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Vol. 4
EIRC NEWS
No. 5
15th June, 2011
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Vol. 4
EIRC NEWS
No. 5
15th June, 2011
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Contents
EIRC of ICWAI
Chairman
Shri Ajay Deep Wadhwa
Officers
Col. U. K. De
Performance Appraisal of Central Coalfields Limited
during Globalization
Dr. Sanjay Ghosh, CMA Krishna Kumar Sharma
4
Secret of Success !!!
Nilabjo Chakraborty
7
Stay Healthy, be Happy
8
Chapters’ News
8
Be a true Professional
9
☎ : 2455-3418/5957, Ext- 204 Ajay Deep Wadhwa
Chief Administrative Officer
(D) 6536-5130 EIRC Activities
Electronic filing of return of Tax Deducted at
Source - Procedures
☎ : 2455-3418/5957, Ext- 205 Mrityunjay Acharjee
Paper Clipping
P. Sarkar
Accounts Officer
(D) 6456-3601
Do you know
Compiled by Anshul Wadhwa
S. Pal
☎ : 2455-3418/5957, Ext- 206 Some technical information
Section Officer (Postal)
A. Bhattacharya
☎ : 2455-3418/5957, Ext- 207
Section Officer (Edu.)
P. Banerjee
Section Officer (PD)
(D) 6456-3603 Some interesting facts
(D) 6533-1075
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Common mistakes which as a professional you can do at
your office and which must be avoided
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Some traits of non-motivating Managers
16
Suggested Minimum Professional Fees
17
Notification - Govt. of India
18
☎ : 2455-3418/5957, Ext- 208 Cencept of Vouching in Auditing
Pranab Kumar Sikdar
(D) 6456-3602
Candidates placed in different organizations
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Disclaimer
The views and opinions expressed or implied by way of articles in the EIRC NEWS are those of the authors and do not necessarily
reflect those of the EIRC of ICWAI. EIRC of ICWAI bears no responsibility for the contents in the articles published.
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Vol. 4
No. 5
15th June, 2011
Performance Appraisal of Central Coalfields Limited
during Globalization
Dr. Sanjay Ghosh, Krishna Kumar Sharma
St. Xavier’s College, Ranchi, [email protected]
Introduction
The performance appraisal of such a high profile organization
like Central Coalfields Limited (CCL) during globalization
appears to be of great significance. The term globalization
practically introduced in India in the year 1991 when India
adopted and implemented the idea of liberalization,
privatization, and globalization (LPG) in the economy. No
doubt, this has changed the overall functioning of domestic
market. It changed the level of competition, quality and type
of product, marketing strategies, pricing models, treatment
with human resource and overall utilization of the resources.
This has affected the performance of Central Coalfields Limited
(CCL) also. Before discussing further let’s see the profile and
current position of Central Coalfields Limited (CCL). 1
Scope of study:
The scope of study shall be Central Coalfields Limited. The
study on the topic mentioned above deals with the
performance appraisal of CCL during globalization, covering
its productivity, profitability, employee welfare and other
human resource perspectives.
Brief introduction of Central Coalfields Limited (CCL)
Central Coalfields Limited is a Category-I Mini-Ratna
Company since October 2007. During 2009-10, coal
production of the company reached it’s highest-ever figure of
47.08 million tones, with net worth amounting to Rs. 2644
crore against a paid-up capital of Rs. 940 crore.
Formed on 1st November 1975, CCL (formerly National Coal
Development Corporation Ltd) was one of the eight
subsidiaries of Coal India Ltd. 2
Early History – Formation of NCDC (Pre-nationalisation)
CCL had a proud past. As NCDC, it heralded the beginning of
nationalization of coal mines in India. National Coal
Development Corporation Ltd. (NCDC) was set up in October,
1
2
Financial management practices of public sector enterprises in
India: capital structure decisions and risk considerations International Journal of Risk Assessment and Management 2007
- Vol. 7, No.4 pp. 491 – 534.
http://ccl.gov.in/comp/our_history.htm (website of Central
coalfields Limited)
EIRC NEWS
1956 as Government-owned Company in pursuance of the
Industrial Policy Resolutions of 1948 and 1956 of the
Government of India. It was started with a nucleus of 11 old
state collieries (owned by the Railways) having a total annual
production of 2.9 million tonnes of coal.
Until the formation of NCDC, coal mining in India was largely
confined to the Raniganj coal belt in West Bengal and the
Jharia coalfields in Bihar (now in Jharkhand), besides a few
other areas in Bihar (now in Jharkhand) and a part of Madhya
Pradesh (now Chattishgarh also) and Orissa.
NCDC played a pioneering role in India’s coal industry by
introducing large-scale mechanization and modern and
scientific methods of coal mining for promoting conservation
of high grades of coal and exploiting deep coking coal seams
necessitating heavy capital investment and sophisticated
technical skill. NCDC went in for foreign collaboration with
countries such as Poland and the USSR besides limited
collaboration with Japan, West Germany and France.
NCDC’s role can be truly assessed by its contribution towards
growth of new coal resources in, what are known as, the
outlying areas. The opening of new mines in Madhya Pradesh,
Orissa and Maharashtra brought about a significant change in
these regions by creating new opportunities of
industrialization and employment. Development of the
Singrauli coalfields has brought coal almost to the door steps
of northern India.
With the development and application of improved mining
techniques, emphasis on planning, design and research;
introduction of modern mine management systems and an
enlightened industrial relations policy, NCDC was able to
provide the infrastructure for the total nationalization of coal
industry in the country.
From its very beginning, NCDC addressed itself to the task of
increasing coal production and developing new coal resources
in the outlying areas, besides introducing modern and
scientific techniques of coal mining.
In the Second Five Year Plan (1956-1961) NCDC was called
upon to increase its production from new collieries, to be
opened mainly in areas away from the already developed
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Raniganj and Jharia coalfields. Eight new collieries were
opened during this period and the production increased to
8.05 million tonnes by the end of Second Plan. 3
During Third Five Year Plan (1961-1966), though the
Corporation had built up a much larger production capacity,
it could not be utilized due to a sluggish domestic coal market.
Production had, therefore, to be pegged down and the
development of several collieries undertaken from the early
part of the Plan period, had to be suspended. By this time, the
contribution of NCDC to the nation’s coal production (67.72
million tones) increased to around 9.6 million tonnes.
With gradual rise in the demand of coal due to commissioning
of new power plants and development of other coal-based
industries during Fourth Five Year Plan (1969-1974), NCDC’s
production increased to 15.55 million tonnes by the terminal
year of Fourth Five Year Plan, i.e, 1973-74. 4
Nationalisation of Coal Mines:
A major event in the history of Indian coal industry during
the Fourth Plan Period (1969-74) was the nationalisation of
the erstwhile privately owned coal mines in two phases. In the
first phase, the management of coking coal mines was taken
over by the Government of India on 17th Oct. 1971 and
nationalization was effective from 5th January 1972. A state
owned company, Bharat Coking Coal Ltd. was formed for
managing coking coal mines. For convenience of
management, BCCL collieries in the East Bokaro coalfields
in Bihar (now Jharkhand) were transferred to NCDC, and its
projects in Central Jharia region viz., Sudamdih and Moonidih
deep shaft mines were handed over, in stages to BCCL.
In the second phase of nationalisation, the management of
non-coking coal mines in the country, excepting the captive
coal mines of the two steel plants, viz, TISCO and IISCO, was
taken over by the Government on 31st January 1973. These
mines were subsequently nationalized with effect from 1st
May 1973 and another state-owned company, Coal Mines
Authority Ltd. (CMAL) came into being with headquarters at
Calcutta (now Kolkata) to manage and develop NCDC
collieries and other newly nationalized units. NCDC itself, in
this process, became a division of CMAL which owned 36
collieries under commercial production in Bihar, Orissa,
Madhya Pradesh and Maharashtra, besides four coal washeries,
one by-product coke oven plant, two large central workshops
and manpower of about 71,000. 5
3
4
5
http://ccl.gov.in/comp/our_history.htm (website of Central
coalfields Limited)
http://ccl.gov.in/comp/our_history.htm (website of Central
coalfields Limited)
http://www.coalindia.in/Company.aspx?tab=3 (website of Coal
India Limited)
EIRC NEWS
No. 5
15th June, 2011
The formation of CMAL witnessed regrouping of the coal
mines into three divisions, namely, Western, Central and
Eastern. The regrouping had to be done for the convenience
of management, keeping in view the geographical location of
the collieries.
As a result, NCDC units located in the States of Maharashtra
and Madhya Pradesh, with the exception of Singrauli
coalfields, became a part of the Western Division.
The Central Division consisted of all the old collieries of
NCDC in Orissa and Bihar (except Sudamdih and Moonidih
which had been handed over to BCCL) and those acquired by
CMAL after take-over in Giridih, East Bokaro, West Bokaro,
South Karanpura, North Karanpura, Hutar & Daltongunj
Coalfields in Bihar. The Central Division consisted of 64
collieries, four coal washeries, one by-product coke oven plat,
on bee-hive coke plant and one central workshop having a
manpower of 1,11,500. The CMAL, with its three divisions
continued upto 1st November 1975 when it was renamed as
Coal India Limited (CIL) following the decision of Govt. of
India to restructure the coal industry. The Central Division of
CMAL came to be known as Central Coalfields Limited and
became a separate company with the status of a subsidiary of
CIL, which became the holding company.6
Importance of coal industry in the economic development
of country
India’s major mineral resources include coal, iron, mica, bauxite,
titanium, chromites, limestone, and thorium. India meets most
of its domestic energy demands through its 92 billion tones of
coal reserves (about 10% of world coal reserves). 7
Current Indian coal scenario
The Indian coal industry is the fourth largest in term of coal
reserves and third largest in terms of coal production in the
world. But despite its huge resource base, till date India has
not been able to minimize its coal deficit. 8
Key finding:1. Coal requirement for the power utilities to grow at rate
of around 10% during 2007-2008 to 2011-2012.
2. Private coal washries have rapidly increased the
production of washed non-coking coal in India.
3. High coking coal demanded by the Indian steel industries
and low reserved base has boosted the import of coking coals.
6
7
8
http://www.coalindia.in (website of Coal India Limited)
http://coal.nic.in/welcome.html (website of Ministry of Coal, Govt.
of India)
Economic Survey 2009-10 of Government of Indiaindiabudget.nic.in/es2009-10/ esmain.htm.
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No. 5
15th June, 2011
4. Coking coal requirement in steel production as expected to touch over 85.34 million metric tons in 2011-2012.
Performance of Central coalfields Ltd.10
Particulars
Production of Raw Materials
(Million Tonnes)
Average Manpower
Productivity :Average per man per year
(Tonnes)
Capital Employed (In Lakhs)
Profits & Loss for the year
(In Lakhs)
2006
40.51
2007
41.32
2008
44.15
2009
43.24
2010
47.08
65536
62905
60209
57681
55305
618.14
656.86
733.28
749.65
851.28
168624.77
11649.01
170346.23
102030.39
156671.51
103524.51
149849.22
76380.39
186582.88
153305.01
Need of Performance Appraisal
Since inception of planning in India, a system of mixed
economy was introduced to materialize the speedier process
of industrialization in the country. Although both the public
and private sector were assigned responsibilities to play their
effective roles in development of the economy, the former
was entrusted with greater responsibility mainly because of
expectation that public sector as an engine of ground will
help achieve commanding heights of India’s economy. But
the poor performance of Public sector undertakings has been
criticized across the nation at global level and the very
existence of such organization is being questioned.
Performance appraisal of Public sector undertakings has
therefore been considered necessary to assess their level of
efficiency for its further improvements with a view to ensuring
the increased level of profitability. The globalization of Indian
economy has thrown a challenge to the performance of public
sector vis-à-vis that of private sector. Although the
performance of PSU can’t be compared exactly on the basis of
same indicators being used by the private enterprise because
PSU and private enterprises have different concepts and
therefore they are neither substitute for each other nor they
9
10
Economic Survey 2009-10 of Government of India indiabudget.nic.in/es2009-10/ esmain.htm.
http://ccl.gov.in/comp/ (website of Central coalfields Limited)
EIRC NEWS
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are in direct competition .they exhibit a distinction from the
public sector in many ways particularly in regard to function,
roles, goals, objectives, responsibilities, accountability and
obligation.
Profitability is one of the main criteria to evaluate the
performance of a private sector enterprise. However owing to
lack of well defined and quantifiable objectives it is very
difficult to evaluate the performance of Public sector
undertakings simply on the basis of profitability alone.
However owing to this ,the profitability of Public sector
undertakings can’t be overlooked as it is the life blood of any
commercial undertaking .the former prime minister of India,
Mrs. Indira Gandhi had rightly observed that one should not
treat Public sector undertakings merely as a sentimental value
the final test lay in profitability ,service and growth. If the
Public sector undertakings do not qualify for these three tests
there is no meaning in it.
Profitability of any enterprise depends upon the efficiency
level achieved by it. “Efficiency is basically an input output
relationship.” This may be altered by bringing about suitable
changes in their processes, procedures and practices. It can
also be improved upon by minimizing waste, cost of input,
labour and overhead through application of better
management tools and techniques. Efficiency is a relative
term which may vary annually and from one end to another.
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Vol. 4
No. 5
15th June, 2011
Secret of Success !!!
Nilabjo Chakraborty
Student
[email protected]
The secret of life is the law of attraction.
Everything that is and comes into our life is attracted by us.
And it is attracted to us by virtue of the images we are holding
in our mind. The only reason why we do not have what we
want is because we are thinking more about what we don’t
want than what we actually want.
Listen to your thoughts and listen to the words you are saying.
Most people define themselves by their finite body, but we are
not a finite body.Even under a microscope we are an energy
field.What we know about energy is this: you go to a quantum
physicist and ask “what creates the world?”He/she says
“ENERGY”, well then describe energy, now he/she says”ENERGY can never be created nor destroyed, it always was,
always has been its moving into form, through form and out of
form.”When you go to a theologian and asked the question,”what
created the universe, and he/she will say “GOD”.OK describe
God, now he/she says-‘’GOD “always was and always has been,
never can be created or destroyed, all that ever was always will be
always moving into form, through from and out form.We can see
same description just different terminology.
Quantum mechanics confirms it all, that the universe
essentially emerges from thought and all the matter around us
is just precipitated thought. Ultimately we are the source of
the universe and when we understand that power directly by
experience, we can start to exercise our authority and begin to
achieve more and more.
So depending on how we use that power - positively or
negatively; that is the kind of body in terms of health, that’s
the kind of environment we create. We are the creator, not
only of our own destiny, but ultimately we are the creators of
the universal destiny.
Universe is like the genie in the story of Aladdin and his
magical lamp. We are Aladdin. Universe is the genie telling
us –”YOUR WISH IS MY COMMAND”!!! Whatever may it
EIRC NEWS
be, positive or negative that we wish for or think about we
will get. This law of attraction does not perceive something to
be good or bad, nor whether we want it or we don’t want it.it
only respond to our thoughts.
Suppose you think-you can’t handle all this work. And you
will get more work than you can handle. The law of attraction
gives us what we are thinking about-period! Unknowingly
we apply the law in personal or professional or social life. As
a professional student we think-”this course is hard, the subjects
are hard to understand, and what if we fail?” As the universe
says “your wish is my command”. Ultimately we unable to
get full command on the subject, we can’t perform in exam
and we fail. Had we thought-”this course is fruitful, subjects
are interesting and we will get good marks. The scenario on
the result day would have been different.
There is no limit to what this law can do for us. Dare to believe
in your own ideal, think of the ideal as an already accomplished
fact and work accordingly.
When Henry Ford was bringing his vision of the motor vehicle
into our world, people around him ridiculed him and thought
he gone mad to pursue such a WILD vision.
He knew the law of attraction; he understood the secret to
success!!! He said-”whether you think you can or think you
can’t either way you are correct.”
For a check, whether this law of attraction works or not,
recently, I made a wish to watch a match at Eden Gardens with
full capacity, favor of the home team. Miraculously, three
days later I got a pass to Eden Gardens and experienced
everything I had wished for.
The knowledge of the “law of attraction”and “secret for
success” has been given to you. What you do with it is entirely
in your hand. Whatever you choose for you is right. Whether
you choose to use it, or you choose not to use it, you get to
choose. The freedom of choice is yours.
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Vol. 4
No. 5
15th June, 2011
Stay Healthy, be Happy
Handbook 2011
Health :
1. Drink plenty of water.
2. Eat breakfast like a king, lunch like a prince and dinner
like a beggar.
3. Eat more foods that grow on trees and plants & eat less
food that is manufactured in plants.
4. Live with the 3 E’s – Energy, Enthusiasm and Empathy.
5. Make time to pray.
6. Play more games.
7. Read more books than you did in 2010.
8. Sit in silence for at least 10 minutes each day.
9. Sleep for 7 hours.
10. Take a 10-30 minutes walk daily. And while you walk, smile.
Personality :
11. Don’t compare your life to others. You have no idea
what their journey is all about.
12. Don’t have negative thoughts or things you cannot
control. Instead invest your energy in the positive
present moment.
13. Don’t over do. Keep your limits.
14. Don’t take yourself so seriously. No one else does.
15. Don’t waste your precious energy on gossip.
16. Dream more while you are awake.
17. Envy is a waste of time. You already have all you need.
18. Forget issues of the past. Don’t remind your partner with his/
her mistakes of the past. That will ruin your present happiness.
19. Life is too short to waste time hating anyone. Don’t
hate others.
20. Make peace with your past so it won’t spoil the present.
21. No one is in charge of your happiness except you.
22. Realize that life is a school and you are here to learn.
Problems are simply part of the curriculum that appear
and fade away like algebra class but the lessons you
learn will last a lifetime.
23. Smile and laugh more.
24. You don’t have to win every argument. Agree to disagree…..
Society :
25. Call your family often.
26. Each day give something good to others.
27. Forgive everyone for everything.
28. Spend time with people over the age of 70 & under the
age of 6.
29. Try to make at least three people smile each day.
30. What other people think of you is none of your business.
31. Your job won’t take care of you when you are sick.
Your friends will. Stay in touch.
Life :
32. Do the right thing!
33. Get rid of anything that isn’t useful, beautiful or joyful.
34. GOD heals everything.
35. However good or bad a situation is, it will change…
36. No matter how you feel, get up, dress up and show up.
37. The best is yet to come.
38. When you awake alive in the morning, thank GOD for it.
39. Your inner most is always happy. So, be happy.
Last but not the least :
40. Please try to be happy always.
Chapters’ News
Guwahati Chapter: In the Annual General Meeting of
Guwahati Chapter of Cost Accountants held on 18.05.2011
the following members have elected as office bearers for the
year 2011-12:
Shri Parmeswar Lal Kanoi
: Chairman
Shri Swapan Kumar Saha
: Vice-Chairman
Shri Sanjib Das
: Secretary
Shri Anil Goyal
: Treasurer
Cuttack Bhubaneswar Chapter: In the 42nd Annual General
Meeting of Cuttack-Bhubaneswar Chapter of Cost
Accountants held on 29.05.2011 the following members have
elected as office bearers for the year 2011-12:
Shri Niranjan Sahoo
: Chairman
Shri Manas Ranjan Lenka : Vice-Chairman
Shri Satyabrata Samal
: Secretary
EIRC NEWS
Shri Siba Prasad Kar
: Treasurer
Hazaribagh Chapter : Hazaribagh Chapter of Cost
Accountants, (former extension counter of EIRC) has started
its functioning as Chapter of ICWAI. The same was
inaugurated on 29th March, 2011 by Shri Yashwant Sinha,
Chiarman, Financial Standing Committee of Parliament in
presence of Shri B.M.Sharma, President, Shri Kunal Banerjee,
Past President of ICWAI, Shri A.D.Wadhwa, Chairman, EIRC
of ICWAI etc. Following members have been nominated as
office bearers to run the Chapter:
Shri R. K. P. Singh
: Chairman
Shri Radhey Shyam
: Secretary
Shri Arun Prasad
: Treasurer
Shri S. N. Mishra
: Member
Shri Sijit Kumar
: Member
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Vol. 4
No. 5
15th June, 2011
Be a true Professional
Ajay Deep Wadhwa
M. Com, FICWA, Chairman. EIRC of ICWAI
[email protected]
India is full of qualified persons but lack professionals.
Professionals are the persons who find time to do everything
and whatever they do, they do with perfection. We can never
become successful Cost Accountants, unless we are
professionals.
Professionals do not mean money-minded persons; it means
result oriented persons.
My institute ICWAI (The Institute of Cost and Works
Accountants of India) has given me a plenty of opportunities
to meet professionals. Based on discussion with them, after
hearing their speeches and interacting with successful persons
in different time periods, I have prepared following list of
“success-mantras” which help us in becoming true
professionals 1. Sleep less. This is one of the best investments we can
make to make our life more productive and rewarding.
Most people do not need more than 6 hours to maintain
an excellent state of health. Try getting up one hour
earlier for 21 days and it will develop into a powerful
habit. Remember, it is the quality not the quantity of
sleep that is important. And just imagine having an extra
30 hours a month to spend on the things that are important
to us.
2. Set aside one hour every morning for personal
development matters. Meditate, visualize the day, read
inspirational texts to set the tone of the, listen to
motivational tapes or read great literature.
3. Do not allow those things that matter the most in our life
be at the mercy of activities that matter the least. Time
management is life management so guard the time with
great care.
4. Always answer the phone with enthusiasm in the voice
and show the appreciation for the caller. Good phone
manners are essential. To convey authority on the line,
stand up. This will instill further confidence in the voice.
5. Set aside every Sunday evening for self and be strongly
disciplined with this habit. Use this period to plan the
week, to read new materials and inspirational books, to
listen to soft soothing music, to talk to family members
and to simply relax.
6. Stay on purpose, not on outcome. Don’t do anything for
the money or the recognition. Those will come naturally.
This is the way of the world.
EIRC NEWS
7. Laugh. Laughter activates many beneficial chemicals
within the body that place us into a very joyous state.
Laughter therapy has been regularly used to heal persons
with varied ailments and is a wonderful tonic for life’s ills.
8. Learn to be still. The average person doesn’t spend even
30 minutes a month in total silence and tranquility.
Develop the skill of sitting quietly, enjoying the powerful
silence for at least ten minutes a day. Simply think about
what is important to in the life.
9. Enhance the will-power; it is likely one of the best
training programs we can invest in. Newton once said “If I have done the public any service, it is due to patient
thought.” Newton had a remarkable ability to sit quietly
and think without interruption for very long periods of
time. If he can develop this so can we.
10. Make an effort to be humorous throughout the day. Not
only is it beneficial from a physical viewpoint but it
diffuses tension in difficult circumstances and creates
an excellent atmosphere wherever we are.
11. Become a highly disciplined time manager. There are
roughly 168 hours in a week. This surely allows plenty
of time for achievement of the many goals we desire to
accomplish. Be ruthless with the time. Set aside a few
minutes each morning to plan the day. Plan around the
priorities and focus on not only those tasks which are
immediate but not important (i.e., many telephone calls)
but especially on those which are important but not
urgent Whenever I come my CCL or ICWAI office, I
come equipped myself with a piece of paper which has
the list of things to do in whole day.
12. Associate only with positive, focused people who you
can learn from and who will not drain your valuable
energy with complaining and uninspiring attitudes.
13. We must have a mission statement in life. This is simply
a set of guiding principles which clearly state where we
are going and where we want to be at the end of our life.
A mission statement embodies our values.
14. Remember people’s names and treat everyone well. This
habit, along with enthusiasm, is one of the great success
secrets. Everyone in this world wears an imaginary button
that screams out “I WANT TO FEEL IMPORTANT AND
APPRECIATED!”. I remember Dr.A.K.Sarkar, former
Director (F) of CCL. He will always keep the names of
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15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
people in mind and will recognize everyone with name.
Therefore he enjoyed lot of respect among his
subordinates and colleagues.
Never discuss the health, wealth and other personal
matters with anyone outside of the immediate family.
Be very disciplined in this regard.
Try to be comparatively truthful, patient, persevering,
modest and generous.
Maintain a diary to measure the progress and to express
our thoughts.
Become a committed CD player user. Most personalmastery programs and books are now offered in this
format. Listen to these inspirational materials on the way
to work or ironing clothes at house.
Remember that forgiveness is a virtue that few develop,
but one that is most important to maintaining peace of
mind.
Believe in Life Long Learning (LLL). A person who
believes that he cannot learn anything else will stagnate
quickly and not move to higher levels. A true sign of a
secure, mature individual is someone who sees every
opportunity as a chance to learn. Even the teachers have
teachers.
Mastery of the art of public speaking is a noble goal. We
must dedicate our self to it. We are judged by the caliber
of our communication skills.
When we stand and meet someone, we must stand firm and
steadfast. A telling sign of an unfocused, weak mind is
constant fidgeting, shifting of the eyes and shallow breathing.
Ask not what this world can do for you but, rather, what
you can do for this world. Make service an important
goal in the life. It is a most fulfilling investment of time.
Remain slightly aloof. Do not let everyone know
everything about you. Cultivate a mystique.
Never argue with the person we work for – we will lose
more than just the argument.
In terms of business attire, dark suits (navy blue and
charcoal grey) reflect power, sophistication and
authority. We will never find a prime minister or president
in a tan suit?
Recall the wise saying “mens sana in corpore sano” which
means in a sound body rests a sound mind. Never neglect
the body which is intimately connected to the mind.
This is our temple. Feed it the finest fuels, exercise daily
and care for it is our prized possession.
Be careful about the reputation. If it is good it will take
us to the highest of heights. But once tarnished, it will
be difficult to retrieve. Always reflect on the course of
action.
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No. 5
15th June, 2011
29. Never complain and overlook the weaknesses of friends.
If we look for flaws we will most surely find them. Be
mature enough to ignore the petty failings of others and
see the good that each one inherently possesses. We can
learn from everyone. Everyone has a story to tell, a joke
to share and a lesson to learn.
30. Be kind, considerate and courteous. But also be shrewd
and know when to be tough and courageous. This is the
mark of a well-defined character and we will surely
command respect. It is most useful to read books on
friendliness and enhancing relationships by being a
good listener, showing others sincere appreciation and
refining other interpersonal skills.
31. Create an image as a highly competent, strong,
disciplined, calm and decent individual.
32. Keep well-informed about current events, the latest books
and popular trends. Many peak performers read five or
six papers a day. We don’t have to read every story of
every paper. Know what to focus on, what to pass by and
what to clip out and read at another time
33. We should never discuss our personal development
activities with anyone.
34. Schedule relaxation time. Be ruthless in protecting it.
35. Nice quotation- “Peak performers are physically relaxed
and mentally engaged”.
36. Readers are leaders. U.S. President Bill Clinton read more
than 300 books during his short time at Oxford
University. Some top performers read a book a month.
37. Work to develop a dynamic, charismatic personality.
Such a quality is something each one of us has the
potential to develop but few do. President Kennedy was
a sickly youth but rose above his physical problems to
be the most charismatic and exciting political figure in
the history of the United States.
38. Think of people who can provide us with inspiration,
motivation and support for our goals and aspirations.
Plan to meet them.
39. “Anybody can become angry - that is easy; but to be
angry with the right person, and to the right degree, and
at the right time, and for the right purpose, and in the
right way - that is not within everybody’s power and is
not easy.” - Aristotle
40. Knowledge is power. People who have achieved great
success are not necessarily more skillful or intelligent
than others. What separates them is their burning desire
and thirst for knowledge. The more one knows, the more
one achieves.
41. Get into the habit of memorizing beautiful poetry. Not
only will it be a great source of entertainment but it will
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Vol. 4
quickly lift our intellectual functions to a higher level by
improving our memory, concentration and mental agility.
42. Become a committed and sincere net-worker.
43. Develop the essential habit of punctuality. Do not be
early and certainly never be late.
44. The telephone is there for our convenience, not for the
convenience of others who are attempting to contact us.
If we are busy with a task, we should not answer the
phone or have someone answer the call so that we may
return it at a more suitable time. most phone calls are not
No. 5
15th June, 2011
important and last far too long anyway.
45. Be known as an innovator at place of work.
46. Remember the power of prayer.
47. It has been said that doing something for others is the
highest form of religion. Every week, out of the 168 hours
available, spend a few in services to others. That is the
reason; I am a Rotarian, i.e. member of Rotary Club.
48. Never ask for favors. God, family members and friends
will favor us.
Thanks for your time for reading above.
EIRC Activities
Workshop on e-filing: EIRC organized a workshop on e-filing
at EIRC premises on 2nd May, 2011. Shri Mrityunjay Acharjee,
Head of Internal Audit and Tax, Balmer Lawrie and visiting
lecturer, IIM was the guest speaker. Shri Prabir Banerjee,
Officer –PD, EIRC introduced the speaker with the
participants. Shri Acharjee made a wonderful presentation with
some life example. The program ended with a hearty vote of
thanks.
Workshop on CAS: EIRC and Guwahati Chapter of ICWAI
jointly organized a workshop on ‘Cost Accounting Standards’
(CAS) on 7 th May, 2011 at Hotel Rajmahal, Guwahati.
Inaugural session was graced by Shri A.D.Wadhwa, Chairman,
EIRC of ICWAI, Shri B.B.Goyal, Advisor – Cost, Govt. of
India, Shri Chandra Wadhwa, past President, ICWAI and Head
of Cost Accounting Standards Board and Shri N.K.Saha,
Chairman, Guwahati Chapter of ICWAI. The program started
with lighting the inaugural lamp by Chief Guest Shri B.B.
Goyal and other dignitaries on the dais. The workshop was
attended by a good number of members and corporate
delegates. Shri P. L. Kanoi, Vice-Chairman of Guwahati
Chapter anchored the program.
Shri A.D.Wadhwa welcomed the participants and narrated a
brief idea about the subject. He appreciated the efforts of Shri
C. Gogoi, Secretary of Guwahati Chapter for arranging the
program and presented him a memento acknowledging his
activities. Shri B.B.Goyal Chief Guest of the program and
Chairman of the Technical session spoke on the need of the
CAS. Shri Chandra Wadhwa, head of the CASB spoke on the
CAS and made a nice presentation. Participants interacted on
different points of the topic and were satisfied with the answers.
The program ended with a hearty vote of thanks by Shri N. K.
Saha.
Campus Interview: M/s. Andrew Yule Co. Ltd., a Govt. of
India enterprise attended EIRC on 12th May, 2011 for campus
selection of qualified Cost Accountants. A few candidates
were finally selected who would join the company shortly.
EIRC NEWS
Program on Softskill: A program on soft skill was arranged
for students at EIRC on 15th May, 2011 morning. Shri Vinod
Kr. Keshri, Manager Accounts, Prateek Plastometals Pvt. Ltd.
spoke before the students. He also made a nice presentation
on “How to face Interview” before the future CMAs. The
students acknowledged the benefits and appreciated the value
addition. Shri Anjan Kr. Bhattacharya, Education Officer and
Shri Dilip Kr. Dey, Executive Assistant of Oral Coaching
coordinated the program.
Investors’ Awareness Program: A program on investors’
awareness was organized by EIRC on 21st May, 2011 at its
own premises. Shri A.D.Wadhwa, Chairman, EIRC and Shri
Sandeepan Mukherjee from NSDL were the speakers. People
from nearby surroundings participated in the program. Mr.
Mukherjee made a nice presentation and depicted the matter
very lucidly. Participants were happy to attend the awareness
program and appreciated the value addition.
Felicitation to Chairman: Employees of EIRC arranged a
get-together on 21st May, 2011 at EIRC premises where the
incumbent Chairman Shri A.D.Wadhwa were present with his
family. In an informal meet all the employees present
expressed their happiness to work under Shri Wadhwa. They
honoured him with some flower bouquet, sweets and gifts.
Mr. Wadhwa also expressed his utmost satisfaction towards
the services rendered by the employees. The get-together was
followed by lunch.
Campus Selection by GRSE: Garden Reach Shipbuilders and
Engineers Ltd., a Govt. of India Undertaking came to EIRC
on 25 th May, 2011 and selected a good number of
Intermediate(ICWAI) passed candidates.
Campus Selection by Tata Steel: Tata Steel from Jamshedpur
attended EIRC campus for selection of qualified Cost
Accountants on 31st May, 2011. The interview processed
through Group Discussion and personal interview. A good
number of candidates have been shortlisted. Finally selected
candidates will be issued offer letter shortly.
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Electronic filing of return of Tax Deducted
at Source - Procedures
Mrityunjay Acharjee
[email protected]
In the present era of e-governance, at all the spheres of Income
Tax, filing of return through electronic mode is made
compulsory. Like electronic filing of returns of tax deducted
at source, the Central Government has announced a scheme on
March 30, 2005 for electronic filing of return of tax collected
at source under section 206C of the Income-tax Act, 1961 (‘the
Act’). This article examines the salient features of the scheme
announced by the Central Government.
Tax Collected at Source
Items Falling under Section 206C - Section 206C(1) provides
for collection of income-tax at source from buyers of certain
goods specified in the section. The goods specified in the
section are alcoholic liquor for human consumption, tendu
leaves, timber obtained on a forest lease or by any other mode,
any other forest produce other than timber and tendu leaves
and scrap. The recent addition to the list of goods is ‘scrap’
from June 1, 2003. Under Explanation (b ) to the section,
‘scrap’ means waste arising from manufacture or mechanical
working of materials and not usable as such due to its form.
Objects of the Section - This section is designed to check tax
evasion by dealers in the above goods by collecting tax from
them at specified percentages on the purchase price paid by
them while purchasing the goods from the seller and under subsection (3), the seller remitting the same to the Government
within seven days of collection. A lower rate than that in
schedule to sub-section (1) is permissible if the Assessing Officer
is satisfied that the lower rate is justified in relation to the total
income of the buyer and issues a certificate for lower collection
of tax at source on purchases made by the buyer.
Scope-Widened - The section has been widened in scope in
its application to the ‘seller’ from June 1, 2003 to include
‘Individuals and HUFs’ who are subject to tax audit under
clause (a) or (b) of section 44AB of the Act. Earlier, the section
applied only to the Central and State Governments, local
authority or corporation or authority established under any
Central or State or Provincial Act, or any company or firm or
co-operative society as a ‘seller’ of the specified goods. By
EIRC NEWS
this move, second and subsequent dealers who are generally
individuals and firms dealing in such goods with a certain
turnover under section 44AB are also brought into the tax net
apart from the first seller. A buyer engaged in the retail sale of
such goods is exempt from collection of tax at source as also
a public sector company. As the scheme of collection of tax
at source has become multi-point, ‘buyer in retail-trade’ has
to be understood in the context the turnover limits fixed in
section 44AB.
Returs of Tax Collected
Filing of Return - Sub-section (5A) of section 206C provides
for filing of half-yearly returns for the period ending 30th
September and 31st March of each year by the Tax Collector,
being the seller, of the taxes, collected. Sub-sections (5B)
and (5C) provide for electronics filing of such tax collected
at source returns . Form No. 27E is the form of such half
yearly returns and this is designed to provide full information
on the buyers and the purchases made by them in the half year
covered by the returns . Where the information under Form
No. 27E is voluminous, electronics filing of such returns is
facilitated by the section.
Tax Colle tion Account Number - The Tax Collection
Account Number specially given to the seller or the tax
collector identifies such person in all the transactions
involving tax collection, remittance and filing of return of
such collection and payment. As the section applies to each
purchase of the specified goods at different points of sale,
each buyer other than a retailer is a seller also in the chain of
transactions from the whole-sale to the retail level and has to
possess a PAN as well as a Tax Collection Account Number to
be in the business of these goods. Form No. 27E provides for
a data-structure that enables the Income-tax Department to
track the buyers and sellers in these goods along the
transaction-chain.
Procedure of Return - The filing of return in Form No. 27E
classifies buyers into two categories by allotting 01 Code for
companies and 02 Code for buyers other than companies.
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Again, separate filing of return is required for each item of
trade coming under section 206C. For each buyer in the
specified goods, the total value of purchases made by him in
the half year is shown along with the tax collected thereon
and if the tax collection is lower than the stipulated percentage,
reasons therefor. The same procedure for collection and
remittance is repeated as every buyer turns seller in the
transaction-chain till the retail buyer is reached and this type
of reporting at each stage leaves a transparent trail for the
income-tax department to detect tax evasion at each stage.
Electronic Filing Procedure
The ELECTRONIC filing of return of tax collected at source
returns envisages the following :
Scheme of Filing of Return - The Scheme of filing of of Tax
Collected at Source has three players : The seller or taxcollector filing it is described as the ‘e-collector’, the person
through whom it is transmitted to the Government is called
the ‘e-TCS intermediary’ and the Government is represented
by ‘e- filing Administrator’. The half yearly return itself is
described as ‘e-TCS Return ’ under the scheme.
Pan and Tan Mandatory - The e-collector shall prepare the
return as per the data-structure provided by the Government
and shall adhere to the form prescribed for filing of return . It
is mandatory to quote the PAN and TAN of the e-collector as
well as the PAN of the buyer in every case. All columns in the
filing of return should be duly filled up.
Approved Media - The approved computer media for data
shall be used. Approved media as per rule 37EA(3) of the
Income-tax Rules, 1962 is “CD-ROM of 650 MB capacity,
4mm 2 GB/4 GB (90M/20M) DAT Cartridge or 3.5” - 1.44MB
floppy diskette. On-line transmission from e-collector to a
designated server of the e-Administrator is also approved under
the scheme. When transmitted online from the computer of
the e-collector to the designated server, packets of data with
separate identification numbers and each packet covered by a
paper-format declaration in Form No. 27B may be required.
Where compression software is used by the e-collector to
compress data within the computer media, such compression
software should also accompany the e-TCS filing of return .
Commodity wise, the filing of return have to be filed
separately. So separate computer media for each Form of eTCS filing of return is necessary. [See point 2(e) above] Each
filing of return should be accompanied with a certificate from
the e-collector that the media is clean and virus-free. Each
EIRC NEWS
No. 5
15th June, 2011
computer media is identified separately with the name, address
and PAN and TAN of the e-collector, the period to which the
filing of return relates, the Form number of the filing of return
and the volume number of the said media in case more than
one volume of such media is used, all affixed on the media in
a label.
Form No. 27B – Each filing of return is accompanied by a
declaration in Form No. 27B in paper format. This Form No.
27B provides for control totals splitting the buyers into
corporate and non-corporates and tallying the purchases with
the tax collected in each category and totalling the number
of persons, both corporate and non-corporate, from whom tax
was collected. This declaration signed by the e-collector
provides the total-check of the transactions covered by the
filing of return .
Role of the E-TCS Internediary
Appointment of Intermediary - In pursuance of the policy
of outsourcing, the Income-tax Department has appointed
intermediaries to receive and check the electronic filing of
return from e-collectors before acknowledging receipt of
the returns. Each intermediary is a company authorised by the
Board to act as e-TCS intermediary.
Function - The e-TCS intermediary receives from the ecollector, the computer media with the declaration in Form
No. 27B, performs format level validation and control-checks,
and on being satisfied, issues the provisional receipt. The
data in the media is then uploaded to the designated server of
the e-filing Administrator and checked for deposit of the tax
collected at source in bank and the PAN of the person from
whom it was collected. On successful completion of the check,
the data with accompanying Form No. 27B in each case shall
be transmitted correctly to the server of the e-filing
Administrator. The e-TCS intermediary is not responsible for
the errors or omissions in the filing of return submitted by
the e-collector.
The data contained in the return is retained in the system of
the e-TCS intermediary in such form as prescribed by the efiling Administrator for one year after the completion of the
relevant financial year in which the return is required to be
filed. So also the details of the deficiency memo and the
provisional receipts issued.
Deficient Data - Where the data in the return is found to be
deficient as regards deposit of collection in bank, PAN or
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TAN details or any other relevant details, the e-filing
Administrator will issue a deficiency note to e-collector for
removing the deficiencies within seven days and when so
removed, the data will be transmitted to the server of e-filing
Administrator by the intermediary and the date of the
provisional receipt issued shall be deemed to be the date of
filing of the e-TCS return.
Time-Limit for Rectification - Where the deficiencies pointed
out by the filing of return Administrator are not corrected
within seven days by the e-collector, the e-TCS intermediary
shall transmit the data as such to the e-filing Administrator,
where upon, the Assessing Officer on instructions from e-filing
Administrator, may declare the e-return as invalid in further
proceedings with the e-collector. He may also allow further
time to the e-collector for rectification of defects pointed out.
Deficiency Memo - Time - Limit - The deficiency memo to
the e-collector, where required, is to be issued by the e-filing
Administrator within 30 days of the issue of the provisional
receipt in all cases and if no such memo is issued within that
time, then the provisional receipt is taken as regular
acknowledgement of filing of a correct and complete return
of tax collected at source.
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15th June, 2011
Role of E_Filing Administrator
The e-filing Administrator shall specify the procedures, data
structures, formats and standards for ensuring secure capture
and transmission of data for the day-to-day administration
of the scheme. He shall ensure technical compliance by the eTCS intermediaries, look into complaints against their
functioning, review their working and attend to such other
connected matters as he deems fit.
Conclusion
This scheme facilitates e-filing of bulk returns by assessees
coming under section 206C and collecting tax at source on
sale of specified goods. The return of collection in Form No.
27E being comprehensive in information and the collection
itself becoming multi-point with the introduction of
individuals and firms in the definition of sellers, one more
step is taken under this scheme in the forward direction towards
detection of tax evasion with the help of Information
Technology. Voluminous data is best captured, stored and
analysed with Information Technology and this scheme
facilitates the same and paves way for better administration
of tax collected at source under section 206C.
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No. 5
15th June, 2011
Do you know ?
Compiled by Anshul Wadhwa
Student
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Fright traffic in India stands at over 3 billion tones.
India imported 963.1 tonnes of gold in 2010 as opposed to 578.5 tonnes previous year.
Surat’s diamond industry trades about Rs. 200 Crore worth of diamonds every day.
Govt. of India collected an all time high income tax of Rs. 4.5 lakh crore in 2010-11, at least Rs. 4000 crore more than
the revised estimated budget of Rs. 4.46 lakh crore. This is an addition to all time high refund of Rs. 72000 crore that
CBDT has made till March 31st, 2011 by clearing backlog.
India is having 122 million LPG Gas connection now.
65% of Indians are below the age of 35. It makes India the youngest country of the world.
Benchmark and standards for internet are set by a standard body. World Wide Web Consortium, which is now head
by Sir Timothy J. B. Lee. Lee is also regarded as father of world wide web.
At present India has 27 public sector banks, 7 new private sector banks, 15 old private sector banks, 31 foreign banks
in addition to RRB’s, local area banks and co-operative banks.
If you want to watch a movie on the day of release with the comfort of your house, be a member of club X, an initiative
by UFO movies. After a sign up fee of Rs. 6.00 lakh, UFO movies will install the required equipment to beam movies
into your home.
Some technical information –
1.
2.
3.
Since gold in its pure state is quite delicate and too soft to turn into ornaments, other metals are added to gold to make
it durable.
While 24 carat of gold contains 99.9% of yellow metal, 22 carat has 91.6% of gold and 21 carat indicates 87% of the
metal.
Black Swan Events are low probability but high impact events which increase the risk for a corporate house. These
events are almost impossible to forecast and play major bottleneck in managing the business risks effectively.
Some interesting facts –
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As per “The Times” , London, Indians are believed to posses 18,000 tonnes of gold, - more than double the estimated
8,100 tonnes held by US Federal Reserve.
About 25 lakhs laptop and note books were sold in India during 2009-10.
As per a recent survey, Indians emerged as the fourth most Vacation-deprived nationality. Indians take very few
leaves for vacation and do not celebrate holidays in comparison to the European counterparts.
Common mistakes which as a professional you can do at your office
and which must be avoided –
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Speaking in your mother tongue in front of people who do not follow your language. It is considered extremely rude
to speak in a language your colleagues, co-workers and guests do not understand. The conversation must be in
official language.
When someone offers you his/her visiting card and you keep it in your drawer without having a glance over it.
Whenever you are offered a visiting card, read it for 30 seconds. It makes positive impact on the presenter. He feels
happy that his card has been viewed seriously which means you are serious to interact with that person.
Calling a person for official reasons on odd hours, like before 8 A.M. in the morning or after 10 P.M. in the night. Try
to avoid a call to your official colleagues during afternoon on a holiday.
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Some traits of non-motivating Managers
Are you a non-motivating managers? Do your colleagues, sub-ordinates or peers not like to come to you or not respect you?
If yes, it means you are a poor manager and do not motivate others as a leader.
Some traits of poor managers are listed below –
l Use the words “ I “ more often then “ We “.
l Use abusive words for colleagues and sub-ordinates.
l Do not trust colleagues. Checks every report, every data himself.
l Behaves very poorly, with sub-ordinates.
l Never praise others, specially infront of them.
l Calls everyone with a typical name, like “ Kala Thakur” ( Black Thakur ) or “ Hari Priya “.
l Your colleagues enjoy your absence in the office.
l Even your personal assistant does not talk to you freely and avoid conversation with you.
l People wait eagerly for your departure on holidays.
l Your colleagues and sub-ordinates avoid discussing even important issues with you.
l You get irritated immediately, even at the drop a pen!
l You are shot tem-pered and people call you “Pressure-cooker” at your back.
l You make comments on the personal habits or problems of your colleagues and sub-ordinates.
l People avoid inviting you on social or personal functions.
l You always threaten people with due consequences.
l Criticize the people, specially employees and sub-ordinates, in public.
l Do not praise others in public.
l Time schedule is not followed. Time is given but not honoured – people always like the persons who maintain time
schedule.
l Do not show respect to sub-ordinates. Humiliate them in public and use abusive language. We should always remember
that the behavior what we give to our sub-ordinates, they give the same to the clients. If sub-ordinates are not
behavioring properly with the clients, the reasons may be the bosses.
Chairman’s Communique (Contd.)
(Continued from Page 01)
I had written letters to the CMDs of almost all the Banks of the country to give Cost Accountants also opportunities for doing
concurrent audit in their branches. Few Banks have responded positively. I hope that our HQ will take further initiatives. In my
opinion, some Banks are not giving this job to us without any specific reasons. If matter is taken up at appropriate level, things
will certainly improve.
I also attended a career counseling programme at the office of Dainik Jagran for the students and it was very successful.
By the time, this issue reaches you, the election results of our institute will be declared and new office-bearers will be ready to take
charge. New committee at EIRC will take charge on 7th August and hope they will be able to fulfill the aspirations of our members.
With best wishes,
Yours sincerely,
(Ajay Deep Wadhwa)
Chairman, EIRC of ICWAI
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THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
12 SUDDER STREET, KOLKATA – 700 016
SUGGESTED MINIMUM PROFESSIONAL FEES AS APPROVED BY THE COUNCIL AT ITS
268TH MEETING HELD ON MAY 28, 2011
1. Fees for Cost Audit related assignments:
Turnover in Rs. Crores
Below 5
5 – 10
10 – 20
20 – 50
50 – 75
75 – 100
100 – 150
150 – 250
250 – 500
500 – 750
750 – 1000
1000 – 2500
2500 – 5000
5000 – 20000
20000 and above
1. Costing Assignments :
1.1 Monthly Retainership
Fees for Cost Audit
20,000
40,000
50,000
75,000
1,00,000
1,25,000
1,75,000
2,50,000
4,00,000
5,00,000
6,00,000
7,50,000
8,50,000
10,00,000
Negotiable
:
1.2
Casual Visit
:
:
1.3
1.4
Chamber Consultation
Certificate Work
:
:
EIRC NEWS
Fees for Cost Records/Compliance
25,000
35,000
50,000
75,000
1,00,000
1,50,000
2,00,000
2,50,000
3,50,000
4,50,000
5,00,000
Negotiable
Rs.10,000 – 15,000 for the first visit and Rs.2,500 – 5,000 for each
subsequent visit of around two hours during the month.
Rs.5,000 – 10,000 per day (Partner having less than 10 years of practice)
Rs. 10,000 – 25,000 per day (Partner having more than 10 years of
practice)
Rs.2,500 per hour at the minimum.
(a)
Minimum Rs.2500 per certificate – for Small Scale Units.
(b)
Minimum Rs.5000 for others.
(c)
For certification involving in-depth scrutiny and study Rs.2000
per hour of work involved.
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No. 5
15th June, 2011
THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
12 SUDDER STREET, KOLKATA – 700 016
2.
3.
4.
Designing Systems of Cost and Management Accounting (Minimum Fees)
(a) Upto Turnover of Rs. 2 Crores
50,000
(b) Rs.2 Crores to Rs.10 Crores
1,00,000
(c) Rs. 10 Crores to Rs. 100 Crores
2,50,000
(d) Above Rs. 100 Crores
5,00,000
Finance Applications and Feasibility Reports :
Scrutiny of technical and market feasibility reports, preparing financial feasibility reports and drawing
projection of profitability, financial position, capital plan and cash flow – Based on Project Cost.
Charges for providing Services of Juniors
Cost Accountant (Qualified Assistant)
Rs. 1,000 per hour
Cost Assistant (Intermediate)
Rs. 750 per hour
Cost Assistant – Trainee
Rs. 500 per hour
For all assignments, Service Tax and other applicable Taxes, Travelling and out-of pocket expenses
will be charged extra.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
New Delhi, dated the 26th May 2011
Notification
G.S.R. (E). ™ In exercise of the powers conferred by sub-section (1) of section 642 read with section 610B of
the Companies Act, 1956 (1 of 1.956), the* Central Government hereby makes the* following rules further to
amend the Companies (Central Government’s) General Rules and Forms. 1956, namely : 1. (1) These rules may h& called the Companies (Central Government’s) General Rules and Forms
( Amendment:) Rules 2011.
(2) They shall come into force? with effect from
2.
29th
May, 2011.
In the Companies (Central Government’s) General Rules and- Forms, 1956, in Annexure ‘A’ for Form
23D the following Form shall be substituted , namely :J. N. Tikku
Joint Director
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No. 5
15th June, 2011
Concept of Vouching in Auditing
CMA Pranab Kumar Sikdar
Sr. Faculty of EIRC of ICWAI
E-mail: [email protected]
Introduction to Vouching:
Whenever a financial transaction is done the effect of the
same is recorded in the books of accounts. A proper sequence
of steps are followed to ensure that the transaction is properly
recorded and also to ensure the existence of documentary
proof of the transaction so that if anybody desires to scrutinize
the details of the transaction at some later date, he may be
pro-vided with the same.
What is a Voucher?
A voucher is a documentary evidence of a financial
transaction, date of financial transaction as well as the amount
involved in the financial transaction. Other neces-sary papers
related with the transaction are also annexed along with the
voucher. For example, a company may have invited tenders
for a particular activity and on the basis of bids received; a
contract may have been given to one party to whom the
payment may have been finally made subsequent to
completion of activity. In this the voucher evidence would
also contain follow-ing document attached to it:
Ø Copy of advertisement inviting tenders
Ø Details of bids received from various parties
Ø Criteria for short listing the name of selected party
Ø Details of work completed by the party.
Vouchers are thoroughly examined by auditors with a view to
ensure that payments have been correctly made to the person
entitled to it for completing the job expected of him. Thus,
they not only substantiate an entry in the books of accounts
with documentary evidence such as agreements, receipts, and
counterfoils but also ensure that the transaction has been
authorized by a competent authority. The act of examining
voucher is referred as vouching.
Vouching is not merely comparison of an entry with the
supporting document, rather it is a critical examination of
supporting document to understand and to ensure the es-sence
of transaction e.g., audit clerk may compare the date, name of
party and amount involved for wages paid. But it may be
wrong if wages are incurred for installation of machinery and
accordingly it should have been debited to machinery account
and not wages account.
EIRC NEWS
Various Definitions of Vouching:
According to Ronald A. Irish — “Vouching is a technical
term which refers to the in-spection of documentary evidence
supporting and substantiating a transaction.”
According to R.K. Mautz— “The examination of documentary
evidence in support of entries is often referred to as vouching.”
According to L.R. Dicksee—”Vouching consists in comparing
entries in the books of accounts with documentary evidence
in support there to.”
According to J.R. Batliboi— “Vouching means testing the
truth of the items appearing in the books of original entry.”
According to F.R.M. De Paula— “Vouching does not mean
merely the inspection of receipts with the cash book, but
includes the examination of the transactions of a business
together with documentary and other evidence of sufficient
validity to satisfy an auditor that such transactions are in order,
have been properly authorised and are correctly recorded in
the books.”
Objectives:
Objectives of Vouching:
The main objectives of vouching are:
Ø To examine that all transactions and entries have been
properly accounted for in the appropriate books of
account.
Ø To ensure that adequate documentary evidence exist
to all the transactions.
Ø To ensure that the transactions and entries relate to the
business and to the period under audit.
Ø To ensure that there is no omission of any records.
Ø To evaluate the collected evidence and vouchers.
Ø To ensure that the transactions and entries are properly
authenticated by the responsible officer.
Essentials of Vouching:
(i) The vouchers should be serially numbered and should
be arranged in the chronological order (datewise). This
helps not only in saving time but also ensures
continuity of the transactions.
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(ii)
The date of voucher shall tally with the date of entry
in the books of accounts.
(iii) The voucher which has already been checked shall be
marked so that duplicate voucher shall not be
produced. The documentary evidences annexed along
with the voucher shall also be marked to avoid their
reoccurrence.
(iv) If there is any duplicate voucher, the auditor shall
thoroughly investigate as it reflects some fraud on the
part of company or the concerned account officer.
(v) The auditor shall also ensure that the vouchers have
been properly stamped if the amount of consideration
involved is Rs. 5000 or above. One rupee stamp should
be annexured by the payee along with his signature
on the stamp.
(vi) The nature of financial transaction shall be assessed
to ensure that it relates to the business of the concerned
organisation.
(vii) An auditor should also ensure that there shall be no
intermixing of revenue and capital expenditure as it
will have serious repercussion on the profitability of
the company.
(viii) An auditor shall ensure that the amount written in
words shall match with the amount written in figures.
(ix) The expenses involving time period such as rent, rates
etc. shall also contain the details of the period for which
these payments are being made and it should be
carefully examined by the auditors.
(x) The consideration involved in the transaction should
be properly verified with the docu-ments attached with
the vouchers and the name of the payee shall also be
verified from the attached documents.
When an Auditor refuses to accept the vouchers?
An auditor may refuse to accept the vouchers in the following
circumstances:
(a) The amount written in words does not match with the
amount written in figures.
(b) The date of voucher does not match with the date of
entry in the books of accounts.
(c) The amounts mentioned in the voucher do not
correspond to the entry made in the jour-nal.
(d) The voucher has not been properly stamped if the
amount of consideration involved is Rs.5000 or above.
(e) If the payment made does not correspond to payment
in the regular course of business.
(f) If the voucher has not been endorsed or authorized by
a competent authority, it would amount to irregular
EIRC NEWS
No. 5
15th June, 2011
payment.
(g) If the voucher is mutilated and the same has not been
initialled by any senior officer then it should not be
accepted.
More on Vouching:
While vouching if a number of vouchers or supporting
documentary evidences are not available for the entries made
in the books of account, such non-availability of vouchers is
called as missing vouchers. It may be deliberate or accidental.
In other words, it may be innocent misplacement or indicative
of a big fraud. But the auditor should make a list of such
missing vouchers and he should try to locate such vouchers
or should find the reasons behind such non-availability. The
auditor should follow the audit procedures to find out these
missing vouchers.
a) The auditor should insist on getting fresh evidences
for the transactions recorded in the books.
b) He should find out the evidences supporting the details
of missing voucher.
c) He should ask for and seek the explanations from the
employees of client.
d) He should report accordingly in his report.
Vouching is the means of Auditing or Vouching is the
backbone of Auditing.
Auditing is a systematic process of objectively obtaining and
evaluating evidence regard-ing economic events ascertaining
the truthness and fairness of the results and communicating
the same to the interested users. Vouching is essence of
Auditing. It is called so because of the role played by it in
achieving the objects of auditing and its contribution towards
the successful conduct and completion of audit. The success
of an audit largely depends upon the intelligence and care
with which vouching has been done, as vouching being the
very basis of an audit. It is the vouching on the basis of which
an auditor satisfies himself.
1. That the documentary evidence of sufficient validity
is available in order.
2. That the transaction did in reality take place as stated.
3. That it has been properly authorised by a competent
official.
4. That is has been worthy and exclusively related to the
business
5. That it has been properly recorded in the books of
accounts.
In the words of Dr. Paula, Vouching is in fact essence or
‘backbone’ of auditing, as it is one of the most powerful tools
in the hands of auditor. It constitutes the foundation upon
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which the super structure of auditing is erected. Apparently,
the entries seem to be innocent until and unless the auditor
goes behind the books of account and traces the sources
thereof. He cannot ascertain the truth and genuineness of the
transaction and the accuracy of the financial informa-tion. He
has to go beyond and satisfy him that the entries are correct,
duly authorised and related to the business. It is possible that
fictitious payments have been shown in the accounts with a
motive to defalcate the money or payment might not be related
to business or it is not for the period or particular year
concerned. These discrepancies can be traced out only when
re-lated vouchers are aimed carefully. Through effective
vouching, the auditor may find such entries which are contrary
to facts. If vouching is carried out with great care and
intelligence, it can unearth deep mistakes and planned frauds.
The vital importance of vouching of documents is brought
out in famous case of Armitage vs.Brewer and Knot (1932). In
this case damages were claimed against the auditors as a result
of frauds committed by one of the employees. The judgement
was given against the auditors as they did not exercise
reasonable care in the examination of the documents, which
were suspi-cious on their face and called for an enquiry.
Provisions under the Companies Act, 1956:
According to Section 227 of the Companies Act, 1956 the
auditor has to certify the Bal-ance Sheet and Profit and Loss
Account give true and fair view of financial position and
opera-tions of the company respectively and they have been
correctly drawn up. Only after properly carrying out vouching
the auditor can say that the books of account are correct. Unless
the books of account are correct i.e., transactions are properly
entered in the books, the Balance Sheet and Profit & Loss
Account cannot be drawn correctly.
From the above discussion it is clear that vouching is the
foundation stone and one of the most important steps of
auditing. It has been rightly remarked that vouching is the
essence or backbone of auditing.
Vouching vs. Routine Checking: Routine checking is
concerned with ascertaining the arithmetical accuracy of
Ø Casting (of journal and ledgers)
Ø Posting (of entries from the books of original entry to
ledger accounts)
Ø Balancing (of ledgers accounts)
Ø Carry forward (of balances)
Ø Drawing up (of the trial balance)
Ø Final accounts (Balance Sheet and Profit and Loss
Account)
EIRC NEWS
No. 5
15th June, 2011
Distinguish Between Vouching and Routine Checking
Sl. Vouching
Routine checking
No.
1. Vouching is much
Routine checking is a
wider in concept and
part of vouching.
application than routine
checking.
2. Vouching must trace
Routine checking is
the source of
limited to the entries as
information beyond
they appear in the books
the books of account.
of accounts.
3. Vouching is carried out
Routine checking is done
by senior staff.
by junior level audit staff.
4. In vouching, the
In routine checking the
verifies the auditor
auditor verifies the
documentary evidence
arithmetical accuracy of
of entries.
the entries.
5. Vouching require
Routine checking does
adequate knowledge.
not require much
knowledge and
intelligence.
Vouching of Important Items:
1. Cash Sales
(i) The auditor should examine the efficiency and
adequacy of internal checks and internal controls
already in practice.
(ii) The auditor shall check the duplicate copies of
the cash memo with the salesmen’s copies/
summaries.
(iii) If any cash memo is cancelled, then all the copies
including the original copy can-celled should be
preserved.
(iv) The auditor shall verify the entries in the sales
book and in the cash book with the ‘till’ records,
where automatic ‘tills’ are in use.
(v) The entire sale proceeds should be deposited in
bank so the counterfoils of pay-in-slips can serve
as evidence.
2. Credit Sales
(i) The auditor should examine the internal control
system in force. If there is any shortcoming,
communicate the same to the management
through a letter of weakness.
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3.
4.
5.
6.
(ii) Credit sales can be verified by reference to the
purchase orders received from cus-tomers and
copies of invoices issued to them.
(iii) Goods sold should be normally dealt in by the
company and sales should relate to the period
under audit.
(iv) Goods sold on ‘sale or return’ basis should be
recorded separately.
(v) If goods are sold on consignment basis, then it
should not be treated as sale unless the goods are
sold by consignee. In this case, copies of Performa
Invoice and Account Sales will serve as evidence.
Sales Returns
(i) The auditor should examine the entries in sales
return book with respect to goods received note.
(ii) Examine credit notes and entries in customers
account.
(iii) If there are large sales returns in the beginning of
year, it may be the reversal of ficti-tious sales
shown in the last year to show high revenue. The
auditor should scrutinise these aspects also.
Cash Purchases
(i) The auditor should check the internal control
system in operation.
(ii) The auditor should make routine checking. He
should also verify whether the entries in cash book
and stock ledger are correctly made or not.
(iii) The auditor shall check the cash memo or invoice
issued by the supplier to verify the payment of
such purchases.
Credit Purchases
(i) Credit Purchases can be verified by reference to
the purchase requisitions and pur-chase orders
placed with the suppliers.
(ii) The auditor can also examine the entries in
purchases book with reference to purchase invoice
and goods received note.
(iii) The auditor can verify the statement of accounts
of suppliers and correspondence with them from
time to time.
Purchase Returns
(i) The auditor should verify the internal control
system and cut-off procedures employed in the
organisation,
(ii) The auditor should see the entries are correctly
made in purchase returns book and suppliers
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15th June, 2011
account,
(iii) The auditor shall check the goods returned note
and debit notes issued.
7. Cash Received from Debtors:
(i) The auditor should verify the counterfoil of receipt
issued to customer,
(ii) Verify the entries made in cash book/pass book
and customers account.
(iii) The date of issue of receipt should correspond with
the date on which receipts are recorded in the cash
book.
(iv) The cash discount given to customers should be
duly authorised and as per the policy of the
organisation.
(v) Bank Reconciliation Statement can be examined
to verify that all collections by cheques are
accounted for.
(vi) The auditor can also obtain confirmation from the
debtors.
8. Cash Paid to Creditors
(i) The auditor should examine that purchases are
duly authorised.
(ii) The payment to creditors should be as per the terms
of purchase order.
(iii) Verify the suppliers’ bill and receipt issued by
creditors.
(iv) The auditor should see that proper distinction is
made between the payment against goods received
and the payment as advance against the supplies
to be made in future.
(v) The auditor can also examine the bank statement
to confirm the payments made through cheque.
9. Petty Cash
(i) The auditor shall assess the adequacy of internal
check and internal control systems already in
practice
(ii) The auditor shall find the imprested amount, the
authority fixing the amount, when and how it was
fixed
(iii) The auditor shall ensure that the cheques drawn
for petty cash by reference to cash book (credit
side) and petty cash book (debit side), all vouchers
over a certain sum with respect to supporting
evidences /receivers’ signature/ payment
authorisation/ stamped receipt/initialling of
alterations/amounts in words and figures, etc.
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(iv) Actual inspection shall be carried to verify the
petty cash balance.
(v) The auditor shall examine the receipts/payments
columns, the total of subsidiary columns to ensure
their agreement with the total payments,
(appropriate accounts)
(vi) The amounts drawn far petty expenses (say,
postage stamps, and stationery articles) with the
relevant account books (postage book, stationery
book) shall also be verified.
10. Bills Receivable: - While vouching bills receivable, the
auditor shall ensure the following points.
(i) Bill Receivable Book shall be compared with
Cash Book and Pass Book to verify that the
amount has been received on due date. The carbon
copy of receipt issued will serve as evidence.
(ii) The auditor must make enquiries (through
correspondence) about the bills which have
matured but the amount has not been received for
them.
(iii) For bills discounted with banks, bank advice will
serve as evidence. The auditor should see whether
entries are made in Pass Book and Bills Discounted
Book.
(iv) The bills discounted but not matured till the
Balance Sheet date should be shown as contingent
liability.
(v) For the bills dishonoured the receipt issued by
notary public for noting charges paid will serve as
evidence.
(vi)The auditor should see that provision is made for the
bills which are doubtful of recovery.
11. Wages and Salaries
(i) The auditor shall examine internal checks and
internal controls which are being used such as
time records or piecework records, preparation of
wages, disbursements of wages to work men etc.
(ii) The auditor shall also verify the accuracy of
records connected with preparation and payment
of wages.
(iii) The auditor shall examine the payroll summary/
wage sheets/salary register.
(iv) The auditor shall check the computation of wages
and salaries taking into account the factors like
increments, loans and advances, leave without pay,
deduction on account of Provident Fund or
Income Tax, contribution to ESI etc.
EIRC NEWS
No. 5
15th June, 2011
(v) The auditor shall examine that unclaimed wages
and salaries are recorded in a separate register.
(vi) Disbursement of wages in the presence of such
official who is able to identify the workers.
(vii) The auditor shall ensure that wage sheet is duly
signed by each worker/employee and
countersigned by the responsible official.
12. Purchase of Freehold Property
While vouching freehold property the auditor should
examine the following points:(i) The auditor should carefully examine the
document of title of property purchased.
(ii) In case purchase has been made through a broker,
then broker’s note or his statement of account
should be examined.
(iii) In case purchase has been made through auction,
the auditor should examine the account of
auctioneer.
(iv) Various expenditure incurred such as brokers
commission, commission of auctioneer, legal charges
etc., should be vouched by their respective accounts.
(v) The auditor shall vouch the payment against the
receipt of payment issued to seller,
(vi) The auditor shall see that property is transferred
and registered in the name of client.
13. Purchase of Patents and Copyrights In case of patents and
copyrights the auditor should vouch the following points:(i) The auditor should examine the purchase agreement.
(ii) The auditor shall verify the receipt for the payment made.
(iii) The auditor should examine the agent’s accounts
to verify the fees paid to him.
(iv) The auditor shall examine that the expenses
incurred in connection with purchase of patents
and copyrights are capitalised,
(v) The auditor should examine the renewal fees paid
and ensure that renewal fees is not capitalised.
14. Loans Granted
In order to vouch loans the auditor should consider the
following points:(i) Examine the authority to make loans etc.
(ii) Examine the loan agreement to ascertain the terms
and conditions of loan,
(iii) Examine the title deeds of the security.
(iv) In case of limited companies it should be examined
that the provisions of Companies Act have been
complied with.
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No. 5
15th June, 2011
Follwing Candidates( ICWAI) FROM Eastern Region have
been placed in different organizations through
campus & off campus selection
SL NO.
1
2
NAME OF THE COMPANY
MECON LTD
TENUGHAT LTD
3
ITC LTD.
4
ANDREW YULE
5
6
TCS
BHEL
7
8
9
10
11
ACT TV
ALLAHABAD BANK
VEDANTA ALUMINUM LTD.
NESTLE INDIA LTD.
COAL INDIA LTD.
12
TATA STEEL
EIRC NEWS
SELECTED CANDIDATE
KUNAL KR.SINGH
ANIL KUMAR KOIRY
BHAV MITRA
SAURABH JHA
VIKASH KUMAR
PRACHI PARASRAMKA
PRIYANKA BHATTACHARYA
ARNAB SENGUPTA
PAMELA MALLICK
SOURAV CHAKRABORTY
UTTORON ROY CHOWDHURY
NEHA AGARWAL
SUBHANKAR SAHA
MALAY SINHA
PARAMJIT SINGH
MANOJ KR. MALLIK
INDRANI BANERJEE
BRIJESH GOYAL
GAURAV AGARWAL
AVISHEK BANDYOPADHYAY
ABANI KANTA BEHERA
NABA KUMAR DAS
ANUP KUMAR DAS
MINAKSHI MAZUMDAR
ALOKE SAHA
DHEERAJ KUMAR PRADHAN
SUCHISMITA PARIDA
RAJESH PATTANAYAK
KISHAN K. RUNGTA
LIST AWAITEd
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No. 5
15th June, 2011
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