1. Company Accounts Internal Audit Corporate Social Responsibility Agenda for Today’s Discussion 1 By- CA Ankita Hudiya

2. Sections to be Covered 2 By- CA Ankita Hudiya

3. Section 134- Financial Statements, Board Reports Section 135- Corporate Social Responsibility Section 136- Right of Member to copies of audited Financial Statements Section 137- Copy of Financial Statement to be filed with Registrar Section 138- Internal Audit 3 By- CA Ankita Hudiya

4. 4 Section 128- Books of Accounts -Already existing provisions Books of accounts to kept at Registered Office. Can be kept at other place other than Registered Office-Pass resolution in BM & intimate the same to ROC within “7” days of such resolution. 4 By- CA Ankita Hudiya

5. 5 -New provisions Books of accounts can be kept in electronic form. Records of Branch to be updated PERIODICALLY at head office. FORM AOC -5 to be filled if books kept at some other place other than registered office. Central Government can direct maintenance Of BOA for more than 8 years. Penalties for any offence under this section has been increased terribly. Section 128- Books of Accounts 5 By- CA Ankita Hudiya

6. 6 The word “Balance sheet & Profit & Loss” has now been replaced with Financial Statements Now the section goes as under: The Act requires EVERY COMPANY to prepare its financial statements at the end of the “financial year” so as to give a TRUE & FAIR VIEW of the state of affairs of the company. Financial Statements to cover: Balance sheet Profit and Loss Account Cash Flow Statements for the financial year Statement of Changes in Equity Any explanatory note annexed to or forming part of, any document referred to in sub clause (i) to (iv) Section 129- Financial Statements By- CA Ankita Hudiya

7. 7 Contd: ……Section 129- Financial Statements 7 Preparation of Consolidated financial statements of the company & all of its subsidiaries Subsidiaries to include Associate Company & Joint Venture A separate statement containing the salient feature’s of the financial statement of the subsidiary /subsidiaries shall also be presented in form AOC 1 Subsidiary must exist till the END of the financial year Deviation from accounting standards in its financial statements is to be disclosed Penalties for any offence under this section has been increased terribly.

8. 8 Company accounts – Fraudulent manner Affairs of the Co. are mismanaged, casting a doubt on the reliability of the financial statements Court or tribunal Central Government, Income tax Authorities, SEBI, or any other Statutory or Regulatory authority Reopen Books of Accounts Orders/directs OR Section 130- Reopening of Accounts on Courts/ Tribunal Orders By- CA Ankita Hudiya

9. 9 Section 131- Voluntary Revision of Financial Statements & Boards Reports Non compliance with section 129(Prep of Financial Statements) Non compliance with section 134(Board reports & Financial Statement) Can revise F.S or B.R for any of the preceeding “3” financial years **Note-Revision can be done just once OR By- CA Ankita Hudiya

10. The Central Government may prescribe the accounting standards or any addendum there to as recommended by ICAI and NFRA Make recommendations to CG Oversee the Quality of service provided to professionals with who use such compliance. Have the same powers as are vested in a civil court Monitor & enforce the compliance of the same Will have power to carry on investigation on its own or on order of CG Section 132- Constitution of NFRA (National Financial Reporting Authority) NFRA Will recommend Central Government in forming Auditing & Accounting Standards Section 133- Central Govt. to Prescribe Accounting Standards 10By- CA Ankita Hudiya

11. 11 Where professional or other misconduct gets proved “PENALTY” If Individual- Min Rs 1 Lakhs Max. - 5 times fees Received If Firm- Min Rs 10 Lakhs Max. 10 times fees Received Debarring the Member from Practice for Min 6 Months or Max 10 Years!!!!!!!!!! By- CA Ankita Hudiya

12. 12 Section 134-Financial Statements Signing of F inancial S tatements: As per section 134(1), F inancial S tatement is required to be signed by: the Chairperson of the Company where he is Authorised by the Board OR by Two Directors out of which one shall be managing director, the C hief E xecutive O fficer, if he is a Director in the Company, the C hief F inancial O fficer, and the C ompany S ecretary of the company, wherever they are appointed. * In the case of a One Person Company, the F inancial S tatements: is required to be signed only by One Director. Section 134- Financial Statements, Board Reports By- CA Ankita Hudiya 12

13. 13 Contents of Directors Report The following contents are mandatory to mention in the Director Report 1.Extract under section 92 i.e. extracts of the Annual Return. 2.Number of meeting of Board of Directors. 3. D irectors R esponsibility S tatement. 4.D isclosure in the Board Report regarding the Declaration of independent directors. 5.Matters as per section 178 of the act, if applicable: committee of Nomination, Remuneration and stakeholders relationship committee 6.Reservation and qualification on A uditor Report and S ecretarial Report. 7.Details of Loans and Guarantee under SECTION 186 # 8.Particulars of Contract and arrangement under SECTION 188 ( R elated P arty T ransaction). 9.State of C ompany A ffairs. 10.Reserves. 11.Dividend. 12.Material Changes. 13.Conservation, Technology etc. 14.Foreign Exchange. 15.R isk M anagement: the development and implementation of risk management policy. 16.CSR. 17.Formal Annual evaluation : performance of the Board and its committee and its individual directors. This clause shall be applicable only listed company or prescribed public limited company. 18.other matter. * In case, company has intention to disclose other matter, it may so. # The details of Loans, Guarantee and investment shall be mentioned in the Director Report as per provisions of Section 186 of the Act. By- CA Ankita Hudiya

14. 14 Signing of B oard R eport By- CA Ankita Hudiya As per section 134(6), B oard R eport shall be signed by ;  By its Chairperson, if a uthorized,  By at least two Directors one of whom shall be Managing Director or by the Director where there is one Director.

15. 15 Penal provisions of section 134 By- CA Ankita Hudiya The Company shall be punishable  FINE < Rs 50,000 but may extend to Rs 25,00,000 &  EVERY OFFICER in D efault shall be P unishable with IMPRISONMENT for a term which may extend to 3 years or with fine which shall not be less than Rs 50,000 but which may extend to Rs 25,00,000 or with both. +

16. 16 Copy of Financial Statements including Consolidated Financial Statements, Auditor Report, any other document annexed or attached thereto which are to be laid before the AGM shall be sent to the member and debenture trustee B efore TWENTY ONE DAYS of the meeting Mode of communication: a.Listed companies b.Public companies having a Net Worth of Rs One Crores or more Having a Turnover of Rs 10 Crores or more c. Others can send by registered post, speed post, courier or electronic mode Section 136- Right of Member to copies of audited Financial Statements Can send copies by electronic mode OR

17. 17 Section 137- Copy of Financial Statement to be filled with Registrar Companies other than OPC In case of One Person Company AGM Held Within 30 days of AGM AGM NOT Held Within 30 days of last date before which the AGM should have been held AGM Adjourned Within 30 days of Adjourned AGM Within 180 days from the Closure of FY Companies to file form AOC 4

18. Section 135- Corporate Social Responsibility Every Year mandatorily has to spend: 2% * (Average Net profit of the company made during the immediately 3 preceeding financial years) on CSR. OR 18

19. By- CA Ankita Hudiya19 Net Profit Shall exclude any profit arising from any Overseas Branch or Branches of the Company whether operated as a separated Company or otherwise. any Dividend received from other companies in India covered & complying with the provisions of Section 135. * Profit Calculated as per Provisions Companies Act,1956 shall not be required to be recalculated.

20. Steps for CSR Activities To set up CSR Committee Company to Formulate & Monitor Company to meet Board’s Report Min no of members: 3, out of which one shall be independent director. For PVT companies without independent director can form committee without these directors Company’s C S R Policy T wice a Year D isclose Committee’s and C S R Policy 20

21. 21 Activities undertaken shall E xclude the following: Expenditure in normal course of business. Programmes & activities that benefit of ONLY the employees and their family. Programmes or activities carried out as a PRECONDITION for setting up a business. Anything done to fulfill a CONTRACTUAL OBLIGATION undertaken by a company. Fulfillment of Required Regulations. By- CA Ankita Hudiya Rule 4 : Companies (Corporate Social Responsibility Policy) Rules 2014

22. 22 Objective- to provide guidance on R ecognition, Measurement, P resentation & D isclosure of expenses on activities relating to CSR. Issued On May 15, 2015 By- CA Ankita Hudiya Guidance Note on Accounting for expenditure on C S R Activities

23. 23 Making Contribution to the funds as specified in S CHEDULE VII of the Act, Through a Registered Trust, On its Own Treatment of such expenditure: Charge to Profit & Loss Account By- CA Ankita Hudiya CSR obligations can be met in the following ways:

24. 24 Disclosure for the amount spent on C S R By- CA Ankita Hudiya Amount of CSR Expenditure - To be disclosed in Notes to Statement of P&L A/c Other Things to be disclosed in NOTES: Gross Amount required to be Spend by the Co. during the year Amount Spent during the year on - Construction, Acquisition of any Asset - On purpose other than above (Revenue Expenditure)

25. 25 Shortcomings Of C S R 1. Law does not stipulate any penalties for non- compliances for the same 2. The act states that the amount will be spent in local area where business is located- What about rural areas? Suggestion: Spend 50% in local area of business and 50% in rural area By- CA Ankita Hudiya

26. 26 Questions that arise on the same????????????? 1. What if the company spends less than 2% of the Average Net Profits? 2. What if the company spends more than 2% of the Average Net Profits? 3. What if during incurring such Expenditure, it gives rise to an ASSET ? Whether to be considered in companies B/S? 4.What treatment to be given if Company supplies goods manufactured by itself or renders services provided by itself-When is the same to be Accounted in Books? By- CA Ankita Hudiya 5.What if a company receives a grant for carrying out such CSR activities? 6. What if company derives Income from such CSR activities? 7. Whether Expense of CSR can be claimed under the Provisions of Income Tax?

27. 27 Section 138 read with rule 13 of the Companies(Accounts) Rules 2014 Following class of Companies shall appoint an internal Auditor Compulsorily: 1. Every Listed Company 2. Every Unlisted Company a.) P aid up S hare C apital of Rs. 50 Crores or more OR b.) T urnover of Rs. 200 Crores or more OR c.) O utstanding loans or borrowings from Banks or PFI exceeding Rs 100 Crores or more OR d.) O utstanding deposits of Rs. 25 Crores or more 3. Every Private Company a.) T urnover of Rs. 200 Crores or more OR b.) O utstanding loans or borrowings from Banks or PFI exceeding Rs 100 Crores or more Section 138- Internal Audit

28. 28 For any Queries please contact us at CA Ankita Hudiya | ACA | |Contact Details| |R O| B-14, Jhilmil Colony, Delhi-110095| |B O| FF-76 & FF-80, Ansal Fortune Arcade, Sec-18,Noida| |M|+91-9899440636| |T | 0120-4218157| |E|admin@scaa.in | |W| www.scaa.in| admin@scaa.inwww.scaa.in By- CA Ankita Hudiya