tag:blogger.com,1999:blog-292098662024-03-08T13:56:13.879-05:00Scope of Cost Accountanthttp://management-accountant.blogspot.com
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Disclaimer:These are mere compilations and the Blogger do not own any responsibility for any error.The user may like to confirm from authorities Concerned for authentic and updated information.Unknownnoreply@blogger.comBlogger36125tag:blogger.com,1999:blog-29209866.post-53725181034341892452014-02-09T20:39:00.001-05:002014-02-09T20:39:27.930-05:00Can Internal Audit address cost accounting issues and replace it.This is one of the falsity advanced by the financial accountants to estopp the blooming of cost accounts.<br />
Unfortunately these individuals and institutions first of all do not differentiate between an accounting function and an audit exercise.<br />
Secondly they often restrict the scope of internal audit to audit of financial transactions and generate another report.<br />
Internal audit is a cross functional exercise of checking the controls and processes that includes its reflection in financial accounting system.<br />
Internal audit is gamut of entity view on the strength of processes and transformation of value.its focus is on the system that generates value.However Internal audit is used to backup statutory audit report.<br />
Cost accounting is an accounting function and cost audit is a scrutiny of such an accounting reflection.There can be a internal audit of cost accounting system as well.Unknownnoreply@blogger.com27tag:blogger.com,1999:blog-29209866.post-53214622314644582032013-09-01T11:46:00.001-04:002013-09-01T11:46:47.371-04:00SEBI-Investment Advisor Guidelines.Internal Audit of Stock Broker 2008.No registration U/S 3 of the regulation is required for a cost accountant who delivers an Investment advice in the course of his professional service.<br />
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<br />
DEPUTY GENERAL MANAGER<br />
MARKET REGULATION DEPARTMENT<br />
DIVISION OF MARKET SUPERVISION<br />
Tel : 26449261, Fax : 26449021<br />
Email : manojk@sebi.gov.in<br />
MRD/DMS/Cir-29/2008<br />
October 21, 2008<br />
The Managing Director / Executive Director<br />
of all Stock Exchanges<br />
Dear Sir,<br />
Sub: Internal Audit for stock brokers/trading members/clearing<br />
members<br />
In partial modification of SEBI circular No. MIRSD/ DPSIII/ Cir-26/ 08 dated<br />
August 22, 2008 on the above subject, it has now been decided that stock<br />
brokers/trading members/clearing members shall carry out complete internal<br />
audit on a half yearly basis by chartered accountants, company secretaries<br />
or cost and management accountants who are in practice and who do not<br />
have any conflict of interest.<br />
The Stock Exchanges are advised to:<br />
1. make necessary amendments to the relevant bye-laws, rules and<br />
regulations for the implementation of the above decision immediately,<br />
2. bring the provisions of this circular to the notice of the member brokers<br />
/clearing members of the Exchange and also to disseminate the same<br />
on the website, and<br />
3. communicate to SEBI, the status of the implementation of the<br />
provisions of this circular in the Monthly Development Report.<br />
It may be noted that the other provisions of the said circular remain<br />
unchanged.<br />
This circular is being issued in exercise of the powers conferred by Section<br />
11 (1) of Securities and Exchange Board of India Act, 1992 to protect the<br />
interest of investors in securities and to promote the development of, and to<br />
regulate, the securities market.<br />
Yours faithfully,<br />
MANOJ KUMAR<br />
<br />Unknownnoreply@blogger.com17tag:blogger.com,1999:blog-29209866.post-43656999827157794352013-09-01T11:17:00.001-04:002013-09-01T11:17:39.991-04:00Act 18 of 2013 the companies act 2013 of India.<a href="http://icmai.in/upload/Institute/Press_release/Press_Release_14082013_F.pdf">http://icmai.in/upload/Institute/Press_release/Press_Release_14082013_F.pdf</a><div>
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<a href="http://taxguru.in/chartered-accountant/text-provisions-related-cost-accountant-companies-bill2011.html">http://taxguru.in/chartered-accountant/text-provisions-related-cost-accountant-companies-bill2011.html</a><br /><a href="http://icmai.in/upload/Institute/Press_release/Press_Release_14082013_F.pdf"></a>
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<b style="margin: 0px; padding: 0px;">The followings are compiled information of the word Cost Accountant in New Proposed Company Bill.</b></div>
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<b style="margin: 0px; padding: 0px;">Definitions</b>.</div>
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<b style="margin: 0px; padding: 0px;">2. </b>In this Act, unless the context otherwise requires,—</div>
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(<i style="margin: 0px; padding: 0px;">28</i>) “</div>
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” means a cost accountant</div>
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as defined in clause (<i style="margin: 0px; padding: 0px;">b</i>) of subsection (<i style="margin: 0px; padding: 0px;">1</i>) of section 2 of the Cost and Works Accountants Act, 1959;</div>
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(<i style="margin: 0px; padding: 0px;">38</i>) “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a <b style="margin: 0px; padding: 0px;">cost accountant</b> and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force;<span id="more-54121" style="margin: 0px; padding: 0px;"></span></div>
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<b style="margin: 0px; padding: 0px;"><span class="IL_AD" id="IL_AD4" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">Incorporation of company</span></b></div>
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<b style="margin: 0px; padding: 0px;">7. </b>(<i style="margin: 0px; padding: 0px;">1</i>) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated, the following documents and information for <span class="IL_AD" id="IL_AD9" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">registration</span>, namely:—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed;</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) a declaration in the prescribed form by an advocate, a chartered accountant, <b style="margin: 0px; padding: 0px;">cost accountant</b>or company secretary in practice, who is engaged in the <span class="IL_AD" id="IL_AD2" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">formation of the company</span>, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made there under in respect of registration and matters precedent or incidental thereto have been complied with;</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) an affidavit from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar forregistration of the company contain information that is correct and complete and true to the best of his knowledge and belief;</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) the address for correspondence till its registered office is established;</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;</div>
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(<i style="margin: 0px; padding: 0px;">f</i>) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director <span class="IL_AD" id="IL_AD12" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">Identification Number</span>, residential address, nationality and such other particulars including proof of identity as may be prescribed; and</div>
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(<i style="margin: 0px; padding: 0px;">g</i>) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) The Registrar on the basis of documents and information filed under sub-section (<i style="margin: 0px; padding: 0px;">1</i>) shall register all the documents and information referred to in that subsection in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) On and from the date mentioned in the certificate of incorporation issued under sub-section (<i style="margin: 0px; padding: 0px;">2</i>), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate.</div>
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(<i style="margin: 0px; padding: 0px;">4</i>) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (<i style="margin: 0px; padding: 0px;">1</i>) till its dissolution under this Act.</div>
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(<i style="margin: 0px; padding: 0px;">5</i>) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the <span class="IL_AD" id="IL_AD1" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">registration of a company</span>, he shall be liable for action under section 447.</div>
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(<i style="margin: 0px; padding: 0px;">6</i>) Without prejudice to the provisions of sub-section (<i style="margin: 0px; padding: 0px;">5</i>) where, at any time after the <span class="IL_AD" id="IL_AD5" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">incorporation of a company</span>, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (<i style="margin: 0px; padding: 0px;">b</i>) of subsection (<i style="margin: 0px; padding: 0px;">1</i>) shall each be liable for action under section 447.</div>
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(<i style="margin: 0px; padding: 0px;">7</i>) Without prejudice to the provisions of sub-section (<i style="margin: 0px; padding: 0px;">6</i>), where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an <span class="IL_AD" id="IL_AD8" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">application</span> made to it, on being satisfied that the situation so warrants,—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) direct that liability of the members shall be unlimited; or</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) direct removal of the name of the company from the register of companies; or</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) pass an order for the winding up of the company; or</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) pass such other orders as it may deem fit:</div>
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Provided that before making any order under this sub-section,—</div>
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(<i style="margin: 0px; padding: 0px;">i</i>) the company shall be given a reasonable opportunity of being heard in the matter; and</div>
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(<i style="margin: 0px; padding: 0px;">ii</i>) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.</div>
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<b style="margin: 0px; padding: 0px;">Internal audit</b></div>
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<b style="margin: 0px; padding: 0px;">138. </b>(<i style="margin: 0px; padding: 0px;">1</i>) Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a <b style="margin: 0px; padding: 0px;">cost accountant</b>, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.</div>
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<b style="margin: 0px; padding: 0px;">Powers and duties of auditors and auditing standards</b>.</div>
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<b style="margin: 0px; padding: 0px;">143. </b>(<i style="margin: 0px; padding: 0px;">1</i>) Every auditor of a company shall have a right of access at all times to the books of account and vouchers of the company, whether kept at the registered office of the company or at any other place and shall be entitled to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor and amongst other matters inquire into the following matters, namely:—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) whether loans and advances made by the company on the basis of security have been properly secured and whether the terms on which they have been made are prejudicial to the interests of the company or its members;</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) whether transactions of the company which are represented merely by book entries are prejudicial to the interests of the company;</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) where the company not being an <span class="IL_AD" id="IL_AD11" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">investment</span> company or a banking company, whether so much of the assets of the company as consist of shares, debentures and other securities have been sold at a price less than that at which they were purchased by the company;</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) whether loans and advances made by the company have been shown as deposits;</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) whether <span class="IL_AD" id="IL_AD10" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">personal expenses</span> have been charged to revenue account;</div>
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(<i style="margin: 0px; padding: 0px;">f</i>) where it is stated in the books and documents of the company that any <span class="IL_AD" id="IL_AD7" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">shares have been</span>allotted for cash, whether cash has actually been received in respect of such <span class="IL_AD" id="IL_AD3" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">allotment</span>, and if <span class="IL_AD" id="IL_AD6" style="background-attachment: scroll !important; background-color: transparent !important; background-image: none !important; background-position: 0% 50%; background-repeat: repeat repeat !important; border-bottom-color: rgb(0, 0, 255) !important; border-bottom-style: solid !important; border-bottom-width: 1px !important; color: rgb(0, 0, 255) !important; cursor: pointer !important; display: inline !important; float: none !important; margin: 0px; padding: 0px 0px 1px !important; position: static; text-decoration: underline !important;">no cash</span> has actually been so received, whether the position as stated in the account books and the balance sheet is correct, regular and not misleading:</div>
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Provided that the auditor of a company which is a holding company shall also have the right of access to the records of all its subsidiaries in so far as it relates to the consolidation of its financial statements with that of its subsidiaries.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) The auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements which are required by or under this Act to be laid before the company in general meeting and the report shall after taking into account the provisions of this Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of this Act or any rules made there under or under any order made under sub-section (<i style="margin: 0px; padding: 0px;">11</i>) and to the best of his information and knowledge, the said accounts, financial statements give a true and fair view of the state of the company’s affairs as at the end of its financial year and profit or loss and cash flow for the year and such other matters as may be prescribed.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) The auditor’s report shall also state—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit and if not, the details thereof and the effect of such information on the financial statements;</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books and proper returns adequate for the purposes of his audit have been received from branches not visited by him;</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) whether the report on the accounts of any branch office of the company audited under sub-section (<i style="margin: 0px; padding: 0px;">8</i>) by a person other than the company’s auditor has been sent to him under the proviso to that sub-section and the manner in which he has dealt with it in preparing his report;</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) whether the company’s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns;</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) whether, in his opinion, the financial statements comply with the accounting standards;</div>
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(<i style="margin: 0px; padding: 0px;">f</i>) the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company;</div>
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(<i style="margin: 0px; padding: 0px;">g</i>) whether any director is disqualified from being appointed as a director under sub-section (<i style="margin: 0px; padding: 0px;">2</i>) of section 164;</div>
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(<i style="margin: 0px; padding: 0px;">h</i>) any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith;</div>
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(<i style="margin: 0px; padding: 0px;">i</i>) whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls;</div>
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(<i style="margin: 0px; padding: 0px;">j</i>) such other matters as may be prescribed.</div>
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(<i style="margin: 0px; padding: 0px;">4</i>) Where any of the matters required to be included in the audit report under this section is answered in the negative or with a qualification, the report shall state the reasons therefor.</div>
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(<i style="margin: 0px; padding: 0px;">5</i>) In the case of a Government company, the Comptroller and Auditor-General of India shall appoint the auditor under sub-section (<i style="margin: 0px; padding: 0px;">5</i>) or sub-section (<i style="margin: 0px; padding: 0px;">7</i>) of section 139 and direct such auditor the manner in which the accounts of the Government company are required to be audited and thereupon the auditor so appointed shall submit a copy of the audit report to the Comptroller and Auditor-General of India which, among other things, include the directions, if any, issued by the Comptroller and Auditor-General of India, the action taken thereon and its impact on the accounts and financial statement of the company.</div>
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(<i style="margin: 0px; padding: 0px;">6</i>) The Comptroller and Auditor-General of India shall within sixty days from the date of receipt of the audit report under sub-section (<i style="margin: 0px; padding: 0px;">5</i>) have a right to,—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) conduct a supplementary audit of the financial statement of the company by such person or persons as he may authorise in this behalf; and for the purposes of such audit, require information or additional information to be furnished to any person or persons, so authorised, on such matters, by such person or persons, and in such form, as the Comptroller and Auditor-General of India may direct; and</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) comment upon or supplement such audit report:</div>
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Provided that any comments given by the Comptroller and Auditor-General of India upon, or supplement to, the audit report shall be sent by the company to every person entitled to copies of audited financial statements under sub section (<i style="margin: 0px; padding: 0px;">1</i>) of section 136 and also be placed before the annual general meeting of the company at the same time and in the same manner as the audit report.</div>
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(<i style="margin: 0px; padding: 0px;">7</i>) Without prejudice to the provisions of this Chapter, the Comptroller and Auditor-General of India may, in case of any company covered under sub-section (<i style="margin: 0px; padding: 0px;">5</i>) or sub-section (<i style="margin: 0px; padding: 0px;">7</i>) of section 139, if he considers necessary, by an order, cause test audit to be conducted of the accounts of such company and the provisions of section 19A of the Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971, shall apply to the report of such test audit.</div>
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(<i style="margin: 0px; padding: 0px;">8</i>) Where a company has a branch office, the accounts of that office shall be audited either by the auditor appointed for the company (herein referred to as the company’s auditor) under this Act or by any other person qualified for appointment as an auditor of the company under this Act and appointed as such under section 139, or where the branch office is situated in a country outside India, the accounts of the branch office shall be audited either by the company’s auditor or by an accountant or by any other person duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country and the duties and powers of the company’s auditor with reference to the audit of the branch and the branch auditor, if any, shall be such as may be prescribed:</div>
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Provided that the branch auditor shall prepare a report on the accounts of the branch examined by him and send it to the auditor of the company who shall deal with it in his report in such manner as he considers necessary.</div>
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(<i style="margin: 0px; padding: 0px;">9</i>) Every auditor shall comply with the auditing standards.</div>
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(<i style="margin: 0px; padding: 0px;">10</i>) The Central Government may prescribe the standards of auditing or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949, in consultation with and after examination of the recommendations made by the National Financial Reporting Authority:</div>
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Provided that until any auditing standards are notified, any standard or standards of auditing specified by the Institute of Chartered Accountants of India shall be deemed to be the auditing standards.</div>
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(<i style="margin: 0px; padding: 0px;">11</i>) The Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein.</div>
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(<i style="margin: 0px; padding: 0px;">12</i>) Notwithstanding anything contained in this section, if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed.</div>
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(<i style="margin: 0px; padding: 0px;">13</i>) No duty to which an auditor of a company may be subject to shall be regarded as having been contravened by reason of his reporting the matter referred to in sub-section (<i style="margin: 0px; padding: 0px;">12</i>) if it is done in good faith.</div>
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(<i style="margin: 0px; padding: 0px;">14</i>) The provisions of this section shall <i style="margin: 0px; padding: 0px;">mutatis mutandis </i>apply to—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) the <b style="margin: 0px; padding: 0px;">cost accountant</b> in practice conducting cost audit under section 148; or</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) the company secretary in practice conducting secretarial audit under section 204.</div>
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(<i style="margin: 0px; padding: 0px;">15</i>) If any auditor, <b style="margin: 0px; padding: 0px;">cost accountant</b> or company secretary in practice do not comply with the provisions of sub-section (<i style="margin: 0px; padding: 0px;">12</i>), he shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees.</div>
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<b style="margin: 0px; padding: 0px;">Central Government to specify audit of items of cost in respect of certain companies</b>.</div>
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<b style="margin: 0px; padding: 0px;">148. </b>(<i style="margin: 0px; padding: 0px;">1</i>) Notwithstanding anything contained in this Chapter, the Central Government may, by order, in respect of such class of companies engaged in the production of such goods or providing such services as may be prescribed, direct that particulars relating to the utilisation of material or labour or to other items of cost as may be prescribed shall also be included in the books of account kept by that class of companies:</div>
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Provided that the Central Government shall, before issuing such order in respect of any class of companies regulated under a special Act, consult the regulatory body constituted or established under such special Act.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) If the Central Government is of the opinion, that it is necessary to do so, it may, by order, direct that the audit of cost records of class of companies, which are covered under sub-section (<i style="margin: 0px; padding: 0px;">1</i>) and which have a net worth of such amount as may be prescribed or a turnover of such amount as may be prescribed, shall be conducted in the manner specified in the order.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) The audit under sub-section (<i style="margin: 0px; padding: 0px;">2</i>) shall be conducted by a <b style="margin: 0px; padding: 0px;">Cost Accountant</b> in practice who shall be appointed by the Board on such remuneration as may be determined by the members in such manner as may be prescribed:</div>
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Provided that no person appointed under section 139 as an auditor of the company shall be appointed for conducting the audit of cost records:</div>
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Provided further that the auditor conducting the cost audit shall comply with the cost auditing standards.</div>
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<i style="margin: 0px; padding: 0px;">Explanation</i>.—For the purposes of this sub-section, the expression “cost auditing standards” mean such standards as are issued by the Institute of Cost and Works Accountants of India, constituted under the Cost and Works Accountants Act, 1959, with the approval of the Central Government.</div>
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(<i style="margin: 0px; padding: 0px;">4</i>) An audit conducted under this section shall be in addition to the audit conducted under section 143.</div>
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(<i style="margin: 0px; padding: 0px;">5</i>) The qualifications, disqualifications, rights, duties and obligations applicable to auditors under this Chapter shall, so far as may be applicable, apply to a cost auditor appointed under this section and it shall be the duty of the company to give all assistance and facilities to the cost auditor appointed under this section for auditing the cost records of the company:</div>
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Provided that the report on the audit of cost records shall be submitted by the <b style="margin: 0px; padding: 0px;">cost accountant</b> in practice to the Board of Directors of the company.</div>
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(<i style="margin: 0px; padding: 0px;">6</i>) A company shall within thirty days from the date of receipt of a copy of the cost audit report prepared in pursuance of a direction under sub-section (<i style="margin: 0px; padding: 0px;">2</i>) furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein.</div>
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(<i style="margin: 0px; padding: 0px;">7</i>) If, after considering the cost audit report referred to under this section and the information and explanation furnished by the company under sub-section (<i style="margin: 0px; padding: 0px;">6</i>), the Central Government is of the opinion that any further information or explanation is necessary, it may call for such further information and explanation and the company shall furnish the same within such time as may be specified by that Government.</div>
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(<i style="margin: 0px; padding: 0px;">8</i>) If any default is made in complying with the provisions of this section,—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) the company and every officer of the company who is in default shall be punishable in the manner as provided in sub-section (<i style="margin: 0px; padding: 0px;">1</i>) of section 147;</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) the cost auditor of the company who is in default shall be punishable in the manner as provided in sub-sections (<i style="margin: 0px; padding: 0px;">2</i>) to (<i style="margin: 0px; padding: 0px;">4</i>) of section 147.</div>
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<b style="margin: 0px; padding: 0px;">Merger and amalgamation of companies</b>.</div>
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<b style="margin: 0px; padding: 0px;">232. </b>(<i style="margin: 0px; padding: 0px;">1</i>) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of the company or companies involving merger or the amalgamation of any two or more companies; and</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) that under the scheme, the whole or any part of the undertaking, property or liabilities of any company (hereinafter referred to as the transferor company) is required to be transferred to another company (hereinafter referred to as the transferee company), or is proposed to be divided among and transferred to two or more companies, the Tribunal may on such application, order a meeting of the creditors or class of creditors or the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal may direct and the provisions of sub-sections (<i style="margin: 0px; padding: 0px;">3</i>) to (<i style="margin: 0px; padding: 0px;">6</i>) of section 230 shall apply <i style="margin: 0px; padding: 0px;">mutatis mutandis.</i></div>
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(<i style="margin: 0px; padding: 0px;">2</i>) Where an order has been made by the Tribunal under sub-section (<i style="margin: 0px; padding: 0px;">1</i>), merging companies or the companies in respect of which a division is proposed, shall also be required to circulate the following for the meeting so ordered by the Tribunal, namely:—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) the draft of the proposed terms of the scheme drawn up and adopted by the directors of the merging company;</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) confirmation that a copy of the draft scheme has been filed with the Registrar;</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) a report adopted by the directors of the merging companies explaining effect of compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholders laying out in particular the share exchange ratio, specifying any special valuation difficulties;</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) the report of the expert with regard to valuation, if any;</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) a supplementary accounting statement if the last annual accounts of any of the merging company relate to a financial year ending more than six months before the first meeting of the company summoned for the purposes of approving the scheme.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) The Tribunal, after satisfying itself that the procedure specified in sub-sections (<i style="margin: 0px; padding: 0px;">1</i>) and (<i style="margin: 0px; padding: 0px;">2</i>) has been complied with, may, by order, sanction the compromise or arrangement or by a subsequent order, make provision for the following matters, namely:—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of the transferor company from a date to be determined by the parties unless the Tribunal, for reasons to be recorded by it in writing, decides otherwise;</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) the allotment or appropriation by the transferee company of any shares, debentures, policies or other like instruments in the company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person:</div>
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Provided that a transferee company shall not, as a result of the compromise or arrangement, hold any shares in its own name or in the name of any trust whether on its behalf or on behalf of any of its subsidiary or associate companies and any such shares shall be cancelled or extinguished;</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company on the date of transfer;</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) dissolution, without winding-up, of any transferor company;</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) the provision to be made for any persons who, within such time and in such manner as the Tribunal directs, dissent from the compromise or arrangement;</div>
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(<i style="margin: 0px; padding: 0px;">f</i>) where share capital is held by any non-resident shareholder under the foreign direct investment norms or guidelines specified by the Central Government or in accordance with any law for the time being in force, the allotment of shares of the transferee company to such shareholder shall be in the manner specified in the order;</div>
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(<i style="margin: 0px; padding: 0px;">g</i>) the transfer of the employees of the transferor company to the transferee company;</div>
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(<i style="margin: 0px; padding: 0px;">h</i>) where the transferor company is a listed company and the transferee company is an unlisted company,—</div>
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(<i style="margin: 0px; padding: 0px;">A</i>) the transferee company shall remain an unlisted company until it becomes a listed company;</div>
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(<i style="margin: 0px; padding: 0px;">B</i>) if shareholders of the transferor company decide to opt out of the transferee company, provision shall be made for payment of the value of shares held by them and other benefits in accordance with a pre-determined price formula or after a valuation is made, and the arrangements under this provision may be made by the Tribunal:</div>
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Provided that the amount of payment or valuation under this clause for any share shall not be less than what has been specified by the Securities and Exchange Board under any regulations framed by it;</div>
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(<i style="margin: 0px; padding: 0px;">i</i>) where the transferor company is dissolved, the fee, if any, paid by the transferor company on its authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation; and</div>
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(<i style="margin: 0px; padding: 0px;">j</i>) such incidental, consequential and supplemental matters as are deemed necessary to secure that the merger or amalgamation is fully and effectively carried out:</div>
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Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company’s auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133.</div>
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(<i style="margin: 0px; padding: 0px;">4</i>) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to the transferee company and the liabilities shall be transferred to and become the liabilities of the transferee company and any property may, if the order so directs, be freed from any charge which shall by virtue of the compromise or arrangement, cease to have effect.</div>
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(<i style="margin: 0px; padding: 0px;">5</i>) Every company in relation to which the order is made shall cause a certified copy of the order to be filed with the Registrar for registration within thirty days of the receipt of certified copy of the order.</div>
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(<i style="margin: 0px; padding: 0px;">6</i>) The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date.</div>
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(<i style="margin: 0px; padding: 0px;">7</i>) Every company in relation to which the order is made shall, until the completion of the scheme, file a statement in such form and within such time as may be prescribed with the Registrar every year duly certified by a chartered accountant or a <b style="margin: 0px; padding: 0px;">cost accountant</b> or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not.</div>
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(<i style="margin: 0px; padding: 0px;">8</i>) If a transferor company or a transferee company contravenes the provisions of this section, the transferor company or the transferee company, as the case may be, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of such transferor or transferee company who is in default, shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both.</div>
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<i style="margin: 0px; padding: 0px;">Explanation.</i><b style="margin: 0px; padding: 0px;"><i style="margin: 0px; padding: 0px;">—</i></b>For the purposes of this section,—</div>
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(<i style="margin: 0px; padding: 0px;">i</i>) in a scheme involving a merger, where under the scheme the undertaking, property and liabilities of one or more companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to another existing company, it is a merger by absorption, or where the undertaking, property and liabilities of two or more companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to a new company, whether or not a public company, it is a merger by formation of a new company;</div>
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(<i style="margin: 0px; padding: 0px;">ii</i>) references to merging companies are in relation to a merger by absorption, to the transferor and transferee companies, and, in relation to a merger by formation of a new company, to the transferor companies;</div>
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(<i style="margin: 0px; padding: 0px;">iii</i>) a scheme involves a division, where under the scheme the undertaking, property and liabilities of the company in respect of which the compromise or arrangement is proposed are to be divided among and transferred to two or more companies each of which is either an existing company or a new company; and</div>
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(<i style="margin: 0px; padding: 0px;">iv</i>) property includes assets, rights and interests of every description and liabilities include debts and obligations of every description.</div>
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<b style="margin: 0px; padding: 0px;">Appointment of administrator</b></div>
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<b style="margin: 0px; padding: 0px;">259. </b>(<i style="margin: 0px; padding: 0px;">1</i>) The interim administrator or the company administrator, as the case may be, shall be appointed by the Tribunal from a databank maintained by the Central Government or any institute or agency authorised by the Central Government in a manner as may be prescribed consisting of the names of company secretaries, chartered accountants, <b style="margin: 0px; padding: 0px;">cost accountant</b>s and such other professionals as may, by notification, be specified by the Central Government.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) The terms and conditions of the appointment of interim and company administrators shall be such as may be ordered by the Tribunal.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) The Tribunal may direct the company administrator to take over the assets or management of the company and for the purpose of assisting him in the management of the company, the company administrator may, with the approval of the Tribunal, engage the services of suitable expert or experts.</div>
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<b style="margin: 0px; padding: 0px;">Company Liquidators and their appointments</b>.</div>
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<b style="margin: 0px; padding: 0px;">275. </b>(<i style="margin: 0px; padding: 0px;">1</i>) For the purposes of winding up of a company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintained under sub-section (<i style="margin: 0px; padding: 0px;">2</i>) as the Company Liquidator.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, <b style="margin: 0px; padding: 0px;">cost accountant</b>s or firms or bodies corporate having such chartered accountants, advocates, company secretaries, <b style="margin: 0px; padding: 0px;">cost accountant</b>s and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) Where a provisional liquidator is appointed by the Tribunal, the Tribunal may limit and restrict his powers by the order appointing him or it or by a subsequent order, but otherwise he shall have the same powers as a liquidator.</div>
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(<i style="margin: 0px; padding: 0px;">4</i>) The Central Government may remove the name of any person or firm or body corporate from the panel maintained under sub-section (<i style="margin: 0px; padding: 0px;">2</i>) on the grounds of misconduct, fraud, misfeasance, breach of duties or professional incompetence:</div>
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Provided that the Central Government before removing him or it from the panel shall give him or it a reasonable opportunity of being heard.</div>
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(<i style="margin: 0px; padding: 0px;">5</i>) The terms and conditions of appointment of a provisional liquidator or Company Liquidator and the fee payable to him or it shall be specified by the Tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company.</div>
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(<i style="margin: 0px; padding: 0px;">6</i>) On appointment as provisional liquidator or Company Liquidator, as the case may be, such liquidator shall file a declaration within seven days from the date of appointment in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the Tribunal and such obligation shall continue throughout the term of his appointment.</div>
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(<i style="margin: 0px; padding: 0px;">7</i>) While passing a winding up order, the Tribunal may appoint a provisional liquidator, if any, appointed under clause (<i style="margin: 0px; padding: 0px;">c</i>) of sub-section (<i style="margin: 0px; padding: 0px;">1</i>) of section 273, as the Company Liquidator for the conduct of the proceedings for the winding up of the company.</div>
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<b style="margin: 0px; padding: 0px;">Provision for professional assistance to Company Liquidator.</b></div>
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<b style="margin: 0px; padding: 0px;">291. </b>(<i style="margin: 0px; padding: 0px;">1</i>) The Company Liquidator may, with the sanction of the Tribunal, appoint one or more chartered accountants or company secretaries or <b style="margin: 0px; padding: 0px;">cost accountant</b>s or legal practitioners or such other professionals on such terms and conditions, as may be necessary, to assist him in the performance of his duties and functions under this Act.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) Any person appointed under this section shall disclose forthwith to the Tribunal in the prescribed form any conflict of interest or lack of independence in respect of his appointment.</div>
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<b style="margin: 0px; padding: 0px;">Power to order examination of promoters, directors, etc</b></div>
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<b style="margin: 0px; padding: 0px;">300. </b>(<i style="margin: 0px; padding: 0px;">1</i>) Where an order has been made for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to the Tribunal under this Act, stating that in his opinion a fraud has been committed by any person in the promotion<b style="margin: 0px; padding: 0px;">, </b>formation, business or conduct of affairs of the company since its formation, the Tribunal may, after considering the report, direct that such person or officer shall attend before the Tribunal on a day appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as an officer thereof.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) The Company Liquidator shall take part in the examination, and for that purpose he or it may, if specially authorised by the Tribunal in that behalf, employ such legal assistance as may be sanctioned by the Tribunal.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) The person shall be examined on oath and shall answer all such questions as the Tribunal may put, or allow to be put, to him.</div>
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(<i style="margin: 0px; padding: 0px;">4</i>) A person ordered to be examined under this section—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) shall, before his examination, be furnished at his own cost with a copy of the report of the Company Liquidator; and</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) may at his own cost employ chartered accountants or company secretaries or <b style="margin: 0px; padding: 0px;">cost accountant</b>s or legal practitioners entitled to appear before the Tribunal under section 432, who shall be at liberty to put to him such questions as the Tribunal may consider just for the purpose of enabling him to explain or qualify any answers given by him.</div>
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(<i style="margin: 0px; padding: 0px;">5</i>) If any such person applies to the Tribunal to be exculpated from any charges made or suggested against him, it shall be the duty of the Company Liquidator to appear on the hearing of such application and call the attention of the Tribunal to any matters which appear to the Company Liquidator to be relevant.</div>
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(<i style="margin: 0px; padding: 0px;">6</i>) If the Tribunal, after considering any evidence given or hearing witnesses called by the Company Liquidator, allows the application made under sub-section (<i style="margin: 0px; padding: 0px;">5</i>), the Tribunal may order payment to the applicant of such costs as it may think fit.</div>
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(<i style="margin: 0px; padding: 0px;">7</i>) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, a copy be supplied to him and may thereafter be used in evidence against him, and shall be open to inspection by any creditor or contributory at all reasonable times.</div>
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(<i style="margin: 0px; padding: 0px;">8</i>) The Tribunal may, if it thinks fit, adjourn the examination from time to time.</div>
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(<i style="margin: 0px; padding: 0px;">9</i>) An examination under this section may, if the Tribunal so directs, be held before any person or authority authorised by the Tribunal.</div>
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(<i style="margin: 0px; padding: 0px;">10</i>) The powers of the Tribunal under this section as to the conduct of the examination, but not as to costs, may be exercised by the person or authority before whom the examination is held in pursuance of sub-section (<i style="margin: 0px; padding: 0px;">9</i>).</div>
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<b style="margin: 0px; padding: 0px;">Qualification of President and Members of Tribunal</b></div>
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<b style="margin: 0px; padding: 0px;">409. </b>(<i style="margin: 0px; padding: 0px;">1</i>) The President shall be a person who is or has been a Judge of a High Court for five years.</div>
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(<i style="margin: 0px; padding: 0px;">2</i>) A person shall not be qualified for appointment as a Judicial Member unless he—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) is, or has been, a judge of a High Court; or</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) is, or has been, a District Judge for at least five years; or</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) has, for at least ten years been an advocate of a court.</div>
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<i style="margin: 0px; padding: 0px;">Explanation.</i>—For the purposes of clause (<i style="margin: 0px; padding: 0px;">c</i>), in computing the period during which a person has been an advocate of a court, there shall be included any period during which the person has held judicial office or the office of a member of a tribunal or any post, under the Union or a State, requiring special knowledge of law after he become an advocate.</div>
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(<i style="margin: 0px; padding: 0px;">3</i>) A person shall not be qualified for appointment as a Technical Member unless he—</div>
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(<i style="margin: 0px; padding: 0px;">a</i>) has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service; or</div>
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(<i style="margin: 0px; padding: 0px;">b</i>) is, or has been in practice as a chartered accountant for at least fifteen years; or</div>
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(<i style="margin: 0px; padding: 0px;">c</i>) is, or has been, in practice as a <b style="margin: 0px; padding: 0px;">cost accountant</b> for at least fifteen years; or</div>
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(<i style="margin: 0px; padding: 0px;">d</i>) is, or has been, in practice as a company secretary for at least fifteen years; or</div>
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(<i style="margin: 0px; padding: 0px;">e</i>) is a person of proven ability, integrity and standing having special knowledge and experience, of not less than fifteen years, in law, industrial finance, industrial management or administration, industrial reconstruction, investment, accountancy, labour matters, or such other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of companies; or (<i style="margin: 0px; padding: 0px;">f</i>) is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.</div>
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<b style="margin: 0px; padding: 0px;">Right to legal representation</b>.</div>
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<b style="margin: 0px; padding: 0px;">432. </b>A party to any proceeding or appeal before the Tribunal or the Appellate Tribunal, as the case may be, may either appear in person or authorise one or more chartered accountants or company secretaries or <b style="margin: 0px; padding: 0px;">cost accountant</b>s or legal practitioners or any other person to present his case before the Tribunal or the Appellate Tribunal, as the case may be.</div>
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Compiled by :-</div>
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<strong style="margin: 0px; padding: 0px;">CMA ROHIT J VORA</strong></div>
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Controlling Partner</div>
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Rohit & Associates</div>
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Cost Accountants</div>
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contact@rohitvora.com</div>
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Unknownnoreply@blogger.com7tag:blogger.com,1999:blog-29209866.post-34779010835464751852013-07-03T21:14:00.000-04:002013-07-03T21:14:35.177-04:00MRAs with Other Professional Bodies.The Institute of Cost Accountants of India (the Erstwhile ICWAI) has entered into plethora of MOUs with world accountancy Bodies for recognition of its qualifications such as follows:
1.With CIMA UK Advance Standing Arrangement.
2.With CISI Uk for recognition to membership.
3.With IPA Australia For an MRA.
4.With IMA USA for MRA.
http://icmai.in/aboutus/1Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-29209866.post-34690931906975861722010-08-24T09:03:00.002-04:002010-08-24T09:13:48.449-04:00New Company Bill 2008 =Tentative Provisions.Section 2(zb) “cost accountant” means a cost accountant as defined in clause (b) of subsection<br />(1) of section 2 of the Cost and Works Accountants Act, 1959 and who holds<br />a valid certificate of practice under sub-section (1) of section 6 of that Act;<br /><br />Section 7(b) a declaration in the prescribed form by an advocate, a Chartered<br />Accountant, Cost Accountant or Company Secretary, who is engaged in the formation<br />of the company, or by a person named in the articles as a director, manager or Secretary<br />of the company, that all the requirements of this Act and the rules made thereunder in<br />respect of registration and matters precedent or incidental thereto have been complied<br />with.<br />Section 131(3) Where a company includes the particulars relating to items of cost in the books of<br />account in pursuance of a resolution passed by the company, the audit of cost records as<br />contained in the books of account of the company shall be conducted by a Cost Accountant<br />in practice who shall be appointed by the Board on such remuneration as may be determined<br />by the members in such manner as may be prescribed:<br />Provided that no person appointed under section 123 as an auditor of the company<br />shall be appointed for conducting the audit of cost records.<br />Section131 -4.Provided that the report on the audit of cost records shall be submitted by the Cost<br />Accountant in practice to the Board of Directors of the company.<br />266. (1) The Company Liquidator may, with the sanction of the Tribunal, appoint one<br />or more chartered accountants or company secretaries or cost accountants or legal<br />practitioners or such other professionals as may be necessary to assist him in the performance<br />of his duties and functions under the Act.<br />Section 274 (4)(b)(b) may at his own cost employ chartered accountants or company secretaries<br />or cost accountants or legal practitioners entitled to appear before the Tribunal under<br />section 393, who shall be at liberty to put to him such questions as the Tribunal may<br />consider just for the purpose of enabling him to explain or qualify any answers given<br />by him.<br />(b) may at his own cost employ chartered accountants or company secretaries<br />or cost accountants or legal practitioners entitled to appear before the Tribunal under<br />section 393, who shall be at liberty to put to him such questions as the Tribunal may<br />consider just for the purpose of enabling him to explain or qualify any answers given<br />by him.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-29209866.post-51223791870254676822010-08-24T07:04:00.001-04:002010-08-24T07:06:33.294-04:00ICWAI Qualification for Appointment as Teaching Faculty in Universities<br />and Colleges in the Area of Management/Business Administration<br />University Grants Commission (UGC) has notified “UGC Regulations on Minimum<br />Qualifications for Appointment of Teachers and Other Academic Staff in<br />Universities and Colleges and Measures for the Maintenance of Standards in<br />Higher Education, 2010 vide its Circular No. F.3-1/2009 dated 30th June 2010.<br />The Regulations prescribe the minimum qualification for appointment of<br />teaching faculty in universities and colleges in the area of Management/<br />Business Administration. The qualifications specified for appointment of<br />Assistant Professor, Associate Professor and Professor in the above area and<br />Principal/Director/Head of the Institution include First Class Graduate and<br />professionally qualified Cost and Works Accountant among other<br />qualifications and subject to other requirements including qualifying<br />NET/SLET/SET as the minimum eligibility condition for recruitment and<br />appointment of Assistant Professors.<br />These regulations shall apply to every university established or incorporated by<br />or under a Central Act, Provincial Act or a State Act, every institution including a<br />constituent or an affiliated college recognised by the Commission, in<br />consultation with the university concerned under Clause (f) of section 2 of the<br />University Grants Commission Act, 1956 and every institution deemed to be a<br />university under Section 3 of the said Act.<br />The relevant extract of the notification is as follows:<br />MINIMUM QUALIFICATIONS FOR APPOINTMENT OF TEACHING FACULTY<br />IN UNIVERSITIES AND COLLEGES- MANAGEMENT/BUSINESS<br />ADMINISTRATION:<br />1. Assistant Professor:<br />I. Essential:<br />1. First Class Masters Degree in Business Management/Administration/in<br />a relevant management related discipline or first class in two year full<br />time PGDM declared equivalent by AIU/ accredited by the AICTE/UGC;<br />OR<br />2. First Class graduate and professionally qualified Chartered<br />Accountant/Cost and Works Accountant/Company Secretary of the<br />concerned statutory bodies.<br />II. Desirable:<br />1. Teaching, research, industrial and/or professional experience in a<br />reputed organization;<br />2. Papers presented at Conferences and/or published in refereed<br />journals.<br />2. Associate Professor:<br />i. Consistently good academic record with at least 55% marks (or an<br />equivalent grade in a point scale wherever grading system is followed) in<br />Master’s Degree in Business Management/Administration/in a relevant<br />management related discipline or first class in two years full time PGDM<br />declared equivalent by AIU/recognized by the AICTE/ UGC;<br />OR<br />First Class graduate and professionally qualified Chartered<br />Accountant/Cost and Works Accountant/Company Secretary of the<br />concerned statutory body.<br />ii. Ph.D. or Fellow of Indian Institute of Management or of an Institute<br />recognized by AICTE and declared equivalent by the AIU.<br />iii. A minimum of eight years’ experience of teaching/industry/ research/<br />professional at managerial level excluding the period spent for obtaining<br />the research degree.<br />OR<br />iv. In the event the candidate is from industry and the profession, the<br />following requirements shall constitute as essential requirements:<br />i. Consistently good academic record with at least 55% marks (or an<br />equivalent grade in a point scale wherever grading system is followed) in<br />Master’s Degree in Business Management/Administration/in a relevant<br />management related discipline or first class in two years full time PGDM<br />declared equivalent by AIU/recognized by AICTE/UGC,<br />OR<br />First Class graduate and professionally qualified Chartered<br />Accountant/Cost and Works Accountant/Company Secretary of the<br />concerned statutory body.<br />ii. A minimum of ten years experience of teaching/industry/research/<br />profession, out of which five years must be at the level of Assistant<br />Professor or equivalent excluding the period spent for obtaining research<br />degree. The candidate should have Professional work experience, which is<br />significant and can be recognized at national/international level as<br />equivalent to Ph.D. and ten years managerial experience in<br />industry/profession of which at least five years should be at the level<br />comparable to that of lecturer/assistant professor.<br />v. Without prejudice to the above, the following conditions may be<br />considered desirable:<br />a) Teaching, research, industrial and/or professional experience in a<br />reputed organization;<br />b) Published work, such as research papers, patents filed/obtained, books<br />and/or technical reports; and<br />c) Experience of guiding the project work/dissertation of PG/Research<br />Students or supervising R&D projects in industry.<br />3. Professor:<br />i. Consistently good academic record with at least 55% marks (or an<br />equivalent grade in a point scale wherever grading system is followed) in<br />Master’s Degree in Business Management/Administration/ in a relevant<br />discipline or consistently good academic record with at least 55% marks<br />(or an equivalent grade in a point scale wherever grading system is<br />followed) in two year full time PGDM declared equivalent by<br />AIU/recognized by the AICTE/UGC;<br />OR<br />First Class graduate and professionally qualified Chartered Accountant/<br />Cost and Works Accountant/Company Secretary of the concerned<br />statutory body.<br />ii. Ph. D. or Fellow of Indian Institute of Management or of an Institute<br />recognized by AICTE and declared equivalent by the AIU.<br />iii. A minimum of ten years’ experience of teaching/industry/research/<br />professional out of which five years must be at the level of Reader or<br />equivalent excluding the period spent for obtaining the research degree.<br />OR<br />iv. In the event the candidate is from industry and the profession, the<br />following shall constitute as essential:<br />1. Consistently good academic record with at least 55% marks (or an<br />equivalent grade in a point scale wherever grading system is followed) in<br />Master’s Degree in Business Management/Administration/ in a relevant<br />management related discipline or consistently good academic record with<br />at least 55% marks (or an equivalent grade in a point scale wherever<br />grading system is followed) in two years full time PGDM declared<br />equivalent by AIU/recognized by the AICTE/UGC.<br />OR<br />First Class graduate and professionally qualified Chartered Accountant<br />Cost and Works Accountant/Company Secretary of the concerned<br />statutory body.<br />2. The candidate should have professional work experience which is<br />significant and can be recognized at national/International level as<br />equivalent to Ph. D. and twelve years’ managerial experience in<br />industry/profession of which at least eight years should be at least at a<br />level comparable to that of Reader/Assistant Professor.<br />v. Without prejudice to the above, the following conditions may be<br />considered desirable:<br />i) Teaching, research, and/or professional experience in a reputed<br />organization;<br />ii) Published work, such as research papers, patents filed/obtained, books<br />and/or technical reports;<br />iii) Experience of guiding the project work/dissertation of PG/research<br />students or supervising R&D projects in industry;<br />iv) Demonstrated leadership in planning and organizing academic,<br />research, industrial and/or professional activities; and<br />v) Capacity to undertake/lead sponsored R&D consultancy and related<br />activities.<br />4. Principal/Director/Head of Institution<br />i. Qualification same as those prescribed for the post of professor in the<br />relevant discipline with a minimum of fifteen years’ experience of<br />postgraduate teaching/industry/research.<br />OR<br />ii. For candidates from Industry/Profession:<br />Qualification same as those prescribed for the post of Professor from<br />industry/profession stream with fifteen years’ experience of postgraduate<br />teaching/research out of which five years must be at the level or<br />Professor in the relevant discipline.<br />iii. Without prejudice to the above, the following conditions may be<br />considered desirable:<br />1. Administrative experience in senior level responsible position in the<br />Industry/Professional Institution.<br />For full text of the notification please visit the url:<br />http://www.ugc.ac.in/policy/revised_finalugcregulationfinal10.pdfUnknownnoreply@blogger.com8tag:blogger.com,1999:blog-29209866.post-70462834693443570192010-08-24T06:45:00.000-04:002010-08-24T07:01:02.921-04:00Notice<br />Dated: 6th April 2009<br /><br /> <br /><br /> <br /><br />Sub: Internal Audit for stock brokers/trading members/clearing members<br /><br /> <br /><br /> <br /><br />This is further to Exchange Notice October 29, 2008 wherein all the stock brokers/trading members/clearing members were directed to carry out complete internal audit on a half yearly basis by chartered accountants, company secretaries or cost and management accountants who are in practice and who do not have any conflict of interest. It was also informed that, the first internal audit period would be from October 1, 2008 to March 31, 2009.<br /><br /> <br /><br />Further, on the basis of SEBI letter No. MIRSD/DPS-I/PG/158174/09 dated March 23, 2009, the applicability, scope/guidelines of audit, format of audit report, audit certificate and the time limit for submission of audit report are given as Annexure 1, 2 and 3.<br /><br /> <br /><br />All stock brokers/trading members/clearing members are advised to ensure compliance with the above requirements.<br /><br /> <br /><br />Members are advised to submit the Audit Reports to the Surveillance Department of the Exchange on 4th Floor of the Exchange at 7, Lyons Range, Kolkata.<br /><br /> <br /><br />In case of any queries / clarification, the members may contact Manager Surveillance and DGM Surveillance.<br /><br /> <br /><br /> <br /><br />Company Secretary and Financial Controller<br /><br /><br /><br /> <br />Annexure – 1<br /> <br /><br /> <br /><br />INTERNAL AUDIT FOR STOCK BROKERS/TRADING MEMBERS/CLEARING MEMBERS<br /><br /> <br /><br /> <br /><br />Applicability<br /><br /> <br /><br />Trading Members (Stock Brokers) and Clearing members are required to appoint an internal auditor for carrying out complete internal audit in all segments of the Exchange in which they are enabled for trading/clearing (wherein atleast a one/single trade have been executed or cleared by them) and submit a report to the Exchange on half yearly basis. The first half year period would start from October 01, 2008.<br /><br /> <br /><br />Who can conduct internal audit<br /><br /> <br /><br />Internal audit is required to be carried out by any Chartered Accountant, Company Secretary or Cost and Management Accountant who is in practice and who does not have any conflict of interest.<br /><br /> <br /><br />Scope/Purpose of Audit<br /><br /> <br /><br />The purpose of audit should be <br /><br /> <br /><br />(a) to ensure that the books of account, records and documents have been maintained in the manner required under Securities Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, SEBI (Stock brokers and Sub-brokers) Regulations, 1992, Securities Contracts (Regulation) Rules, 1957, circulars issued by SEBI & Exchange, Bye laws of the Exchange including agreements, data security and insurance in respect of operations of trading member/clearing member. <br /><br />(b) to ascertain whether adequate internal control systems, procedures and safeguards have been established and are being followed by the intermediary to fulfill its obligations under Securities and Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, SEBI (Stock brokers and Sub-brokers) Regulations, 1992, Securities Contracts (Regulation) Rules, 1957, circulars issued by SEBI & Exchange, Bye laws of the Exchanges and with respect to data security and insurance in respect of operations of trading member/clearing member. <br /><br />(c) to ascertain whether any circumstances exist which would render the intermediary unfit or ineligible for dealing in securities market.<br /><br />(d) to ascertain whether the provisions of the securities laws and the directions and/or circulars issued there under by SEBI/Exchange have been complied with<br /><br />(e) to ascertain, whether the provision of Bye-laws, notices, circulars, instructions or orders issued by stock exchanges have been complied with <br /><br />(f) to inquire suo motu into such matters as may be deemed fit by the auditor in the interest of investors or the securities market<br /><br /> <br /><br /> <br /><br /> <br /><br />Submission of internal audit report<br /><br /> <br /><br />Internal auditor would submit the audit report to the Proprietor/Partners/Board of respective trading/clearing member. In case the trading member is a partnership firm or corporate entity, the report would be placed before the meeting of its management committee/Board of Directors. In all cases, the trading member shall forward the audit report along with para-wise/point wise comments to respective stock exchanges within 3 months from the end of the relevant half year audit period. The audit report may be combined across segments and activity (trading/clearing) for respective Exchanges.<br /><br /> <br /><br />The initial internal audit should be for the period commencing from October 1, 2008 till March 31, 2009 and the audit report together with para-wise/point wise comments should be submitted to the Exchange within 30th June 2009 and the subsequent audit reports with comments should be submitted to the Stock Exchange within 3 months from the end of relevant half year audit period.<br /><br /> <br /><br /> <br /><br />Non-compliance relating to internal audit by the members<br /><br /> <br /><br />Non-submission of internal audit report as per the aforesaid guidelines shall be treated as non-compliance and suitable disciplinary action may be initiated against the concerned member/s. Where, in the opinion of the Exchange, the quality of the reporting is not satisfactory or the audit is not carried out in accordance with the aforesaid guidelines, the Exchange reserves the right to advise the concerned member/s to change the auditors and/or submit revised reports.<br /><br /><br /><br /> <br /><br />Annexure – 2<br /><br /> <br /><br />Areas to be covered in internal audit and areas on which comments needs to be incorporated in the report are given below<br /><br /> <br /><br />1. Client registration and documentation<br /> <br />Execution of KYC, MCA/TPA, and RDD – checks and balances in place<br /> Whether KYC, MCA/TPA, RDD are executed in the prescribed formats & the same is executed before execution of trades for the client?<br /><br /> <br /><br />Whether UCC is allotted to the client & the same is uploaded to the Exchange with PAN <br /><br /> <br /><br />Whether all fields in KYC including client’s financial details are filled in properly?<br /><br /> <br /><br />Whether proper proof of identity, PAN and proof of address are taken with KYC form? <br /><br /> <br /><br />Whether any contravening clauses are included in MCA/TPA? <br /><br /> <br /><br />Whether in person verification of clients is done by the employees of the trading member only?<br /><br /> <br /><br />Whether date of verification, name and signature of the official who has done in-person verification and the member’s stamp incorporated in the client registration form?<br /><br /> <br /><br />Whether copies of all the documents executed by client are given to the respective clients?<br /><br /> <br /><br />Whether change in address, bank account or demat account is carried out on receipt of written request along with documentary proof from the respective client?<br /><br /> <br /><br />Whether client details including financial details are reviewed periodically and updated? <br /> <br />Verification of formats of KYC, MCA/TPA and RDD and attachments including proof of identity and address, as prescribed by SEBI/BSE<br /> <br />Verification that Contradictory clauses are not mentioned in KYC, MCA/TPA and RDD<br /> <br />Systems and procedures put in place by member for verification of PAN before opening account<br /> <br />Procedure followed by the member for informing UCC to the clients & uploading to the Exchange <br /> <br />Mechanism to ensure financial details of clients<br /> <br />Procedure adopted for in person verification of clients<br /> <br />Procedure adopted by relationship managers, if any, for procuring new clients<br /> <br />Delivery of copies of client registration documents to the clients<br /> <br />Storage of client registration documents and retrieval mechanism<br /> <br />Procedure adopted for obtaining clients’ consent for electronic contract notes<br /> <br />Periodic review of client related information and updation of the same in system<br /> <br />Verification of RDD/KYC/MCA/TPA of different types of clients<br /> <br />Acquaintance procedure for new clients<br /> <br />Applicable SEBI Circulars.<br /><br /> <br /><br />SEBI circular no. SMDRP/Policy/Cir-39/2001 dated July 18, 2001<br /><br />SEBI circular no. SEBI/MIRSD/DPS-1/Cir-31/2004, dated August 26, 2004 & Regulation-7 D <br /><br />SEBI circular no. MRD/DoP/SE/Cir- 35/2004 dated October 26, 2004<br /><br />SEBI circular no. MRD/DoP/Cir- 05/2007 dated April 27, 2007<br /><br />MIRSD/DPS-III / 130466 / 2008 dated July 02, 2008<br /><br /> <br /> <br /><br /> <br /><br />2. Order management and risk management systems <br /> <br />Procedure adopted for receipt of orders from clients<br /> Whether checks are in place to ensure that no unauthorized orders are executed from any of the terminals? <br /><br /> <br /><br />Whether control reports like orders executed away from market price, client-wise / scrip-wise / terminal-wise volumes / exposures are generated to monitor any manipulation or unwarranted activity?<br /><br /> <br /><br />In case of dormant accounts, are there any checks in place to ensure that in case the account is reactivated whether it is operated by the respective client only?<br /><br /> <br /><br />Whether initial and other margins are collected from respective clients in the prescribed form of funds, fixed deposit receipts, bank guarantees and approved securities with appropriate haircut?<br /><br /> <br /><br />Whether the member has a proper system for reporting the correct client margin collection, in Derivatives segment?<br /><br /> <br /><br />Verify whether the margin reported by the member to the Exchange in Derivatives segment is actually collected and available in the books of accounts of the member. In case of any irregularity observed, mention the instances wherein wrong reporting of margin collected from clients/trading members was observed.<br /><br /> <br /><br />Whether Risk Management System (RMS) includes policy on margin collection from clients/trading member and the RMS is documented?<br /><br /> <br /><br />Whether proper systems are in place to ensure timely collection for pay-in from the respective client as per settlement schedule?<br /><br /> <br /><br />Whether proper monitoring mechanism is in place to review long outstanding debit balances in clients’ accounts and recovery of the same?<br /><br /> <br /><br /> <br /><br />Whether member has reported details of client funding, if any, to the exchange within prescribed time limit?<br /><br /> <br /><br />What are the sources of funds in case client funding is observed?<br /><br /> <br /><br />Whether all the institutional trades are routed through custodians by following Straight Through Processing (STP) ?<br /><br /> <br /><br />What are the reasons for institutional trades not being routed through custodians? Whether any specific pattern is observed for the same?<br /><br /> <br /><br />Whether member has obtained prior approval from the exchange before providing terminal to the clients under DMA facility?<br /><br /> <br /><br />Whether member has complied with regulatory requirements related to. DMA?<br /><br /> <br /> <br />Mechanism for order management and execution<br /> <br />Procedure adopted for setting Limits at client level / Terminal level/Dealer level <br /> <br />Policy on Margin collection mechanism and the modes of margin money <br /> <br />Procedure adopted for reporting of client margin collection to Clearing House<br /><br /> <br /> <br />Review of process adopted for monitoring / recovery of long outstanding debit balances<br /> <br />Procedure adopted for calculation & reporting client funding<br /> <br />Procedure for monitoring institutional trades not routed through custodians <br /> <br />Procedure adopted for providing Direct Market Access (DMA) facility <br /> <br />Applicable SEBI Circulars.<br /><br /> <br /><br />SEBI circular no. MRD/DoP/SE/Cir-07/2005 dated February 23, 2005<br /><br />SEBI circular no. MRD/DoP/SE/Cir- 17/2005 dated September 02, 2005<br /><br />Exchange Notice no. 20040420-12 dated April 20, 2004.<br /><br />Exchange notice no. 20080417-24 dated April 17, 2008.<br /><br />Exchange Notice No. 20051216-8 dated December 16, 2005 <br /><br /> <br /> <br /><br /> <br /><br /> <br /><br />3. Contract notes, Client margin details and Statement of accounts<br /> <br />Procedure adopted for issuance of contract notes<br /> Whether contract notes are sent within 24 hours of execution of trades and margin details are sent daily to respective clients and proof of delivery / dispatch is maintained?<br /><br /> <br /><br />Whether all prescribed details including name and signature of authorised signatory, dealing office details and brokerage are contained in contract note?<br /><br /> <br /><br />In case contract notes and margin details are sent in electronic form, whether log is maintained? Whether trail of bounced mails is maintained and physical delivery is ensured in case of bounce mails?<br /><br /> <br /><br />Whether member has complied with regulatory requirements related to. Electronic Contract Notes(ECN)?<br /><br /> <br /><br />Whether complete statement of accounts for funds and securities are issued on a quarterly basis to clients, with error reporting clause? Whether proof of sending the same is maintained?<br /><br /> <br /> <br />Verification of format of contract notes issued<br /> <br />Verification of copy of contract note with Proof of dispatch/register of dispatch/logs maintained<br /> <br />Adherence to electronic contract note norms, if applicable<br /> <br />Procedure adopted for sending statement of accounts<br /> <br />Contents & periodicity of statement of accounts of funds and securities<br /> <br />Procedure adopted for sending margin details to clients<br /> <br />Procedure for maintaining acknowledgement / proof of delivery of contract notes/statement of accounts/margin details to the clients<br /> <br />Applicable SEBI Circulars.<br /><br />Clause B(2) of Code of conduct for Stock Brokers specified under Regulation 7 <br /><br />SMD-1/23341 dated November 18, 1993<br /><br />SMD (B)/104/22775/93 dated October 29, 1993 <br /><br />SMD/MDP/CIR/043/96 dated August 5, 1996 <br /><br />MRD/DoP/SE/Cir-20/2005 dated September 08, 2005<br /><br />SEBI/DNPD/143542 /Cir-43/08 dated November 06, 2008 <br /><br /> <br /> <br /><br /> <br /><br />4. Dealing with clients’ funds and securities<br /> <br />Verification of details of cash receipts from / payments to clients, if any, observed during the audit period are to be given (mentioning any specific branch involved). <br /> Whether cash dealings with clients are done by branches / sub brokers?<br /><br /> <br /><br />Whether banker’s cheque / demand draft are accompanied with written request from the respective client? <br /><br /> <br /><br />Whether pay-in or pay-out is received from or delivered to respective clients only?<br /><br /> <br /><br />Whether any instances were observed wherein pay-in / pay out was received from / made to account other than the respective client account? Whether systems are in place to ensure compliance in this regard by the member?<br /><br /> <br /><br />Whether collaterals of clients were pledged with banks / other entities for raising funds? If yes, details of such instances observed are to be given.<br /><br /> <br /><br />Whether funds raised by pledging client securities were utilised for respective client only? List of instances to be provided in case of non-utilisation of proceeds for respective client?<br /><br /> <br /><br />Whether client’s funds / securities are transferred to respective clients accounts within one working day of after the pay-out of the settlement? <br /><br /> <br /><br />Whether any instance of misutilisation of clients’ funds or securities is observed? If yes, give complete details of such instances <br /><br /> <br /><br />Whether bank book and register of securities are in alignment with bank statements and transaction statements provided by banks and depositories?<br /><br /> <br /><br />Whether dividend and other corporate benefits received on behalf of clients is paid/credited/passed on to the respective clients account ? <br /><br /> <br /> <br />Verification of internal controls adopted by the member while accepting banker’s cheque / demand draft from clients<br /> <br />Procedure for ensuring that receipts and payment of funds/securities are from/to respective client only<br /> <br />Periodic Reconciliation of books of accounts <br /> <br />Verification of following books of accounts/records <br /><br />- Register of Securities<br /><br />- Bank Statements<br /><br />- Depository accounts maintained by member<br /><br />- Client ledgers<br /><br />- Cash Book<br /><br />- Bank Book<br /><br />- Details of records of client securities pledged, if any.<br /><br />- Underlying for any overdraft/loan account.<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. SEBI/MRD/SE/Cir- 33/2003/27/08 dated August 27, 2003<br /><br />Code of conduct for Stock Brokers specified under Regulation 7 of SEBI (Stock Brokers and Sub brokers) Regulations, 1992.<br /><br />SEBI circular no. MRD/DoP/SE/Cir-11/2008 dated April 17, 2008<br /><br /> <br /> <br /><br /> <br /><br />5. Banking and Demat account operations<br /> <br />Procedure for segregation of own and clients’ funds and securities (in separate accounts)<br /> Whether member maintains separate bank accounts for clients funds & own funds. Also, whether maintains separate beneficiary accounts for clients’ securities & own securities?<br /><br /> <br /><br />Whether clients funds and securities are segregated from own funds and securities? <br /><br /> <br /><br />Are there any instances of use of client beneficiary account or client bank account for unauthorised purposes? In case of any irregularity observed, mention the instances in detail.<br /> <br />Internal controls for use of client bank and client beneficiary accounts only for authorized purposes.<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. SMD/SED/CIR/93/23321 dated November 18, 1993.<br /> <br /><br /> <br /><br />6. Terminal operations and systems<br /> <br />Procedure and policy adopted by member before allotment of trading terminals <br /> Whether terminals are provided by the member in his head office, branch office or the office of sub broker? <br /><br /> <br /><br />Whether any unauthorized terminal is observed to be allotted? If yes, give complete details. <br /><br /> <br /><br />Whether periodic audit of systems and software is conducted by certified systems auditor?<br /><br /> <br /><br />Whether terminals are operated by approved persons/approved users with valid BCSM certification?<br /><br /> <br /><br />Whether correct User name, login id, terminal location are reported to the Exchange?<br /><br /> <br /><br />Whether internal controls are in place to ensure that the certification of approved users has not expired?<br /><br /> <br /><br />Whether prior permission is obtained by member for providing IML? Whether member has complied with applicable provision of IML?<br /><br /> <br /><br />Whether updated version of software is used?<br /><br /> <br /><br />Whether back up facilities are in place and followed?<br /><br /> <br /><br />Whether broker has got his system audit done & submitted the system audit report to the Exchange within prescribed time limit?<br /><br /> <br /> <br />Verification of terminals and its users, at the audit place.<br /><br /> <br /><br /> <br /> <br />Verification of certification of the approved users.<br /> <br />Due diligence adopted for password security<br /> <br />Procedure in place for audit of systems and software<br /> <br />Periodic updating of version and back up mechanism <br /> <br />System adopted for data storage, security and access<br /> <br />Verification of logs from server<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. SMDRP/Policy/Cir-49/2001 dated October 22, 2001<br /><br />SEBI/MRD/SE/15958/2003 August 22, 2003 <br /><br />Exchange Notice No.20070517-26 dated May 17, 2007<br /> <br /><br /> <br /><br />7. Management of branches / sub brokers and internal control<br /> <br />System and Policy followed for opening / closing of branch<br /> Whether survey is conducted by the member for opening / closing of branches?<br /><br /> <br /><br />In case of closure, whether advance notice of the same is sent to clients? Proof of the same.<br /><br /> <br /><br />Whether there is monitoring mechanism to identify sudden increase / decrease in client level turnover from any specific branch?<br /><br /> <br /><br />Whether periodic inspection of branch / sub broker is conducted and reports are maintained? What is the follow-up mechanism?<br /><br /> <br /><br />Whether unregistered intermediation is observed?<br /><br /> <br /><br />Whether the member has shared commission/brokerage with entities with whom trading members are forbidden to do business / another trading member / employee in the employment of another trading member?<br /><br /> <br /><br />Whether internal controls exists and are sufficient to cover the risks at the members end?<br /><br /> <br /><br />Whether Stock broker indemnity policy with standard cover/clauses has been taken? <br /><br /> <br /> <br />Procedure adopted to inform the same to clients<br /> <br />Periodicity and procedure adopted for inspection of branches / sub brokers <br /> <br />Reporting mechanism and mode of informing the inspection observations to branches / sub brokers<br /> <br />Follow up action plan<br /> <br />Policy of fixing of roles and responsibilities of officials in head office, branches and sub-brokers office<br /> <br />Process laid out so as to prevent unregistered intermediation <br /> <br />Documentation of Internal controls and Comments on Internal controls in place<br /><br /> <br /> <br />Verification of Stock broker indemnity insurance policy<br /> <br />Sharing of commission/brokerage<br /> <br />Applicable SEBI Circulars.<br /><br />Section 12 of SEBI Act<br /><br />SEBI circular no. SMD/SED/RCG/270/96 dated January 19, 1996<br /><br />SEBI circular no. SMD/Policy/CIR-3/98 dated January 16, 1998<br /><br />SEBI circular no. Sub-Brok/Cir/02/2001 dated January 15, 2001 <br /><br />Regulation 18B of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992<br /><br />SEBI circular no. SMD/POLICY/CIRCULAR/3- 97 dated March 31, 1997.<br /><br /> <br /> <br /><br /> <br /><br />8. Investor grievance handling<br /> <br />Mechanism to monitor complaints lodged with branches/sub-brokers<br /> What is the system to report complaints received by branches / sub brokers to the head office?<br /><br /> <br /><br />Whether complaints are received from specific branch/sub-broker?<br /><br /> <br /><br />Whether complaints register includes complete details of investor complaints?<br /><br /> <br /><br />What is the procedure adopted to resolve complaints? <br /><br /> <br /><br />Whether specific action plan is framed by the member in respect of long pending complaints?<br /><br /> <br /><br />Whether designated email id for investor grievances is created and informed to the investors ? <br /><br /> <br /><br />What is the periodicity of monitoring investor complaints?<br /><br /> <br /><br />Whether complaints of substantial amount is escalated to the top management ?<br /><br /> <br /> <br />Maintenance of complaints register<br /> <br />Redressal mechanism for complaints registered against the member<br /> <br />Comment on complaints pending for long period<br /> <br />Verification of investor grievance register and email id<br /> <br />Internal control for verification of complaints received through the designated email –id<br /> <br />Applicable SEBI Circulars.<br /><br /> <br /><br />SEBI circular no. MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006<br /><br />Clause 1(d) of Regulation 12A<br /> <br /><br /> <br /><br />9. Maintenance of Books of Accounts<br /> <br />Prescribed books of accounts, registers and records are maintained Exchange wise, with the required details and for the stipulated period as per regulatory requirement<br /><br /> <br /><br /> <br /><br /> <br /><br /> <br /><br /> <br /><br /> <br /> Whether prescribed books of accounts, registers and records are maintained Exchange wise, with the required details and for the stipulated period as per regulatory requirement?<br /><br /> <br /><br />Whether exchange wise separate books of accounts are maintained?<br /><br /> <br /><br />Whether member has dealt with any suspended /defaulter /expelled member and/or prohibited entity?<br /><br /> <br /><br />Whether prior approval has been obtained by member for change in shareholding/directors/constitution?<br /><br /> <br /><br />Whether prior approval has been obtained in case the member has dealt with another member of the Exchange?<br /><br /> <br /><br />Whether member has intimated the Exchange in case of they have dealt with member of another stock exchange?<br /><br /> <br /><br />Whether advertisements are issued after prior permission of the Exchange?<br /><br /> <br /><br />Whether member maintains and updates client master in its back office?<br /><br /> <br /><br />Whether financial reports of the member has been analysed? Comments on the same.<br /><br /> <br /> <br />Verification of books of accounts and other records <br /> <br />Internal controls on the process for taking approval of the Exchange<br /><br /> <br /><br />Analysis of financial reports<br /> <br /> <br /> <br />Applicable Regulations & SEBI Circulars<br /><br />Rule 15 of Securities Contract Regulation Rules 1957<br /><br />Regulation 17(1) & 18 of SEBI (Stock Broker Sub-broker) Regulation 1992<br /><br />Rule 4 (c) of SEBI (Stock Brokers and Sub Brokers) Rules, 1992 <br /><br />Clause C(4) & C (5) of Regulation 7<br /><br />SEBI Circular No. SMDRP/Policy/Cir-49/2001 dated October 22, 2001<br /><br />SEBI circular no. MIRSD/MSS/Cir- 30/ 13289/03 dated July 09, 2003<br /><br />SEBI circular no. SEBI/MIRSD/Cir-06/2004 dated January 13, 2004<br /><br />SEBI circular no. MIRSD-DR 1/SRP/Cir- 43/28408/04 dated December 15, 2004<br /><br />SEBI circular no. SEBI/MRD/SE/Cir-15/2005 dated August 4, 2005<br /><br /> <br /> <br /><br /> <br /><br />10. Systems & Procedures pertaining to Prevention of Money Laundering Act (PMLA), 2002<br /> <br />Customer acceptance policy and customer due diligence measures <br /><br /> <br /> What is the process adopted by member to verify the identity of the customer and/or the person on whose behalf a transaction is being conducted ?<br /><br /> <br /><br />Whether any account was opened in fictitious name/benami account ?<br /><br /> <br /><br />What checks and balances are in place to ensure that the identity of the client does not match with any person having criminal background or is not banned in any other manner?<br /><br /> <br /><br />What are the factors of Risk perception having regard to client's location, address, nature of business activity, trading turnover and the manner of making payments so that the clients can be classified in to "High Risk", " Medium Risk"," Low Risk" category?<br /><br /> <br /><br />Whether details of appointment of Principal Officer and change in Principal officer, if any is intimated to FIU-India? <br /><br /> <br /><br />Whether member has adopted and implemented written guidelines prescribed under PMLA, 2002?<br /><br /> <br /><br />Whether member has adequate system to generate alerts for suspicious transactions?<br /><br /> <br /><br />As per provisions of Prevention of Money Laundering Act, 2002 whether record of transactions, its nature and its value are maintained?<br /><br /> <br /> <br />Walk through of the process<br /> <br />Process of generation and monitoring alerts<br /> <br />System in place that allows continuous monitoring of transactions<br /> <br />Process for identifying STR (Suspicious Transaction Report) and reporting the same to FIU-India filed<br /><br /> <br /><br /> <br /> <br />Processes for verification of alerts with KYC details<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. ISD/CIR/RR/AML/1/06 dated January 18, 2006 <br /><br />SEBI circular no. ISD/CIR/RR/AML/2/06 dated March 20, 2006 <br /><br />SEBI circular no. ISD/AML/CIR-1/2008 dated December 19, 2008 <br /><br />SEBI letter no. ISD/SR/AK/AML/150847/2009 dated January 15, 2009<br /> <br /><br /> <br /><br />11. Transfer of trades<br /> <br />Transfer of trades in the back office<br /><br /> <br /><br /> <br /><br /> <br /> Whether any trades were transferred from one client code to another client code or from client code to pro or vice-versa in the back office of the member?<br /><br /> <br /><br />Whether any pattern was observed in case, transfer trades carried out at member’s back office <br /> <br />Verification of trade files downloaded by the Exchange with sauda register/back-office file of member (based on which contract notes are generated)<br /> <br />Internal controls for transfer of trades<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. SEBI/MRD/SE/Cir- 32/2003/27/08 dated August 27, 2003<br /><br /> <br /> <br /><br /> <br /><br />12. Margin Trading<br /> <br />Verification of agreements <br /> Whether member has obtained specific approval from the exchange, in case he is providing margin trading facility to his clients?<br /><br /> <br /><br />Whether member has complied with regulatory requirements related to margin trading?<br /> <br />Records of funding <br /> <br /> <br /> <br /> <br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. SEBI/MRD/SE/SU/Cir-15/04 dated March 19, 2004<br /><br /> <br /><br /> <br /> <br /><br /> <br /><br />13. Proprietary Trading<br /> <br />Verification of ids enabled for pro<br /><br /> <br /> If member is doing pro trading, whether member has disclosed this information to his clients?<br /><br /> <br /><br />If member is doing pro trading from multiple locations, whether member has obtained prior approval from the Exchange in this regard?<br /> <br />Process for approval of Exchange <br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. SEBI/MRD/SE/Cir-32/2003/27/08 dated August 27, 2003<br /><br />SEBI letter no. SEBI/MRD/SE/Cir-42/2003 dated November 19, 2003<br /><br /> <br /> <br /><br /> <br /><br />14. Internet Trading<br /> <br />Process of approval from Exchange<br /> <br /> <br />Verification of internet agreements<br /> Whether member has obtained specific approval from the exchange, in case he is providing internet trading facility to his clients?<br /><br /> <br /><br />Whether member has complied with regulatory requirements related to internet trading?<br /><br /> <br /><br />Whether broker has got his system audit done & submitted the system audit report to the Exchange within prescribed time limit?<br /><br /> <br /> <br />Procedure followed for user id and password<br /> <br />Internal controls for internet trading<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI Circular no. SMDRP/POLICY/CIR-06/2000 dated January 31, 2000<br /><br />Exchange Notice No. 47315 /2000 dated April 17, 2000<br /> <br /><br /> <br /><br />15. Operations of Professional Clearing member/ Members clearing trades of other trading members<br /> <br />Verification of execution of trading -clearing member (TM-CM) agreements/Custodial Participant agreements <br /> Whether TM-CM agreements are executed in prescribed formats with trading member?<br /><br /> <br /><br />Whether Clearing member custodial participant agreements are executed in prescribed formats ? <br /><br /> <br /><br />Whether statement of accounts has been sent to trading member/custodial participants/? <br /><br /> <br /><br />Whether clearing members had collected appropriate and adequate margins in prescribed forms from respective trading members?<br /><br /> <br /><br />Whether Margin collection reported to Exchange is in accordance with margins actually collected from trading member ?<br /><br /> <br /><br />Whether exposure allowed to trading members were based on requisite margins available with the clearing member?<br /><br /> <br /><br />Whether interest is charged to the trading member? If yes, what is the basis of interest with complete details like percentage of interest, periodicity of interest charged<br /> <br />Verification of issuance of statement of accounts to trading members/custodial participants<br /> <br /><br /> <br /><br />16. Securities Lending & Borrowing Scheme<br /> <br />Process of approval from Exchange<br /><br /> <br /> Whether member has obtained specific approval from the exchange?<br /><br /> <br /><br />Whether member has complied with regulatory requirements related to SLBS ?<br /><br /> <br /> <br />Verification of SLBS agreement<br /> <br />Applicable SEBI Circulars.<br /><br />SEBI circular no. MRD/DoP/SE/Dep/Cir- 14 /2007 dated the December 20, 2007<br /><br />SEBI circular no. MRD/DoP/SE/Cir- 31 /2008 dated October 31, 2008<br /><br /> <br /> <br /><br /> <br /><br /><br /><br /> <br /><br />Points to be noted<br /><br /> <br /><br />The guidelines prescribed hereunder do not limit the scope of the internal audit. The points mentioned are only indicative in nature and not exhaustive. This has been prepared based on the regulatory requirement (as per relevant acts, rules, regulations and circulars) which keep on developing from time to time. The auditors should peruse them and update the scope of the audit.<br /><br /> <br /><br />The report shall also include the following.<br /><br />1. If any major significant deviations and deviations of recurring nature are observed, the same should be reported separately in the covering page of the audit report. If auditors observations are in the nature of a deviation or a recommendation, the member’s response should be sought and recorded in the report.<br /><br />2. Comments by auditor on the status of compliance in respect of deviations reported in the last audit report,<br /><br />3. Improvements brought about in the operations between the last audit and the current audit.<br /><br />4. In case the member has been inspected in the relevant half year by the Exchange / SEBI, comments by the auditor on whether the member has complied with the observations made in the Exchange/SEBI inspection report are to be included in the audit report.<br /><br />5. A statement by the auditor that the provisions of SCRA 1956, SEBI Act 1992, SEBI (Stock Brokers and Sub-brokers) Regulations 1992, Rules, Bye laws, Regulations and circulars of SEBI, agreements, Bye laws of Exchange, circulars of Clearing House, data security and insurance have been covered in the audit. <br /><br />6. Auditor shall specifically declare about direct / indirect interest in or relationship with the member or its share holders / directors / partners / proprietors / management, if any and also confirm that they do not perceive any conflict of interest in such relationship / interest while conducting internal audit of the said member.<br /><br />7. Membership number allotted by the affiliated professional body should be quoted at the bottom of the report as provided in the format.<br /><br />8. Observations in the report should be quantified giving instance wise details, details of segment and activity ( trading or clearing) for which such violations are observed.<br /><br /> <br /><br /><br /><br />Annexure - 3<br /><br /> <br /><br />CERTIFICATE FOR INTERNAL AUDIT<br /><br /> <br /><br />We have examined the relevant books of accounts, records and documents maintained by M/s. _______________, (name of the trading/clearing member) bearing SEBI registration number ______________________) a member of the Calcutta Stock Exchange Association Ltd., / National Stock Exchange of India Limited / Bombay Stock Exchange Ltd. / MCX-Stock Exchange /other Stock Exchange, for the following segments to fulfill the internal audit requirement as prescribed by SEBI vide circulars dated August 22, 2008 & October 21, 2008, for the half year ended_____________________.<br /><br /> <br /><br />Segments <br /><br />(Cash Segment/Derivatives Segment / Debt Segment /Currency Derivatives/Securities Lending & Borrowing segment)<br /> Activity (Trading/Clearing/Trading and Clearing)<br /> SEBI registration number <br /> <br /> <br /> <br /> <br /> <br /><br /> <br /><br />The purpose of this audit is to examine that the processes, procedures followed and the operations carried out by the Trading Member/Clearing Member are as per the applicable Acts, Rules, Regulations, Bye-laws and Circulars prescribed by SEBI and the Stock Exchange. <br /><br /> <br /><br />We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of this internal audit. In our opinion proper books of accounts, records & documents, as per the regulatory requirement have been maintained by the member, so far as it appears from examination of the books.<br /><br /> <br /><br />We have conducted the audit within the framework provided by SEBI/Stock Exchange for the purpose of this internal audit. <br /><br /> <br /><br />To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud / non-compliance /violation by the member is observed during the course of this audit.<br /><br /> <br /><br />Based on the scrutiny of relevant books of accounts, records and documents, we certify that the member has complied with the relevant provisions of SEBI Act, 1992, Securities Contracts (Regulation) Act 1956, Securities Contracts (Regulation) Rules 1957, SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 and various circulars of SEBI. The member has complied with the Rules, Bye-laws, Regulations of BSE / NSE / MCX-SE and various circulars issued by the Stock Exchange and Clearing Corporation/Clearing House.<br /><br /> <br /><br />We declare that we do not have any direct / indirect interest in or relationship with the member or its directors / partners / proprietors / management and also confirm that we do not perceive any conflict of interest in such relationship / interest while conducting internal audit of the member.<br /><br /> <br /><br />In our opinion and to the best of our information and according to the explanations given to us by the proprietor/partner(s)/director(s)/compliance officer, the Report provided by us as per the Annexure and subject to our observations, which covers the entire scope of the audit, is true and correct.<br /><br /> <br /><br />__________________<br /><br />Company Secretary / Cost and Management Accountant / Chartered Accountant<br /><br />(Seal & Signature)<br /><br /> <br /><br /> <br /><br />(Name of the Proprietor / Partner)<br /><br /> <br /><br />Membership no. / CP. No.<br /><br /> <br /><br />Place:-<br /><br /> <br /><br />Date:-Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-77338432683231190782009-02-21T23:19:00.000-05:002009-02-21T23:20:55.651-05:00Lending Under Consortium arrangements RBI certificationThis may be a new addition to CMAs apart from other professionals..<br />=========================================================<br />RBI/2008-2009/379 <br /><br />DBOD.No. BP.BC.110/08.12.001/2008-09 <br />February 10, 2009 <br /><br />The Chairman & Managing Directors /<br />Chief Executive Officers of<br />All Scheduled Commercial Banks<br />(Excluding RRBs and LABs)<br /><br /><br />Dear Sir, <br /><br />Lending under Consortium Arrangement / Multiple Banking Arrangements <br /><br /><br />Please refer to Paragraph 2(iii) of our circular RBI/2008-09/183/DBOD.No.BP.BC.46 /08.12 .001/2008-09 dated September 19, 2008 on the captioned subject.<br /><br />2. In terms of Paragraph 2(iii) of the above circular, in order to strengthen the information sharing system among banks in respect of the borrowers enjoying credit facilities from multiple banks, the banks are required to obtain regular certification by a professional, preferably a Company Secretary, regarding compliance of various statutory prescriptions that are in vogue, as per specimen given in Annex III to the above circular. <br /><br />3. In this context it is clarified that in addition to Company Secretaries, banks can also accept the certification by a Chartered Accountants & Cost Accountants. Further, on the basis of suggestions received from Indian Banks Association, Annex III - Part I & Part II (copy enclosed) has also been modified. <br /><br />Yours faithfully, <br /><br /><br />(P. Vijaya Bhaskar)<br />Chief General Manager.<br /><br /><br /><br />Encl: As above. <br /><br />--------------------------------------------------------------------------------<br /><br /><br /><br /><br />Part : I <br /><br />DILIGENCE REPORT <br /><br />To,<br />The Manager, <br /><br />___________________ (Name of the Bank)<br />I/We have examined the registers, records, books and papers of ____________ Limited having its registered office at……………………………………………………… as required to be maintained under the Companies Act, 1956 (the Act) and the rules made thereunder , the provisions contained in the Memorandum and Articles of Association of the Company, the provisions of various statutes, wherever applicable, as well as the provisions contained in the Listing Agreement/s, if any, entered into by the Company with the recognized stock exchange/s for the half year ended on…………… . In my/our opinion and to the best of my/our information and according to the examination carried out by me/us and explanations furnished to me/us by the Company, its officers and agents. I/We report that in respect of the aforesaid period: <br /><br />1. The management of the Company is carried out by the Board of Directors comprising of as listed in Annexure …., and the Board was duly constituted.<br />During the period under review the following changes that took place in the Board of Directors of the Company are listed in the Annexure …., and such changes were carried out in due compliance with the provisions of the Companies Act, 1956.<br /><br />2. The shareholding pattern of the company as on ------- was as detailed in Annexure …………:<br />During the period under review the changes that took place in the shareholding pattern of the Company are detailed in Annexure…….:<br /><br />3. The company has altered the following provisions of <br /><br />(i) The Memorandum of Association during the period under review and has complied with the provisions of the Companies Act, 1956 for this purpose.<br /><br />(ii) The Articles of Association during the period under review and has complied with the provisions of the Companies Act, 1956 for this purpose.<br /><br /><br />4. The company has entered into transactions with business entities in which directors of the company were interested as detailed in Annexure….. .<br /><br />5. The company has advanced loans, given guarantees and provided securities amounting to Rs. ____________ to its directors and/or persons or firms or companies in which directors were interested, and has complied with Section – 295 of the Companies Act , 1956.<br /><br />6. The Company has made loans and investments; or given guarantees or provided securities to other business entities as detailed in Annexure ….and has complied with the provisions of the Companies Act, 1956.<br /><br />7. The amount borrowed by the Company from its directors, members, financial institutions, banks and others were within the borrowing limits of the Company. Such borrowings were made by the Company in compliance with applicable laws. The break up of the Company's domestic borrowings were as detailed in Annexure ….. :<br /><br />8. The Company has not defaulted in the repayment of public deposits, unsecured loans, debentures, facilities granted by banks, financial institutions and non-banking financial companies.<br /><br />9. The Company has created, modified or satisfied charges on the assets of the company as detailed in Annexure…. Investments in wholly owned Subsidiaries and/or Joint Ventures abroad made by the company are as detailed in Annexure …… <br /><br />10. Principal value of the forex exposure and Overseas Borrowings of the company as on ………… are as detailed in the Annexure under"<br /><br />11. The Company has issued and allotted the securities to the persons-entitled thereto and has also issued letters, coupons, warrants and certificates thereof as applicable to the concerned persons and also redeemed its preference shares/debentures and bought back its shares within the stipulated time in compliance with the provisions of the Companies Act,1956 and other relevant statutes. <br /><br />12. The Company has insured all its secured assets.<br /><br />13. The Company has complied with the terms and conditions, set forth by the lending bank/financial institution at the time of availing any facility and also during the currency of the facility <br /><br />14. The Company has declared and paid dividends to its shareholders as per the provisions of the Companies Act, 1956.<br /><br />15. The Company has insured fully all its assets.<br /><br />16. The name of the Company and or any of its Directors does not appear in the defaulters' list of Reserve Bank of India.<br /><br />17. The name of the Company and or any of its Directors does not appear in the Specific Approval List of Export Credit Guarantee Corporation.<br /><br />18. The Company has paid all its Statutory dues and satisfactory arrangements had been made for arrears of any such dues.<br /><br />19. The funds borrowed from banks/financial institutions have been used by the company for the purpose for which they were borrowed.<br /><br />20. The Company has complied with the provisions stipulated in Section 372 A of the Companies Act in respect of its Inter Corporate loans and investments.<br /><br />21. It has been observed from the Reports of the Directors and the Auditors that the Company has complied with the applicable Accounting Standards issued by the Institute of Chartered Accountants in India.<br /><br />22. The Company has credited and paid to the Investor Education and Protection Fund within the stipulated time, all the unpaid dividends and other amounts required to be so credited.<br /><br />23. Prosecutions initiated against or show cause notices received by the Company for alleged defaults/offences under various statutory provisions and also fines and penalties imposed on the Company and or any other action initiated against the Company and /or its directors in such cases are detailed in Annexure….. .<br /><br />24. The Company has (being a listed entity) complied with the provisions of the Listing Agreement.<br /><br />25. The Company has deposited within the stipulated time both Employees' and Employer's contribution to Provident Fund with the prescribed authorities. <br /><br />Note : The qualification, reservation or adverse remarks, if any, are explicitly stated may be stated at the relevant paragraphs above place(s). <br /><br />Place: Signature: <br />Date: Name of Company Secretary/Firm: <br />C.P. No.:Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-77338498555367965432009-02-21T23:14:00.000-05:002009-02-21T23:16:22.270-05:00ICWAI going truely Global !!!Kudos members Yes We can.http://www.hindu.com/edu/2009/02/16/stories/2009021650440100.htm<br /><br />Going global, ICWAI way <br /><br /><br /><br /><br /><br /><br />--------------------------------------------------------------------------------<br /><br />The institute is exploring possibilities of tie-ups with counterparts in developed countries <br /><br /><br />--------------------------------------------------------------------------------<br /><br /><br />The fast-paced changes that are sweeping across the world in financial and accounting professions are posing new challenges to accountants in managerial and senior positions in the corporate world in the country. This has placed a new responsibility on the professional bodies that produce accountants to update the curriculum and bring it on a par with international standards. <br /><br />The Institute of Cost and Works Accountants of India (ICWAI), which has sensed an urgency in this direction, has not only updated its curriculum with effect from January, 2008 and brought it on a par with the standards prescribed by the International Federation of Accountants (IFAC), but also started exploring the possibilities of entering into tie-ups with its counterparts in developed countries. This is mainly to ensure that the Indian accountants find acceptance by global business players like multinational companies.<br /><br />CIMA tie-up <br /><br />One such tie-up of great significance the ICWAI has entered into recently is with the Chartered Institute of Management Accountants (CIMA) of the United Kingdom, one of the oldest accounting bodies .<br /><br />“The MoU with CIMA, UK heralds an era of opening-up for the Indian students. Never before did Indian students have an opportunity to attain international accounting recognition at such a fast pace,” says ICWAI president Kunal Banerjee.<br /><br />The MoU, he explains, has provided for exemption of 11 of the total 14 papers in the CIMA examination for those who have qualified in the ICWAI examination. In what is called the ‘Gateway Scheme’, Indian students who have completed the ICWAI final examination can straightaway join the last level, of the CIMA examination. <br /><br />“All they have to do is appear for a proficiency test called CIMA Professional Gateway Assessment (CPGA) by paying a fee of £40, which is half of what the CIMA charges for its own students,” Mr. Banerjee says. <br /><br />He points out that the arrangement is also a great money-saver for Indian students, as they will have to pay a fee of £80 for each appearance of each of these three papers only. In normal course, Indian students desiring to complete the CIMA examination will have to pay £80 for each appearance of each of the 14 papers.<br /><br />As a token of reciprocity, ICWAI has exempted CIMA-qualified persons from appearing for 12 of the total 18 papers. However, six papers dealing mainly with Indian corporate laws and related aspects, will have to be cleared.<br /><br />Mr. Banerjee says there have been fruitful discussions with the Institute of Management Accountants (IMA), USA and the Certified Management Accountants (CMA), Canada for entering into ‘mutual recognition agreements’.<br /><br />“The pact we propose to enter into with the IMA has been cleared by the Ministry of Corporate Affairs. The one with the CMA will be finalised by end of March,” he adds. The MoU will pave the way for direct reciprocal arrangement of granting membership.<br /><br /><br /><br /><br />K. SRIMALI<br /><br /><br /><br />in VijayawadaUnknownnoreply@blogger.com1tag:blogger.com,1999:blog-29209866.post-82639640586843373222009-01-30T21:06:00.002-05:002009-01-30T21:10:34.845-05:00Internal Audit of Stock BrokersTraining programme for internal audit of stock brokers<br /><br /> <br /><br />Training Programme for Internal Audit of Stock Brokers<br /> <br />Background<br /> <br />Periodical audit is one of the tools to ascertain the level of compliance among stock brokers of the exchanges. The scope of audit should cover the existence, scope and efficiency of the internal control system, compliance with the provisions of the SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956, SEBI (Stock brokers and Sub- brokers) Regulations, 1992, circulars issued by SEBI, agreements, KYC requirements, Bye-Laws of the Exchanges, data security and insurance in respect of the operations of the stock brokers/clearing members.<br /> <br />SEBI has issued circulars asking stock exchanges to direct stockbrokers/trading members/clearing members to carry out complete internal audit on a half yearly basis by chartered accountants, company secretaries or cost and management accountants who are in practice and who do not have any conflict of interest.<br /> <br />The programme<br /> <br />This executive education programme is offered by NISM, in co-ordination with BSE & NSE, for chartered accountants, cost accountants and company secretaries. It aims at helping them carry out effective internal audit of the broker’s books in order to satisfy the requirements of SEBI and the exchanges. The sessions discuss audit procedure and areas that the auditor should examine with references to what books, documents and data are to be checked. Programme faculty has been drawn from SEBI and the two main exchanges. Duration of the programme would be two days.<br /> <br />Offerings<br /> <br />There will be six programmes in Mumbai and two programmes each in Kolkata, New Delhi and Chennai. The dates for the six Mumbai offerings are given below. The dates of the other metro cities are yet to be finalized.<br /> <br />1. January 9&10, 2009 4. January 30&31, 2009<br />2. January 16&17, 2009 5. February 6&7, 2009<br />3. January 23&24, 2009 6. February 13&14, 2009<br /> <br />Programme fee<br /> <br />The programme fees would be Rs.2,250/- (for both days; inclusive of service tax) per participant. The programme fee covers courseware, lunch and tea for both days. A participant certificate will be given to all the participants.<br /> <br />Registration <br /> <br />For registration and other details kindly contact:Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-19201071615362556562007-05-12T23:31:00.000-04:002007-05-12T23:33:03.920-04:00Cost Audit to services-Extended by CBEC in the finance billExcise audits uptill now applicable to manufacturing unit has been extended to Services under the Service Tax.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-15182200359414537752007-04-19T10:21:00.000-04:002007-04-19T10:23:01.164-04:00To Act As Company Secretary.Companies (Appointment and Qualifications of Secretary) Rules, 1988<br />In exercise of the powers conferred by clauses (a) and (b) of section 642 read with clause<br />(45) of section 2 and section 383A of the Companies Act, 1956 (1 of 1956), and in<br />supersession of the Companies (Secretary's Qualifications) Rules, 1975, the Central<br />Government hereby makes the following Rules, namely :<br />1. Short title and commencement -<br />(1) These rules may be called the Companies (Appointment and Qualifications of<br />Secretary) Rules, 1988.<br />(2) It shall come into force on the 1st day of December, 1988.<br />2. Appointment, etc., of whole-time secretary -<br />(1) Every company having a paid-up share capital of not less than rupees fifty lakhs<br />shall have a whole-time secretary.<br />(2) No person shall be appointed as whole-time secretary under sub-rule (1) unless<br />he is a member of the Institute of Company Secretaries of India constituted under the<br />Company Secretaries Act, 1980 (56 of 1980).<br />(3) A company having a paid-up share capital of less than rupees fifty lakhs may<br />appoint any individual as its whole-time secretary to perform the duties of a<br />secretary under the Companies Act, 1956, and any other ministerial or administrative<br />duties :<br />Provided that no individual shall be eligible to be so appointed unless he possesses one or<br />more of the qualifications specified in sub-rule (4).<br />(4) No individual shall be appointed as secretary pursuant to sub-rule (3) unless he<br />possesses any one or more of the following qualifications, namely :-<br />(i) membership of the Institute of Company Secretaries of India constituted<br />under the Company Secretaries Act, 1980 (56 of 1980) ;<br />(ii) pass in the Intermediate examination conducted either by the Institute of<br />Company Secretaries of India constituted under the Company Secretaries Act,<br />1980 (No. 56 of 1980), or by the earlier Institute of Company Secretaries of<br />India incorporated on 4th October, 1968, under the Companies Act, 1956 (1 of<br />1956), and licensed under section 25 of that Act ;<br />(iii) Post-graduate degree in commerce or corporate secretary ship granted by<br />any university in India ;<br />(iv) degree in law granted by any university ;<br />(v) membership of the Institute of Chartered Accountants of India constituted<br />under the Chartered Accountants Act, 1949 (38 of 1949) ;<br />(vi) membership of the Institute of Cost and Works Accountants of India<br />constituted under the Cost and Works Accountants Act, 1959 (23 of 1959) ;<br />(vii) post-graduate degree or diploma in management sciences, granted by any<br />university, or the Institutes of Management, Ahmedabad, Calcutta, Bangalore<br />or Lucknow ;<br />(viii) post-graduate diploma in company secretary ship granted by the Institute<br />of Commercial Practice under the Delhi Administration or Diploma in<br />Corporate Laws and Management granted by the Indian Law Institute, New<br />Delhi ;<br />(ix) post-graduate diploma in company law and secretarial practice granted by<br />the University of Udaipur; or<br />(x) membership of the Association of Secretaries and Managers, Calcutta,<br />registered under the West Bengal Registration of Societies Act, 1961 (XXVI of<br />1961) :<br />Provided that where the paid-up share capital of such company is increased to rupees<br />twenty-five lakhs or more, the company shall, within a period of one year from the date<br />of such increase, comply with the provisions of sub-rules (1) and (2) of rule 2.<br />Explanation - In this rule, "University" has the meaning assigned to it in the University<br />Grants Commission Act, 1956 (No. 3 of 1956), and includes any university outside India<br />which is recognised by the Union Public Service Commission for the purposes of<br />recruitment to public services and posts in connection with the affairs of the Union or of<br />any State.<br />3. Provisions relating to existing secretaries -<br />Notwithstanding contained in sub-rules (1) and (2) of rule 2, the qualifications<br />possessed by a person holding the office of whole-time secretary of a company<br />immediately before 30th October, 1980, in terms of the second proviso to clause (a)<br />of rule 2 of the Companies (Secretaries Qualifications) Rules, 1975, shall be<br />deemed to be the qualifications which he shall be required to possess in order to be<br />eligible to continue as whole-time secretary in that company.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-29209866.post-74865764645722874082007-03-04T06:42:00.000-05:002007-03-04T06:43:56.936-05:00Legal Representatives for Appelate tribunalRight to legal representations<br /><br />22C. The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers or present his or its case before the Securities Appellate Tribunal.<br /><br />Explanation. - For the purposes of this section, -<br /><br /> 1. "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;<br /> 2. "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;<br /> 3. "cost accountant" means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;<br /> 4. "legal practitioner" means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.40Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-29209866.post-54443672583646044472007-03-04T06:28:00.000-05:002007-03-04T06:30:26.684-05:00Valuation in Banks RBIRBI No.2006-2007/224<br />DBOD.BP.BC No. 50 / 21.04.018/ 2006-07<br />January 4, 2007<br />The Chairmen/Chief Executives<br />All Commercial Banks<br />(excluding RRBs)<br />Dear Sir,<br />Valuation of Properties - Empanelment of Valuers<br />It has been observed that different banks follow different policies<br />for valuation of properties and appointment of valuers for the<br />purpose. The issue of correct and realistic valuation of fixed assets<br />owned by banks and that accepted by them as collateral for a sizable<br />portion of their advances portfolio assumes significance in view of<br />its implications for correct measurement of capital adequacy position<br />of banks. In this context, there is a need for putting in place a<br />system/procedure for realistic valuation of fixed assets and also for<br />empanelment of valuers for the purpose.<br />2. Banks may be guided by the following aspects while formulating a<br />policy on valuation of properties and appointment of valuers:<br />(a) Policy for valuation of properties<br />i) Banks should have a Board approved policy in place for valuation of<br />properties including collaterals accepted for their exposures.<br />ii) The valuation should be done by professionally qualified<br />independent valuers i.e. the valuer should not have a direct or<br />indirect interest.<br />iii) The banks should obtain minimum two Independent Valuation Reports<br />for properties valued at Rs.50 crore or above.<br />(b) Revaluation of bank’s own properties<br />In addition to the above, the banks may keep the following aspects in<br />view while formulating policy for revaluation of their own properties.<br />i) The extant guidelines on Capital Adequacy permit banks to include<br />revaluation reserves at a discount of 55% as a part of Tier II<br />Capital. In view of this, it is necessary that revaluation reserves<br />represent true appreciation in the market value of the properties and<br />banks have in place a comprehensive policy for revaluation of fixed<br />assets owned by them. Such a policy should interalia cover procedure<br />for identification of assets for revaluation, maintenance of separate<br />set of records for such assets, the frequency of revaluation,<br />depreciation policy for such assets, policy for sale of such revalued<br />assets etc. The policy should also cover the disclosure required to be<br />made in the 'Notes on Account' regarding the details of revaluation<br />such as the original cost of the fixed assets subject to revaluation<br />and accounting treatment for appreciation / depreciation etc.<br />ii) As the revaluation should reflect the change in the fair value of<br />the fixed asset, the frequency of revaluation should be determined<br />based on the observed volatility in the prices of the assets in the<br />past. Further, any change in the method of depreciation should reflect<br />the change in the expected pattern of consumption of the future<br />economic benefits of the assets. The banks should adhere to these<br />principles meticulously while changing the frequency of<br />revaluation/method of depreciation for a particular class of asset and<br />should make proper disclosures in this regard.<br />(c) Policy for Empanelment of Independent valuers<br />i) Banks should have a procedure for empanelment of professional<br />valuers and maintain a register of 'approved list of valuers'.<br />ii) Banks may prescribe a minimum qualification for empanelment of<br />valuers. Different qualifications may be prescribed for different<br />classes of assets (e.g. land and building, plant and machinery,<br />agricultural land, etc.). While prescribing the qualification, banks<br />may take into consideration the qualifications prescribed under<br />Section 34AB (Rule 8A) of the Wealth Tax Act, 1957.<br />3. Banks may also be guided by the relevant Accounting Standard issued<br />by the Institute of Chartered Accountants of India.<br />Registration of valuers.<br />34AB. (1) The 32[Chief Commissioner or Director General] shall<br />maintain a register to be called the Register of Valuers in which<br />shall be entered the names and addresses of persons registered under<br />sub-section (2) as valuers.<br />(2) Any person who possesses the qualifications prescribed33 in this<br />behalf may apply to the 34[Chief Commissioner or Director General] in<br />the prescribed form35 for being registered as a valuer under this section:<br />Provided that different qualifications may be prescribed for valuers<br />of different classes of assets.<br />36(3) Every application under sub-section (2) shall be verified in the<br />prescribed manner, shall be accompanied by such fees as may be<br />prescribed and shall contain a declaration to the effect that the<br />applicant will<br />(i) make an impartial and true valuation of any asset which he may be<br />required to value;<br />(ii) furnish a report of such valuation in the prescribed form;<br />(iii) charge fees at a rate not exceeding the rate or rates prescribed<br />in this behalf;<br />(iv) not undertake valuation of any asset in which he has a direct or<br />indirect interest.<br />37(4) The report of valuation of any asset by a registered valuer<br />shall be in the prescribed form and be verified in the prescribed manner.<br />Qualifications of registered valuers.<br />8A. (1) For the purposes of sub-section (2) of section 34AB, the<br />qualifications for registration as valuers of different classes of<br />asset shall be as specified in sub-rules (2) to (11).<br />(7) A valuer of stocks, shares, debentures, securities, shares in<br />partnership firms and of business assets, including goodwill but<br />excluding those referred to in sub-rules (2) to (6) and (8) to (11),<br />shall have the following qualifications, namely :<br />(i) he must be a member of the Institute of Chartered Accountants of<br />India or the Institute of Cost and Works Accountants of India 62[or<br />the Institute of Company Secretaries of India]; and<br />(ii) 63[(A) he must have been in practice as a chartered accountant or<br />a cost and works accountant or a company secretary for a period of not<br />less than ten years and his gross receipts from such practice should<br />not be less than fifty thousand rupees in any three of the five<br />preceding years, or]<br />(B) he must be a person formerly employed<br />(a) in a post under Government as a gazetted officer, or<br />(b) in a post under any other employer carrying a remuneration of not<br />less than Rs. 64[2,000] per month,<br />and, in either case, must have retired or resigned from such<br />employment after having rendered service for a period of not less than<br />65[ten] years in the field of audit and accounts or taxation work 66[, or]<br />66[(c) as a Company Secretary 67[or a Deputy Company Secretary] or an<br />Assistant Company Secretary in a post carrying a remuneration of not<br />less than Rs. 68[2,000] per month and must have retired or resigned<br />from such employment after having rendered service for a period of not<br />less than 69[ten] years.]Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1169865543668839842007-01-26T21:38:00.000-05:002007-01-26T21:39:03.723-05:00Depositaries act<p align="justify"><span style="font-family:arial;font-size:85%;"><b>23C. Right to legal representation. — </b>The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Securities Appellate Tribunal.</span></p><p><span style="font-family:arial;font-size:85%;">Explanation. — For the purposes of this section, —</span></p><p><span style="font-family:arial;font-size:85%;">(a) ';chartered accountant'; means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act:</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(b) ';company secretary'; means a company secretary as defined in clause (c) os sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(c) ';cost accountant'; means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(d) ';legal practitioner'; means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1169865428408396332007-01-26T21:36:00.000-05:002007-01-26T21:37:08.916-05:00Securities contracts regulation act<p align="justify"><span style="font-family:arial;font-size:85%;"><b>22C. Right to legal representation. — </b>The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Securities Appellate Tribunal.</span></p><p><span style="font-family:arial;font-size:85%;">Explanation. — For the purposes of this section, —</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(a) ';chartered accountant'; means chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(b) ';company secretary'; means a company secretary as defined in clause (c) of sub-section (10 of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(c) ';cost accountant'; means a cost accountant as defined in clause (b) of subsection (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;</span></p><p align="justify"><span style="font-family:arial;font-size:85%;">(d) ';legal practitioner'; means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.</span></p><p align="justify"><span style="font-family:arial;font-size:85%;"><b>22D. Limitation. — </b>The provisions of the Limitation Act, 1963 (36 of 1963), shall, as far as may be, apply to an appeal made a to a Securities Appellate Tribunal.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1169790439876603202007-01-26T00:46:00.000-05:002007-01-26T00:47:19.976-05:00Cost Audit in Global Perspective-Emerging Global economic order and the relevance of Cost records.Cost Audit –Here to stay in a Global perspective.<br />Maintenance of Cost records and Audit of the same has been in India since long and<br />recognized in the companies act 1956 by an amendment in 1965.The main intention<br />of the legislature was laying emphasis on controlling cost and setting up an<br />administrative pricing mechanism to protect the interest of the society.<br />Its emphasis is manifold unlike maintenance of financial records and its audit year on<br />year basis. While financial accountants addresses the needs of owner partially they<br />seldom address the interests of the society at large. In this context Maintenance of cost<br />records through a compliance mechanism has to travel a longway since the same is not<br />yet compulsory across board among companies(exemption to small scale sector)across<br />sectors(services and agriculture still to take up)Regularity(audit depends on order from<br />CAB even when Cost records maintenance is made compulsory)Accounts not certified by<br />qualified cost accountant(where Audit is not ordered ).<br />In the above back drop let us discuss few lines about the hype created in the Industry<br />circle about abolition of cost audit in global perspective.<br />First of all one must understand that maintenance of records reflecting cost of production<br />and services is the primary need for any business and in the global scenario it is all the<br />more vital .Unlike formatted financial accounts, which lay emphasis on recording of<br />transaction in a double entry mode, Cost accounts concentrate on business process<br />through a planning mechanism(budget) setting up of standards for physical and financial<br />incurrence(thus an inclusive mechanism of financial and non-financial measure) and<br />records transaction in a double entry mode to reflect a true and fair view for business<br />sustenance and growth.Its vision covers the interests of all internal and external<br />stakeholder and thus all encompassing.<br />Cost accounting is, State of Economy-Neutral, in the sense it does not simply focus on<br />recording transactions to claim such a neutrality while it addresses issues of economic<br />prosperity, its sustenance, through resource planning and overall growth<br />perspective(through enabling business process re-engineering) in the global arena.<br />Be it Capitalist Mode where Money is driving growth{(Optimising the yield from<br />investment is primary concern through internal(Process efficiency ) and<br />external(Delivery end-to-end and Income maximization) re-engineering)}.Be it Socialist<br />which lay emphasis on Planning process for resource allocation and egalitarian approach<br />to push a sustainable growth forward.<br />It is sector neutral since there is a longstanding and a reliable relation between money and<br />its exchange(Goods and services) and Cost is relational parameter for measuring value to<br />a business.<br />It impacts business cycle and prolongs the process, if not , completely plug the process<br />of concentration of economic power by checking the system and allowing efficient<br />process to flow thereby protecting the stakeholders from vagaries of business cycle.<br />It is something related to good governance and fair practices in “business and<br />governance of the economy “and can be defined for all the socio-economic setup and is a<br />very dynamic tool for measuring growth and efficiency.<br />The relevance of the stakeholders is better addressed in a liberalized and global setup<br />than a controlled setup and the relevance of cost accounting in the emerging world order<br />can only be better emphasized by looking into the global consumer and business<br />perspective. Infact the global scenario has complicated the economics of scale and<br />resource consumption specially, the speed of delivery, that we need to fall back on cost<br />accounting as addressing the whole range of issues that are the expectation of community<br />of nations.<br />Cost accounting is” Forms of business” neutral in that it addresses the core issues of<br />Value engineering for recording of transaction and has the business perspective, rather<br />than simply counting numbers it grows numbers and directs a sustainable growth in the<br />economy.<br />In the light of what has been stated above it is highly relevant and utmost imperative to<br />infuse the culture of recording transaction in the cost accounting mode transcending<br />business territories , economic model adopted by the state and the forms of business and<br />also in the governance of the economy.<br />In this context Indian economy had made a good beginning way back in 1965 and if the<br />realization of social-cost benefit is percolated down the line and addresses individual<br />citizens perspective in the society that is well geared in a political setup where<br />individual citizen has the right of choice to elect the representative to govern the society<br />and the resources, which is of common concern ,and the business model and any<br />economic activity is, that of exploitation of resources owned in equal measure of right<br />and opportunity by every citizen of India, then the agency factor comes alive for any<br />exploitors who come to the forefront of such activity and hence they are liable not only to<br />their business interest but also to the community interest and in that Cost accounting is a<br />potent tool of measurement. The object of competition and free movement of goods and<br />services is to plug inefficiency in global perspective and improve efficient delivery model<br />and these can seldom be addressed by financial statements of Profit and loss account<br />and balance sheet.<br />Having discussed at length of the requirement of cost accounting in the global economic<br />scenario we will now deal with what can be the way ahead from the stakeholders<br />perspective. These are recommendations to march ahead.<br />1.IFAC a world body of accountants which has yet far concentrated on the management<br />accounting issues should be geared with the might of Management accounting bodies to<br />come up with Statements of management accounting practice that is “economy, sector<br />and business forms neutral” which addresses the triple bottom line issues in global<br />perspective.<br />2.ICWAI in its interest and in the interest of stakeholders at large become proactive in<br />the delivery model (end to end) to percolate cost consciousness and other management<br />accounting related issues. It should come with policy guidelines that will push forward<br />reforms in accounting practices in the Indian context. It should also ensure quality man<br />power is made available in five years from now positioning the management accounting<br />model where the demand could be anywhere between 500000 to 1000000.<br />3.The GOI should become proactive and also come with a policy paper on the Inclusive<br />accounting aspect(financial and management accounting) addressing socio-economic<br />model of sustainable growth. It should re-position the role of Management accountant<br />as a Public accountants on par with Chartered accountants in all spheres of economic<br />activity and encourage them to participate in the process of maintenance of accounts and<br />audit in all forms of business and in government specially Taxation and budgeting<br />aspect.It should also shift away from the belief that ICAI is be all and end all of<br />Accounting and auditing profession.<br />4.Various economic legislation should define the role of Management accountant<br />clearly addressing the needs of our society.<br />Specific issues that needs to be re looked and amendments sought are:<br />1.Companies act should make a provision for Compulsory maintenance of cost records<br />for all businesses registered with it and allow audit on par with Statutory financial audit.<br />The cost auditor should submit its report to the Board and where after a gist can be<br />presented before the AGM.<br />2.All other forms of business where specific legislation is available should have<br />compulsory maintenance of cost records as a mandatory provision.<br />3.TAX departments should extensively use the services of Cost and Management<br />accountants in the process of collection of tax revenue.A process of auditing cost records<br />should be in place to ascertain exact cost of transaction and true determination of Income.<br />4.Government should recognize the true potential of Cost and management accountants<br />and employ them under ICAS or in consultancy assignments as an expert in social-cost<br />benefit analysis. The services should also be utilized in various regulatory frame work<br />that is coming up in administrative ministries for determination of fair price and<br />efficiency parameters.<br />CMA.R.VeeraraghavanUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1169790283337201112007-01-26T00:40:00.000-05:002007-01-26T00:44:43.796-05:00TRAI-Account separation and the role of cost and management accountant4. Reports - (1) Based on the information available in the books of accounts and<br />other documents specified in the Rules and the order/notification issued there<br />under, service provider shall prepare geographical area-wise following financial<br />and non-financial reports: -<br />Financial Reports<br />Profit and Loss Statements<br />(i) Profit and loss statement of the products mentioned in column (4)<br />against services rendered by the service providers specified in column<br />(2) of the Schedule I. The statement shall be prepared in the Proforma<br />“A” of Schedule III;<br />(ii) Separate Profit and Loss statement for each of the service rendered by<br />the service provider and specified in regulation 1(2). The statement<br />shall be prepared in the Proforma “B” of Schedule III;<br />Page 5<br />Product Cost Statement<br />(iii) Product wise Cost Sheet in the Proforma “C” of Schedule III;<br />Network Element Cost Statements<br />(iv) Network Element wise Cost Sheet shall be prepared which clearly<br />indicates cost and its allocation to various products. An indicative list<br />of Network elements of services for which these cost sheets shall be<br />prepared is at Schedule II. However, the list of network elements shall<br />depend on network architecture used by the service provider. The<br />Network Element Cost Statements shall be prepared in the Proforma<br />“D” of Schedule III;<br />(v) A summary sheet showing network element wise total cost, cost driver<br />and cost per unit of usage. The statement shall be prepared in Proforma<br />“E” of Schedule III;<br />(vi) A summary sheet indicating network element wise cost allocated to<br />various products. The statement shall be prepared in Proforma “F” of<br />Schedule III;<br />Capital Employed Statements<br />(vii) Capital Employed Statement for each of the service rendered by the<br />service provider and specified in regulation 1(2). The statement shall<br />be prepared in Proforma “G” of Schedule III;<br />(viii) A statement showing allocation of capital employed for a service to the<br />network elements. The statement shall be prepared in Proforma “H” of<br />Schedule III;<br />Fixed Asset Statement<br />(ix) Statement showing category wise fixed assets and depreciation in the<br />Proforma “I” of Schedule III’; and<br />Non-Financial Report<br />(x) A statement of operational data relating to network architecture,<br />network usage, network capacity, product, services volumes, tariffs,<br />etc. Reports for services mentioned in Regulation 1(2) shall be<br />prepared in Proformae “L” to “T” of Schedule III.<br />(2) The service providers shall prepare Reports mentioned in Regulation 4 (1) every<br />year on the basis of historical cost accounting and every second year on the basis<br />of replacement cost accounting:<br />Provided that if less than three years have elapsed since issue of the license to<br />provide a particular service, the financial statements based on Replacement Cost<br />Accounting may not be prepared for that service.<br />Page 6<br />(3) The profit and loss statement and capital employed statement mentioned under<br />Regulation 4(1) of this regulation prepared on the basis of the Historical cost<br />Accounting shall be reconciled with the Annual Financial Statement of the<br />service provider prepared under Section 211 of the Companies Act, 1956. The<br />reconciliation statements shall be prepared in Proformae J and K of Schedule III.<br />(4) The service providers shall prepare financial reports mentioned in regulation<br />4(1) on the basis of replacement cost accounting, by-<br />(i) following financial capital maintenance methodology;<br />(ii) limiting cost adjustment to the fixed assets;<br />(iii) ignoring replacement cost adjustment for assets having life of less<br />than 3 years;<br />(iv) taking cost of modern equivalent asset when existing asset is not<br />available due to change in technology. Whenever, old asset is<br />replaced by modern equivalent asset, change in operational<br />expenditure as a result of such replacement shall also be accounted<br />for; and<br />(v) clearly indicating holding gain or loss, supplementary depreciation<br />and change in the operational cost due to replacement of old asset by<br />modern equivalent asset.<br />5. Periodicity of submission of report � (1) The service providers<br />shall submit<br />audited reports based on the historical cost accounting every year<br />within six<br />months of the end of accounting year to the Authority.<br />(2) The service provider shall also submit reports based on the<br />replacement cost<br />accounting every second year within six months of the end of<br />accounting year to<br />the Authority.<br />(3) The reporting period shall be same as followed by the company for<br />preparation<br />of the annual financial accounts under sub section (4) of section 210<br />of the<br />Companies Act, 1956.<br />Provided that, if reporting period exceeds fifteen calendar months,<br />the accounting<br />separation statements shall be divided into 12 months and the balance<br />period.<br />6. Audit - (1) Every service provider, to which these regulations<br />apply, shall appoint<br />an auditor who is qualified for appointment as an auditor under<br />section 224 or<br />233-B of The Companies Act, 1956.<br />(2) The auditor shall audit the reports so prepared.<br />(3) The auditor in his report shall express an opinion as to whether<br />the reports<br />have been properly drawn in accordance with the regulation and he has<br />received<br />all information and explanation necessary for the purpose of audit.<br />7. Confidentiality - The Authority shall ensure the confidentiality of<br />the financial<br />information submitted under various provisions of the Regulation.<br />Page 7<br />Provided that, where the Authority is of the opinion that it is<br />necessary or<br />expedient to disclose the information in public interest, it may, for<br />reasons to be<br />recorded in writing, do so.<br />Provided further that no information shall be disclosed by the<br />Authority, except<br />after giving the company an opportunity of making such representation<br />in writing,<br />as it may wish to make in that behalf and taking such representation into<br />consideration.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1161875132914587122006-10-26T11:03:00.000-04:002006-10-26T11:05:34.210-04:00National Tax Tribunal Act 2005 and Cost Accountant?13. Appearance before National Tax Tribunal.—(1) A party to an appeal other than Government<br />may either appear in person or authorise one or more chartered accountants or legal practitioners<br />or any person duly authorised by him or it to present his or its case before the National Tax<br />Tribunal.<br /><span style="font-size: 10pt; font-family: Arial; color: black;">) The Government may authorise one or more legal practitioners or any of its officers to present its case before the National Tax Tribunal.<br /><br /> <!--[if !supportLineBreakNewLine]--><br /> <!--[endif]--></span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1160669265619440132006-10-12T12:06:00.000-04:002006-10-12T12:07:46.276-04:00Cost Audit -A paradigm view.<div class="subject root grey"> Re: Cost Audit Again in News-Business Line. </div><br /><br />--- In CMA_India@yahoogroups.com, "CMA.R.Veeraraghavan" <vraghavan26@...> wrote:<br />><br />> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">Sir<o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">This has reference to the Article in the opinion section of your<span> </span>daily on 12-10-2006 </span><strong><span style="font-size: 10pt; font-family: Arial; color: blue;">"</span></strong><span style="font-size: 10pt; font-family: Arial; color: blue;">Should we bid adieu to cost audit?".by A.R.Ramanathan.</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">In addition to what the esteemed author has stated- for the government and the industry to re-orient its outlook towards the exercise, I would like to add the following which may kindly be Published.</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">While questioning the requirement of Cost audit time and again one must analyse in totality why Cost audit is required and for that, one must know the deficiency and focus of related audit systems that have been statutorily sanctified ,specially the <b><span style="color: red;">Financial Audit</span></b>:</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">The focus of financial audit is scrutiny <b><span style="color: red;">of financial records</span></b>(Income and expenses)to ascertain and repose faith in the profits projected, Value of assets and liability in a given period, Propriety of the transaction of income and outgo. Simply this is the essence of scrutiny of financial records. Its focus is Shareholders of the company who are supposedly wealth creators of the business.</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoBodyText">Financial records fail miserably in speaking out about the internal strength, efficiency, and sustenance aspect of the business ,which a seasoned businessman is interested. Financial records do not also reflect the wealth creation for the society at large(no macro economic outlook).<span><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">It doesn't question price-output-cost relation as well, it doesn't also address the competitors strategy and our strength. In essence it is simply a documentation of inflow-outflow data and projection of residue as gain available for distribution.</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">Financial audit is shortsighted in its approach and Blind<span> </span>towards societal interest.</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoBodyText">The focus of Cost-audit is stake-holders at large (every citizen of India is a stakeholder in the economic activity of the country) Cost records basically reflect Cost incurred in the activity and the drivers that enable such incurrence and thus warn the business to moderate the drivers in advance. It speaks amply about utilisation of resources which is vital for managing an economy. It discloses the reasonability or otherwise of the pricing module which is important to bringing an exploitation free society.<span><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">Cost records scrutiny is vital for business sustenance as well ,when we talk of demutualisation of<span> </span>management and owners. Management perspective is sustenance and efficiency and these two are amply addressed by cost records, through its methods and techniques which are prescriptive(Like budgeting, standard costing ,variable costing, pricing methods like target pricing etc.)</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">Do owner-investor benefit from this exercise, yes in the long run an investor is unconcerned with immediate gains but the <b><span style="color: red;">vision of business</span></b> to sustain and its data projecting <b><span style="color: red;">bottomline efficiency </span></b>is utmost important for a owner-investor,</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">While a government benefit from the cost data for planning,resource monitoring,Price controls and comparative industry study with authentic cost data.The tax department benefits from the hard work of Cost accountants both inrespect of Direct tax(where the basis is to judge from allowances and disallowances and mapping with cost to business activity)and indirect taxes(where Cost of goods and services is vital).</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">It is thus unfortunate to see cost audit often being projected in negative perspective by one and all and in a democracy the conflict of interest in sharing such data is just in the maxim<b><span style="color: red;">"what is good for all is many a times not good for a few who rule". </span></b>which sans the basic framework of the constitution<b><span style="color: red;">"Of the people, by the people and for the people".</span></b></span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">Improving reporting methodology, switching from becoming just a <span style="color: red;">prescriptive exercise</span> to a <span style="color: red;">value-added and dynamic tool</span> can trigger focus on cost audit. Audit itself is an art of handling data to produce decision tools and cost auditor should now-on be proactive and prove value addition to the management. Cost audit in India is there to stay for long and i am confident about it and the world can learn from us in this regard.</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <p class="MsoNormal"><span style="font-size: 10pt; font-family: Arial;">Thanx</span><span style="font-size: 10pt; font-family: Arial;"><o></o></span></p> <span style="font-size: 10pt; font-family: Arial;">CMA.R.Veeraraghavan</span>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-29209866.post-1160323461404420972006-10-08T12:02:00.000-04:002006-10-08T12:56:45.770-04:00EXIM Policy and Practising Cost accountants<span style="color: rgb(255, 0, 0);">Click on the heading above to go places.</span><br />AAYAAT- NIRYAAT FORM<br />HANDBOOK OF PROCEDURES VOLUME 1, 2004-09<br />as amended upto 8 th April 2005<br />GUIDELINES FOR APPLICANTS<br />1. Two copies of the application must be submitted unless otherwise mentioned.<br />2. Each individual page of the application has to be signed by the applicant.<br />3. a. Part 1 & Part 4 has to be filled in by all applicants. In case of applications submitted<br />electronically, no hard copies of Part 1 may be submitted. However in cases where<br />applications are submitted otherwise, hard copy of Part 1 has to be submitted.<br />b. Only relevant portions of Part 2 & Part 3 need to be filled in.<br />4. Application must be accompanied by documents as per details given below:<br />I. For Importer Exporter Code Number (IEC)<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Certificate from the Banker of the applicant firm in the format given in Appendix 18A.<br />3. Self certified copy of Permanent Account Number (PAN) issued by Income Tax<br />Authorities.<br />4. Self certified copy of RBI approval in cases where non resident interest/holding in the<br />firm/company exists with repatriation benefits.<br />II. For Import Licence for Restricted Items<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of<br />application fee in terms of Appendix 21B.<br />2. Self certified copy of Proforma Invoice from foreign supplier showing CIF value of the<br />goods.<br />3. Self certified copy of Registration Certificate issued by concerned authority.<br />4. Self certified copy of the recommendation letter by the concerned authority.<br />5. In case of import of gift, Donor's letter in Original.<br />6. In case of import of Ammunition, a certificate from the Chartered Accountant/Cost and<br />Works Accountant/Company Secretary showing sales turnover of ammunition<br />(indigenous and imported) during the preceding three licensing years.<br />II A. For Import Certificate under Indo – US Memorandum<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Self certified copy of letter from US supplier in support of request for Import Certificate.<br />III. For Export Licence for Restricted Items<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Self certified copy of Export Order.<br />III A. For Export Licence for SCOMET Items<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. For Export of Special Chemicals in Categories 1B a nd 1C of Schedule 2 Appendix<br />3 of ITC (HS) Classification of Export & Import items:<br />a. Self certified copy of Export Order.<br />b. End User certificate indicating the end product for which the item of export will be<br />used by end user in the format given in Appendix 3 6.<br />3. For Export of all other category items of Schedule 2 Appendix 3 of ITC (HS)<br />Classification of Export & Import items except those given in serial no 2 above :<br />a. Self certified copy of Export Order.<br />b. End User certificate indicating the end product and/or end purpose for which the item<br />of export will be used by end user in the format given in Appendix 36.<br />c. Technical Specifications of the items to be exported (not exceeding one page for<br />each item).<br />d. Self certified copy of Bill of Lading for items exported earlier under a Licence as per<br />serial no. 3 of Part B of sub section III A.<br />IV. For Star Export House Certification<br />1. Self certified copy of valid RCMC.<br />2. Statement of exports made in the preceding three licensing years and/or current<br />licensing year duly certified by a Chartered Accountant/Cost and Works Accountant in<br />the format given in Appendix 26.<br />3. Self certified copy of the Balance Sheet filed with Income Tax Authorities for the relevant<br />year(s).<br />V. For Advance Licence applications<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Additional documents required in case of issue of Advance Licence for Annual<br />Requirements:<br />a. Statement of exports made in the preceding licensing year duly certified by a<br />Chartered Accountant/Cost and Works Accountant in the format given in Appendix<br />26.<br />b. Self certified copy of the manufacturing licence of the applicant firm or his supporting<br />manufacturer.<br />3. Additional documents required in case of issue of DFRC:<br />a. In case of physical exports<br />i. EP copy of the Shipping Bill or Bill of Export (only in case of exports through<br />notified land Customs under paragraph 4.19)<br />ii. Bank Certificate of Exports and Realisation as given in Appendix 22A or<br />Foreign Inward Remittance Certificate (FIRC) in the case of direct negotiation of<br />documents or Appendix 22D in the case of offsetting of export proceeds with<br />approval of RBI. In case of FIRC, a declaration from the exporter that the<br />remittance is in respect of Shipping Bill(s) No ____________ dtd _________<br />shall also be furnished.<br />iii. Statement of exports/supplies giving separately each Shipping Bill number/Bill of<br />export number and date, FOB/ FOR value in Indian rupees as per Shipping Bill/<br />Bill of export and description of the resultant product.<br />b. In case of deemed exports<br />i. Copy of the invoice duly signed by the unit receiving the material and their<br />jurisdictional excise authorities certifying the item of supply, its quantity, value<br />and date of such supply. However incase of supply of items, which are nonexcisable<br />product(s), a project authority certificate (PAC) certifying quantity,<br />value and date of such supply would be acceptable in lieu of excise certification.<br />Not withstanding the above, in respect of supplies to EOU, a copy of ARE-3 duly<br />signed by the jurisdictional excise authorities certifying the item of supply, its<br />quantity, value and date of such supply shall be furnished.<br />ii. Payment certificates from the project authority as per Appendix-22C or<br />payment certificate or bank certificate of payment for domestic supplies as per<br />Appendix 22B which ever is applicable.<br />iii. Statement of supplies giving separately each supply invoice number and date,<br />FOR value in Indian rupees as per invoice and description of th e resultant<br />product.<br />4. In cases where import of fuel has been sought for the grant of Advance Licence/<br />Advance Licence for Annual Requirements/ DFRC (excluding Advance licence<br />applications for ad-hoc norms and those under Para 4.7 of Handbook)<br />a. Self certified copy of the permission issued to the manufacturer exporter by the<br />competent authority (concerned State Electricity Board or Power Corporation or<br />Regulatory Commission of the State) under Section 44 of the Electricity (Supply) Act,<br />1948 for the installation of captive power plant based on the specified fuel unless the<br />permission is specifically waived by the State Electricity Board; and<br />b. Self certified copy of the letter intimating the date of commissioning of the captive<br />power plant from the concerned authority which issued the permission letter is to be<br />submitted.<br />Note: The import of only such fuel(s) shall be allowed which have/ has been specified in<br />the said permission.<br />5. Additional documents required in case of supplies under deemed<br />export/intermediate supplies under Advance Licence Scheme:<br />a. Invalidation letter in case of supplies to<br />i. an EPCG licence holder;<br />ii. an Advance Licence holder;<br />b. Project Authority certificate in case of supplies other than (a) (i) & (ii) above and to<br />EOU/ EHTP/ STP/BTP units;<br />6. Additional documents required in case of issue of Advance Licence under Para<br />4.7 of Handbook<br />a. Information as per Appendix-11A.<br />b. 1. Technical Details of the export product as per the details given in Appendix 33<br />2. Chartered Engineer certificate certifying the import requirements of raw materials<br />in the format given in Appendix 32B<br />3. Production and Consumption data of the manufacturer/supporting manufacturer<br />of the preceding three licensing years, duly certified by the Chartered accountant/<br />Cost & Works Accountant/ Jurisdictional Excise Authority.<br />V A. For GEM REP applications<br />1. Bank Receipt (in duplicate)/Demand Draft evidencing payment of application fee in<br />terms of Appendix 21B.<br />2. Bank certificate of export and realisation in the format given in Appendix 22A evidencing<br />realisation of exports proceeds/sales proceeds.<br />3. Export Promotion (EP) copy of Shipping Bill(s) in Original. (Photocopy of the EP copy of<br />Shipping Bill duly endorsed may be returned for utilization/re-import purposes when the<br />exports are made on consignment basis).<br />4. Customs attested invoice.<br />5. In case of application for Replenishment licence under paragraph 4A.28 of this<br />Handbook, an applicant will be required to submit documents as given at S.No.1 above<br />and Statement of Exports made during the preceding licensing year duly certified by<br />Chartered Accountant/Cost & Works Accountant in the format given in Appendix 26.<br />V B. For Diamond Imprest applications<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Self certified copy of valid RCMC.<br />3. Self certified copy of Export Order.<br />4. Statement of exports of cut and polished diamonds made during the preceding three<br />licensing years duly certified by Chartered Accountant/Cost & Works Accountant in the<br />format given in Appendix 26. The value of exports made towards fulfillment of export<br />obligation under Diamond Imprest Licence shall be shown separately.<br />V C. For DEPB applications<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Export Promotion (EP) copy of Shipping Bill(s). In case of exports through notified land<br />Customs under paragraph 4.40, Bill of Export may be accepted in lieu of Shipping Bill.<br />3. Bank Certificate of Exports and Realisation as given in Appendix 22A or Foreign Inward<br />Remittance Certificate (FIRC) in the case of direct negotiation of documents or Appendix<br />22 D in the case of offsetting of export proceeds with the approval of RBI. In case of<br />FIRC, a declaration from the exporter that the remittance is in respect of Shipping Bill(s)<br />No ____________ dtd _________ shall also be furnished<br />VI. For EPCG Licence applications<br />1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application<br />fee in terms of Appendix 21B.<br />2. Self certified copy of Drug Manufacturing License in case of export of Pharmaceutical<br />product or self certified copy of IEM/SSI Registration Number in case of other products<br />or a self certified copy of Service Tax Registration in case of Service Providers.<br />3. Certificate from a Chartered Engineer in the format given in Appendix 32A certifying:<br />a. the end use/nexus of machinery sought for import under EPCG Scheme in the pre<br />production/production/post production activity of the exported goods/services<br />(explaining the end use of machinery in detail); and/or<br />b. the essentiality of spare parts sought for import and its required quantity for existing<br />machinery manufacturing the goods to be exported/ machinery sought for import;<br />and/or<br />c. complete usage of equipments/goods sought for import under the EPCG Scheme for<br />supply of service to overseas customers/ service consumers of any other country in<br />India to earn free foreign exchange/supply of service in India relating to export paid<br />in free foreign exchange.<br />4. Statement of exports made/services rendered by the applicant firm in respect of the<br />same/similar export product/services rendered during the preceding three licensing<br />years duly certified by a Chartered Accountant/Cost and Works Accountant in the format<br />given in Appendix 26.<br />5.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1156903779176193762006-08-29T22:07:00.000-04:002006-08-29T22:09:40.006-04:00The broader sketch of areas in which u can find cost accountants are engaged.This should primarily contain each practising members area ofoperations classified as One major area and other area based onrevenue generation or clientele.This would focus the institute on marketing services of CostAccountants.The PCAs need not be asked to divulge clientele or revenueinformation but simply a self declaration as to the activities.The areas under coverage should be broadly:<br />1.Maintenance of Books accounts(Including Cost accounts wherenecessary).<br />2.Engaged in Establishment and design(customisation)of Accounts(Financial as well as Cost accounts).<br />3.Internal Audit(Including design and certification).<br />4.Rendering Accounting services for non-corporates.<br />5.Engaged in Consultancy services relating to various Tax laws forbusiness.<br />6.Acting as Authorised representatives under the provisions ofvarious laws(Taxation and others)<br />7.Rendering Management Consultancy.<br />8.Engaged In Statutory Cost Audit.<br />9.Engaged in Attest Functions under VAT and Central Excise andCustoms Acts.<br />10.Engaged in rendering Financial services(Brokering,Portfoliomanagement.<br />Any Other Services if that is what the Practising CA is engaged in.<br />This would finally help in pooling resources of expertise to pass onto the next breed of Cost accountants in the make.I think council members will make this concscious decision soonerthan later.<br />In addition they can be engaged as consultants in Project management ,Specific assignments from Governments etcUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-29209866.post-1156589787932862542006-08-26T06:56:00.000-04:002006-08-26T07:02:16.850-04:00Cost Accountants to establish Professional accounting firms to help business maintain accounts in complinace with various laws.Accounting services as distinct from audit and attest services are well developed in many countries.As a Professional Accountant A cost accountant in practice can help business establish a well knit accounting mechanism.Establish internal controls and perform internal audit.<br />Accounting function is largely inhouse in organised business in india but sooner than later this function will be a outsourced function with comparative cost-benefit.Practising Cost Accountants should sharpen their edges to deliver the business the value addition needed with respect to various compliances.<br />In addition Cost Accounting system whereever prescribed are to be guided by a cost accountant for the industry and business houses to comply with.<br />Many business entity that have been prescribed to maintain cost accounts find it difficult to comply for want of trained Cost accountants.The role of cost accountants multiplies here.Infact if the practising cost accountants keep track of this many companies will start complying with the provisions.<br />The gist of applicability is mentioned below:<br />Books of account to be kept by company:<br /><br /><span style="color:#000099;">209(1) Every Company shall keep at its registered office proper books of account with respect to -<br />(a) ......<br />(b) ......<br />(c) .....<br />(d) in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account:<br /><br />Provided that all or any of the books of account aforesaid may be kept at such other place in India as the Board of directors may decide and when the Board of directors so decides, the company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.<br /></span><br /><span style="color:#ff0000;">In exercise of the powers conferred by sub section (1) of section 642 read with clause (d) of sub<br />section 209 of the Companies Act, 1956, (1 of 1956), the Central Government hereby makes the following rules,<br />namely:-<br />1. Short Title and Commencement:-<br />(1) These rules may be called the cost Accounting Record []* Rules, 1967.<br />(2) They shall come in to force on the 1st day of October 1967.<br />2. Application:- They shall apply to every company engaged in the production or manufacturer of []* excepting<br />those companies falling under the category of small scale industrial units.<br />Explanation - For the purpose of this rule, the expression "small scale industrial undertaking" means a<br />company -<br />(a) [the aggregate value of the machinery and plant installed wherein does not exceed The limit as<br />specified for a small scale industries (Development and regulation ) Act.1951 (65 of 1951), as on the last date of<br />the preceding financial year and]1<br />(b) [the aggregate value of the realization made by the company from the sale or supply of all its products<br />during the preceding financial year does not exceed ten crore rupees.]2<br />3. Maintenances of Records:-<br />(1) Every Company to which there rules apply shall in respect of easy of its accounting years commencing<br />on or after the 1st day of October, 1967,[till the 31st day of March,2000]3 keep proper books of account<br />containing inter alia particulars specification in I and II annexed to these rules relation to utilization of material,<br />labour and other items of cost so far as they are applicable to it.<br />(2) The book of account aforesaid shall be kept in such a way as to make it possible to calculate the cost of<br />production of ----produced during the financial year of the Company (hereinafter referred to<br />the relevant period) from the particulars entered therein.<br />[(3) Every company to which these rules apply shall, in respect of each of its financial year commencing<br />on or after the 1st day of April, 2000 keep proper books of account containing, inter alia, the particulars<br />specified in Schedule III and Proforma mentioned in the said Schedule annexed to these rules relating to the<br />utilization of materials, labour and other items of cost in so far as they are applicable to cycles and components<br />thereof.<br />Provided that if the said company is manufacturing any other product or is engaged in other activities in addition<br />to manufacture of cycles and components thereof, the particulars relating to utilization of materials, labour and<br />other items of cost in so far as they are applicable to such other products or activities shall not be included in the<br />cost of cycles and components thereof.<br />(4) The books of accounts referred to in sub-rules(3) shall be kept on a regular basis in such a manner as<br />to make it possible to calculate the cost of production and cost of sales of all makes of cycles and components<br />thereof for every financial year from the particulars entered therein and every such books of account and the<br />proforma specified in Schedule III annexed to these rules shall be completed not later than ninety days from the<br />closing of the financial year of the company to which they relate.<br />(5) Statistical and other records shall be maintained in accordance with the provisions of the Schedule III<br />annexed to these rules, which shall be such as to enable the company to exercise as far as possible, control over<br />the various operations and costs with a view to achieve optimum economies in cost and provide the necessary<br />data required by the Cost Auditor to suitably report on all the points referred to in Cost Audit (Reports)<br />Rules,1996.<br />(6) It shall be the duty of every person, referred to in sub-section(6) and sub-section(7) of section 209 of<br />the Companies Act 1956 (1 of 1956), to take all reasonable steps to secure compliance by the company with the<br />provisions of sub-rules (1), (2), (3), (4) and (5) of this rule in the same manner as he is liable to maintain<br />accounts required under sub-section(1) of section 209 of the said Act".]4<br />4. Penalty:- If a company contravent the provision of rule 3, the company and every officer of the company<br />who is in default [including the person referred to]5 in sub-section (6 of section 209 of the Company Act 1956 (1<br />of 1956) shall be punishable with fine which may extend to five hundred rupee and where the contravention is a<br />continuing one, with a further fine which may extend to fifty rupees for every day after the first during which<br />such contravention continue.<br /><br /></span><span style="color:#ff0000;"></span>Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-29209866.post-1156261790948333992006-08-22T11:48:00.000-04:002006-08-22T11:52:36.870-04:00Valuer under wealth tax act(7) A valuer of stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill but excluding those referred to in sub-rules (2) to (6) and (8) to (11), shall have the following qualifications, namely :<br />(i) he must be a member of the Institute of Chartered Accountants of India or the Institute of Cost and Works Accountants of India <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN62.HTM">62</a>[or the Institute of Company Secretaries of India]; and<br />[(A) he must have been in practice as a chartered accountant or a cost and works accountant or a company secretary for a period of not less than ten years and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five preceding years, or]<br />(B) he must be a person formerly employed<br />(a) in a post under Government as a gazetted officer, or<br />(b) in a post under any other employer carrying a remuneration of not less than Rs. <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN64.HTM">64</a>[2,000] per month,<br />and, in either case, must have retired or resigned from such employment after having rendered service for a period of not less than <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN65.HTM">65</a>[ten] years in the field of audit and accounts or taxation work <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN66.HTM">66</a>[, or]<br /><a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN66.HTM">66</a>[(c) as a Company Secretary <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN67.HTM">67</a>[or a Deputy Company Secretary] or an Assistant Company Secretary in a post carrying a remuneration of not less than Rs. <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN68.HTM">68</a>[2,000] per month and must have retired or resigned from such employment after having rendered service for a period of not less than <a href="http://www.taxmann.com/DitTaxmann/OtherRules/WTRules/WTR57FTN69.HTM">69</a>[ten] years.]Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-29209866.post-1156048535695915902006-08-20T00:29:00.000-04:002006-08-20T00:35:40.690-04:00Cost Accountant and Competition ActSection 2(g) of the rules of the competition rules and section 35 of the competition act enables a cost accountant in practice as a counsel on behalf of the client to represent before the commission.<br /><br />Appearance before Commission<br />35. A complainant or defendant or the Director General may either appear in person or authorise one or<br />more chartered accountants or company secretaries or cost accountants or legal practitioners or any of<br />his or its officers to present his or its case before the Commission.<br />Explanation.—For the purposes of this section,—<br />(a) "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1)<br />of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a<br />certificate of practice under sub-section (1) of section 6 of that Act;<br />(b) "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of<br />section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate<br />of practice under sub-section (1) of section 6 of that Act;<br />(c) "cost accountant" means a cost accountant as defined in clause (b) of sub-section (1) of section 2<br />of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of<br />practice under sub-section (1) of section 6 of that Act;<br />(d) "legal practitioner" means an advocate, vakil or an attorney of any High Court, and includes a<br />pleader in practice.<br /><br />1<br />I<br />2. Definitions –<br />(1) In these Regulations, unless the context otherwise requires:<br />(a) "Act" means the Competition Act, 2002 (12 of 2003);<br />(b) "Bench" means Bench constituted under Section 22 of the<br />Act and includes the Principal Bench, Additional Bench,<br />Mergers Bench and Special Bench. Special Bench means<br />larger Bench constituted under sub-section (4) of Section 23<br />of the Act.<br />(c) "Chairperson" means the Chairperson appointed under<br />Section 8 and includes the senior-most Member acting as<br />Chairperson under sub-sections (4) of Section 10 and the<br />senior most Member discharging the functions of the<br />Chairperson under sub-section (5) of Section 10 of the Act;<br />(d) "Commission" means the Competition Commission of India<br />established under Section 7 of the Act;<br />(e) "Complaint" means and includes complaint or reference falling<br />under Section 19 of the Act;<br />(f) "Complainant" means a person who or the Central<br />Government or a State Government or a Statutory Authority<br />which makes complaint to the Commission.<br />(g) "Counsel" means and includes a legal practitioner, a<br />chartered accountant, a company secretary, a cost<br />accountant as defined in Explanation to Section 35 of the<br />Act;Unknownnoreply@blogger.com0