Applicability of Pronouncements/Legislative Amendments/Circulars etc. for November, 2013 – Intermediate (IPC) Examination Paper 1: Accounting A. Pronouncements Accounting Standards 1, 2, 3, 6, 7, 9, 10, 13 and 14 are covered in the syllabus. (Text of all applicable Accounting Standards are available in the Appendix I of Volume I of ‘Accounting’ Study Material revised in November, 2012.) B. Announcement relevant for November, 2013 examination Criteria for Classification of Entities and Applicability of Accounting Standards Due to recent changes in the enhancement of tax audit limit, the Council of the ICAI has recently decided to change the 1st criteria i.e. determination of SME on turnover basis for Level II entities from Rs. 40 lakhs to Rs. 1 Crore with effect from the accounting year commencing on or after April 01, 2012. Paper 5: Advanced Accounting A. Pronouncements Accounting Standards 4, 5, 11, 12, 16, 19, 20, 26 and 29 are covered in the syllabus. (Text of all applicable Accounting Standards are available in the Appendix II of Volume I of ‘Advanced Accounting’ Study Material revised in November, 2012.) B. Notification/Announcement relevant for November, 2013 examination 1. Presentation of Foreign Currency Monetary Item Translation Difference Account (FCMITDA) In the Revised Schedule VI format, no line item has been specified for the presentation of “Foreign Currency Monetary Item Translation Difference Account (FCMITDA)”. Therefore, the Council of the Institute at its 324th meeting held on March 24-26, 2013 at New Delhi, decided that debit or credit balance in FCMITDA should be shown on the “Equity and Liabilities” side of the balance sheet under the head ‘Reserves and Surplus’ as a separate line item. 2. Criteria for Classification of Entities and Applicability of Accounting Standards Due to recent changes in the enhancement of tax audit limit, the Council of the ICAI has recently decided to change the 1st criteria i.e. determination of SME on turnover basis for Level II entities from Rs. 40 lakhs to Rs. 1 Crore with effect from the accounting year commencing on or after April 01, 2012. 3. Clarification on Debenture Redemption Reserve (DRR) Ministry of Corporate Affairs vide Circular no. 04/2013 dated 11 February, 2013 has clarified the adequacy of DRR for various institutions/companies as follows: All India Financial Institutions (AIFIs) regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures Nil Other Financial Institutions and NBFCs registered with the RBI under Section 45-IA of the RBI (Amendment) Act, 1997 if debentures issued through public issue 25% if privately placed debentures Nil Other companies including manufacturing and infrastructure companies (including listed and unlisted companies) 25% Every company required to create/maintain DRR shall before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. 4. Maintenance of Cash Reserve Ratio at 4.00 per cent for all banks vide circular DBOD. No. Ret. BC. 76/12.01.001/2012-13 dated January 29, 2013. 5. Statutory Liquidity Ratio for Local Area Banks be reduced from 25 per cent to 23 per cent of their Net Demand and Time Liabilities (NDTL) with effect from the fortnight beginning August 11, 2012. 6. Review of the Prudential Guidelines on Restructuring of Advances by Banks/Financial Institutions Reserve Bank of India has reviewed the prudential guidelines on restructuring of advances by banks/ financial institutions vide circular no. DBOD.No.BP.BC.63/21.04.048/2012-13 applicable for all scheduled commercial banks excluding RRBs dated November 26, 2012 and has decided: i) To enhance the provisioning requirement for restructured accounts classified as standard advances from the existing 2.00 per cent to 2.75 per cent in the first two years from the date of restructuring. In cases of moratorium on payment of interest/principal after restructuring, such advances will attract a provision of 2.75 per cent for the period covering moratorium and two years thereafter; and that ii) Restructured accounts classified as non-performing advances, when upgraded to standard category will attract a provision of 2.75 per cent in the first year from the date of upgradation instead of the existing 2.00 per cent. In accordance with the above, loans to projects under implementation, when restructured due to change in the date of commencement of commercial operations (DCCO) beyond the original DCCO as envisaged at the time of financial closure and classified as standard advances would attract higher provisioning at 2.75 per cent as against the present requirement of 2.00 per cent as per the details given below: Infrastructure projects Particulars Provisioning Requirement If the revised DCCO is within two years from the original DCCO prescribed at the time of financial closure 0.40 per cent If the DCCO is extended beyond two years and upto four years or three years from the original DCCO, as the case may be, depending upon the reasons for such delay (Ref.: DBOD.No.BP.BC.85 /21.04.048/2009-10 dated March 31, 2010) 2.75 per cent – From the date of such restructuring till the revised DCCO or 2 years from the date of restructuring, whichever is later. Non-infrastructure projects Particulars Provisioning Requirement If the revised DCCO is within six months from the original DCCO prescribed at the time of financial closure 0.40 per cent If the DCCO is extended beyond six months and upto one year from the original DCCO prescribed at the time of financial closure (Ref.: DBOD.No.BP.BC.85 /21.04.048/2009-10 dated March 31, 2010) 2.75 per cent – From the date of such restructuring for 2 years. All other extant guidelines on Income Recognition, Asset Classification and Provisioning pertaining to advances will remain unchanged. Note: (Common for Intermediate (IPC) Paper 1 and Paper 5) Non-Applicability of Ind ASs for November, 2013 Examination The MCA has hosted on its website 35 converged Indian Accounting Standards (Ind AS) without announcing the applicability date. These are the standards which are being converged by eliminating the differences of the Indian Accounting Standards vis-à-vis IFRS. (Students may note that Ind ASs are not applicable in November, 2013 Examination. However, Accounting Standards as specified in the syllabus are applicable for them in November, 2013 examination.) Paper 4: Taxation Applicability of Finance Act, Assessment Year etc. for November, 2013 examination (1) The amendments made by the Finance Act, 2012 in income-tax and service tax; (2) The provisions of income-tax law as applicable for the assessment year 2013-14; (3) The significant notifications and circulars issued upto 30th April, 2013 (income- tax and service tax) (The Study Materials relevant for May, 2013 and November, 2013 examinations are updated based on the provisions of law as amended by the Finance Act, 2012 and significant circulars and notifications issued up to 30.6.2012. The amendments made by the Finance Act, 2012 in income-tax and service-tax and notifications and circulars issued between 1.5.2011 and 30.4.2012 in income-tax are also separately discussed in the publication “Supplementary Study Paper-2012”.) Paper 6: Auditing and Assurance I. Standards on Auditing (SAs) S.No SA Title of Standard on Auditing Effective Date 1 SA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing April 1, 2010 2 SA 210 Agreeing the Terms of Audit Engagements April 1, 2010 3 SA 220 Quality Control for Audit of Financial Statements April 1, 2010 4 SA 230 Audit Documentation April 1, 2009 5 SA 240 The Auditor’s responsibilities Relating to Fraud in an Audit of Financial Statements April 1, 2009 6 SA 250 Consideration of Laws and Regulations in An Audit of Financial Statements April 1, 2009 7 SA 260 Communication with Those Charged with Governance April 1, 2009 8 SA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management April 1, 2010 9 SA 299 Responsibility of Joint Auditors April 1, 1996 10 SA 300 Planning an Audit of Financial Statements April 1, 2008 11 SA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment April 1, 2008 12 SA 320 Materiality in Planning and Performing an Audit April 1, 2010 13 SA 330 The Auditor’s Responses to Assessed Risks April 1, 2008 14 SA 402 Audit Considerations Relating to an Entity Using a Service Organization April 1, 2010 15 SA 450 Evaluation of Misstatements Identified during the Audits April 1, 2010 16 SA 500 Audit Evidence April 1, 2009 17 SA 501 Audit Evidence - Specific Considerations for Selected Items April 1, 2010 18 SA 505 External Confirmations April 1, 2010 19 SA 510 Initial Audit Engagements-Opening Balances April 1, 2010 20 SA 520 Analytical Procedures April 1, 2010 21 SA 530 Audit Sampling April 1, 2009 22 SA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures April 1, 2009 23 SA 550 Related Parties April 1, 2010 24 SA 560 Subsequent Events April 1, 2009 25 SA 570 Going Concern April 1, 2009 26 SA 580 Written Representations April 1, 2009 27 SA 600 Using the Work of Another Auditor April 1, 2002 28 SA 610 Using the Work of Internal Auditors April 1, 2010 29 SA 620 Using the Work of an Auditor’s Expert April1, 2010 30 SA 700 Forming an Opinion and Reporting on Financial Statements April 1, 2012 31 SA 705 Modifications to the Opinion in the Independent Auditor’s Report April 1, 2012 32 SA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report April 1, 2012 33 SA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements April 1, 2011 34 SA 720 The Auditor’s Responsibility in Relation to Other Information in Documents Containing Audited Financial Statements April 1, 2010 II. Statements 1. Statement on Reporting under Section 227 (1A) of the Companies Act, 1956. 2. Statement on the Companies (Auditor’s Report) Order, 2003. III. Guidance Notes 1. Guidance Note on Audit of Inventories. 2. Guidance Note on Audit of Debtors, Loans and Advances. 3. Guidance Note on Audit of Investments. 4. Guidance Note on Audit of Miscellaneous Expenditure. 5. Guidance Note on Audit of Cash and Bank Balances. 6. Guidance Note on Audit of Liabilities. 7. Guidance Note on Audit of Revenue. 8. Guidance Note on Audit of Expenses. 9. Guidance Note on Provision for Proposed Dividend.
Posted on: Mon, 26 Aug 2013 03:11:46 +0000
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