Internal Financial Controls

Facts

Ø  The Companies Act 2013 has introduced new reporting requirement and has cast onerous responsibilities on the statutory auditors as mentioned in Sec 143(3) and Sec 143(12) of Companies Act 2013 because reporting on internal financial control is not covered under the Standards on Auditing issued by ICAI and also because of the fact that no framework has been prescribed under the companies Act’2013 and the Rules thereunder for the evaluation of internal financial controls.

Sec 143(3) and sec 143(12) read with rule 10A of companies (audit and Auditors) Rules-

Auditor to evaluate and issue a separate report on the adequacy and operating effectiveness of Internal Financial Controls (IFC) over the financial reporting and financial statements in case of all companies(Both listed and unlisted).

Ø  The Companies Act 2013 has significantly expanded the scope of internal controls to be considered by the directors of companies to cover all aspects of the operations of the company as the management has the primary responsibility of designing, implementing and maintaining appropriate internal financial controls.

Ø Under the Act, the directors statement of responsibility over establishing adequate internal financial controls and asserting operating effectiveness of such controls of the company is required only in case of listed companies as per Sec 134(5) (e).

Sec 134(5)(e) read with rule 8(5)(viii) of companies (Accounts) Rules, 2014 and schedule VI; clause 49(I)(D):-

Sec 134(5) (e) –Director Responsibility Statement to state that

·         The directors in case of listed company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

·         Whereby Internal Financial controls consists of policies and procedures adopted by company for ensuring orderly and efficient conduct of its business.

Rule 8(5)(viii) of the companies (Accounts) Rules, 2014:- Board to report details on adequacy and operating effectiveness of Internal financial Controls(IFC) with reference to financial statements.

So, it has now become important to ensure keeping in view internal financial controls which has placed responsibility on directors that how directors are ensuring that proper policies and procedures are in existence and that whether they are operating effectively in terms of

·         Commercial operations and

·         Financial transactions,

during the year though the reporting is required at the balancesheet date, in order for the prevention and timely detection of material misstatements arising out of these operations and transactions that may have an effect on the financial statements.

Ø  Role of Audit committee-Clause (vii) of Sub-section 4 of Section 177 of the Act states that every audit committee shall act in accordance with the terms of reference specified in writing by the board which shall, inter alia, include, “evaluation of internal financial controls and risk management systems”.

Employee motivation

Motivating employees isn’t as simple as paying them more. People are complex and lots of different factors contribute to their overall level of job satisfaction, and what motivates people to do their best work. Happiness, career aspirations, challenges, money, stress, are all factors that contributing factors in employee motivation.

Non Banking Finance Companies (NBFC)-RBI Compliance Chart

Disclaimer:  The entire contents of this document have been prepared on the basis of  books and information existing at the time of the preparation. Though utmost efforts has made to provide authentic information, it is suggested that to have better understanding. kindly  cross-check  the relevant NBFC norms.

                                                                                                               
                                                                                                                                   Avinash Chandra
                                                                                                                                 Company Secretary

INCREMENTAL EXPORTS INCENTIVISATION SCHEME (IEIS)

1.As per Incremental Exports Incentivisation Scheme (Notification No.27 (RE-2012)/2009-2014, Dated 28th of December 2012) of DGFT, an IEC holder would be entitled for a duty credit scrip @ 2% on the incremental growth (achieved by the IEC holder) during the period (a) 01-Jan-13 to 31-Mar-13 compared to the prev period from 01-Jan-12 to 31-Mar-12 (Three months)

(b) 01-Apr-13 to 31-Mar-14 compared to the prev period from 01-Apr-12 to 31-Mar-13 (Full F.Y) on the FOB value of exports. Incremental growth shall be in respect of each exporter (IEC holder) without any scope for combining the exports for Group Company. 

2.The scheme is region specific and will cover exports to USA, European and Asian countries only (except

exports to Singapore, U.A.E and Hong Kong) - for (a) above

-> The scheme is region specific and will cover exports to Latin American and African

countries also- for (b) above.

3. . The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the Scheme:

-> Export of imported goods or exports made through trans-shipment.

-> Export from SEZ / EOU / EHTP / STPI / BTP / FTWZ

-> Deemed Exports

-> Service Exports

-> Third Party exports

-> Diamond, Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones.

-> Ores and concentrates of all types and in all formations.

-> Cereals of all types.

-> Sugar of all types and all forms.

-> Crude / petroleum oil and crude / primary and base products of all types and all formulations.

-> Export of milk and milk products.

-> Export performance made by one exporter on behalf of other exporter.

-> Supplies made to SEZ units.

-> Items, export of which requires an export authorisation (except SCOMET), will not be considered.

-> Export of Meat and Meat Products.

As per Public Notice No. 41 /2009-2014:-had mandated filing of applications for incremental export during the period 1.1.2013-31.3.2013 vis-a-vis 1.1.2012-31.3.2012 in ANF 3F. Application for obtaining Duty Credit Scrip shall be filed within a period of twelve months from the date of export or within six months from the date of realization or three months from the date of printing / release of shipping bill, whichever is later, in respect of shipments for which claim is being filed.

Disclaimer:  The entire contents of this document have been prepared on the basis of relevant Act and as per the information existing at the time of the preparation. Though utmost efforts has made to provide authentic information, it is suggested that to have better understanding kindly  cross-check  the same with incentives available in Foreign Exchange Management Act