Accounts of the Company - a quick summary

Given below are some of the common questions asked regarding the maintenance of Books of Accounts of the company.

Where the books of account should be kept?

1. At registered place.

2. At any other place, only if, Board resolution is passed and notice is given within 7 days for passing the resolution.

How long can a financial year be?

Maximum 15 months and can be extended to 18 months with permission of registrar.

Which employees’ particulars must be disclosed?

1. Who received Rs. 60 Lakhs or more in a year.

2. Who received Rs. 5 Lakhs or more in a month.

3. Who holds 2% or more equity, and receive remuneration > received by MD, WTD or Manager.

Who will sign annual accounts?

Manager/Secretary + 2 directors (if there is an MD then one of the directors must be MD and if there is only 1 director in India then it can be signed by only 1 director)

Who will sign the Board Report?

1.  Chairman, if board authorizes, or

2.  2 directors (if there is a MD then one of the directors must be MD and if there is only 1 director in India then it can be signed by only 1 director)

What if accounts of the company are demanded by any stakeholders?

Must be provided within 7 days of demand.

Time limit of filing annual accounts with registrar?

Within 30 days of “holding the AGM/should have been held.”

What if AGM didn’t held?

Statement of reasons need to be given.

What if accounts are needed to be revised before adoption of accounts?

Only if:

1. Accounts are not circulated (already approved ones).

2. Auditor’s report on modified account is given.

3. Reason is provided by the auditor.

4. Auditor withdraws copy of earlier report given.

What if accounts are needed to be revised after adoption of accounts?

Not even possible, except when,

1. It is for showing true and fair view.

2. It is for meeting the technical requirements of law.

Can you expand a little bit on holding company accounts?

1. Extent of holdings in subsidiary company should be stated.

2. Profits not shown of subsidiary should be stated.

3. Profits shown of subsidiary should be stated.

4.  F/Y of holding and subsidiary must coincide or FY of subsidiary must end before of that of holding co. (with a gap of maximum 6 months) but duration of both must be equal.

 
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Audit of the company - a quick summary

Given below are the some of the common questions asked regarding the audit of the company. 

What if auditor is taking audit to fetch personal gain in a company?

That’s why there is a limitation imposed by CG prohibiting the appointment of auditor:

1. Who is indebted to the company for more than Rs. 1000. Even If he becomes indebted after his appointment he must vacate the office.

2. Who is holding any security of the company.

What is the limit on audits?

1. Max 20 companies (out of which limit of 10 companies having share capital of Rs. 25 Lakhs of more.

2. Limit doesn’t include:

· Private Company.

· Guarantee Company without share capital.

· Foreign Company, Society or Trust.

· Tax Audits.

· Branch Audit.

· Special Audit.

3. Limit includes

· Joint Audit.

· Audit u/s 25.

4. Total No. of Audits = 30.

How first auditor and subsequent auditors are appointed?

First Auditor	Subsequent Auditor
Appointed by board within 1 month of registration of the company, if failed, then appointed by members in GM.	Company to give notice within 7 days of (re)appointment to the auditor.
No intimation required.	Auditor should intimate the registrar within 30 days of receipt of (re)appointment.

What if no auditor is appointed?

CG will appoint the auditor.

What is casual vacancy? Can you expand?

Casual vacancy i.e. Vacancy of office by auditor before expiry of his term.

Okay. Who will casual vacancy then?

1. If reason is resignation by auditor – By shareholders.

2.Otherwise – By Board.

I know that appointment of auditors requires Ordinary resolution. Any exception?

Yes, appointment will require Special resolution when, 25% or more share capital is held by any of the stated companies, AS ON THE DATE OF AGM:

·  CG.

· SG.

· Government Company.

· Public Financial Institution.

· Nationalized bank.

· General Insurance Company.

I want to remove my company’s auditor, tell me how to proceed?

First make sure to comply with following provisions.

First auditor to be removed before AGM	Subsequent auditor to be removed before AGM	Any auditor at AGM
No notice to be given.	No notice to be given.	Special Notice is required.
Pass Ordinary Resolution.	Pass Ordinary Resolution.	Pass Ordinary Resolution.
No CG approval.	Previous CG approval required.	No CG approval.

Then notice is to be sent to auditor as a part of his right of being heard:

1. Send notice to the auditor of his removal.

2. Auditor will then have the right:

· To be heard at the meeting.

· To make written representation.

· To make it circulate among members of the company.

It may prove harmful if auditor use his right to erode the company’s reputation?

That’s why CLB may take back auditor’s rights if he uses them to secure needless publicity for defamatory matter.

List in short all the rights of auditor?

Auditor has right to:

1. Access Books.

2. Obtain explanation.

3. Attend any GM and receive notice.

4. Be heard at GM.

5. Access branch office’s books.

6. Receive remuneration.

7. Make representation on removal (as discussed in above question).

8. Right to lien on conditions:

· Books must be of company and work has been done on such books by the auditor on which fees is due.

· It has come into possession of auditor by his authority.

Okay, what about duties of the auditor?

1. Making audit report to members.

2. Reasons of qualification of audit report, if qualified.

3. Signing of audit report.

4. Disclosure in audit report:

· On true and fair view.

· On CARO.

· Principal assertions.

Is it fine to blame auditor for incorrectness in Board Report?

No, because the BR is attached not annexed to financial statements.

It would be difficult to do branch audit of every company. Are there any exemptions?

Yes,

1. When any manufacturing, processing or trading activity is not done at any branch office and scrutiny is made by a responsible person.

2. When Average of “Quantum of Activity” of preceding 3 FY < either Rs. 2 Lakhs or 2% or turnover, where quantum of activity is the higher of aggregate value of:

· Goods manufactured.

· Goods sold.

· Expenditure.

3. Other cases:

· Sufficient arrangement is made for scrutiny of accounts of branch office.

· Auditor is not available at a reasonable cost.

· Any other reason.

Who can do Special audit and what if remuneration is not paid to him?

A Chartered Accountant, doesn’t matter if he is in practice or not.

If remuneration is not paid to him, he can recover it from the company as if the arrears of land revenue.

Any other concept?

Yes, audit committee, it should be made by PUBLIC COMPANY having paid up capital of Rs. 5 Crores or more. Minimum 3 members (all directors) must be there in committee and 66.67% shall be directors other than MD/WTD.

 
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Bill Gates gave a speech at a High School about 11 things

Bill Gates gave a speech at a High School about 11 things they did not and will not learn in school. He talks about how feel-good, politically correct teachings created a generation of kids with no concept of reality and how this concept set them up for failure in the real world.

Rule 1 :  Life is not fair - get used to it!

Rule 2 : The world doesn't care about your
self-esteem. The world will expect you to accomplish something BEFORE you feel good about yourself.

Rule 3 : You will NOT make $60,000 a year right out of high school. You won't be a vice-president with a car phone until you earn both.

Rule 4 : If you think your teacher is tough, wait till you get a boss.

Rule 5 : Flipping burgers is not beneath your dignity. Your Grandparents had a different word for burger flipping: they called it opportunity.

Rule 6 : If you mess up, it’s not your parents' fault, so don't whine about your mistakes, learn from them.

Rule 7 : Before you were born, your parents weren't as boring as they are now. They got that way from paying your bills, cleaning your clothes and listening to you talk about how cool you thought you were. So before you save the rain forest from the parasites of your parent's generation, try delousing the closet in your own room.

Rule 8 : Your school may have done away with winners and losers, but life HAS NOT. In some schools, they have abolished failing grades and they'll give you as MANY TIMES as you want to get the right answer. This doesn't bear the slightest resemblance to ANYTHING in real life.

Rule 9 : Life is not divided into semesters.. You don't get summers off and very few employers are interested in helping you FIND YOURSELF. Do that on your own time.

Rule 10: Television is NOT real life. In real life people actually have to leave the coffee shop and go to jobs.

Rule 11 : Be nice to nerds. Chances are you'll end up working for one.

rbi hikes repo rate by 0.25 percent to 7.75, CRR Unchanged

Inflation worries forced the Reserve Bank to continue its firm stance and hike the short-term lending (repo) rate by 0.25 per cent, a step that will make corporate and consumer loans more expensive.

There was no surprise in the first full policy unveiled by new RBI Governor Raghuram Rajan on Tuesday, who increased the repo rate, as was widely expected, by 0.25 per cent to 7.75 per cent and brought down the cost of short-term funds for banks by slashing the marginal standing facility (MSF) rate by a similar quantum to 8.75 per cent.

The policy stance and measures, Mr. Rajan said, “are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth.

“These will help strengthen the environment for growth by fostering macroeconomic and financial stability. The Reserve Bank will closely monitor inflation risk while being mindful of the evolving growth dynamics,” he said.

The central bank reduced the growth forecast for the current fiscal to 5 per cent from 5.5 per cent projected earlier. Economic growth fell to a decade-low of 5 per cent in the previous financial year.

The RBI left other rates unchanged, such as the cash reserve ratio at 4 per cent, and mandatory holdings in government securities and other liquid assets as a solvency measure (SLR) at 23 per cent.

However, the Governor doubled the borrowing limit of banks against their cash positions or NDTL to 0.5 per cent for both 7-day and 14-day repos, with immediate to increase liquidity in the system.

Lowers growth forecast

The Reserve Bank on Tuesday scaled down the growth forecast for current fiscal to 5 per cent from the earlier projection of 5.5 per cent, citing downside risk stemming from domestic constraints.

” ... headwinds to growth from domestic constraints continue to pose downside risks, and vulnerabilities to sudden shifts in the external environment remain,” RBI Governor Raghuram Rajan said in the second quarter review of monetary policy.

The RBI had projected a growth of 5.5 per cent for 2013-14 in its first quarter monetary policy on July 30.

The economy grew by 4.4 per cent in the first (April-June) quarter of current fiscal. It had expanded by 5 per cent in 2012—13 fiscal, the lowest level in a decade.

“Strengthening export growth and signs of revival in some services, along with the expected pick-up in agriculture, could support an increase in growth in the second half of 2013-14 relative to the first half,” Mr. Rajan said.

He said the revival of large stalled projects and clearances by the Cabinet Committee on Investment (CCI) would buoy investment and overall economic activity towards the close of the year.

The RBI’s projections are in line with that of the World Bank and International Monetary Fund (IMF) which lowered the growth forecast for India earlier this month.

The World Bank slashed India’s economic growth forecast for the current financial year to 4.7 per cent from an earlier projection of 6.1 per cent. Besides, IMF projected an average growth rate of about 3.75 per cent for India in 2013-14.

Mr. Rajan said industrial activity has weakened with a contraction in consumer durables and capital goods sector, reflecting ongoing downturn in both consumption and investment demand.(The Hindu)

 
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