june 2016 - students newsletter -...

STUDENTS'NEWSLETTERSILIGURI BRANCH OF EICASA

THE INSTITUTE OF CHARTEREDACCOUNTANTS OF INDIA( SET UP BY AN ACT OF PARLIAMENT )

JUNE 2016

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIAICAI BHAWAN, Post Box No. 7100,Indraprastha Marg, New Delhi - 110002Tel. : +91(11) 39893989E-mail : [email protected] Website : http://www.icai.org

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STUDENTS' NEWSLETTER June 2016I02

EDITORIAL TEAM

MEMBERS

ADVISORS

STUDENT NEWSLETTER COMMITTEE MEMBERS

1. CA. Pankaj Kumar Maskara

Editor ( Members Newsletter)

2. CA. Sanjay DasEditor (Students Newsletter)

3. CA. Kanhaiyalal Khetan

4. CA. Vivek AgarwalSub-

1. CA. Adarsh Chandak

2. CA. Lekh Ram NyoliwalaIn-charge - Student Inputs

3. CA. Manish Agarwal (306118)In-charge - Members Inputs

4. CA. Pooja Jindal

5. CA. Prateek Pugalia

6. CA. Rahul Goyal

1. CA. R. N. Chandak

CA. Manish Goyal

1. Aditya Minda

2. Rishab Goyal

3. Sachin Agarwal

4. Raksha Agarwal

5. Sneha Agarwal

6. Anindita Roy

Editor

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Index

Announcement

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upcoming issues of the Students' Newsletter.

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received latest by 10th of the preceding month

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Articles invited for Students' Newsletter

Siliguri Branch of EICASA of ICAI

TIME - Our Most Precious Resource

HEY RAJAN!!!Who will succeed like you???

Fraud ReportingUnder Companies Act 2013

03

05

08

Glimpses 11

STUDENTS' NEWSLETTER June 2016I 03

Dear Friends,As you are flipping through the pages of this booklet, noticing the magnificent work of the

ignited minds, please wait for a while before flipping on to the next page. This is not an article, this is not an essay not it's a story. It is just a conversation between you and me. A conversation which is the result of the knowledge gained after listening, reading and learning. By the time we have finished this conversation, a change in your mind set relating to the importance of time is expected to happen. And if it doesn't happen, please go read it once again.

One person worked long and hard for making a great career. One day he decided to rest from the work and to live in luxury for his pleasure, which he could afford because of his wealth.

Just when he made this decision, an angel of death came to him.Being a very wealthy person, he decided to buy some more time from the angel of death at any

cost. He bargained for a long time but the angel was unmoved.Desperate, the rich man made the last proposal to the angel:- Give me just one hour of my life, so that I could admire the beauty of this earth for the last time

and spend some time with my family and friends whom I haven't seen for a long time, and I will give you all of my wealth.

But the angel refused again.Finally, the man asked if the angel could give him at least one minute so that he could write a

goodbye note. His wish was granted and he wrote a note:"Spend your time, which was given to you, in the right way. I couldn't buy even an hour of life

with all of my wealth. Listen to your heart and check if the things surrounding you have a true value. Cherish every minute of your life."

"The Trouble Is, You Think You Have Time". The famous lines given by Gautam Buddha manifests the value of time. In today's era, the average life span of a years. This means that we have got this number of years multiplied by 365 days to do whatever we want to do in life. Furthermore, as each day passes by, the days are decreasing. It is mandatory to add further that these number of hours were also given to Helen Keller, Pasteur, Michelangelo, Mother Teresa, Leonardo da Vinci, Thomas Jefferson, and Albert Einstein. They made the proper use of time.

The talk of the town is I DON'T HAVE TIME. It's sad to say that these class of people will never "find" time for anything. Someone has rightly quoted that If you want time, you must make it. The tick tock of the clock conveys us some important lessons and its worth pondering on those lessons,

1. How the time of our life continually passes;2. How it is impossible to bring back time that is past;3. How the past and future times are not in our control but only that time in which we are

now living;4. How the end of our life is unknown;5. How we must be prepared for death every day, every hour and every minute;6. How because of that we must always be in the state of continual repentance;7. How we must be repentant in every hour and spiritually disposed as we would wish to be at

the hour of our death. Imagine there is a bank that credits our account each morning with 86,400. It carries over no

TIMEOur Most Precious ResourceByNITISH KHETANERO-0205292


CA. Pankaj Maskara,Chairman, Siliguri Branch of EIRC of ICAI.

balance from day to day. Every evening deletes whatever part of the balance we failed to use during the day. What would we do? Draw out every cent, of course!!!!

Each of us has such a bank. Its name is TIME.Every morning, it credits us with 86,400 seconds.Every night it writes off, as lost, whatever of this we have failed to invest to good purpose.It carries over no balance. It allows no overdraft.Each day it opens a new account for us.Each night it burns the remains of the day.If we fail to use the day's deposits, the loss is ours.There is no going back.There is no drawing against the "tomorrow".We must live in the present on today's deposits.Invest it so as to get from it the utmost in health, happiness, and success!The clock is running.Make the most of today.LUMINARY LINES!!!!

To realize the value of ONE YEAR, ask a student who failed a grade.To realize the value of ONE MONTH, ask a mother who gave birth to a pre-mature baby.To realize the value of ONE WEEK, ask the editor of a weekly newspaper.To realize the value of ONE HOUR, ask the lovers who are waiting to meet.To realize the value of ONE MINUTE, ask a person who missed the train.To realize the value of ONE SECOND, ask a person who just avoided an accident.To realize the value of ONE MILLISECOND, ask the person who won a silver medal in the Olympics.

Let us treasure every moment that we have! And treasure it more because we shared it with someone special, special enough to spend our time.

And remember that time waits for no one.Yesterday is historyTomorrow is mysteryToday is a giftThat's why it's called the present!!

This is the beginning of a new day.God has given me this day to use as I will.I can waste it or use it for good.What I do today is important , becauseI am exchanging a day of my life for it.When tomorrow comes,this day will be gone forever,leaving in its place somethingthat I have traded for it.I want it to be gain, not loss;good not evil; success not failure;in order that I shall not regretthe price I paid for it.

After coming to the conclusion, if you are repenting upon that you are late by now to learn about the importance of time, please remember these lines:LIFE IS NOT ABOUT WHAT YOU COULDN'T DO SO FAR, IT'S ABOUT WHAT YOU CAN STILL DO.


The above lines say it all about 23rd RBI Governor Mr. Raghuram Govind Rajan, an Indian economist and crush of many girls!!! 'Raghu' to his many friends and colleagues - is rated as one of the most influential economists of his generation. Rajan is the second youngest governor after Manmohan Singh, who took charge when he was 10 days short of his 50th birthday.

Bhopal-born Rajan has always been a high achiever: A gold medalist at both IIT Delhi and IIM Ahmadabad, he went on to complete his PhD from the Massachusetts Institute of Technology. He was chief economist at the International Monetary Fund from 2003 to 2007, the youngest to occupy the position. In 2005, Rajan warned about the growing risks in the financial system and proposed policies that would reduce such risks. Some economists called the warnings �misguided� and Rajan himself a "luddite". However, following the 2008 economic crisis, Rajan's views came to be seen as prescient. He has won many accolades & recognition as one of the best central bank governors worldwide.

He is a style icon in public servants and famous for his bold speeches at public gatherings and seminars.

Through his tenure at the Reserve Bank of India, Raghuram Rajan has racked up a number of crucial issues in his speeches, including some that were clearly outside his remit�whether it was making a case for tolerance at a time when the country was debating a ban on beef, warning of the dangers of dictatorship or labeling bank defaulters as freeloaders. He has taken very bold decisions during his tenure and was criticized for the same but this man has something in his mind for the Indian economy. He had cut the policy rate by a higher-than-expected half a percentage point and that build public perception that Rajan is not a traditional central banker. Once again he has taken bold decision related to his career as RBI Governor. His announcement of exit from RBI on Saturday when all the financial markets were shut reinforced that perception.

He wrote a letter to RBI staff and put up on the RBI�s website for wider dissemination and said he would demit office after his three-year term expires on 4th September.

�I am an academic and I have always made it clear that my ultimate home is in the realm of ideas...� wrote Rajan, who is on leave from the University of Chicago, where he is the distinguished service professor of finance at the Booth School. He also wrote that he will be always available to serve the country at any position and as an Indian.

He detailed in the letter the RBI�s achievements over the past three years and the work in progress, including the clean-up of bank balance sheets ridden by bad loans and the setting up of a monetary policy committee. As we know, Dr. Rajan took up the reins of the RBI when the economy was in tough times. Inflation was high, the investor outlook was low, Rupee was depreciating and the government was as good as non functional. In these three years, Rajan has garnered immense popularity as a central banker, especially for his strong determination and strict policies of fighting inflation. Here are some of his achievements as the RBI Governor � a financial master who is willing to take challenges head on, following facts and numbers about his work is certainly a hard look away.

Rajan is known for his primary focus on curbing inflation. His biggest achievement is that he successfully brought down retail inflation to 3.78% in July 2015 from 9.8% in September 2013 � the lowest since the 1990s. Wholesale inflation was down to a historic low of -4.05% in July 2015 from 6.1% in September 2013.

Under Rajan, the RBI adopted consumer price index (CPI) as the key indicator of inflation, which is the global norm, despite the government recommending otherwise.

1. Inflation

2. Consumer Price Index (CPI)

HEY RAJAN!!!Who will succeed like you???ByMOHIT BHANSALINRO-0283621


3. Strengthen Forex Reserve

4. Rescinding the currency before 2005

5. Giving the control to the Banks

6. Setting up Payment Banks

What payment bank can and can't do :-

7. Rajan the Fighter against Crony capitalism :-

vARUNDHATI BHATTACHARYA:

India¡¦s Forex Reserve is now stronger by about 30% than it was two years back. During the recent depreciation, Rajan said the central bank has Forex Reserves to the tune of $380 billion, which is a comfortable level, and would intervene if there was a need.

This is considered to be the masterstroke of the man. He called for a withdrawal of the notes published before 2005. In an interview he was asked whether this was an attempt to demonetize to which he responded ¡§It is an attempt to replace less effective notes with more effective notes. This was a technical action by him to withdraw notes which have fewer security features than new notes. This was seen as an attempt to flush out unaccounted money and reduce counterfeiting.

Indian banks will no longer have to receive RBI permission for each branch they want to open, though they will still be obliged to open branches in underserved rural areas in proportion to their expansion in the cities. The measures are aimed at freeing India¡¦s banks from the web of state controls that have stifled the sector since independence in 1947.

The Reserve Bank granted ¡¥in-principle¡¦ approval to 11 entities, including Reliance Industries, Aditya Birla Nuvo, Vodafone and Airtel, to set up payments banks and proposed such licences ¡¥on tap¡¦ in future.Under Rajan, two universal banks have been licensed and eleven payment banks have been given the nod. This is expected to extend banking services to the nearly two-thirds of the population who are still deprived of banking facilities. RBI grants in-principle nod for 11 payments banks .

� They can¡¦t offer loans but can raise deposits of upto Rs. 1 lakh, and pay interest on these balances just like a savings bank account does.

� They can enable transfers and remittances through a mobile phone.� They can offer services such as automatic payments of bills, and purchases in cashless, chequeless

transactions through a phone.� They can issue debit cards and ATM cards usable on ATM networks of all banks.� They can transfer money directly to bank accounts at nearly no cost being a part of the gateway that connects

banks.� They can provide forex cards to travelers, usable again as a debit or ATM card all over India.� They can offer forex services at charges lower than banks.� They can also offer card acceptance mechanisms to third parties such as the ¡¥Apple Pay.¡¦

The Indian banking system is mainly in public hands and was used to finance crony capitalism, which has held the country back for too many years. So far, Indian banks have lived in the illusion that all debtors would pay sooner or later, even when borrowers often borrowed from one bank to pay another. As Governor, Rajan has rightly decided to force the banks to cut down exposure to their most dubious borrowers, even at the cost of bringing out non-performing loans. From an economic point of view this is the best time. With the country growing at 8 per cent, these losses can be easily absorbed by the banking system.

The bank clean-up is by no means over. The monetary policy panel is yet to be formed. A new generation of payments banks and small finance banks to widen financial inclusion aren't yet in place.

Despite most of his reforms and policies being lauded, Rajan has been criticized by some for being slow in cutting interest rates. Although his move might help in killing inflation once and for all on one hand, it increases the risk of a much bigger crisis of deflation on the other.

Rajan is currently on leave from the Chicago Booth School of Business. India¡¦s central bank chiefs are appointed by the prime minister in consultation with the finance minister. Ten of 22 governors -- including Rajan¡¦s three immediate predecessors -- served at least five-year terms. Two of them -- in 1937 and 1957 -- resigned earlier due to differences with the government.

"I am sure the reforms the government is undertaking, together with what will be done by you and other regulators will build on this platform and reflect in greater job growth and prosperity for our people in the years to come," Rajan said in the letter. "I am confident my successor will take us to new heights with your help."

While the list is long and is getting longer by the day, I believe following are the most likely contenders :

As the chair of the State Bank of India, she is well informed on banking sector issues. She has argued that "the tools [to fight bad loans] were not already available" when the


process of cleaning up bank balance sheet started. In February 2016, when banking system liquidity moved to a large deficit, she argued that the RBI needed to be more pro-active in liquidity management. She critiqued the draft on marginal cost pricing, saying that the "repo rate has become a blunt tool for determining the lending rates" as banks are not dependent on market borrowings. Following the August 2015 Yuan devaluation, she stated that "it (further fall in the rupee) is required; otherwise exports will become absolutely unviable." Her personal views on monetary policy are not known. She recently stated that "we are fairly hopeful of inflation possibly undershooting RBI's 5 per cent target...capital infusion will be the key going forward to support credit growth".

As a Deputy Governor in charge of Monetary Policy, Urjit Patel's appointment would imply continuity of monetary policy. He is generally perceived as more hawkish. As Chairman of the Urjit Patel committee, he recommended moving to a CPI inflation target of 4% +/-2% and towards positive real interest rates. The committee recommended moving away from windows where the RBI provides assured access to liquidity for banks towards auction-based liquidity. He is also fiscally conservative, as has argued in the past that the government's medium-term fiscal consolidation and rebalanced expenditure policy (away from revenue and towards capex) should support disinflation.

Arvind Subramanian stands on the dovish side of policy spectrum. In mid-2015, he argued that the real interest rate for producers was unusually high. Given the wide divergence between CPI and WPI inflation, he also argued that the GDP deflator was a better measure of the monetary policy stance and that resolving the stressed balance sheet problem - a serious impediment to private investment - amid a high real rate of interest was a difficult task.

Finally, on the external front, he has argued that India should consider targeting a level of $750-1000 billion of FX reserves in the long-run, given its rising economic and political power. In March 2015, when the six-country real effective exchange rate (2004-05 prices) was around 125 (currently at 122.2 in May 2016), he stated that "part of the community out there...wants a strong exchange rate, but that would be very detrimental to our exports".

Rakesh Mohan stands near the middle of the policy spectrum. In a working paper he co-authored in March 2015, he argued that India's immediate priority "is to achieve the kind of fiscal quality and low inflation levels exhibited during 2003-08, with focused attention to increasing efficiency and compliance in tax revenue collection". He supports increased public spending in transport and infrastructure in order to crowd in private investment. However, back in 2007, he argued that inflation targeting may not be ideal for India due to the existence of interest rate distortions and the role of supply-side factors in driving inflation, where monetary policy may have little impact.

More recently, in the above quoted March 2015 paper, he argued that "as persistently high food inflation has been a key driver of headline inflation, monetary policy will have its limitations." He also said that achieving 8-9% growth needs "the maintenance of appropriate interest rates, a realistic and competitive real exchange rate and focused attention on removing impediments in factor markets, particularly labour and land".

Having already served as the Deputy Governor of RBI, Subir Gokarn is well versed in the inner workings of the RBI. He seems more inclined towards 'balancing' growth and inflation objectives in making monetary policy decisions.Back in 2010, he argued food inflation was driven by a structural imbalance between demand and supply, particularly in the case of protein food items, and there was no short-term solution to the supply-side problem because the goods are non-tradable.

At the same time, in mid-2012, despite slowing economic growth, he argued for the status quo on rates given high inflation (WPI~7-8% at the time). He also argued that bringing inflation under control was critical in order to su.stain growth over the medium term. He has also been a proponent of fiscal consolidation, stating that "we can't discount the importance of fiscal consolidation contributing to growth. It is not that growth first and then we get fiscal consolidation. They are interrelated".

The majority of candidates under consideration right now are on the neutral-to-dovish side of the policy spectrum, unlike Governor Rajan, who was considered relatively hawkish. While this has the potential to change the direction of monetary policy, the agreement on flexible inflation targeting, which has institutionalized the monetary policy framework, and the upcoming formation of a monetary policy committee, which will reduce the reliance on an individual (RBI governor) as policy decisions will be committee based, should abate some of these concerns.

The major question now arises is "will they be able to come up with the great ideas for which Rajan is well known in the world economy... or if they come up, then will they get success as Rajan has succeeded???"

vURJIT PATEL :

vARVIND SUBRAMANIAN :

vRAKESH MOHAN :

vSUBIR GOKARN :


¦INTRODUCTION

¦FRAUD

¦When Fraud Reporting is required

The biggest fraud in India's corporate history, B. Ramalinga Raju,

founder and CEO of Satyam computer, India's fourth largest IT service firm. Raju was once the poster boy of India's IT revolution -rubbing shoulders with top CEOs and politicians across the world, including Bill Clinton.

A web of 365 investment companies was used to allegedly divert funds from Satyam. These companies had several transactions in the form of inter-corporate investment, advance and loans within and among them. One such company, with a paid up capital of Rs 5 lakh, had made an investment of Rs 90.25 crore and received unsecured loans of 600 crore.

As Raju put it, "It was like riding a tiger, not knowing how to get off without being eaten."The term Fraud is not new; the old Act already provides punishment for fraud in various sections but the

new Act has come with more specific and clear provisions relating to fraud and fraud reporting. The scope and coverage is very broad and unlike Companies Act, 1956 the Companies Act, 2013 provides similar punishment for all type of frauds.

The Fraud provision is in force w.e.f. 12th September, 2013 and Fraud Reporting provisions are brought in force w.e.f. 01st April, 2014 under the Companies Act, 2013.

Even though our country has witnessed several Corporate frauds, few of them being - the5,000 crore rupees Harshad Mehta scam in 1992,14,000 crore rupees Satyam fiasco in 2009,1,76,000 crore rupees 2G Spectrum Scam.The Central Government seeks the support of auditors in bringing transparency & discipline in the

corporate world to protect the interests of the shareholders & public at large.

Fraud in relation to affairs of a company or any body corporate, includesqAny act,qOmission,qConcealment of any fact orqAbuse of position committed by any person or any other person with the connivance in any

manner, with intent to deceive, to gain undue advantage from, or to injure the interests of,mthe company ormits shareholders ormits creditors ormany other person,

Whether or not there is any wrongful gain or wrongful loss;"Wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally

entitled;"Wrongful loss" means the loss by unlawful means of property to which the person losing is legally

entitled.

Overview of Sec.143 (12) under Companies Act, 2013 -If an Auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud

- is being committed or- has been committed against the company

Fraud ReportingUnder Companies Act 2013BySNEHA AGARWALERO-0204823


By officers or employees of the company, he shall immediately report the matter.For 'reason to believe' to come into existence, it cannot be based on suspicion. There needs to be

sufficient information or convincing evidence to advance beyond suspicion that it is possible someone is committing or has committed a fraud. 'For example, identification of fraud risk factors in itself cannot cause 'reason to believe' that a fraud exists'

ØStatutory Auditors of the companyØCost Accountant conducting cost audit under section 148 of the 2013 ActØCompany Secretary conducting secretarial audit under section 204 of the 2013 ActØBranch auditors appointed under section 139 of the 2013 Act

ØInternal AuditorsØOther professionals appointed under other statutes rendering other services to the company.

Section 143(12) to 143(15) of the Act contains provisions relating to reporting of fraud. Rule 13 of The Companies (Audit and Auditors) Rules, 2014 contains the operational procedure of Reporting of Fraud prescribed in Section 143(12) of the Act.

When a fraud comes to the knowledge of the auditor, the auditor shall immediately forward his report to the Board / Audit Committee.The Board is required to submit its reply or observation within 45 days.

Within 15 days of receipt of such reply or observations; the auditor shall forward his report and the reply or observations of the Board or the Audit Committee along with his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government.

In case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of 45 days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he failed to receive any reply or observations within the specific time.

Section 143 (15) If any auditor, cost accountant or company secretary in practice do not comply with the provisions of sub-section (12), he shall be punishable with fine which shall not be less than 1 lakh rupees but which may extend to 25 lakh rupees.

ØRule 13(2) the report shall be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed post followed by an e-mail in confirmation of the same.

ØRule 13(3) the report shall be on the letter-head of the auditor containing postal address, e-mail address and contact number and be signed by the auditor with his seal and shall indicate his Membership Number.

ØRule 13(4) the report shall be in the form of a statement as specified in Form ADT-4. This Form of Report is available as an annexure to The Companies (Audit and Auditors) Rules, 2014.

As the readers may be aware that subsequent to the issuance of the Guidance Note, Section 143(12) has been amended by the Companies (Amendment) Act, 2015 issued in May 2015 and Rule 13 of the Companies (Audit and Auditors) Rules, 2014 has been amended by the Companies (Audit and Auditors) Amendment Rules, 2015 issued in December 2015. The amended provisions require inter alia :

ØReporting by statutory auditor to Central Government only for frauds which involve/expected to involve individually an amount of Rs. one crore or above.

ØIn case of fraud involving lesser than above amount, statutory auditor to report matter to the audit committee/Board of company instead of Central Government.

According to clause (x) of CARO 2016, auditor needs to report whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and amount involved is to be indicated.

¦AUDITOR INCLUDE

¦DOESN'T INCLUDE

Statutory provisions of Fraud and Fraud Reporting under The Companies Act, 2013.¦Reporting of Fraud in Companies Act, 2013

ØFraud Report to Board/Audit Committee :

ØFraud Report to Central Government on Receipt of Reply or Observations :

ØFraud Report to Central Government on failure of Receipt of Reply or Observations :

¦Punishment for Fraud in Companies Act, 2013

¦Authority and Mode/Format of dispatching Final Fraud Report to Central Government:

¦Amendment in Section 143(12) corresponding Rule 13 of Companies Act 2013

¦Requirement of CARO 2016 With Respect to Fraud


¦Reporting under Section 143(12) When the Suspected Offence Involving Fraud Relates to Periods prior to Coming into Effect of the 2013 Act

¦STANDARDS ON AUDITING

For example :

¦Additional Points On Reporting Frauds

An auditor, in the current year, may identify a possible or committed fraud that relates to an earlier year covered under the 1956 Act. The question that arises is whether such frauds should also be reported under Section 143(12).Requirements similar to Section 143(12) of the 2013 Act was not prescribed in the 1956 Act. Even the reporting under CARO only required the auditors to report to the members on any fraud on or by the company that had been noticed or reported during the year.

As such, auditors would not have reported on frauds as envisaged under Section 143(12) in those years. Accordingly, in case of fraud relating to earlier years to which the Companies Act, 1956 was applicable, reporting under Section 143(12) will arise only if the suspected offence involving fraud is identified by the auditor in the course of performance of his duties as an auditor during the financial years beginning on or after April 1, 2014 and to the extent that the same was not dealt with in the prior financial years either in the financial statements or in the audit report or in the Board's report under the Companies Act, 1956.

According to SA 240 "The Auditor's Responsibility Relating to Fraud in an Audit of Financial Statement" An intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage. It may be noted that under section 143(9) read with Section 143(10), the duty of the auditor, inter alia, in an audit is to comply with the Standards on Auditing (SAs). Further, Section 143(2) requires the auditor to make out his report after taking into account, inter alia, the auditing standards. Accordingly, the term, "in the course of performance of his duties as an auditor" implies in the course of performing an audit as per the SAs. The definition of fraud as per SA 240 and the explanation of fraud as per Section 447 of the 2013 Act are similar, except that under Section 447, fraud includes 'acts with an intent to injure the interests of the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss.' However, an auditor may not be able to detect acts that have intent to injure the interests of the company or cause wrongful gain or wrongful loss, unless the financial effects of such acts are reflected in the books of account/financial statements of the company.

Øan auditor may not be able to detect if an employee is receiving pay-offs for favoring a specific vendor, which is a fraudulent act, since such pay-offs would not be recorded in the books of account of the company.

Therefore, the auditor shall consider the requirements of the SAs, insofar as it relates to the risk of fraud, including the definition of fraud as stated in SA 240, in planning and performing his audit procedures in an audit of financial statements to address the risk of material misstatement due to fraud.

ØIn case of fraud already reported by management or by other persons no need to report, but review the steps taken by the management.

ØThe auditor of the parent company is not required to report on frauds under Section 143(12) if they are not being or have not been committed in the parent company but relate to frauds in:

ØHowever, the auditor of the parent company in India will be required to report in the components of the parent company.

ØIn case of fraud noted in an audit of a bank - an auditor would report to Reserve Bank of India in addition to the Chairman/Managing Director/Chief Executive of the concerned bank & to Central Government (if Bank is a company under the 2013 Act).

The new company law envisages the change of the statutory auditors from being a watchdog to a whistle blower. Overall, the new law will plug most loopholes of the old regime. Considering the number of corporate frauds that are surfacing in the country today, the old Act was evidently inadequate. Hence, it is anticipated that the new provisions of the Companies Act, 2013 would bridge the gulf between increasing corporate frauds and the statutory regime. The Auditing and Assurance Standards Board of The Institute of Chartered Accountants of India considering the priority and importance of Fraud and Fraud Reporting under the Companies Act, 2013.


GLIMPSESGLIMPSES

The attending students are in standing positionduring the period of playing Moto Song of

ICAI standing beside the speaker.

CS. Jyoti Srivastava, speaker is being felicitated bya student. CA. Sanjay Das, Chairman,

Siliguri Branch of EICASAis standing beside the speaker.

The Attending Members along with theEx. Committee Members

CA. Aditya Mitruka is being felicitating by a student.CA. Sanjay Das, Vice Chairman is in between of them.

CA.Manoj Kr. Agarwal, Speaker and the studentsduring the progress of the seminar

(LtoR) Sri Gaurav Modi,Miss. Nandini Paul, Rishav Goyal(all EICASA members of Siliguri Branch), CA. Sanjay Das, Chairman, Siliguri Branch of EICASA, CA. Manish Goyal, Chairman, EICASA

and Sri Akash Agarwal(Member Siliguri branch of EICASA)


GLIMPSESGLIMPSES

Sri Amlan Sanyal during his deliberation in the class. Mock Test Programme is in Progress

Members are discussing in the meeting Group photograph of the students of GMCS-I batch no.8along with CA.Amar Agarwala, faculty

CA. Niraj Hardoi, faculty is being felicitated by a student.CA. Sanhay Das, Vice-Chairman is also seen in the picture.

The speakers of the mentoring programme of the day

june 2016 - students newsletter -...

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