Category: finance

CARO Check List

ByD meenal vaid
July 10, 2023
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Particulars					Remarks
1	Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets
	a)	Whether records of Fixed Assets (tangible, intangible and leased assets) are maintained showing the following particulars:
		i.	Sufficient description (distinctive numbers, purchase agreement, documents, records and registration references, etc.) of the asset to make identification possible.
		ii.	Classification, that is, the head under which it is shown in the accounts, e.g., plant and machinery, office equipment, etc. componentwise, as applicable
		iii.	Location/situation
		iv.	Quantity, i.e., number of units.
		v.	Original cost.
		vi.	Year of purchase.
		vii.	Adjustment for revaluation or for any increase or decrease in cost, e.g., on revaluation of foreign exchange liabilities.
		viii.	Date of revaluation, if any.
		ix.	Rate and basis of depreciation, useful life, particulars regarding amortisation and impairment.
		x.	Depreciation, amortisation and impairment for the current year.
		xi.	Accumulated depreciation, amortisation and impairment loss.
		xii.	Particulars regarding sale, discarding, demolition, destruction etc.
		xiii.	Particulars of fixed assets that have been retired from active use and held for disposal.
		xiv.	Particulars of fixed assets that have been fully depreciated or amortised or impaired.
	b)	Whether aggregate original cost, depreciation or amortisation to date and impairment loss, if any, as per the register/records agrees with General Ledger balances? If not, note the disagreements in respect of each class of assets.
				Conclusion:
		(i)	Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;
		(a)	i.	Whether Fixed Assets were physically verified at any time during the year or earlier years according to a phased program?
			ii.	What is the periodicity of physical verification and whether the same is reasonable?
			iii.	Whether assets physically verified agreed/ reconciled with book figures? If not, note the
				discrepancies against each class of assets in terms of value, and state how the discrepancies have been dealt with.
			iv.	Instructions to officials for carrying out physical verification to include procedures, timing,
				competency of team members, count sheets/tags, formats etc.
		(b)	Physically verify few items from the fixed asset register & vice versa.
		(c)	Whether management representation is obtained confirming that:
				* fixed assets are physically verified by the company in accordance with the policy of the company.
				* periodicity of the physical verification of fixed assets.
				* details of the material discrepancies noticed during the physical verification of the fixed assets.
				* If no discrepancies were noted during physical verification, the same should be clearly mentioned.
				Conclusion:
	(c )	Whether the title deeds of immovable properties are held in the name of the company. If not, provide the details thereof;

		(a)	Does the company have any immovable properties (land and buildings)? Has the Company identified the land and building on the basis of Fixed Asset Register.
		(b)	Whether the title deeds of these immovable properties are in the name of the company?

			Whether the details as per title deeds reconcile with the details in Fixed assets register, if not, is there any material difference to be reported here
		(c)	Has the management provided details of immovable properties not held in company’s name (for example, location, description, and reasons for not being held in the company’s name?
			i	In case the title deeds are lost, assess whether the certified copies of such documents are available with the company and what actions have been taken by the management in this
				regard?
			ii	In case the title deeds are mortgaged with the lenders, assess if the confirmation from the
				lenders is obtained for the same.
			iii	The discrepancies observed should be reported in the CARO report.
2	Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, whether they have been properly dealt with in the books of account;
		(a)	Has the management physically verified the inventory, as defined in AS 2? Inventory normally
			includes-
				* Raw materials and Components
				* Packing materials
				* Maintenance supplies
				* Work in progress
				* Finished Goods
				* Stores and Spares
				* Consumables and Loose tools
		(b)	Whether evidence of physical verification has been seen and reasonableness of periodicity of physical verification evaluated? If yes, verify:
				* written instructions issued by the management.
				* duly authenticated physical verification sheets.
				* duly authenticated summary sheets/ consolidation sheet
				* internal memo etc. regarding issues arising on physical verification.
				* any other documents evidencing physical verification.
		(c)	Whether the original physical verification sheets have been reviewed and selected items traced into the final inventories? (including the more valuable ones as per ABC classification)
		(d)	Whether the comparison of final inventories with stock has been done? Whether records and other corroborative evidence, e.g. inventory statements submitted to banks?
		(e)	In case of continuous stock taking method, whether management:
			i)	maintains adequate and up-to-date stock records;
			ii)	has established adequate procedures for physical verification of inventories, so that in the
				normal circumstances, the programme of physical verification will cover all material items of inventory at least once during the year; and
			iii)	check/examine thoroughly and corrects all material differences between the book records
				and the physical counts.
		(f)	Whether stock register is updated and value of inventory extracted from it tally with the books of account.
		(g)	If any material discrepancies were found as compared to stock records, what were the extent of discrepancies (in terms of value) and how the same have been dealt with in the books of account as well as in the stock records?
			Conclusion:
3	(a)	Whether the company has granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. If so, whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest;
		(i)	Has the Company granted any loans (Secured or Unsecured) to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Companies Act 2013?
		(ii)	Where the company has granted any loans to parties covered in the register maintained under section 189 of the Act and squared off during the year, obtain details of such transactions.
		(iii)	Whether the terms of the above loans are prima facie prejudicial, due consideration to be given to the factors mentioned below:
			* terms & condition of the loan repayment, rate of interest, restrictive covenants etc.,

			* company’s financial standing, its ability to lend, and terms of its borrowings

			* borrower’s financial standing

			* the nature of the security,

			* prevailing rate of interest, etc.
	(b)	Whether the schedule of repayment of principal and payment of interest has been stipulated
		and whether the repayments or receipts are regular;
			(i)	Whether the schedule of repayment of principal and payment of interest has been stipulated in the loan agreements / mutually agreed letter of arrangement at the time of sanction?
			(ii)	Whether repayment of principal amount and interest thereon are received regularly on the
				due date or immediately thereafter?
			(iii)	If not, the fact and details should be Obtained
				Conclusion:
	©			If the amount is overdue, state the total amount overdue for more than ninety days, and whether reasonable steps have been taken by the company for recovery of the principal and
				interest;
	(i)			Whether list of overdue amount has been prepared & recorded and reasonable steps taken for recovery of amount of loan which is overdue more than ninety days?
	(ii)			Following documents may be seen for verification of reasonableness of steps taken by the company for recovery of principal and accrued interest on loan granted:
				* Facts of each case including amounts involved

				* Issue of reminder

				* Sending of advocates or solicitor’s notice In absence of legal steps whether auditor is satisfied
				that reasonable steps have been taken
	(iii)			Obtain management’s representation regarding steps that have been taken for recovery of total amount overdue more than ninety days.
				Conclusion
4	In respect of loans, investments, guarantees, and security whether provisions of section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide the details thereof.

	(a)	Where Companies has given loans to directors etc.:
		i)	Whether any loans given to directors or any other person in whom the director is interested, or given any guarantee or provided any security in connection with any loan taken by directors or such other person?
		ii)	Whether any of the transaction is attracting the provisions of section 185?
		iii)	Whether any of such transactions are covered under the exceptions provided under section 185? If so, obtain the relevant evidences ensuring such exemption.
	(b)	Where company has made loan/ investment
		i)	Obtain the details of loans and investment made by the Company including opening balances
		ii)	Whether company has made investment through more than two layers of investment companies?
		iii)	Whether the company has exceeded the limit of sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and
			securities premium account, whichever is more?
		iv)	If so, whether prior approval by means of a special resolution passed at a general meeting has been obtained?
		v)	Whether the rate of interest charges is more or at par to the rates specified in subsection (7) of section 186 of the Act, if not, the reasons thereof,
			Conclusion:
5	In case, the company has accepted deposits,whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed thereunder, where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other tribunal, whether the same has been complied with or not?
	(a)	If the Company has accepted deposits from the public state whether:
		i)	The directives issued by the Reserve Bank of India have been complied with and also that:
		ii)	The provisions of Section 73 to 76 of the Companies Act, 2013 and the rules framed there under have been complied with.
		iii)	List out contraventions, if any.
		Where an order has been passed by the CLB or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of above, examine the steps taken by the company to comply with the order, and if not, report briefly stating there in the nature of contravention and the fact that Company has not complied with the order.
		Conclusion
6	Whether maintenance of cost records has been specified by the Central Government under subsection (1) of section 148 of the Companies Act, 2013 and whether such accounts and records have been so made and maintained.
	(a)	Whether cost accounting records have been prescribed for the company under section 148(1) of the Companies Ac, 2013? If so verify whether proper cost accounts and records are made and maintained by the Company as specified.
		Conclusion:
7	Whether the company is regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated;
	a)	Whether a list of statutory dues which company is required to deposit regularly has been obtained.
	b)	In case where there are no arrears on the balance sheet date but the company has been irregular during the year in depositing the statutory dues, the fact should be stated.
	c)	Whether the Company has been generally regular in depositing statutory dues or otherwise, indicate the same.
		Note: A matter is disputed where there is a positive evidence or action on the part of the company to show that it has not accepted the demand for payment of tax or duty, e.g., where it has gone into appeal.
	d)	Whether penalty and/or interest levied under the respective law is included under amounts payable.
	e)	Ensure that disclosure is restricted to the actual arrears and should not include the amounts which have not fallen due for deposit and have been shown as arrears at the balance sheet date.
	f)	Whether the information about arrears of outstanding statutory dues is provided in the format:
			* Name of the Statute
			* Nature of the dues
			* Amount (Rs.)
			* Period to which amount relates
			* Due date
			* Date of Payment
	g)	Whether a written representation with reference to the date of the balance sheet from the
		management obtained:
			* specifying the cases and the amounts considered disputed;
			* containing a list of the cases and the amounts in respect of the statutory dues which are undisputed and have remained outstanding for a period of more than six months from the date they became payable;
			* containing a statement as to the completeness of the information provided by the management. Whether any register of significant laws with which the entity has to comply within its particular industry and a record of complaints in respect of noncompliance been maintained
			Conclusion:
	(b)	Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned department shall not be treated as a dispute.)
			a)	Review internal audit report, minutes of the meeting of the board of Directors and audit committee
			b)	Ensure that information about arrears of disputed statutory dues is provided in the format:
				* Name of the Statute
				* Nature of the dues
				* Amount (Rs.)
				* Period to which mount relates
				* Forum where dispute is pending
				Conclusion:
8	Whether the company has defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders? If yes, the period and the amount of default to be reported (in case of defaults to banks, financial institutions, and government, lender wise details to be provided).
	a)	Whether all defaults existing at the balance sheet date are reported irrespective of when those defaults have occurred.
	b)	(b) In case of defaults to banks, financial institutions, and government, whether lender ise details reported?
	c)	If application of reschedulement of loan has been made/accepted or default has been made good during the accounting period, whether the fact has been stated.
	d)	Whether the disputes between the company and the lender on various issues give rise to disclaimer stating the fact there is a dispute between the company and the lender and auditor is unable to determine whether there is a default in repayment of dues to the lender concerned.
		Conclusion:
9	Whether moneys raised by way of initial public offer or further public offer (including debt instruments) and the term loans were applied for the purposes for which those were raised. If not, the details together with delays or default and subsequent rectification, if any, as may be applicable, be reported;
	a)	Whether the company raised money by way of initial public offer or further public offer of equity shares, convertible securities and debt securities?
	b)	Examine the terms and conditions stated in the offer document subject to which the company has raised the above mentioned money.
	c)	Whether the end use of the money raised (as mentioned above) is capable of being determined? If not state the fact.
	d)	Whether the said end-use of money disclosed in the financial statements by way of a Note is significantly different from the actual end use? If so, state the fact.
	e)	Examine the various documents submitted to SEBI, offer document and also examine the report of board of directors, if available, to find out whether funds raised have been utilized for the purpose for which they were raised.
	f)	Whether a representation of the management has been obtained as to the completeness of the disclosures with regard to the end-use of moneys raised by initial public offer and further public offer?
	g)	Whether the fund flow statement has been reviewed where one to one correlation is not possible.
	h)	Whether the company has taken any term loan?
	i)	Examine the terms and conditions subject to which the company has obtained the term loans including purpose for which term loans were sanctioned?
	j)	Compare the purpose for which term loans were sanctioned with the actual utilisation of the loans and obtain sufficient appropriate audit evidence regarding the utilisation of the amounts
		raised.
	k)	In case during a construction phase surplus funds were temporarily invested, however, subsequently the same are utilised for the stated objectives, mention the fact that the funds were temporarily used for the purpose other than for which the loan was sanctioned but were ultimately utilised for the stated end-use.
	l)	Whether term loans taken were not applied for stated purpose during the year for any reason? If yes, mention the facts and amount. Also disclose the fact about utilization of term oan of earlier year in current year.
	m)	Whether the fund flow statement has been reviewed where one to one correlation was not possible.
		Conclusion:
10	Whether any fraud by the company or any fraud on the company by its officers or employees has been noticed or reported during the year. If yes, the nature and the amount involved is to be indicated;
		(a) Has SA 240 been complied with? (Attach the check list for compliance of SA 240 with this check list also).
		(b) Examine the following to ascertain whether any fraud has been reported or noticed by the
		management?
			* the reports of the internal Audit
			* the auditor should enquire from the management about any frauds by the company or any fraud on the company by its officers or employees, that it has noticed or that have been reported to it.
			* discuss the matter with other employees including officers of the company.
			* examine the minutes book of the board meeting, audit committee etc., of the company in this regard.
		(c) Where any fraud by the company or any fraud on the company by its officers or employees has been noticed or reported, determine the nature and amount of frauds and disclose the same. Obtain management representation to this effect.
		(d) Whether any fraud has been reported by the auditor during the year under section 143(12)? If so, determine whether that same would be reported under this clause?
		Conclusion:
11	whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same;
	a)	Has the company paid or provided for any managerial remuneration?
	b)	Obtain from management the details of managerial remuneration paid/ provided by the Company Ensure that the computation of managerial remuneration is done in accordance with the provisions of section 197 read with Schedule V of Companies Act, 2013 The remuneration does not include :
		* Sitting Fees (within prescribed limits) (sub section 2 and 5 of Section 197)
		* Remuneration for professional services rendered (Sub section 4 of Section 197)
	c)	Obtain a general understanding of Section 197 read with Schedule V to the Act. Ascertain the
		Guidance Note on CARO 2016 162 system and procedures of the company to ensure compliance with the provisions of section 197 and Schedule V
	d)	Based on the understanding so gained, perform a reasonable test check of compliance with the aforesaid requirements of the Act.
	e)	Examine the steps taken by the company to comply with requirements of the Act with respect to managerial remuneration. Examine the correspondence and documents filed with the Registrar of Companies, Company Law Board, legal correspondence for orders passed, minutes of the meetings of the Board and shareholders.
	f)	Examine whether the Company has obtained requisite approvals mandated by section 197
		read with Schedule V to the Act.
	g)	Obtain a listing of managerial remuneration rejected/ partially approved. Examine the same with underlying documents and obtain understanding of the steps taken by the Company for refund of unapproved managerial remuneration for reporting along with the amount involved. Assess if the management has waived recovery of the excess amount paid over and above the prescribed limit.
	h)	Consider the implications of non-compliances above also in the auditors’ opinion on the financial statements. In case of non-compliance, the amount involved would be the total amount involved which is in excess of the limit prescribed even though during the year the company may have recovered or partially recovered such amount. Obtain, examine and record the steps taken to secure the refund also.
12	Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1:20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability;
		a)	Is the Company a nidhi company? Assess if the Company is registered as a Nidhi Company as per provisions of Section 406 of the Companies Act 2013 or Section 620A of the Companies Act, 1956.
		b)	To check compliance with the following:
			a)	Whether the net owned funds to deposits ratio is more than 1:20 to meet out the liability as on the date of balance sheet?
			b)	Examine whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability.
				Whether the calculation of net owned funds is done as per Rule 3(d) which includes equity share capital, and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet:
				Assess if the proceeds of issue of preference shares have been included in the net owned funds. Ensure that ratio is computed by using the figures of net owned funds and deposit liability computed in accordance with as stated under this clause.
				Conclusion:
13	Whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards;
	a)	Obtain a statement ontaining details of transactions with related parties.
		* Obtain a list of companies, firms or other parties, the particulars of which are required to be entered in the register maintained under section 189 of the Act.
		* Obtain declarations made by the directors in Form MBP-1 i.e., general notice received from a director under Rule 9(1) of The Companies (Meetings of Board and Power) Rules, 2014
		* Verify the entries made in the register under section 189 with such statement from management and declarations received from directors.
		* Assess the additions/ deletions to such list for appropriateness based on relevant declarations
	b)	Obtain understanding of requirements of section 177 and 188 of the Act in relation to related party transactions
	c)	Perform reasonable check to ascertain completeness and accuracy of details in the statement.
	d)	Ascertain the system and procedures of the company to ensure compliance with the provisions of section 177 and 188 of the Act Including the assessment of identification of related parties and whether the transaction is at arm’s length and basis of such conclusion.
	e)	Based on the understanding so gained, perform a reasonable test check of compliance with the aforesaid requirements of the Act.
	f)	Examine minutes of meetings of the audit committee and agreements underlying related party transactions to ascertain audit committee approval for the transactions.
	g)	Examine the minutes of Board meetings to ascertain whether requisite approvals of Board is
		obtained for certain related party transactions as required under section 188 of the Act.
	h)	Where shareholders’ approval is required, check whether the requisite approvals have been
		obtained as required under Section 188 of the Act
	i)	Examine whether related party disclosures are made in the financial statements as per the requirements of Accounting Standard 18
	j)	Examine whether disclosure related to contracts or arrangements with related parties as mandated by section 188 are made in Board’s report Including the assessment of identification of related parties and whether the transaction is at arm’s length and basis of such
		conclusion.
	k)	Consider the implications of non-compliances above also in the auditors’ opinionon the financial statements.
14	Whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of section 42 of the Companies Act, 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised. If not, provide the details in respect of the amount involved and nature of noncompliance
	a)	Has the Company made any preferential allotment or private placement of shares or fully convertible debentures during the year.
	b)	Obtain a statement containing the specific terms of offer for private placement, including
		purpose for which funds were raised, and the details of subsequent applicationamounts,
		dates and the purpose.
	c)	Ascertain whether the offer and allotment of securities referred in 1 above are in compliance with the requirements mandated by section 42 of the Act.
	d)	Based on the understanding so gained, perform a reasonable test check of compliance with
		the requirements of the Act.
	e)	Consider the implications of non-compliances above also in the auditors’ report on the financial statements.
		Note: Reporting under this Clause is required also in instances where the amounts have been raised in earlier year(s) and is being utilized under the year under review.
15	Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether the provisions of section 192 of Companies Act, 2013 have been complied with;
	a)	Obtain a statement containing list of directors of the company, its holding company, subsidiary and associate companies and persons connected with the directors
	b)	Scrutinise the following books of account, records and documents could provide source of such audit evidence to the auditor as to the existence of such non-cash transactions as well as
		persons connected with the
		Directors:
		i	Form No. MBP 1, Notice of Interest by Director, filed pursuant to the Companies (Meetings
			of Board and Its Powers) Rules, 2014
		ii	Form No. MBP 2, Register of Loans, Guarantee, Security and Acquisition Made by the Company, filed pursuant to the Companies (Meetings of Board and Its Powers) Rules, 2014
		iii	Form No. MBP 4, Register of Contracts with Related Party and Contracts and Bodies etc.
			in which Directors are Interested, filed pursuant to the Companies (Meetings of Board and Its Powers) Rules, 2014
		iv	Movements in the Fixed Asset Register
		v	Minutes book of the General Meeting and Meetings of Directors
		vi	Report on Annual General Meeting pursuant to Companies (Management and Administration) Rules, 2014 Minutes of meetings of Board of Directors and Audit committee
	c)	Obtain a statement from management containing transactions between the Company and director(s) referred to above
	d)	Perform reasonable check to ascertain non cash transactions
	e)	Obtain understanding of requirements of section 192 of the Act.
	f)	Based on the understanding so gained, perform a reasonable test check of compliance with
		the aforesaid requirements of the Act.
	g)	Consider the implications of non-compliances above also in the auditors’ opinion on the financial statements.
16	Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and if so, whether the registration has been obtained.
	a)	Examine the financial statements of the Company and assess whether the company has financial assets and financial income
		Note: According to the RBI press release 1998- 99/1269 dated 08.04.1999, a company will be treated as NBFC if its financial assets are more than 50% of its total assets (netted off by intangible assets) and income from financial assets should be more than 50% of its gross income.
	b)	Check whether the company has financing activity as a principal business of the Company.
	c)	Obtain understanding of the requirements of section 45- IA of RBI Act, 1934 with regard to registration of the company with RBI
	d)	Examine whether the Company is carrying out NBFC activity / Core investment company.
	e)	Examine the steps taken by the company to comply with requirements of the RBI Act, 1934 with respect to registration as a NBFC.
		Also examine the correspondence and documents filed with the RBI, minutes of the Board
		meeting.
	f)	Examine whether the Company has obtained Certificate of Registration from RBI in terms of section 45-IA of the RBI Act, 1934.
	g)	Consider the implications of non-compliances above also in the auditors’ opinion on the financial statements.

finance

Disclosures Checklist of Indian Accounting Standards (Ind AS)

Post author By D meenal vaid
Post date June 30, 2023
No Comments on Disclosures Checklist of Indian Accounting Standards (Ind AS)

Disclosures Checklist of Indian Accounting Standards (Ind AS)

ByD meenal vaid
July 10, 2023
No Comments

Disclosures Checklist of Indian Accounting Standards (Ind AS)
Ind AS 1, Presentation of Financial Statements
S.No	Disclosure	Y/NA/N M

1	When financial statements comply with Ind AS, disclosure by way of an explicit and unreserved	Yes
	statement of such compliance in the notes.
2	Additional disclosures when compliance with the specific requirements in Ind ASs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the	Yes
	entity’s financial position and financial performance.
3	In the extremely rare circumstances in which management concludes that compliance with a requirement in an Ind AS would be so misleading that it would conflict with the objective of financial statements set out in the Framework, the entity shall departs from that requirement if the relevant regulatory framework requires, or otherwise does not prohibit, such a departure), and it shall disclosure that:	Yes
	(a) management has concluded that the financial statements present a true and fair view of the entity’s financial position, financial performance and cash flows;
	(b) it has complied with applicable Ind ASs, except that it has departed from a particular requirement to present a true and fair view;
	(c) the title of the Ind AS from which the entity has departed, the nature of the departure, including the treatment that the Ind AS would require, the reason why that treatment would be so
	misleading in the circumstances that it would conflict with the objective of financial statements set out in the Framework, and the treatment adopted; and
	(d) for each period presented, the financial effect of the departure on each item in the financial statements that would have been reported in
	complying with the requirement.
4	In case entity departed from a requirement of an Ind AS in a prior period, and that departure affects the amounts recognised in the financial statements for	Yes
	the current period, disclosures set out in paragraph 1.20 (c) and 1.20 (d).
5	When management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern but going concern concluded to be valid and financial statements are prepared on a going concern basis, disclosure of those uncertainties.	Yes
	When financial statement are not prepared on going concern basis, disclosure of that fact, together with basis on which entity it prepared financial statements and the reason why the entity is not regarded as a
	going concern.
6	Disclosure of significant accounting policies comprising:	Yes
	(a) the measurement basis (or bases) used in preparing the financial statements; and
	(b) the other accounting policies used that are relevant to an understanding of the financial statements.
7	Disclosure of each significant accounting policy that is not specifically required by Ind ASs but the entity selects and applies in accordance with Ind AS 8.	Yes
	(An accounting policy may be significant because of the nature of the entity’s operations even if amounts
	for current and prior periods are not material.)
8	Disclosure of, along with its significant accounting policies or other notes, the judgements, apart from those involving estimations, (see paragraph 1.125) made by management in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in the	Yes
	financial statements.
9	Disclosure of information about the assumptions made about the future, and other major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The notes shall include details of:	Yes
	(a) their nature, and
	(b) their carrying amount as at the end of the reporting period.
10	If it is impracticable to disclose the extent of the possible effects of an assumption or another source of estimation uncertainty at the end of the reporting period, disclosures that it is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that are different from the assumption could require a material adjustment to the carrying amount of the asset or liability affected.	Yes
	In all cases, disclosure of the nature and carrying
	amount of the specific asset or liability (or class of assets or liabilities) affected by the assumption.
Ind AS 2, Inventories
S.No	Disclosure	Y/NA/N M

1	Disclosure of:	Yes
	(a) the accounting policies adopted in measuring inventories, including the cost formula used
	(b) the total carrying amount of inventories and the carrying amount in classifications appropriate to the entity
	(c) the carrying amount of inventories carried at fair value less costs to sell
	(d) the amount of inventories recognised as an expense during the period
	(e) the amount of any write-down of inventories recognised as an expense in the period in accordance with paragraph 2.34.
	(f) the amount of any reversal of any write-down that is recognised as a reduction in the amount of inventories recognised as expense in the period in accordance with paragraph 2.34
	(g) the circumstances or events that led to the reversal of a write down of inventories in accordance with paragraph 2.34
	(h) the carrying amount of inventories pledged as security for liabilities.
2	In case entity adopts a format for profit and loss that results in amounts being disclosed other than the cost of inventories recognised as an expense during the period and the entity presents an analysis of expenses using a classification based on the nature of expenses, disclosures of the costs recognised as an expense for raw materials and consumables, labour	Yes
	costs and other costs together with the amount of the net change in inventories for the period.
Ind AS 7, Cash Flow Statements
S.No	Disclosure	Y/NA/N M

1	Disclosure of, in aggregate, in respect of both obtaining and losing control of subsidiaries or other businesses during the period each of the following:	Yes
	(a) the total consideration paid or received;
	(b) the portion of the consideration consisting of cash and cash equivalents;
	(c) the amount of cash and cash equivalents in the subsidiaries or other businesses over which control is obtained or lost; and
	(d) the amount of the assets and liabilities other than cash or cash equivalents in the subsidiaries or other businesses over which control is obtained or lost, summarised by each major category.
2	Disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing	Yes
	activities, including both changes arising from cash flows and non-cash changes.
3	To the extent necessary to satisfy the requirement in paragraph 7.44A, disclosure of the following changes in liabilities arising from financing activities:	Yes
	(a) changes from financing cash flows;
	(b) changes arising from obtaining or losing control of subsidiaries or other businesses;
	(c) the effect of changes in foreign exchange rates;
	(d) changes in fair values; and
	(e) other changes.
4	Liabilities arising from financing activities are liabilities for which cash flows were, or future cash flows will be, classified in the statement of cash flows as cash flows from financing activities. In addition, the disclosure requirement in paragraph 7.44A also applies to changes in financial assets (for example, assets that hedge liabilities arising from financing activities) if cash flows from those financial assets were, or future cash	Yes
	flows will be, included in cash flows from financing activities.
5	Disclosure of the components of cash and cash equivalents.
6	Disclosure, together with a commentary by management, of the amount of significant cash and cash equivalent balances held by the entity that are
	not available for use by the group.
7	Disclosure of segmental cash flows to enables users to obtain a better understanding of the relationship between the cash flows of the business as a whole and those of its component parts and the availability
	and variability of segmental cash flows.
Ind AS 12, Income Taxes
S.No	Disclosure	Y/NA/N M

1	Disclosures of following major components of tax expense (income) separately:	Yes
	(a) current tax expense (income);
	(b) any adjustments recognised in the period for current tax of prior periods;
	(c) the amount of deferred tax expense (income) relating to the origination and reversal of temporary differences;
	(d) the amount of deferred tax expense (income) relating to changes in tax rates or the imposition of new taxes;
	(e) the amount of the benefit arising from a previously unrecognised tax loss, tax credit or temporary difference of a prior period that is used to reduce current tax expense;
	(f) the amount of the benefit from a previously unrecognised tax loss, tax credit or temporary difference of a prior period that is used to reduce deferred tax expense;
	(g) deferred tax expense arising from the write-down, or reversal of a previous write-down, of a deferred tax asset in accordance with paragraph 56 of this Standard; and
	(h) the amount of tax expense (income) relating to those changes in accounting policies and errors that are included in profit or loss in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors, because they
	cannot be accounted for retrospectively.
2	Separate disclosure of the following:	Yes
	(a) the aggregate current and deferred tax relating to items that are charged or credited directly to equity (see paragraph 12.62A);
	(b) the amount of income tax relating to each component of other comprehensive income
	(paragraph 12.62 and Ind AS 1, Presentation of Financial Statements);
	(c) an explanation of the relationship between tax expense (income) and accounting profit in either or both of the following forms:
	(i) a numerical reconciliation between tax expense (income) and the product of accounting profit multiplied by the applicable tax rate(s), disclosing also the basis on which the applicable tax rate(s) is (are) computed; or
	(ii) a numerical reconciliation between the average effective tax rate and the applicable tax rate, disclosing also the basis on which the applicable tax rate is computed;
	(d) an explanation of changes in the applicable tax rate(s) compared to the previous accounting period;
	(e) the amount (and expiry date, if any) of deductible temporary differences, unused tax losses, and unused tax credits for which no deferred tax asset is recognised in the balance sheet;
	(f) the aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recognised (see paragraph 12.39);
	(g) in respect of each type of temporary difference, and in respect of each type of unused tax losses and unused tax credits:
	(i) the amount of the deferred tax assets and liabilities recognised in the balance sheet for each period presented;
	(ii) the amount of the deferred tax income or expense recognised in profit or loss, if this is not apparent from the changes in the amounts recognised in the balance sheet;
	(h) in respect of discontinued operations, the tax expense relating to:
	(i) the gain or loss on discontinuance; and
	(ii) the profit or loss from the ordinary activities of the discontinued operation for the period, together with the corresponding amounts for each prior period presented;
	(i) the amount of income tax consequences of dividends to shareholders of the entity that were proposed or declared before the financial statements were approved for issue, but are not recognised as a liability in the financial statements;
	(j) if a business combination in which the entity is the acquirer causes a change in the amount recognised for its pre-acquisition deferred tax asset (paragraph 12.67), the amount of that change; and
	(k) if the deferred tax benefits acquired in a business combination are not recognised at the acquisition date but are recognised after the acquisition date (paragraph 12.68), a description of the event or change in circumstances that caused the deferred tax benefits to be recognised.
3	An entity shall disclose the amount of a deferred tax asset and the nature of the evidence supporting its recognition, when:	Yes
	(a) the utilisation of the deferred tax asset is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences; and
	(b) the entity has suffered a loss in either the current or preceding period in the tax jurisdiction to which the deferred tax asset relates.
4	When income taxes are payable at a higher or lower rate if part or all of the net profit or retained earnings is paid out as a dividend to shareholders or when income taxes may be refundable or payable if part or all of the net profit or retained earnings is paid out as a dividend to shareholders, as per paragraph 12.52A disclosure of the nature of the potential income tax consequences that would result from the payment of dividends to its shareholders.
	In addition, disclosures of the amounts of the potential income tax consequences practicably determinable
	and whether there are any potential income tax consequences not practicably determinable.
Ind AS 16, Property, Plant and Equipment
S.No	Disclosure	Y/NA/N M

1	For each class of Property Plant and Equipment, disclosures of following:	Yes
	(a) the measurement bases used for determining the gross carrying amount;
	(b) the depreciation methods used;
	(c) the useful lives or the depreciation rates used;
	(d) the gross carrying amount and the accumulated depreciation (aggregated with accumulated impairment losses) at the beginning and end of the period; and
	(e) a reconciliation of the carrying amount at the beginning and end of the period showing:
	(i) additions;
	(ii) assets classified as held for sale or included in a disposal group classified as held for sale in accordance with Ind AS 105 and other disposals;
	(iii) acquisitions through business combinations;
	(iv) increases or decreases resulting from revaluations under paragraphs 16.31, 16.39 and
	16.40 and from impairment losses recognised or reversed in other comprehensive income in accordance with Ind AS 36, Impairment of Assets;
	(v) impairment losses recognised in profit or loss in accordance with Ind AS 36, Impairment of Assets;
	(vi) impairment losses reversed in profit or loss in accordance with Ind AS 36, Impairment of Assets;
	(vii) depreciation;
	(viii) the net exchange differences arising on the translation of the financial statements from the functional currency into a different presentation currency, including the translation of a foreign operation into the presentation currency of the reporting entity; and
	(ix) other changes.
2	Disclosures of the following:	Yes
	(a) the existence and amounts of restrictions on title, and property, plant and equipment pledged as security for liabilities;
	(b) the amount of expenditures recognised in the carrying amount of an item of property, plant and equipment in the course of its construction;
	(c) the amount of contractual commitments for the acquisition of property, plant and equipment; and
	(d) if it is not disclosed separately in the statement of profit and loss, the amount of compensation from third parties for items of property, plant and
	equipment that were impaired, lost or given up that is included in profit or loss.
Ind AS 18, Revenue
S.No	Disclosure	Y/NA/N M

1	Disclosure of:	Yes
	(a) the accounting policies adopted for the recognition of revenue, including the methods adopted to determine the stage of completion of transactions involving the rendering of services;
	(b) the amount of each significant category of revenue recognised during the period, including revenue arising from:
	(i) the sale of goods;
	(ii) the rendering of services; and
	(iii) royalties
	(c) the amount of revenue arising from exchanges of goods or services included in each significant category of revenue.
2	Disclosures of any contingent liabilities and contingent assets arising from items such as warranty costs, claims, penalties or possible losses in accordance with Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets.	Yes
Ind AS 19, Employee Benefits
S.No	Disclosure	Y/NA/N M

1	Disclosure about short-term employee benefits for key management personnel in accordance with Ind AS 24, Related Party Disclosures, and disclosure of	Yes
	short-term employee benefits expense in accordance with Ind AS 1, Presentation of Financial Statements.
2	Disclosure of the amount recognised as an expense for defined contribution plans.	Yes
3	Where required by Ind AS 24, disclosure of information about contributions to defined contribution plans for key management personnel.	Yes
4	Disclosure of information that:	Yes
	(a) explains the characteristics of its defined benefit plans and risks associated with them (paragraph 139 of this Standard);
	(b) identifies and explains the amounts in its financial statements arising from its defined benefit plans (paragraphs 19.140–19.144 this Standard); and
	(c) describes how its defined benefit plans may affect the amount, timing and uncertainty of the entity’s future cash flows (paragraphs 19.145–19.147).
5	Have assessment been made as to whether all or some disclosures should be disaggregated to distinguish plans or groups of plans with materially different risks.	Yes
	For example, an entity may disaggregate disclosure about plans showing one or more of the following features:
	(a) different geographical locations.
	(b) different characteristics such as flat salary pension plans, final salary pension plans or postemployment medical plans.
	(c) different regulatory environments.
	(d) different reporting segments.
	(e) different funding arrangements (eg wholly unfunded, wholly or partly funded).
6	Disclosure of:	Yes
	(a) information about the characteristics of its defined benefit plans, including:
	(i) the nature of the benefits provided by the plan (eg final salary defined benefit plan or contribution-based plan with guarantee).
	(ii) a description of the regulatory framework in which the plan operates, for example the level of any minimum funding requirements, and any effect of the regulatory framework on the plan, such as the asset ceiling (see paragraph 19.64).
	(iii) a description of any other entity’s responsibilities for the governance of the plan, for example responsibilities of trustees or of board members of the plan.
	(b) a description of the risks to which the plan exposes the entity, focused on any unusual, entity specific or plan-specific risks, and of any significant concentrations of risk. For example, if plan assets are invested primarily in one class of investments, eg property, the plan may expose the entity to a concentration of property market risk.
	(c) a description of any plan amendments,
	curtailments and settlements.
7	An entity shall provide a reconciliation from the opening balance to the closing balance for each of the following, if applicable:	Yes
	(a) the net defined benefit liability (asset), showing separate reconciliations for:
	(i) plan assets.
	(ii) the present value of the defined benefit obligation.
	(iii) the effect of the asset ceiling.
	(b) any reimbursement rights. An entity shall also describe the relationship between any reimbursement right and the related obligation.
Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance
S.No	Disclosure	Y/NA/N M

1	Disclosure of:	Not Applicable
	(a) the accounting policy adopted for government grants, including the methods of presentation adopted in the financial statements;
	(b) the nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited; and
	(c) unfulfilled conditions and other contingencies attaching to government assistance that has been
	recognised.
Ind AS 21, The Effects of Changes in Foreign Exchange Rates
S.No	Disclosure	Y/NA/N M

1	Disclosure of:	Yes
	a) Exchange differences recognised in profit or loss, except for those arising on financial instruments accounted in accordance with Ind AS 109, and
	b) Net exchange differences recognised in other comprehensive
	c) income and accumulated in a separate component of equity, and a reconciliation of such exchange differences at the beginning and end of the period.
2	In case presentation currency is different from the functional currency, state that fact together with disclosure of the functional currency and the reason	Yes
	for using a different presentation currency.
3	Disclosure of change in the functional currency of either the reporting entity or a significant foreign operation, together with the reason for the change in functional currency and the date of change in	Yes
	functional currency.
4	In case financial statements are presented in a currency that is different from its functional currency, description that the financial statements as complying with Ind ASs only if they comply with all the requirements of each applicable Standard including	Not Applicable
	the translation method set out in paragraphs 21.39 and 21.42.
5	In case financial statements or other financial information are presented in a currency that is different from either its functional currency or its presentation currency and the requirements of paragraph 21.55 is not met, whether:	Not Applicable
	a) the information has been clearly identified as supplementary information to distinguish it from the information that complies with Ind ASs,
	b) disclosed the currency in which the supplementary information is displayed, and
	c) disclosed the entity’s functional currency and the method of translation used to determine the supplementary information?
Ind AS 23, Borrowing Costs
S.No	Disclosure	Y/NA/N M

1	Disclosure of:	Yes
	(a) the amount of borrowing costs capitalised during the period; and
	(b) the capitalisation rate used to determine the
	amount of borrowing costs eligible for capitalisation.
Ind AS 24, Related Party Disclosures
S.No	Disclosure	Y/NA/N M

1	Disclosure of the relationship between parent and its subsidiaries irrespective of whether there have been transactions between them.	Yes
2	Disclosure of the name of parent and, if different, the ultimate controlling party.	Yes
3	Disclosures of next most senior parent if neither parent nor ultimate controlling party produces	Yes
	consolidated financial statements available for public use.
4	Disclosure of relationships, name of the related party and nature of the related party relationship, when control exists, irrespective of whether there have	Yes
	been transactions between the related parties
5	Disclosure of key management personnel compensation in total for each of following categories:	Yes
	a) Short-term employee benefits,
	b) Post-employment benefits,
	c) Other long-term benefits,
	d) Termination benefits, and
	e) Share based payment
6	In case key management personnel services are obtained from a ‘management entity’, the requirements of paragraph 24.17 is not required to apply to compensation paid or payable by the	Yes
	management entity to its employees or directors.
7	In case there has been related party transactions during the periods covered by the financial statements, disclosure of information about the transactions and outstanding balances, including commitments, necessary for an understanding of the potential effect of the relationship on the financial statements, including the following at a minimum:	Yes
	(a) Nature of related party relationship,
	(b) Amount of transactions,
	(c) Amount of outstanding balances (including commitments), and:
	(i) their terms and conditions, including whether they are secured, and nature of the consideration to be provided in settlement,
	(ii) Details of any guarantees given or received,
	(d) Provisions for doubtful debts related to outstanding balances,
	(e) Expense recognised in respect of bad or doubtful debts due from related parties, and
	(f) Amounts incurred for provision of key
	management personnel services that are provided by a separate entity.
Ind AS 29, Financial Reporting in Hyperinflationary Economies
S.N0	Disclosure	Y/NA/N M

1	Separate disclosure of gain or loss on the net monetary position included in profit or loss.
2	Disclosures shall be made of the following:
	(a) the fact that the financial statements and the corresponding figures for previous periods have been restated for the changes in the general purchasing power of the functional currency and, as a result, are stated in terms of the measuring unit current at the end of the reporting period;
	(b) whether the financial statements are based on a historical cost approach or a current cost approach;
	(c) the identity and level of the price index at the end of the reporting period and the movement in the index during the current and the previous reporting period.
	(d) the duration of the hyperinflationary situation existing in the economy.
3	Disclosures required by this Standard are needed to make clear the basis of dealing with the effects of inflation in the financial statements. They are also intended to provide other information necessary to
	understand that basis and the resulting amounts.
Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets
S.N0	Disclosure	Y/NA/N M

1	This Standard applies to provisions for restructurings (including discontinued operations). When a restructuring meets the definition of a discontinued operation, additional disclosures may be required by Ind AS 105, Non-current Assets Held for Sale and	Yes
	Discontinued Operations.
2	If an entity starts to implement a restructuring plan, or announces its main features to those affected, only after the reporting period, disclosure is required under, Ind AS 10, Events after the Reporting Period, if the restructuring is material and non-disclosure could influence the economic decisions that users make on	Yes
	the basis of the financial statement.
3	For each class of provision, disclosure of:	Yes
	(a) the carrying amount at the beginning and end of the period;
	(b) additional provisions made in the period, including increases to existing provisions;
	(c) amounts used (i.e., incurred and charged against the provision) during the period;
	(d) unused amounts reversed during the period; and
	(e) the increase during the period in the discounted amount arising from the passage of time and the effect of any change in the discount rate.
	Comparative information is not required.
4	Disclosure of the following for each class of provision:	Yes
	(a) a brief description of the nature of the obligation and the expected timing of any resulting outflows of economic benefits;
	(b) an indication of the uncertainties about the amount or timing of those outflows. Where necessary to provide adequate information, an entity shall disclose the major assumptions made concerning future events, as addressed in paragraph 48; and
	(c) the amount of any expected reimbursement, stating the amount of any asset that has been recognised for that expected reimbursement.
Ind AS 38, Intangible Assets
S.N0	Disclosure	Y/NA/N M

1	Disclosure of the following for each class of intangible assets, distinguishing between internally generated intangible assets and other intangible assets:	Not Applicable
	(a) whether the useful lives are indefinite or finite and, if finite, the useful lives or the amortisation rates used;
	(b) the amortisation methods used for intangible assets with finite useful lives;
	(c) the gross carrying amount and any accumulated amortisation (aggregated with accumulated impairment losses) at the beginning and end of the period;
	(d) the line item(s) of the statement of profit and loss in which any amortisation of intangible assets is included;
	(e) a reconciliation of the carrying amount at the beginning and end of the period showing:
	(i) additions, indicating separately those from internal development, those acquired separately, and those acquired through business combinations;
	(ii) assets classified as held for sale or included in a disposal group classified as held for sale in accordance with Ind AS 105 and other disposals;
	(iii) increases or decreases during the period resulting from revaluations under paragraphs 38.75, 38.85 and 38.86 and from impairment losses recognised or reversed in other comprehensive income in accordance with Ind AS 36 (if any);
	(iv) impairment losses recognised in profit or loss during the period in accordance with Ind AS 36 (if any);
	(v) impairment losses reversed in profit or loss during the period in accordance with Ind AS 36 (if any);
	(vi) any amortisation recognised during the period;
	(vii) net exchange differences arising on the translation of the financial statements into the presentation currency, and on the translation of a foreign operation into the presentation currency of the entity; and
	(viii) other changes in the carrying amount during
	the period.
2	A class of intangible assets is a grouping of assets of a similar nature and use in an entity’s operations. Examples of separate classes may include:	Not Applicable
	(a) brand names;
	(b) mastheads and publishing titles;
	(c) computer software;
	(d) licences and franchises;
	(e) copyrights, patents and other industrial property rights, service and operating rights;
	(f) recipes, formulae, models, designs and prototypes; and
	(g) intangible assets under development.
	The classes mentioned above are disaggregated (aggregated) into smaller (larger) classes if this results in more relevant information for the users of
	the financial statements.
3	Disclosures of information on impaired intangible assets in accordance with Ind AS 36 in addition to the information required by paragraph 38.118(e)(iii)–(v).	Not Applicable
4	Disclosure required under Ind AS 8 regarding nature and amount of a change in an accounting estimate that has a material effect in the current period or is expected to have a material effect in subsequent periods resulting from factors such as:	Not Applicable
	(a) the assessment of an intangible asset’s useful life;
	(b) the amortisation method; or
	(c) residual values.
5	Disclosure of:	Not Applicable
	(a) for an intangible asset assessed as having an indefinite useful life, the carrying amount of that asset and the reasons supporting the assessment
	of an indefinite useful life. In giving these reasons, the entity shall describe the factor(s) that played a significant role in determining that the asset has an indefinite useful life.
	(b) a description, the carrying amount and remaining amortisation period of any individual intangible asset that is material to the entity’s financial statements.
	(c) for intangible assets acquired by way of a government grant and initially recognised at fair value (paragraph 38.44):
	(i) the fair value initially recognised for these assets;
	(ii) their carrying amount; and
	(iii) whether they are measured after recognition under the cost model or the revaluation model.
	(d) the existence and carrying amounts of intangible assets whose title is restricted and the carrying amounts of intangible assets pledged as security for liabilities.
	(e) the amount of contractual commitments for the
	acquisition of intangible assets.
6	In case intangible assets are accounted for at revalued amounts, disclosure of the following:	Not Applicable
	(a) by class of intangible assets:
	(i) the effective date of the revaluation;
	(ii) the carrying amount of revalued intangible assets; and
	(iii) the carrying amount that would have been recognised had the revalued class of intangible assets been measured after recognition using the cost model in paragraph 38.74; and
	(b) the amount of the revaluation surplus that relates to intangible assets at the beginning and end of the period, indicating the changes during the period and any restrictions on the distribution of
	the balance to shareholders.
7	Disclosure of the aggregate amount of research and development expenditure recognised as an expense during the period.	Not Applicable
8	Optional disclosure of the following information:
	(a) a description of any fully amortised intangible asset that is still in use; and
	(b) a brief description of significant intangible assets controlled by the entity but not recognised as assets because they did not meet the recognition criteria in this Standard or because they were acquired or generated before this standard was
	effective.
Ind AS 113, Fair Value Measurements
S.N0	Disclosure	Y/NA/N M

1	Disclosure of the following:	Yes
	a) for assets and liabilities that are measured at fair value on a recurring or non-recurring basis in the balance sheet after initial recognition, the valuation techniques and inputs used to develop those measurements, and
	b) for recurring fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on profit or loss or
	other comprehensive income for the period.
2	Disclosure of, at a minimum, the following information for each class of assets and liabilities measured at fair value in the balance sheet after initial recognition:	Yes
	a) for recurring and non-recurring fair value measurements, the fair value measurement at the end of the reporting period, and for non- recurring fair value measurements, the reason for the measurement,
	b) for recurring and non-recurring fair value measurements, the level of the fair value hierarchy (Level 1, 2, or 3),
	c) if there are any transfers between level 1 and level 2 of the hierarchy, the reasons for those transfers,
	d) a description of the valuation technique (s) and the inputs used in the fair value measurement for the items categorised within Level 2 and Level 3 of the hierarchy,
	e) if there has been change in the valuation technique, that change and the reasons for making it,
	f) for fair value measurements categorised within Level 3 of the fair value hierarchy, quantitative information about the significant unobservable inputs,
3	Determination of the appropriate classes of assets and liabilities based on the following:	Yes
	a) the nature, characteristics and risks of the asset or liability, and
	b) the level of the fair value hierarchy within which the fair value measurement is categorised.
4	Disclose and consistently followed policy for	Yes
	determining the transfers between levels in the fair value hierarchy that are deemed to have occurred.

finance

Audit Trials – Newly Introduced by MCA

Post author By Ashwini Priyadarshini
Post date June 7, 2023
No Comments on Audit Trials – Newly Introduced by MCA

MCA (Ministry of Corporate Affairs) has introduced a new audit trail feature that mandates accounting software used by certain companies or individuals to enable an audit trail facility.

As per the MCA’s requirement, the audit trail feature should create an edit log for any changes made on transactions and record the date of each change being made and cannot be disabled. This would enable businesses to track all financial activities while helping to maintain transparency and detecting fraud¹.The requirement was initially made applicable for the financial year commencing on or after the 1st day of April 2021 vide notification G.S.R. 206 (E) dated March 24, 2021. However, its applicability has been deferred two times and this requirement is finally applicable from April 1, 2023.

Its features:

The audit trail feature is designed to record an “edit log” or audit trail of each transaction entered in the accounting software which can be reviewed by auditors or regulators.
This feature will make it easier to track changes and identify errors, potential fraud, or other discrepancies in accounting data.
This feature must be available for all authorized users of the accounting software and cannot be disabled.
The accounting software must ensure the integrity, generation, and retention of the audit trail for a minimum period of eight years.
The implementation of the audit trail feature has been delayed until April 1, 2023, and all accounting software used by certain companies or individuals are expected to comply with this new rule.

These are some of the key features of the audit trail feature introduced by the MCA, which is aimed at promoting transparency and accuracy in financial reporting and auditing.

Pros of Audit Trials – Newly Introduced by MCA:

Increases transparency: The use of audit trails can help increase transparency, making it easier to track changes to financial data and identify potential fraud or errors.
Supports compliance: The MCA may require certain companies to use audit trails in order to comply with regulations. Having this feature built-in to accounting software can make it easier for companies to meet these requirements.
Can provide a better understanding of financial data: By tracking changes to financial data over time, it is easier to identify trends and patterns that may be important for business decisions

Cons of Audit Trials – Newly Introduced by MCA:

Can be resource-intensive: Depending on the size of the organization and the amount of data being tracked, using audit trails may require additional resources (such as storage space and processing power).
Can introduce delays: If auditors need to review audit trails as part of an investigation, this can introduce additional delays in the financial reporting process.
User errors may still occur: Even with audit trails in place, it is still possible for human errors to occur (such as accidentally entering incorrect data). Audit trails can help identify these errors after the fact, but they do not prevent them from happening in the first place.

The audit trail requirement introduced by the Ministry of Corporate Affairs (MCA) is expected to be helpful for Chartered Accountants (CAs). The audit trail feature can provide a comprehensive record of transactions, which can make it easier for CAs to detect and prevent fraudulent activities and ensure accuracy in accounting records. Additionally, the implementation of an audit trail can help CAs in conducting audits more efficiently and effectively.

Implementation of an audit trail can be helpful in ensuring accuracy in accounting records and preventing fraudulent activities. However, the effectiveness of the audit trail feature will depend on how well it is implemented by companies and how rigorously it is monitored by auditors and regulators.

finance

Basics On Trusts

INTRODUCTION

“Trust is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.”

Trusts are formed for charitable purposes which include Relief to the poor, Education, Medical relief, Preservation of environment and Preservation of monuments or places or objects of artistic historic interest and the advancement of any other object of general public utility

Provided that the advancement of any other object of a general public utility shall not be a charitable purpose if it involves the carrying on of any activity like trade, commerce or business or any activity of rendering any service concerning any trade, commerce or business, for a cess or fee or any other consideration of the nature of cess or application or retention of the income from such activity,

Unless: – 1. Such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility;

The aggregate received from such activity activities during the previous year does not exceed 20% of the total receipts are the trust institution undertaking search activity activities of that previous year.

ELIGIBILITY FOR CREATING A TRUST

Any Individual who are competent to contract can form a trust. The trusts can also be created by HUF’s, an association of persons, a company and guardian on behalf of a minor, after seeking permission from the principal court of original jurisdiction.

PROCEDURE FOR CREATING A TRUST

The trusts can be formed either as a society or as a section 8 company. Usually, the Trust Deed is the document that establishes the registration of the Trust.

Parties to the TRUST

AUTHOR – Person creating the Trusts

TRUSTEE – Members of the Trust

BENEFICIARY – The persons who will benefit from the trust.

The contents of the trust deed are as follows

Name of the Trust
Place of office of the Trust
Objects of the Trust
Number of Trustees
Term of the Trustees
Trust Management
Appointment or Resignation or Termination of Trustees
Power, Function and Duties of the Trustees
Application of Trust Property
Other important matters.

The above-mentioned lists are not exhaustive.

Once the trust deed is executed it should be registered with the registrar.

Then the trust should apply for PAN card and Bank account in the name of the Trust.

REGISTERATION UNDER SECTION 12A

Trusts can seek registration u/s 12A to claim an exemption under provisions of Income Tax Act 1961. Section 12A deals with registration of trust.

Earlier trust, institution, or NPO/ NGO, once registered, held a lifetime validity unless the Income Tax Department cancels it. The Income-tax Department introduced changes to the rules and application format for funds, charitable trusts, universities, institutions—including educational and medical institutions—and NPOs/ NGOs from April 1, 2021. Thus, the trusts which are already registered are required to reapply for the same and obtain a new registration under a new Section 12AB.

PROVISIONAL REGISTRATION

Thus, the provisional registration u/s 12 shall be made online by filing application in the Form 10A.The following are the attachments required for duly filing in FORM 10A

Self-certified copy of the instrument creating the trust or establishing the institution
Self-certified copy of the document evidencing the creation of the trust, or establishment of the institution
Self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be
Self-certified copy of registration under Foreign Contribution (Regulation) Act, 2010, if the applicant is registered
Self-certified copy of existing order granting registration under section 12A or section 12AA or section 12AB, as the case may be*
Where the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration is made, Self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up.

FORM 10A should be filed at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought. The approval of provisional registration will be given in FORM 10AC and is valid for three years.

FINAL REGISTRATION

Trusts which are provisionally registered must apply for a final registration by filing FORM 10AB. at least six months before the expiry of provisional registration or six months within the commencement of charitable activities, whichever is earlier. The registration will be granted for a period of five years. The approval of final registration will be given in FORM 10AD.The following are the attachments required for filing FORM 10AB

where the applicant is created, is established, under an instrument, self-certified copy of the instrument;
where the applicant is created, is established, otherwise than under an instrument, self-certified copy of the document evidencing the creation of the applicant
self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;
self-certified copy of registration under Foreign Contribution (Regulation) Act, 2010 (42 of 2010), if the applicant is registered under such Act;
self-certified copy of existing order granting registration or approval under section 12A or section 12AA or section 12AB or clause (23C) of section 10 or section 80G of the Income-tax Act, as the case may be;
self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AA or section 12AB or clause (23C) of section 10 or section 80G of the Income-tax Act, as the case may be, if any;
where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the applicant relating to such prior year or years for which such accounts have been made up;
where a business undertaking is held by the applicant as per the provisions of sub-section (4) of section 11 and the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of such business undertaking relating to such prior year or years for which such accounts have been made up and self-certified copy of the report of audit as per the provisions of section 44AB
where the income of the applicant includes profits and gains of business as per the provisions of sub-section (4A) of section 11 and the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of such business relating to such prior year or years for which such accounts have been made up and self-certified copy of the report of audit as per the provisions of section 44AB
self-certified copy of the documents evidencing adoption or modification of the objects; and
note on the activities of the trust or institution or fund.

Steps for filing FORM 10A / FORM 10AB

Log on to the E-filing portal of income tax department
Go to “Income Tax Forms” under e-File tab.
Select the Form Name as Form 10A/10AB
Fill in the details as required in the form and attach the required and applicable attachments.
Submit the form using digital signatures or EVC as required while return filing.

ANNUAL COMPLAINCES

Filing of ITR

It is mandatory for trusts to furnish Income tax return annually. If the trust is required to get its accounts audited then the due date for filing ITR is 31^st October and in any other case 31^st July of the assessment year.

Audit of accounts

The audit is also pre prerequisite for claiming exemption, where the total income of the trust computed without giving effect to the provisions of section 11 and 12 exceeds Rs 2,50,000 in any previous year, then the accounts of the trust for that year should be audited by a Chartered Accountant.

Publication of Accounts

Publication of Accounts in the newspaper if the annual income/the receipts of the Trust which have been created from the Trust property exceed Rs. 1 crore.

Filing of GST Returns

If the Trust has GSTIN, then it is required to provide GST Returns monthly or quarterly (as may be applicable).

Filing of TDS Return & Issuance of TDS Certificates

If any Trust is deducting tax at source for salaries paid to the staff/employees. It needs to provide Certificates of TDS to the persons on whose behalf TDS was being collected. It should be done within one month from the closure date of the Financial Year. Apart from this, quarterly TDS Returns are also required to be filed.

finance

Internal Financial Control

Post author By CA. Anandaramakrishnan Lokeshwaran
Post date May 10, 2023
No Comments on Internal Financial Control

1. MEANING OF INTERNAL FINANCIAL CONTROL:

As per section 134 of The Companies Act, 2013, the term “Internal Financial Control” means the policies and procedure adopted by the company to ensure:

Orderly and efficient conduct of business, including adherence to company’s policies,
Safeguarding of its assets,
Prevention and detection of frauds and errors,
Timely preparation of reliable financial information.

The Act has set increased responsibility and accountability on Board of Directors, Audit committee, Senior Management and Independent Auditors. The approach that should be adopted by companies should be that of a comprehensive risk management program – Enterprise Risk Management (ERM).

2. APPLICABILITY OF INTERNAL FINANCIAL CONTROL:

RELEVANT PROVISIONS	APPLICABILITY	STATUTORY REQUIREMENT
Section 134 of companies Act 2013	All listed entities	The director’s responsibility statement shall state the director had laid down internal financial controls to be followed by the company and such that internal financial control is adequate and operating effectively.
Section 143 of companies Act 2013	All entities (listed/unlisted)	The auditor’s report shall state whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such IFC.
Section 177 of companies Act 2013	All entities having an audit committee	The audit committee shall evaluate internal financial controls and risk management system. The audit committee may call for comments of auditors about internal control systems before their submission to the board.
Schedule IV	All entities having independent directors	The independent directors should satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.
Rule 8 (5) of Companies Accounts rule	All entities (listed/unlisted)	The board report shall state the details in respect of adequacy of internal financial controls with reference to the financial statement.

Exemption from IFC for specified Private limited companies

One- person company (OPC)
A private limited company having a turnover of less than Rs. 50 Crores as per latest audited financial statement or having aggregate borrowings from bank or financial institutions or body corporate at any point of time during the financial year less than Rs. 25 Crores.

3. OBJECTIVE OF IFC:

Primary objective of IFC is to identify opportunities for improvement and to draw up recommendations & good practices that can be used as a benchmark to develop or strengthen their internal control systems and enhance the reliability of their financial statements. Other Objectives include:

Efficiency and effectiveness in operations.
Prevention and detection of fraud and error.
Safeguarding of its assets.
Accuracy and completeness of accounting records.
Reliability of Financial Reporting.

4. TERM INTERNAL CONTROL:

Internal Control = Internal control over financial reporting + Operational control reporting + Fraud prevention reporting.

5. ROADMAP TO IMPLEMENT INTERNAL FINANCIAL CONTROL:

Assess the current state of internal controls
Embrace a widely acceptable framework or guidelines
Set the right tone at the top i.e., those charged with governance
Ascertain organizational risks which have financial impact
Define the control objectives and control Activities to mitigate the risk
Ongoing continuous monitoring of the functioning of control
Obtain independent assurance on the effectiveness of the internal controls i.e., Independent Auditors

6. ADVANTAGES OF A ROBUST INTERNAL FINANCIAL CONTROL SYSTEM:

By placing more accountability and responsibility on the Board and Audit committee with respect to internal financial controls, the Companies Act 2013 is attempting to align the corporate governance and financial reporting standards with global best practices. With adequate and effective internal financial controls, some of the benefits that the companies would experience include:

Senior Management Accountability
Improved Controls over financial reporting process
Improved investor confidence in entity operations and financial reporting process
Promotes culture of openness and transparency within the entity
Trickling down of accountability to operational management
Improvements in Board, Audit Committee and senior management engagement in financial reporting and financial controls.
More accurate, reliable financial statements
Making audits more comprehensive

7. WHY INTERNAL FINANCIAL CONTROL IS IMPORTANT?

Internal financial controls also become important as they help derive values in the form of

Fresh Independent look at key business processes
Identification of potential operating process opportunities
Updated formal, centralized, and managed internal financial controls documentation for the company
Enhanced support to CEO/CFO certifications
Enhanced control environment, thereby mitigating risk
Better understanding of inherent and residual control risks in internal controls
Helps in business process redesigning to plug revenue leakage & cost
Containment opportunities
Helps in rationalizing the number of controls across organization – moving to smart and automated controls
Helps in standardizing policies and procedures for multi-location / multi- business companies
Fosters a control conscious work culture for people behind controls
Provides assurance to the CEO/CFO as well as improves business performance
In some instances, also serves as a base for blue print of optimal procedures while thinking about ERP.

8. GUIDANCE NOTE ISSUED BY ICAI ON INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING:

Under section 143(3)(i) of the Act, an auditor of a company is required to state in his/her audit report whether the company has an adequate Internal Financial Controls (IFC) system in place and the operating effectiveness of such controls. Explanation to Section 134(5)(e) of the Act defines IFC to include policies and procedures adopted by the company for ensuring orderly and efficient conduct of its business, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.

As per the Guidance Note “Internal Financial Controls Over Financial Reporting” (ICFR) shall mean:

“A process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles”. A company’s internal financial control over financial reporting includes those policies and procedures.

Pertain to the maintenance of the records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company.

Provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statement in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and director of the company.

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect of the financial statement.

9. REPORTING RESPONSIBILITY OF THE MANAGEMENT:

Section 134(5)(e) of the Act (which deals with the directors’ responsibility statement) requires directors of listed companies to state whether they had laid down IFC to be followed by the company and that such IFC are adequate and were operating effectively.

Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

This responsibility also includes Maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding of the assets of the Company, for preventing and detecting frauds and other irregularities, Selection and application of appropriate accounting policies, Making judgments and estimates that are reasonable and prudent and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

10.REPORTING RESPONSIBILITY OF AUDITOR:

The auditor’s objective in an audit of IFC – Financial Reporting (which is generally carried out along with an audit of financial statements) is to express an opinion on the adequacy and operating effectiveness of the company’s IFC – Financial Reporting. A company’s internal financial control cannot be considered effective if one or more material weakness exists.

Globally also, auditor’s reporting on internal controls is together with the reporting on financial statements and such internal controls reported upon relate only to internal controls over financial reporting.

finance

Corporate Social Responsilbility – Sec 135

Post author By CA. Anandaramakrishnan Lokeshwaran
Post date April 25, 2023
No Comments on Corporate Social Responsilbility – Sec 135

APPLICABILTY:

As per Sec 135(1), Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or net profit of rupees five crore or more during the immediately preceding finnacial year fall under the ambit of CSR Provisions.

AMOUNT TO BE SPENT:

Atleast 2% of average net profits of the company made during the immediately preceding three financial years.

Also, as per Sec 135(6) any amount remaining unspent under section (5), pursuant to any ongoing project, undertaken by a company shall be within a period of thirty days from the end of the financial year transferred to a special account opened by the company for that financial year in any scheduled bank named “Unspent CSR account” and such amount to be spent by the company within the period of 3 years from the date on which it has been transferred.

SET-OFF OF EXCESS AMOUNT SPENT:

The excess amount spent in the earlier years can be set off against the required 2% CSR expenditure up to immediately succeeding three financial years subject to complaince with the conditions stipulted under rule 7(3) of the companies rules,2014. This position is applicable from 22^nd January,2021 and has a prospective effect. Thus, no carry forward shall be allowed for the excess amount spent, if any , in financial year prior to FY 20-21.

NET PROFIT FOR THE PURPOSE CSR:

Net profit for the purpose of calculation for the amount to be spent on CSR activities is as per Sec 198 of the Companies Act, 2013 which is primarily PROFIT BEFORE TAX with other adjustment as refered in rule 2(h) of CSR rules.

Other Adjustment:

Net Profit before Tax should not include:

1) capital payments and reciepts.

2)Income tax.

3)Set off of past losses.

CSR COMMITTEE APPLICABILITY:

Sec 135(9) where the amount to be spent by a company under sub section (5) does not exceed fifty lakh rupees the requirement under sub section (1) for constituion of the CSR committee shall not be applicable and the functions of such committee provided under this section shall, in such cases be discharged by the board of directors of such company.

CSR COMMITTEE COMPOSTION
Listed companies	Three or more directors out of which atleast one shall be Independent Director
Unlisted public companies	Three or more directors out of which atleast one shall be Independent Director. However if there is no requirement of having an independent director in the company, two or more directors
Private Companies	Two or more directors. No independent directors are required as mentioned in the proviso under section 135(1).

Functions CSR Committee:

The Corporate Social Responsibility Committee shall —

formulate and recommend the CSR policy to the Board;
recommend the amount of expenditure to be incurred on CSR activities;
monitor the CSR policy of the company from time to time; and
formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy, which shall include the items as mentioned in rule 5(2) of the Companies (CSR Policy) Rules, 2014. For companies covered under Section 135(9) of the Act and not required to have CSR Committee, these functions shall be carried out by the Board itself.

CSR Committee shall meet atleast twice a year.

Rule 5(2) of the Companies (CSR Policy) Rules,2014

a) the list of CSR projects or programmes that are approved to be undertaken in areas or subjects specified in Schedule VII of the Act;

b) the manner of execution of such projects or programmes as specified in sub-rule (1) of rule 4;

c) the modalities of utilisation of funds and implementation schedules for the projects or programmes;

d) monitoring and reporting mechanism for the projects or programmes;

CSR EXPENDITURE:

1)ADMINISTRATIVE OVERHEADS:

Administrative overheads are the expenses incurred by the company for ‘general management and administration of CSR functions. However, the expenses which are directly incurred for the designing, implementation, monitoring, and evaluation of a particular CSR Project or Programme shall not be included in administrative.

Administrative expenses generally comprises of items such as employee cost, Utilities, office Supplies, legal expenses etc. However expenses which are attributable to project implementation shall be included in project cost only.

Example: Salary and training for the employees workings in the CSR division of a company, Stationary Cost, travelling expenses etc. may be included in administrative overheads. However, salary of school teachers or other staff, etc. for education-related CSR projects shall be covered under education project cost.

The maximum permissible limit for administrative overheads is 5% of Total CSR Expenditure of the company for the Financial Year.

2)CSR EXPENDITURE AS MENTIONED IN SCHEDULE VII:

Company which are required to Contribute to CSR activites can contribute according to the List given in Schedule VII of section 135 of companies act, 2013 -mentioned in Annexure-A

3)ANY OTHER PROJECT:

MEANING OF ONGOING PROJECT:

On going project has been defined under rule 2(1)(i) of the companies rule,2014 as a –

A multi- year project, stretching over more than one financial year.
Having a timeline not exceeding three year excluding the year of commencement.
Includes such project that was initially not approved as multi year project but whose duration has been extended beyond one year by the board based on reasonable justification.

MAXIMUM PERMISSABLE TIME LIMIT FOR ANY ONGOING PROJECT:

As per the definition of ongoing project, maximum permissible time limit for any project shall be three Financial year excluding the financial year in which project has been commenced. i.e., (1+3) financial years.

4) NON-PERMITTED CSR ACTIVIES:

Activities are undertaken in pursuance of normal course of business of the company.
Any activity undertaken by the company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level,
Contribution of any amount directly or indirectly to any political party under section 182 of the Act;
Activities benefitting employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019);
Activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services;
Activities carried out for fulfilment of any other statutory obligations under any law in force in India.

TREATMENT OF UNSPENT ACCOUNT:

If the company spends less than the amount required to be spent under the CSR Obligation, the board shall specify the reason for not spending in the Board’s report and shall deal with the unspent amount in the following manner:

NATURE OF UNSPENT ACCOUNT	ACTION REQUIRED	TIMELINES
Unspent Account pertains to ‘Ongoing Projects’	Transfer such unspent amount to separarte bank of the company to be called ‘Unspent bank account’	Within 30days from the end of financial year.
Unspent Account pertains to ‘Other than Ongoing Projects’	Transfer unspent amount to any fund included in schedule VII of the Act.	Within 6Months from the end of financial year.

PENAL PROVISIONS FOR NON- COMPLIANCE WITH PROVISIONS REGARDING TRANSFER OF UNSPENT AMOUNT:

The said non-compliance is a civil wrong and shall attract the following penalties:

COMPANY	Twice the unspent amount required to be transferred to any fund included in Schedule VII of the Act or Unspent CSR Account, as the case may be or one crore rupees which ever in higher.
EVERY OFFICER IN DEFAULT	1/10^th of the Unspent Account required to be transferred to any Fund included in Schedule VII of the Act or Unspent CSR Account or Two lakh whichever is higher.

The penalty does not relieve the company from the obligations under the law, and the penalty is over and above the obligated amount required to be transferred under section 135(5) or 135(6). The penalty is the consequence of abiding the law, and not an alternative for the same.

CSR IMPLEMENTATION:

MODES OF IMPLEMENTATION OF CSR:

Company can undertake CSR activities throughthe following three modes of Implementation,

1)Implementation by Company itself,

2)Implementation through eligible implementing agencies as per sub rule (1) of rule 4.

3)Implementation in collabration through one or more companies as prescribed in sub rule (4) of rule 4.

Rule 4(1) of the Companies (CSR Policy) Rules, 2014 provides the eligible entities which can act as an implementing agency for undertaking CSR activities.

These are:

Entity established by the company itself or along with any other company – a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961.
Entity established by the Central Government or State Government – a company established under section 8 of the Act, or a registered trust or a registered society.
Statutory bodies – any entity established under an Act of Parliament or a State legislature.
Other bodies – a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

CSR REPORTING & OBLIGATIONS:

i) REPORTING OF CSR IN BOARD’S REPORT:

As per rule 8(1) of the companies (CSR Policy) Rule,2014, the Board’s Report pertaining to any financial year, for a CSR eligible company, shall include an annual report on CSR containing particulars specified in Annexure I or Annexure II.

ii) REPORTING IN CSR2 FORM:

Every Company which is required to comply with CSR policies must file the Form CSR2 with Ministry of Corporate affairs within 31^st March every year.

iii) WEBSITE

As per rule 9, the Board of Directors of the company shall mandatorily disclose the following on their website if any, for Public access,

1) Composition of the CSR Committee,

2) CSR Policy,

3) Projects approved by the Board.

ANNEXURE – A

Eradicating hunger, poverty and malnutrition, 2 [promoting health care including preventive health] and sanitation 3 [Including contribution to the Swatch Bharat Kosh set-up by the Central Government for the promotion of sanitation] and making available safe drinking water;
Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water 4 [including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga];
Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
Measures for the benefit of armed forces veterans, war widows and their dependents, 5 [Central Armed Police Forces (CAPE) and Central Para Military Forces (CPMF) veterans, and their dependents including windows];
Training to promote rural sports, nationally recognized sports, Paralympic sports and Olympic sports;
Contribution to the Prime Minister’s National Relief Fund or 6 [Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) or] any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; 7
A)Contribution to incubators or research and development projects in the field of science, technology, engineering and medicine, funded by Central Government or State Government or Public Sector Undertaking or any agency of the Central Government or State Government; and
B)Contributions to public funded Universities; Indian Institute of Technology (IITs); National Laboratories and autonomous bodies established under Department of Atomic Energy (DAE); Department of Biotechnology (DBT); Department of Science and Technology (DST); Department of Pharmaceuticals; Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH); Ministry of Electronics and Information Technology and other bodies, namely Defense Research and Development Organization (DRDO); Indian Council of Agricultural Research (ICAR); Indian Council of Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR), engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs)].

finance

Section 8 Company: Conversion Of Society Into A Not-for-profit Company

Post author By D meenal vaid
Post date April 25, 2023
No Comments on Section 8 Company: Conversion Of Society Into A Not-for-profit Company

BACKGROUND:

A Society is formed for charitable assistance, promotion of science, literature, fine arts, foundation or maintenance of libraries, upkeep of historical buildings, museum and galleries of paintings, works of art etc.

Societies are governed by The Societies Registration Act. 1975. There are various existing government societies and government-controlled societies registered under the said Act. The Government has considered to bring uniformity in the management and governance framework of the societies to enable the societies to work in a more efficient and transparent manner by bring the societies under the legal framework of The Companies Act,2013.

The existing societies have an option to convert them into a Private Company as per the Companies Act,2013 which would envisage them with the following benefit –

Well established corporate governance process
Timely filing of financials and annual accounts with the registrar under Section 129
Regular Board and Committee meetings

Also, a private companies with charitable objectives can be incorporated under Section 8 of the Companies Act,2013

Section 8 companies are the companies which may be incorporated for

charitable or not-for-profit purposes for charity, sports, promoting commerce, art, science, education, research, social welfare, religion, protection of environment or any such other object
They shall apply the income for promoting the objects of the company.
No dividend shall be paid to its members.

PROCEDURE –

STEP 1: PASSING OF SPECIAL RESOLUTION

As per Section 366 of the Companies Act, 2013, there is a requirement for a special resolution. Three-fourth of the members of the society should vote in favor of the special resolution to convert the society into a section 8 company.
Prior consent from secured and unsecured creditors must have been obtained by the society.
After a special resolution is passed in the meeting of members of society for such conversion All the promoter Directors of the Section 8 Company are required to obtain Digital Signature Certificate, and Director Identification Number along with the requisite documents as specified in Annexure 1.

STEP 2: OBLIGATION OF COMPANIES SEEKING REGISTRATION TO MAKE PUBLICATION –

For the purpose of clause (b) of section 374 of the Act, every ‘society’ seeking registration shall publish an advertisement about registration under the said Part, seeking objections, if any within twenty-one clear days from the date of publication of notice and the said advertisement shall be in Form No.URC. 2, which shall be published in a newspaper and in English and in the principal vernacular language of the district in which Society is in existence and circulated in that district.
Notice shall be given to the concerned Registrar (Society) under which it was originally registered and shall require that objections, if any to the Registrar, shall be made within a period of twenty-one days from the date of such notice, failing which it shall be presumed that they have no objection and the notice shall disclose the purpose and substance of matters in relation to objections.
The Registrar shall, after considering the application and the objections, if any, received by him within thirty days from the date of publication of advertisement, and after ensuring that the company has addressed the objections, suitably decide whether the registration should or should not be granted.

STEP 3: FILING OF FORM URC 1 WITH ROC –

A registered Society shall file a Form No. URC. 1 for proposed conversion to registration as a company limited by guarantee under section 8 and shall attach the documents mentioned in Annexure 2.

There should be two or more members for the purpose of registration.

STEP 4: GRANTING OF LICENSE BY REGISTRAR

Where an application is made by a society or trust for registration as a company limited by guarantee and it has been proved to the satisfaction of the Registrar that the proposed company has its objects in accordance with clause (a) of subsection (1) of section 8 of the Act and it intends to comply with the restrictions and prohibitions as mentioned respectively in clause (b) and clause (c) of that sub-section,

The Registrar shall issue a license in Form No. INC. 16 to allow such society or trust to be registered as a limited company under Section 8

STEP 5: INCORPORATION OF SECTION 8 COMPANY

After obtaining the license , the society shall apply for Name approval of the proposed Company in Part A of Spice+ .Thereafter Filing of Memorandum and Articles of Association (AoA) is required with other relevant papers as mentioned in Annexure 3 in Part B of Spice.

Thereupon the registrar will issue a certificate of incorporation in Form No.INC.11 for the incorporation of company.

STEP 6: DISSOLUTION OF SOCIETY-

Where a Society has obtained a certificate of registration as per section 367, an intimation to this effect shall be given, within fifteen days of such registration to the concerned Registrar (society) under which it was originally registered, along with necessary documents or papers for its dissolution as Society.

Annexure 1: Documents Required for DSC & DIN :

Identity Proof: Copy of PAN Card – Self-Attested and attested by a Govt. Gazetted Officer
Address Proof: Copy of Aadhar Card or Driving License) – Self-Attested and attested by a Govt. Gazetted Officer
Photos: Soft Copy of Passport Size Photograph

Annexure 2 : LIST OF DOCUMENTS FOR FILING FORM URC-1

A list showing the names, addresses and occupations of all persons, who on a day, not being more than six clear days before the day of seeking registration, were members of the society with proof of membership;
A list showing the particulars of persons proposed as the first directors of the company, along with DIN, passport number, if any, with expiry date, residential addresses and their interests in other firms or bodies corporate along with their consent to act as directors of the company;
A list containing the names and addresses of the members of the governing body of the society;
A certified copy of the certificate of registration of the society;
Written consent or No Objection Certificate from all the secured creditors of the applicant;
Written consent from the majority of members whether present in person or by proxy at a general meeting agreeing for such registration, and the resolution shall also provide for declaration of the amount of guarantee;
An undertaking that the proposed directors shall comply with the requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable;
A copy of the latest income tax return of the society;
Details of the objects of the company along with a declaration from all the members that the restrictions and prohibitions as mentioned in clause (b) and clause (c) of sub-section (1) of section 8 of the Act shall be complied.

In case a society or trust intending to register as a company under section 366 of the Act is registered under section 12A of the Income Tax Act, 1961 (43 of 1961) for claiming exemption on its income, an intimation in this regard shall be sent to the Income- tax authorities and proof of its service shall be attached.
A copy of the notice, as published and the copy of the notice served on Registrar (Societies) along with proof of service, shall be attached.
Statement of accounts, prepared not later than fifteen days preceding the date of seeking registration and certified by the Auditor together with the Audited Financial Statements of the previous year, wherever applicable shall be attached.

[Provided that if the assets of the existing company during the immediately preceding three years are revalued for the purpose of vesting of its assets with the company to be incorporated under this Act, the surplus arising out of such revaluation shall not be deemed to have been credited to the capital account or current account of partners.]

An undertaking from all the members or partners or trustees providing that in the event of registration as a company under Part I of Chapter XXI of the Act, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered, for its dissolution
The list of members and directors and any other particulars relating to the company which are required to be delivered to the Registrar shall be duly verified by the declaration of any two or more proposed directors.”.

Annexure 3 : DOCUMENTS REQUIRED FOR COMPANY REGISTRATION :

For the Proposed Company:

Suggested Name of the Company (preferably 3 choices)
Proof of Proposed Address of the Registered Office

(Rental Agreement or Lease Deed along with rent receipts, And Telephone bill or Gas Bill or Mobile bill or EB Card with last two months bill Payment Receipt )

For the proposed Directors/Shareholders

Copy of PAN Card (mandatory)
AnyTwo of the following as proof of Identity:

(Copy of Passport or Voters Identity Card or Driving License or Aadhar Card)

Any Oneof the following as proof of residence:

(Bank Statement or Electricity Bill or Telephone Bill or Mobile Bill.)

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