TagAccounting

Is provisioning a necessary precursor to CSR spending?

[The following post is contributed by Prachi Narayan and Swati Rampuria at Vinod Kothari & Co. They can be contacted at [email protected] and [email protected] respectively] Introduction Corporate social responsibility (‘CSR’) was made mandatory by Companies Act, 2013 (‘Act’). Al though it has been a year since this concept has entered the Indian corporate regime, still there are...

Definition of ‘Remuneration’ Under the Companies Act, 2013

[The following post is contributed by Nivedita Shankar, who is a Senior Associate at Vinod Kothari & Company. She can be contacted at [email protected]] As the financial year 2014-2015 approaches its end, companies are gearing up to meet the “many” requirements pertaining to preparation of board’s report in line with the new Companies Act, 2013 (‘Act, 2013’). Amongst the other...

Financial Year Status of Foreign Owned and Controlled Companies

[The following post is contributed by Esha Chakraborty of Vinod Kothari & Co. She can be contacted at [email protected]] The financial year (F.Y.) 2014-15 seems overwhelming for India Inc. as it faces the daunting task of meeting regulatory time-lines on the implementation of several new provisions introduced under the Companies Act, 2013 (the ‘Act, 2013’). The requirement of ‘Uniform...

An Instance of Accounting Fraud

The New York Times analyzes an instance of possible accounting fraud at a Chinese company, Longtop Financial Technologies that has close similarities with India’s own Satyam scandal (i.e. improper confirmation of bank balances). While the Satyam scandal came into the public domain through a confession letter of the Chairman, in this case the auditor blew the whistle. Here is an extract: Deloitte...

MCA grants exemption from attaching subsidiary accounts

Section 212 of the Companies Act, 1956 requires holding companies to attach with its balance sheet, a copy of the balance sheet, profit and loss account etc., of each of its subsidiaries. In recent years, with the globalization of the Indian economy, there has been a large increase in the number of holding companies and subsidiaries. Accounting policies and practices have also evolved, and...

Court of Appeal on the ‘True and Fair view’

In an earlier post, Shantanu had discussed the judgment of the England & Wales High Court in Macquarie  Internationale Investments Ltd. v. Glencore UK Ltd. The decision of the High Court has been upheld on appeal by the Court of Appeal in a judgment available here. The Court of Appeal observes (paragraphs 51, 52 and 54) in relation to the ‘true and fair view’: On this issue a...

End to Accounting Jugglery in Mergers?! – SEBI amends listing agreement to end deviation through disclosure

SEBI has directed, vide circular dated 5th April 2010, the modification of the listing agreement focusing on certain deviations from Accounting Standards commonly carried out as part of Schemes of mergers, demergers, etc. SEBI has done this cleverly and indirectly but with apparently with more effect than it would have done it directly. It has also attempted to kill several birds with one stone...

Lehman Bankruptcy Examiner’s Report

The Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings Inc. provides details about certain transactions that were carried out in the company and the manner in which they were accounted for in its books. The key transaction is question is referred to as “Repo 105”, and the New York Times Dealbook’s White Collar Watch has a nice summary: The examiner’s report gives us...

Accounting Standards under the New Companies Bill

Recent posts have discussed the issue of ‘true and fair view’ and whether compliance with accounting standards necessary translated into meeting this standard laid down in the Companies Act. This makes it interesting to note that the new Companies Bill, apart from specifically stating that Accounting Standards are mandatory (proposed section 117(1)), also provides for them being incorporated in...

Compliance with Accounting Standards and the “True and Fair” View

Can it be said that just because the Accounting Standards are not complied with, the accounts of a company do not present a true and fair picture of its financial position? Is compliance with the Accounting Standards mandatory, or are certain deviations justified? The Supreme Court’s observations in JK Industries v. Union of India, [2008] 143 Comp Cas 325 (SC), appeared to have settled the issue...

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