of common partners?

No.

9. If new partner joins a peer reviewed firm, then whether such partner be allowed for such 5 additional audits?

Yes.

10. In case the firm/ individual has applied for peer review, then whether he will be eligible for additional 5 Secretarial Audits.

No, the benefit of additional 5 secretarial audits will accrue to a firm/individual only after issue of peer review certificate by the Peer Review Board.

Source- ICSI

Online Refund,Return,Payment,Registration,Objection and Public Service

Your Destiny Is In Your Hands

Reap what you sow. One should plan the precious time to win his future and earn enough money and wealth. A farmer tills the soil, sows seeds and does all that is required for getting a good crop. Hard work yields knowledge, experience, and happy life. Ants and bees store the food through toil and time. Lazy and wayward student loses the future. One can wait, but time doesn’t.

Youth is the right period to learn and enjoy. During the old age, money and experience are found but cannot guarantee enjoyment. People are given the freedom to enjoy their interests.Those aligning with the right directions and making the right choices stand to taste the success.

Every situation throws up winners as well as losers. However with a change in the attitude, a person can turn the failure into victory. All successful people faced failures and flops, but they persisted to become legends. Failures actually give experience and determination to reach the success.Light shines surely after a dark tunnel. There is no history of continued failures. Life becomes boring and aimless if success becomes a routine.

Some vital tricks to reach the legitimate destinies are given here.

Seize the opportunities. Money lost can be regained,but not the time and opportunities. Plan well and take actions for moving in the right direction. Too much expectation results in failure and frustration.

Specialize in what you like the most. Of course, this requires a lot of courage and conviction. With sincerity and hard work, a person can overcome any hurdles to shape his desired career.

Save to protect. Habit of thrift enables a person to save for the future and any the exigency. This method is the best option to protect one’s family. Traditionally, people keep aside a part of their earnings as reserves to meet the unforeseen expenses like doctor fees, travel, etc..

Spend to invest. ‘Expenditure as Investment’ is the modern method used for creating wealth. Spend judiciously, that too against the future earnings. You wonder, how? Use the Credit card, Overdraft, Hire-purchase, or any other source of credit for your purchases  and pay the amount later from the actual income. Naturally, the first outgo from your pay packet or business income is towards the expenditure already incurred which is  the savings made in the past. Many people have a meticulous approach through which they could create the tangible assets by taking advantage of the credit card or EMI options.In short, Eat the Cake first and Pay later policy. But don’t overstretch your purse.

Insurance helps. It is a cost, not a liability, but an investment. Many people unnecessarily bother about their past and future. Instead, they should strive to live the present which is the only thing on hand and within control.  In fact,  both the past and future are like darkness only.

Worry is the darkroom in which the negatives are developed. It is an inner feeling to be discarded forthwith to ensure success in life. Destiny is an outcome of your actions only. Stop blaming others for your mistakes.

- See more at: http://taxguru.in/chartered-accountant/destiny-hands.html#sthash.FIqAXSvi.dpuf

Meet the youngest Chartered accountant, just 19 years of age

Chartered accountants have become immobile Naraynm country's youth. Retainers are just 19 years old. Nisclne just 9 years old his father devised the company's balance sheet manipulation. Since then, it is decided that it is rich of extraordinary ability retainers. Mathematics genius known as the guileless.

Innocently at the age of just 19 years ICAI (Institute of Chartered Accountants of India, The) have passed the test but its members as ICAI to associate and will have to wait two years because of ICAI to associate any member at least 21 years of age should be. Only then would be authorized to sign the balance sheet retainers.

CA has recently passed innocently. Being told that the youngest innocently passed the test of the country is considered one of the toughest exams. The mathematics genius has the distinction of guileless. They have made their mark in mathematics and as a winner in several international competitions have brought laurels to the country.

Guileless youngest double world record holder in Guinness' titles have achieved. The youngest World Memory Champion, he won the respect has proved itself. Seven Brilliant Brains of the World (National Champion recognized by), he won the competition. Osmania University as well as the youngest graduate in B.Com and M.Com, he made history.