1 CMA ASHOK B NAWAL B.Com (Hons.), FCMA Chairman – Corporate Law Governance Committee of Institute of Cost Accountants of India Central Council Member of Institute of Cost Accountants of India President – All India Exporter’s Forum Advisor - Confederation of Export units, New Delhi. Trainer - Central Excise Officers of Various Commissionerate Advisor - Laghu Udyog Bharati Founder - Bizsolindia Services Pvt. Ltd. Finalisation of Financial Statements w.r.t. GST
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CMA ASHOK B NAWALB.Com (Hons.), FCMA
Chairman – Corporate Law Governance Committee of Institute of Cost Accountants of IndiaCentral Council Member of Institute of Cost Accountants of India
President – All India Exporter’s Forum
Advisor - Confederation of Export units, New Delhi. Trainer - Central Excise Officers of Various Commissionerate
Financial Statement in relation to a company, includes :
i. a balance sheet as at the end of the financial year;ii. a profit and loss account, or in the case of a company carrying on any activity not for profit, an
income and expenditure account for the financial year;iii. cash flow statement for the financial year;iv. a statement of changes in equity, if applicable; andv. any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to
sub-clause (iv):
Provided that the financial statement, with respect to One Person Company, small company anddormant company, may not include the cash flow statement;
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ACCOUNTS & RECORDS
# Basis of distinction Companies Act, 2013 Goods and Services Tax Act, 2017
1 Section reference – RecordMaintenance
Sec 128 & 2(13) Sec 35 of CGST Act, 2017 and Rule 56 ofCGST Rules, 2017
2 Applicability Every Company registered under CompaniesAct, 2013
Every person registered under Goods andServices Tax Act, 2017
3 Place of Maintenance ofbooks
Registered office of the Company asregistered with the Registrar of Companies
Principal place of business as mentioned inthe Certificate of Registration
4 Can books be maintainedelsewhere?
Yes.Books may be kept at such other placein India as Board of Directors may decide viapassing of resolution in the duly held BoardMeeting of the company.
No. But if more than one place of businessis specified in the certificate of registration,the accounts relating to each place ofbusiness shall be kept at such places ofbusiness
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ACCOUNTS & RECORDS
# Basis of distinction
Companies Act, 2013 Goods and Services Tax Act, 2017
5 Books liable to be maintained
Records maintained in respect of• all sums of money received and
expended by a company and matters inrelation to which the receipts andexpenditure take place
• all sales and purchases of goods andservices by the company
• the assets and liabilities of the company;• the items of cost as may be prescribed
under Sec 148 in the case of a companywhich belongs to any class of companiesspecified under that section
True and correct account of:
• Production / manufacture of goods• Inward supply of goods / services / both• Outward supply of goods / services or both• Stock of goods• Input tax credit availed• Output tax payable and paid• Goods / services imported / exported• Supplies attracting payment of tax on reverse charge• Advances paid, advances received, related
adjustments
6 Period of maintenance of books
For a period of not less than 8 financialyears immediately preceding the financialyear.If the company is in existence for a periodless than 8 years, books should be kept forits period of existence
For a period until the expiry of 72 months from the duedate of furnishing of annual return for the yearpertaining to such accounts and records
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AUDIT RELEVANT DATES
AUDIT RELEVANT DATES :
1. Financial Audit / Financial Statements : 180 days from the date of end of Financial Year
2. Tax Audit under Income Tax Act 1961 : 30th September (30th November when Transfer Pricing is applicable)
3. Annual GST Audit (GSTR-9B Certification) : 31st December
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Provisions w.r.t. Companies Act
Section 143(12) of Companies Act 2013:
“(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of theperformance of his duties as auditor, has reason to believe that an offence of fraud involving suchamount or amounts as may be prescribed, is being or has been committed in the company by its officersor employees, the auditor shall report the matter to the Central Government within such time and insuch manner as may be prescribed:
Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report thematter to the audit committee constituted under section 177 or to the Board in other cases within suchtime and in such manner as may be prescribed:
Provided further that the companies, whose auditors have reported frauds under this sub-section to theaudit committee or the Board but not reported to the Central Government, shall disclose the detailsabout such frauds in the Board's report in such manner as may be prescribed.”.
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Provisions w.r.t. Companies Act
Rule 13 of Companies Audit & Auditors Rules 2014 :13. Reporting of frauds by auditor.- (1) For the purpose of sub-section (12) of section 143, in case the auditor hassufficient reason to believe that an offence involving fraud, is being or has been committed against the company byofficers or employees of the company, he shall report the matter to the Central Government immediately but notlater than sixty days of his knowledge and after following the procedure indicated herein below:i. auditor shall forward his report to the Board or the Audit Committee, as the case may be, immediately after the
comes to knowledge of the fraud, seeking their reply or observations within forty-five daysii. on receipt of such reply or observations the auditor shall forward his report and the reply or observations of the
Board or the Audit Committee along with his comments (on such reply or observations of the Board or the AuditCommittee) to the Central Government within fifteen days of receipt of such reply or observations;
iii. in case the auditor fails to get any reply or observations from the Board or the Audit Committee within thestipulated period of forty-five days, he shall forward his report to the Central Government along with a notecontaining the details of his report that was earlier forwarded to the Board or the Audit Committee for which hefailed to receive any reply or observations within the stipulated time.
(2) The report shall be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post withAcknowledgement Due or by Speed post followed by an e-mail in confirmation of the same.(3) The report shall be on the letter-head of the auditor containing postal address, e-mail address and contactnumber and be signed by the auditor with his seal and shall indicate his Membership Number.(4) The report shall be in the form of a statement as specified in Form ADT-4.
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Accounting Standards / Ind-AS
Accounting Standards / Ind-AS
• Basic Principles :• Income to be accounted on net basis• Expenditure to be accounted net of ITC• Current Asset - ITC Receivables• Current Liability – Tax Payable
• Relevant Accounting Standards / Ind-AS to be referred
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Standards on Audit
Standard on Auditing (SA) 250 (Revised) Consideration of Laws and Regulations in an Audit of Financial Statements
Effect of Laws and Regulations :
Laws & regulations to be compiled by the Management but non-compliances to be reported by Auditor
Responsibility of the Auditor:• To identify material mis-statement of financial statements due to non-compliance with laws & regulations.
However, no responsibility of the auditor to prevent non-compliances or investigate to detect non-compliances.
• Responsible for obtaining reasonable assurance w.r.t. material mis-statement in the financial statement w.r.t.compliances
• The auditor shall perform the following audit procedures to help identify instances of non-compliance with otherlaws and regulations that may have a material effect on the financial statements:
(a) Inquiring of management and, where appropriate, those charged with governance, as to whetherthe entity is in compliance with such laws and regulations; and
(b) Inspecting correspondence, if any, with the relevant licensing or regulatory authorities.
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➢Records to be maintained by registered persons
✓Goods or services imported and Exported
✓Supplies attracting payment of tax
✓Supplies attracting payment of tax on reverse charge
✓Stock of goods supplied / received - opening balance, receipt, supply, goods lost, stolen, destroyed,written off or disposed of by way of gift or free samples including raw materials, finished goods,scrap and wastage thereof
✓Monthly production accounts with quantitative details of raw materials or services used in themanufacture and quantitative details of the goods so manufactured including the waste and byproducts thereof
✓Quantitative details of goods used in the provision of each service, details of input services utilisedand the services supplied
✓Advances received, paid and adjustments made thereto – Refund Vouchers / Payment Vouchers
✓Details of tax payable, tax collected and paid, input tax, input tax credit claimed
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ACCOUNTS & RECORDS
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➢Records to be maintained by registered persons
✓Register of tax invoice, credit note, debit note, delivery challan issued or received during any taxperiod
✓Names and complete addresses of suppliers / customers / recipients
✓Complete addresses of the premises where the goods are stored by him, including goods storedduring transit along with the particulars of the stock stored therein
✓Relevant documents viz invoices, bills of supply, delivery challans, credit notes, debit notes, receiptvouchers, payment vouchers, refund vouchers and e-way bills, etc
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ACCOUNTS & RECORDS
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✓Register of tax invoice, credit note, debit note, delivery challan issued or received during any taxperiod
✓Names and complete addresses of suppliers / customers / recipients
✓Complete addresses of the premises where the goods are stored by him, including goods storedduring transit along with the particulars of the stock stored therein
✓Relevant documents viz invoices, bills of supply, delivery challans, credit notes, debit notes, receiptvouchers, payment vouchers, refund vouchers and e-way bills, etc
➢Period of retention of accounts:
1. Normal situation: 72 months from the due date of filing of annual return for the respective year
2. Appeal or revision or any other proceeding: One year after final disposal of such appeal or revision or proceeding or 72 months from the last date of filing of annual return, whichever is later
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ACCOUNTS & RECORDS
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✓Change in law is constant
✓Monitoring of law is dynamic
✓ Impact assessment due to following notifications issued till date;
✓Exemption of IGST from 13.10.2018 and till 30.9.2018
✓Tracking of IGCRD application and imports thereon
✓EOU to EOU transfer - endorsement of custom duty on invoice / delivery challan
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EOU, STPI
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✓Availment of CENVAT credit, VAT set off as on 30.6.2017 in transitional return (TRAN-1)
✓Goods on which excise and VAT was paid and received by the tax payer after 1.7.2017 and booking done up to 30.7.2017 / 29.8.2017 ( under permission of commissioner)
✓Credit of service tax for the transitional period
✓Goods sold prior to 1.7.2017 and returned by customer within 6 months from 1.7.2017 and thereafter
✓Credit w.r.t stock of raw material , WIP, FG which were exempted in pre GST and taxable in GST
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Transitional Credit
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✓Refund of IGST paid under Rule 96
✓Refund of GST paid for Deemed Exports
✓Refund under Rule 89
✓Determination of Net ITC
✓Refund under Inverted duty structure
✓Refund of wrong tax paid
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Refund
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✓Reconciliation of GSTR-2A with inward supplies
✓Reconciliation of GSTR-3B with GSTR-1
✓Reconciliation of Inward Supplies with respective ledgers of Inward supplies and electronic credit ledger
✓Reconciliation of outward supplies with respective ledgers of Outward supplies and electronic credit and cash ledger
✓Reconciliation of tax payment including interest, late fees with respective legers of duty payable/paid
✓Reconciliation of Service exports with remittances
✓Reconciliation with write-off vis a vis reversals
✓Reconciliation with E-way bill w.r.t. Inward Supplies as well as Outward Supplies
✓Reconciliation with ISD return and accuracy thereof
