Know Your Rights!!

IAS 39 mandates some financial assets and liabilities to be subsequently measured at ‘amortized cost’.  This measurement concept is a management theory put in accounting practice. It means that the contractual interest rate each period should be adjusted to amortize the transaction costs over the expected life of the financial instrument. The amortization is calculated on an effective interest rate (EIR) / yield-to-maturity (YTM) basis. The EIR is the rate that exactly discounts the stream of principal and interest cash flows excluding any impact of credit losses, to the initial net proceeds. It is important to note that EIR method does not take into account any future credit impairments anticipated on that instrument. The carrying amount of the financial instrument subsequently measured at amortized cost is computed as: Transaction costs are an integral part of the amortized cost calculation. They are defined as costs that are directly attributable to the acquisit...

The ICAI Entrepreneurship Cell, will foster entrepreneurship for all CAs who avoid incubating the latent entrepreneurial spirit.  The ICAI E-Cell will show Chartered Accountants of India the doors of opportunity but a dedicated team will also help walk through by providing mentoring, financial, networking with other entrepreneurs and knowledge inputs. The ICAI E-Cell will comprise of CA members, regulators, mentors and service providers from the industry who span a variety of functional areas, sectoral domains and are passionately committed to help aspiring entrepreneurs succeed commercially In all I wish to act as a “Founder & Chief Catalyst” to create “ecrats” (entrecrats) out of the present day “acrats” (accountcrats).

A prayer to my GOD.. Dear God, So far I've done all things right.. I haven't gossiped haven't lost my temper, haven't been greedy, grumpy, nasty, selfish, or overindulgent.  I'm really glad about that.. But in a few hours, God, I'm gonna be get out of bed.. And from then on, I'm going to need a lot more help.. Please be with me always Yours, Gupta Pooja ♥ ♥

An Appeal Dear Companion, This is to bring to your kind notice that my nomination for the Central Council Elections have been accepted.  The elections are on 7 th and 8 th December, 2012 in Ahmedabad, Pune and Mumbai and on 8 th December, 2012 in other parts of the region. I had begun my journey in the year 2000 which forever changed the way I’d perceived access to my fellow professionals. My journey is far, far from finished! I need your support and able guidance to finish what I have started. My Profile Chartered Accountant by qualification; Teacher by profession; Author by choice.. A qualified Chartered Accountant, Company Secretary, LL.B and Masters in Finance from University of Frankfurt, Germany., now I’m pursuing Doctorate of Philosophy (PhD) from Central University of Gujarat. In my professional path; I come from leading multinational banks (Standard Chartered Bank & Societe Generale Bank) at senior positions in Mumbai and in Spain...

In the Part 1 and Part 2 of the ‘Ten Minutes’ series of New Schedule VI an overview of the Balance sheet and Profit and Loss account changes were dealt with. In this last Part I’d like to touch upon my perspective of certain practical issues in putting Schedule VI in place. Issue 1: The aggregate amount of both long term and shot term loans guaranteed by directors or “others” under each head is to be disclosed. Who does this “others” signify? Solution: The words “others” would mean any person or entity other than a director. It is therefore, not restricted to mean only promoters or related parties. In the normal course, a person or entity will generally guarantee a loan of the company only if it is associated with the company in some manner. Issue 2: A liability is to be classified as current if the company has an unconditional right to defer its settlement for at least 12 months after the reporting date. How will a 5-year loan which the company has taken is r...

New Schedule VI – Profit & Loss Account The old version of Schedule VI did not have any format for Profit and Loss account. The New Schedule VI lays down a format for the presentation of P& L account. This format of P& L does not list any appropriation item on its face. Further, the New Schedule VI format prescribes that below the line adjustments to be presented under “Reserves and Surplus” in the balance sheet. The classification of expenses is based on their nature and not on their function. What is classification of expenses based on nature or function? In nature based classification of expenses an entity aggregates expenses within profit or loss according to their nature, for example; purchases of materials, transport costs, employee benefits, depreciation, marketing costs, etc and the expenses are not reallocated among functions within the entity. The main advantage of using this “nature of expense” method is that it is simple to apply because allocati...

The New Schedule VI introduces many new concepts and disclosure requirements. It also does away with several statutory disclosure requirements. The practical application of the New Schedule VI throws up several questions, the answers to which may not be straight forward. Through the medium of the blog I intend to set out an overview of the key changes and implications, critical issues and some perspectives thereon. In three parts I will first list down some important changes related to the Balance Sheet, second part will cover key changes to Profit and Loss account and the last part will be some practical issues and perspectives. Ten Important Changes to the Balance Sheet –  New Schedule VI way 1.         The new schedule VI prescribes a  vertical format  for presentation of balance sheet. Thus, a company will not have an option to use horizontal format for presentation of financial statements. 2.          Th...

While reading through the annual report of one of the listed company (TRF Ltd – A Tata Enterprise) in India my attention was drawn to a small paragraph in the ANNEXURE TO NOTICE - Explanatory Statements pursuant to Section 173(2) of the Companies Act, 1956. Although, the paragraph was concise but it provided enormous information on the company’s profitability. Reasons for loss or inadequate profits: The financial mis-statements were noticed in a particular division for earlier years. This was done by a group of officers who were discharged from the Company and Company has initiated necessary legal proceedings against them. A new team, who had taken charge of the division had reviewed the costs of the projects under execution and corrected the same where ever necessary. Consequently, the Company had to book losses in the division bringing down the overall profits of the Company. This paragraph quite evidently mentions “mis-statements” by group of officers in a division. The compan...