company accounts internal audit corporate social responsibility agenda for today’s discussion 1...
TRANSCRIPT
Company Accounts
Internal Audit
Corporate Social Responsibility
Agenda for Today’s Discussion
1By- CA Ankita Hudiya
By- CA Ankita Hudiya
Section 128- Books of Accounts
Section 129- Financial StatementsSection 130- Reopening of Accounts on Courts/ Tribunal Orders
Section 131- Voluntary Revision of Financial Statements & Boards Report
Section 132- Constitution of NFRA (National Financial Reporting Authority)
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6Section 133- Central Govt. to Prescribe Accounting Standards
Sections to be Covered
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By- CA Ankita Hudiya
Section 134- Financial Statements, Board Reports
Section 135- Corporate Social Responsibility
Section 136- Right of Member to copies of audited Financial Statements
Section 137- Copy of Financial Statement to be filed with Registrar
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11Section 138- Internal Audit
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Section 128- Books of Accounts -Already existing provisions
Books of accounts to kept at Registered Office.
Can be kept at other place other than Registered Office-Pass
resolution in BM & intimate the same to ROC within “7” days of such resolution.
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-New provisions
Books of accounts can be kept in electronic form.
Records of Branch to be updated PERIODICALLY at head office.
FORM AOC -5 to be filled if books kept at some other place other than registered office.
Central Government can direct maintenance Of BOA for more than 8 years.Penalties for any offence under this section has been
increased terribly.
Section 128- Books of Accounts
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The word “Balance sheet & Profit & Loss” has now been replaced
with Financial Statements
Now the section goes as under:
The Act requires EVERY COMPANY to prepare its financial statements at the end of the “financial year” so as to give a TRUE & FAIR VIEW of the state of affairs of the company.
Financial Statements to cover:Balance sheet Profit and Loss AccountCash Flow Statements for the financial yearStatement of Changes in EquityAny explanatory note annexed to or forming part of, any document referred to in sub clause (i) to (iv)
Section 129- Financial Statements
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Contd: ……Section 129- Financial Statements
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Preparation of Consolidated financial statements of the company & all of its subsidiaries
Subsidiaries to include Associate Company & Joint Venture
A separate statement containing the salient feature’s of the financial statement of the subsidiary /subsidiaries shall also be presented in form
AOC 1
Subsidiary must exist till the END of the financial yearDeviation from accounting standards in its financial statements is to be disclosed
Penalties for any offence under this section has been increased terribly.
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Company accounts –Fraudulent manner
Affairs of the Co. are mismanaged, casting a doubt on the reliability of the financial statements
Court or tribunal
Central Government, Income tax Authorities, SEBI , or any other Statutory or Regulatory authority
Reopen Books of Accounts
Orders/directs
OR
Section 130- Reopening of Accounts on Courts/ Tribunal Orders
By- CA Ankita Hudiya 9
Section 131- Voluntary Revision of Financial Statements & Boards Reports
Non compliance with section 129(Prep of Financial Statements)
Non compliance with section 134(Board reports & Financial Statement)
Can revise F.S or B.R for any of the preceeding
“3” financial years
**Note-Revision can be done just once
OR
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The Central Government may prescribe the accounting standards or any addendum there to as recommended by ICAI and NFRA
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•Make recommendations to CG
•Oversee the Quality of service provided to professionals with who use such compliance.
•Have the same powers as are vested in a civil court
•Monitor & enforce the compliance of the same
•Will have power to carry on investigation on its own or on order of CG
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Section 132- Constitution of NFRA (National Financial Reporting Authority)
NFRA Will recommend Central Government in forming Auditing & Accounting Standards
Section 133- Central Govt. to Prescribe Accounting Standards
By- CA Ankita Hudiya 11
Where professional or other misconduct gets proved
“PENALTY”
If Individual- •Min Rs 1 Lakhs
•Max. - 5 times fees Received
If Firm- •Min Rs 10 Lakhs •Max. 10 times fees Received•Debarring the Member from Practice for Min 6 Months or Max 10 Years!!!!!!!!!!
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Section 134-Financial Statements
Signing of Financial Statements:
As per section 134(1),
Financial Statement is required to be signed by:
the Chairperson of the Company where he is Authorised by the Board OR
by Two Directors out of which one shall be managing director,
the Chief Executive Officer, if he is a Director in the Company,
the Chief Financial Officer , and
the Company Secretary of the company, wherever they are appointed.
* In the case of a One Person Company, the Financial
Statements: is
required to be signed only by One Director.
Section 134- Financial Statements, Board Reports
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Contents of Directors ReportThe following contents are mandatory to mention in the Director Report
1. Extract under section 92 i.e. extracts of the Annual Return.2. Number of meeting of Board of Directors.
3. Directors Responsibility Statement.
4. Disclosure in the Board Report regarding the Declaration of independent directors.
5. Matters as per section 178 of the act, if applicable: committee of Nomination, Remuneration and stakeholders relationship committee
6. Reservation and qualification on Auditor Report and Secretarial Report.7. Details of Loans and Guarantee under SECTION 186#
8. Particulars of Contract and arrangement under SECTION 188 (Related Party
Transaction).
9. State of Company Affairs.10. Reserves.11. Dividend.12. Material Changes.13. Conservation, Technology etc.14. Foreign Exchange.
15.Risk Management: the development and implementation of risk management policy.16. CSR.
17. Formal Annual evaluation: performance of the Board and its committee and its individual directors. This clause shall be applicable only listed company or prescribed public limited company.
18. other matter.
*In case, company has intention to disclose other matter, it may so.
# The details of Loans, Guarantee and investment shall be mentioned in the Director Report as per provisions of Section 186 of the Act .
By- CA Ankita Hudiya
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Signing of Board
ReportAs per section 134(6),
Board Report shall be signed by ;
By its Chairperson , if authorized,
By at least two Directors one of whom shall be Managing Director or by the Director where there is one Director.
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Penal provisions of section 134
The Company shall be punishable
FINE < Rs 50,000 but may extend to Rs 25,00,000
&EVERY OFFICER in Default shall be Punishable with IMPRISONMENT for a term which may extend to 3 years or with fine which shall not be less than Rs 50,000 but which may extend to Rs 25,00,000 or with both.
+
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Copy of Financial Statements including Consolidated Financial Statements, Auditor Report , any other document annexed or attached thereto which are to be laid before the AGM shall be sent to the member and debenture
trustee Before TWENTY ONE DAYS of the meeting
Mode of communication:a. Listed companiesb. Public companies
having a Net Worth of Rs One Crores or more
Having a Turnover of Rs 10 Crores or more
c. Others can send by registered post, speed post, courier or electronic mode
Section 136- Right of Member to copies of audited Financial Statements
Can send copies by electronic mode
OR
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Section 137- Copy of Financial Statement to be filled with Registrar
Companies other than OPC
In case of One Person Company
AGM Held Within 30 days of AGM
AGM NOT Held
Within 30 days of last date before which the AGM should have been held
AGM Adjourned Within 30 days of Adjourned AGM
Within 180 days from the Closure of
FYCompanies to
file form AOC 4
Section 135- Corporate Social Responsibility
Net worth of Rs.500
Crores or more in any FY
Turnover of Rs.1000 Crores or more in any FY
Corporate Social
Responsibility
Net Profit of Rs 5 Crores
or more in any FY
Every Year mandatorily has to spend:
2% * (Average Net profit of the company made during the immediately 3 preceeding financial years) on CSR.
OROR
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Net Profit
Shall exclude• any profit arising from any Overseas Branch or Branches of the Company whether operated as a separated Company or otherwise.
• any Dividend received from other companies in India covered & complying with the provisions of Section 135.
*Profit Calculated as per Provisions Companies Act,1956 shall not be
required to be recalculated.
Steps for CSR Activities
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To set up CSR Committee
Company to Formulate &
Monitor
Company to meet
Board’s Report
Min no of members: 3, out of which one shall be independent director.For PVT companies without independent director can form committee without these directors
Company’s
C S R PolicyTwice a Year Disclose
Committee’s and C S R
Policy
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Activities undertaken shall Exclude the following:
Expenditure in normal course of business.
Programmes & activities that benefit of ONLY the employees and their family.
Programmes or activities carried out as a PRECONDITION for setting up a business.
Anything done to fulfill a CONTRACTUAL OBLIGATION undertaken by a company.
Fulfillment of Required Regulations.
By- CA Ankita Hudiya
Rule 4 : Companies (Corporate Social Responsibility Policy) Rules 2014
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Objective- to provide guidance on Recognition,
Measurement, Presentation &
Disclosure of expenses on activities relating to CSR.Issued On May 15, 2015
By- CA Ankita Hudiya
Guidance Note on Accounting for expenditure on C S R Activities
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Making Contribution to the funds as specified in
SCHEDULE VII of the Act,
Through a Registered Trust,
On its Own
Treatment of such expenditure: Charge to Profit & Loss Account
By- CA Ankita Hudiya
CSR obligations can be met in the following ways:
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Disclosure for the amount spent on C S R
Amount of CSR Expenditure - To be disclosed in Notes to Statement
of P&L A/c
Other Things to be disclosed in NOTES:Gross Amount required to be Spend by the Co. during the yearAmount Spent during the year on
- Construction, Acquisition of any Asset
- On purpose other than above (Revenue Expenditure)
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Shortcomings Of C S R
1. Law does not stipulate any penalties for non- compliances for the same
2. The act states that the amount will be spent in local area where business is located- What about rural areas?
Suggestion: Spend 50% in local area of business and 50% in rural area
By- CA Ankita Hudiya
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Questions that arise on the same?????????????1. What if the company spends less than 2% of the Average Net Profits?
2. What if the company spends more than 2% of the Average Net Profits?
3. What if during incurring such Expenditure, it gives rise to an ASSET ? Whether to be considered in companies B/S?4.What treatment to be given if Company supplies goods manufactured by itself or renders services provided by itself-When is the same to be Accounted in Books?
By- CA Ankita Hudiya
5.What if a company receives a grant for carrying out such CSR activities?
6. What if company derives Income from such CSR activities?7. Whether Expense of CSR can be claimed under the Provisions of Income Tax?
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Section 138 read with rule 13 of the Companies(Accounts) Rules 2014
Following class of Companies shall appoint an internal Auditor Compulsorily:
1. Every Listed Company
2. Every Unlisted Company
a.) Paid up Share Capital of Rs.50 Crores or more OR
b.) Turnover of Rs.200 Crores or more OR
c.) Outstanding loans or borrowings from Banks or PFI exceeding Rs 100 Crores or more OR
d.) Outstanding deposits of Rs.25 Crores or more
3. Every Private Company
a.) Turnover of Rs.200 Crores or more OR
b.) Outstanding loans or borrowings from Banks or PFI exceeding Rs 100 Crores or more
Section 138- Internal Audit
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By- CA Ankita Hudiya