Dear friends,
Since the PCC exam for Nov,09 is knocking on the door I decided to share some of my thoughts about the exam with you. My first attempt was on June’ 09 and I passed both the groups at one go. I had a moderate preparation and truly speaking I studied only during the last 2 months. So for those who are appearing in Nov’09 exams there are few tips which I would like to share.
1. For theory based paper like auditing, Law etc. always follow the answer pattern as given in the Institute’s compiler. Always refer the provisions of the relevant Section then conclude your answer on the basis of the said provisions.
2. Don’t try to strengthen your weaknesses in the last few days. Instead focus on your strengths to make them more stronger. I was weak in Law, but instead of mastering the Law portion, I focused on ethics & communication part. In the exam I found law portion tough but I performed well in the remaining 40 marks. I got 62 in that paper.(Roll No.28748) .
3. Give importance to ITSM. If something goes wrong with CostFm this will act as group total enhancer. Being an average student I feel that it is tough to score above 60 in Tax.
4. Good Handwriting is advantageous for scoring good marks. Even if you write something brilliant but if it is not legible to read you will get 0.
5. For those who are giving their 2nd or 3rd attempt don’t criticize ICAI for your results. I am not saying you to praise ICAI but there is no point criticizing them. Has anyone achieved anything by criticizing ICAI? Remember one thing ONLY YOU AND YOUR HARDWORK WILL MAKE YOU A CA if you put in your 100% no power in this world can stop you from achieving your goal.
6. After exam, going back to home don’t start checking what you have written is correct or wrong this will cause huge damage to your confidence for the rest exams.
7. I see many people don’t appear for the rest of the papers if something goes wrong in the initial part of a group. Have the courage to face the music, you never know what you score in the underperformed paper.
8. If you feel any question have been set out of the syllabus try to attempt it, coz attempting it will make sure you get marks for that question even if you are wrong.(TAX PAPER OF JUNE 09)
9. Try to attempt 100 marks in the theory papers it will increase your scoring potential.
I would like to get comments from all my friends regarding my views.
EXAM PREPARATION TIPS
For many people, exam time is the most stressful part. With so much riding on the outcome, there can be a high degree of pressure to perform well. Here are some exam preparation tips to help you.
Getting Started
The earlier you start, the more time you will have to prepare for the exam. You don't have to wait until exam time approaches; try to set the stage from the beginning of the course by reviewing the material. By starting early and studying on a regular basis, you will have a better opportunity to absorb the information and life will be a lot easier when it's time to put it all together for the exam.
Make sure all of your course material is well organized so you can find and fill any gaps. If you miss any classes, get the notes from your friends right away instead of scrambling at the last minute. Proper organization will help you to get a better picture of the material that has to be covered and improve the flow of the study process.
Creating a Study Plan
As the exam nears, you will need to create a plan to help you study effectively and minimize stress. The first step is to figure out how much time and effort you must dedicate to studying for the exam by asking the following questions:
- How much material do you need to cover?
- How difficult is the material?
- How much time is available?
- Do you have any other priorities during the study period?
- What is the format of the exam?
- How important is the exam?
- What is your performance target for the exam?
To prepare the study plan, map out all of the material that has to be covered and make a schedule showing what, when and how much you will study each day. If you have kept up with the course work, studying will involve revision of the material that you have already covered. If you are behind in the course, you will have to finish the readings and other uncompleted work before starting the revision (if there isn't enough time to go over everything, you must decide what is most important for the exam).
Here are some tips to follow in creating your study plan:
- budget your time realistically;
- allocate the study time into several manageable study sessions;
- divide the course material into small segments and assign them to the study sessions;
- set clear and specific goals for the study sessions;
- prioritize to ensure that material weighted more heavily in the exam gets sufficient study time;
- take into account your familiarity with the material and the difficulty level;
- don't make the study sessions too long;
- study sessions should have enough variety in terms of topics and activities to prevent boredom and loss of effectiveness;
- avoid cramming before the exam; and
- don't forget to include regular breaks.
Studying for the Exam
You are now armed with a plan and ready to start studying for the exam. Try to study in a location where you can concentrate and won't be interrupted. You can work with others or join a study group if you find it helpful, but be careful to keep it from turning into an inefficient use of your time. Some proven study tools and techniques are listed below - people respond to different learning styles, so use what works for you.
Revising with Summary Notes
Make a condensed version of your readings and class notes by creating summary notes. Pinpoint the key terms and concepts and make sure that you understand them. You can identify key terms and concepts by paying attention to what has been emphasized in your classes, textbooks and course syllabus. For example, if a particular topic has taken up a lot of time in the classroom, it is more likely to be on the exam and you should have a good understanding of it.
The process of making summary notes can help you to retain more information. By writing the information thoughtfully instead of just seeing it, you can develop a greater perception of the material. To take this further, activate your other senses: you can recite the summary notes aloud, and even record and listen to them.
Memorizing with Flashcards
Flashcards (or "index cards") are a good memorization tool. Reduce your summary notes into bullet points, keywords, lists, formulas and diagrams and place them onto a card for each topic. (Some people like to use flashcards to prepare their summary notes in the first place, while others find that it leads to information overload.)
The items on the flashcards act as memory triggers. By memorizing the flashcards you can enhance your ability to recall larger bits of information referenced by the triggers. You can carry the cards with you and review them even when you have only short bursts of time available.
Practicing under Exam Conditions
Knowing the course material is necessary but not sufficient to guarantee success on the exam - you also need to be able to communicate the answers effectively under exam conditions. Practice using sample questions in the same format as the exam and answer them in a simulated test environment. The sample questions can be sourced from old exams and assignments, which are often similar from year to year with small changes. Even though you are only practicing, it is better to write full answers to the questions so you can work through the entire thought process.
The practice session should serve as a feedback loop. Check the answers to the practice questions to diagnose your strengths and weaknesses. If you are weak in an area, go back and study it further to address any gaps.
Taking Care of Yourself
Don't forget to take care of yourself during the exam preparation. It is very important to be in good mental and physical condition for the exam. A small amount of stress can get you psyched, but too much mental or physical strain can be detrimental to your performance. The last thing you want to do is to sabotage your efforts by ignoring your well-being.
After you finish studying, take some time to relax. Don't stay up too late if you can help it and try to get a good night's sleep. Eat before the exam to build your energy, but avoid heavy foods that can make you drowsy.
Keep a positive attitude about the exam. Think of it as a way to demonstrate your knowledge and not as some imposing challenge. Go to the exam focused and relaxed - you have done the work, now it's time to reap the rewards.
“KEEP THE FLAME ALIVE” “LET THE KNOWLEDGE SPREAD THE WINGS”
Tips to Prepare for INCOME TAX / DIRECT TAX ( PCC, IPCC, CA Final & CS)
Prepared by : CA Prakash Somani (CA, B.Com, NCFM (CMDM), Pursuing CS)
1. No need to say that Modules are of almost no use here as they are too old and expired.
2. There are a lot sections, what to remember what to not….confusion?? Solution is to learn basic sections (Important Sections Link will be provided shortly)
3. Mainly the exam paper is based on latest amendments so be informed of latest amendments (Latest amendments Link will be provided shortly)
4. My opinion on Reference books for DT is here below:
a. V.K. Singhania :
· About the book: Well illustrated with lot of examples on every provision and section.
· When to refer: When you have at least 1 month or more for study on this subject. The practical part of this book is quite good.
· Font Size: Small
· Negative point: It takes a good time to cover this book but it is good for future perspective too.
· Rating: 4.5 Star
b. TN Manoharan :
· About the book: Quite lucid and exam oriented, for conceptual understanding. It enables you to study basic aspects from scratch unlike the first one.
· When to refer: The theory part of this book is good and exam oriented.
· Font Size: Medium
· Negative Point: It has lot of mistakes (When I read it had)
· Rating: 4 Star
c. V.K. Gupta :
· About the book: The notes provided by Gupta Sir are very good for exams. He is based in Delhi and you can get the notes at “Pooja Law House, Behind CA Institute at ITO”
· When to refer: Its comprehensive so you can refer it for exams.
· Font Size: Medium
· Negative Point: The notes are effective more when it is taught by Gupta Sir directly
· Rating: 5 Star
d. G. Sekar (Padhuka):
· About the book: An excellent book written in q and a format which has all the latest case laws and important questions. equipped with a fast track referencer which helps you to breeze through the chapters once you have studied it
· When to refer: Preferably during exams.
· Font Size: Medium
· Negative Point: Only Exam oriented and it may make you pass but will not help in clearing your concepts.
· Rating: 3.5 Star
5. Refer only one book as more then one will create lot of confusions. NOTE : If you are already referring one book then there is no need t change it unless you have sufficient time to cover new book.
6. Latest amendments can also be get from CA Inst. Call 1800228009 Toll Free.
7. The pattern of asking questions in exam paper is very important in it as they are making changes more frequently. Like in our time there was lot of 1 or 2 marks questions so unless you read whole module you can not answer and loose couple of marks.
8. Answers based on case law should be strictly be provided in the way suggested are written.
9. Prepare a list of important sections and stick to your study board and revise it as many times (Proved 100% successful). Make a Chart of Section serially.
10. Once you are finished with IT Act you can read in the order of more important chapters first and then less important.
11. Understand how to answer questions based on Case Laws. Take reference guide from previous attempts answer patterns.
12. Do one practical question based on each provision but you can skip this in exams.
13. Preparing NOTES are very important in this subject as in exams notes will be very useful reference guide.
14. If you are doing coaching some where then without forget cover whatever taught n coaching same day else it will be very difficult for you t manage the back log.
15. Wealth Tax is good and important part of DT and also covering too. Refer Vinod Gupta Notes here which proved excellent.
16. Wealth Tax forms download here Wealth Tax Forms
17. Don't keep your queries pending, solve them IMMEDIATELY (you can ask me J through www.psomani.caclubindia.com )
18. Make sure that all your notes are arranged systematically else it will create lot of complications.
19. Assessment procedure part should be read sequentially. Download Presentation on Assessment Procedure .
20. Complete guide on all sections of assessment procedure will be provided to you shortly.
21. Gross Total Income cover’s all five heads of income so better to spend much time in solving questions on this topic instead of five heads of income.
22. You have to be in fresh mind so take a good break once feet tired.
23. If you are finding any question little confusing then leave it and ask to your friends else if you will try to solve it, there are chances that you may get bored.
24. During revision you need not to solve the entire questions again and again, just selected question of each type or questions where you are facing problem is enough to solve.
Common Point for all subjects:
25. Keep some pages blank in your register after completion of each topic, put updates and other clarifications which may come afterward in your mind.
26. Take short breaks and study. Without break you can not get more output from your studies.
27. It is not important how many hours you study; it is more important how well you have studied.
28. Talk less to keep only specific thoughts in your mind as during exam time less you talk and more you walk will keep you charge.
29. Refer this link for time management Time Management Tips for CA Students
30. Reward yourself with an ice-cream or a brief outing after a good day's work.
Tips to Prepare for LAW ( IPCC & CA Final )
Prepared by : CA Prakash Somani (CA, B.Com, NCFM (CMDM), Pursuing CS)
1. I would not suggest referring modules in Law as they are old and expired many times.
2. Many times you are afraid of how to remember Section no’s and all … I suggest you no need to remember all sections only fundamental sections are enough to remember. The most important thing is what is inside sections.
3. Refer a good book like I suggest Munish Bhandari & GK Kapoor.
4. It would be difficult to write the way modules are written but it is very much advisable in this subject. You can practice at home.
5. Refer only one book as more then one will create lot of confusions.
6. You can not write anything in this subject else you know the law i.e. No “tukka maro pravati“ in this subject.
7. Slogan funda’s will not work here and I suggest you not to try out slogans in Law.
8. Prepare a list of important sections and stick to your study board and revise it as many times (Proved 100% successful). Make a Chart of Section serially.
9. Your “rutta pravati” may work here as there is no concept in remembering sections.
10. This is very interesting subject for those who are interested into but for those who feel it difficult to handle I suggest to use way to which they are comfortable. Just remember “you can Do It”
11. Remember one thing bol bol ke padhna bhi fayada karta he but not when someone else is getting disturbed from it.
12. Refer suggested answers or scanners to know the trend in exam i.e. which chapter is more important and which is less, you can even read in that order.
13. Understand how to answer questions based on Case Studies. Take reference guide from previous attempts answer patterns.
14. Complete a particular topic and try to solve past year question on that topic without help of books.
15. Keep some pages blank in your register after completion of each topic, put updates and other clarifications which may come afterward in your mind.
16. Remember the latest case laws and amendments as there are very much chances that examiner will ask question on that.
17. Check the pattern of question paper, instructions. Are there any changes? It's essential that you are aware of the paper style
18. Make sure that all your notes are arranged systematically.
19. Revision has to be done by keeping the outline of the chapters. This will make you go through them quick and easy.
20. Take short breaks and study. Without break you can not get more output from your studies.
21. It is not important how many hours you study; it is more important how well you have studied.
22. Time yourself while you are studying. It's essential that you finish one chapter and take 5 minutes break to do anything of your hobby to make you fresh (Listen Music)
23. Talk less to keep only specific thoughts in your mind as during exam time less you talk and more you walk will keep you charge.
24. Don't keep your queries pending, solve them immediately (you can ask me J through www.psomani.caclubindia.com ).
25. Reward yourself with an ice-cream or a brief outing after a good day's work.
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Tips to Prepare for Audit ( IPCC & CA Final )
Prepared by : CA Prakash Somani (CA, B.Com, NCFM (CMDM), Pursuing CS)
1. Don’t go by size of modules, they are easy to read
2. While different peoples' learning styles will vary, it is generally most effective to go by your reading speed and never follow or compete with anyone atleast in theory.
3. Refer a good book like Prakhar Sharma/Paduka/ V.K Agrawal Note: (MP Vijay Kumar can be used for AS reference)
4. Examiner will not ask direct Q on AAS so your concept should clear with AAS else you will loose. You may also remember latest AAS
5. Your articleship training will give you practical experience of whatever in the book itself
6. If possible try to write the way module is written, believe me its easy (Indirect method is used in Modules)
7. It wont be possible to read whole Module in exams so be ready with one reference books
8. Refer only one book and never suggest anything new nearto or during exams
9. Professional ethics are to be read carefully as it has weighted of 15-20 marks. Remember their numbers and also to which part they belongs
10. CARO Report and their number should also be remembered, better to prepare slogan (You can get it from me)
11. Stick AAS and CARO Point before your study table for better remembrance
12. It’s a theory subject so better to take one practical subject also i.e. combine interesting and boring subjects during revision. This will keep your level of concentration in tact. ( Refer Point 23)
13. Prepare notes of whatever you are feeling tough to grasp and revise them
14. If there are many points to a particular Q then prepare a slogan suitable for you (It is the best way to cope with bulk points)
15. Refer suggested answers or scanners to know the trend in exam i.e. which chapter is more important and which is less, you can even read in that order also
16. Its not possible to follow “ ratta maro pravati “ here in Audit as it is very large for this
17. Understand how to answer questions based on Case Studies. Take reference guide from previous attempts answer patterns
18. Try out Case Study after having finished each Chapter
19. Think of as many problem as you can and try to solve the same (Only if you have sufficient time)
20. Remember the latest case laws on audit as there are very much chances that examiner will ask question on that
21. Check the pattern of question paper, instructions. Are there any changes? It's essential that you are aware of the paper style
22. Make sure that all your notes are arranged systematically. This is particularly important for the revision of your theory subjects
23. Start revising from the chapters you know the best followed by difficult chapters ( Also refer Point 12)
24. Revision has to be done by keeping the outline of the chapters. This will make you go through them quick and easy
25. Take short breaks and study. Without break you can not get more output from your studies
26. It is not important how many hours you study; it is more important how well you have studied
27. Time yourself while you are studying. It's essential that you study for an hour and take 5 minutes break to do anything of your hobby to make you fresh.
28. Don't keep your queries pending, solve them immediately (you can ask me J through www.psomani.caclubindia.com ).
29. Recent Amendments should also be keep on your priority list.
30. Reward yourself with an ice-cream or a brief outing after a good day's work.
31. Give Thanks to the writer for his efforts to make this available to you J.
CARO Slogan: (Need only 5 readings for CARO (21 points))
Fixed Inventory Loan on Internal Register of Public deposit for Internal Audit & Cost Records with Statutory dues are
accumulated with financial institution dues in the way of loan on shares and chit fund so that trading in shares can
guaranteed for term loans for short & long term in preferential allotment of charges for end use in fraud
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Dear Members and Students,
The Article mentioned below contained brief provisions about Company Audit. If you need the file containing detailed provisions let me know your E-mail ID through Personal Message (PM). This file is very useful for quick reference and preparation for CA Final and PCC Company Audit.
Audit of accounts is compulsory for all types of companies
All the companies registered under the Companies Act, 1956, whether public or private and whether having a share capital or not are required maintaining proper books of accounts under Section 209 of the Companies Act, 1956. Companies have also to get their Books of accounts audited as required under section 224 of the Act.
APPOINTMENT OF AUDITORS
Section 224 governs the appointment of auditors. The auditors are to be appointed by the shareholders of the company in an Annual General Meeting by passing an ordinary resolution. Kindly note appointment of Statutory under section 224(1) is an ordinary business read with Section 173 of the Companies Act, 1956. However, special resolution is required to be passed when section 224A comes into play.
Appointment of first auditors [Section 224(5)]
As per section 224(5), the first auditor or auditors of a company shall be appointed by the Board of directors within one month of the date of registration of the company; and the auditor or auditors so appointed shall hold office until the conclusion of the first annual general meeting. Please note the following important provisions related to the appointment of first auditors:
(i) Appointment of first auditors in general meeting.—A company in general meeting may appoint the first auditor or auditors if the Board of directors fails to exercise its power of appointment of first auditors within one month of the date of incorporation of the company.
(ii) Appointment of first auditors through Memorandum and Articles of Association.—The Institute of Chartered Accountants of India has expressed its opinion vide Compendium of Opinion Volume No. 1 that the appointment of first auditors through the Memorandum and Articles of Association of the newly floated private company is not a valid appointment.
(iii) Removal of first auditors.—The company may, at a general meeting, remove first auditor(s) or all or any of such auditors and appoint in his or their places any other person or persons who have been nominated for appointment by any member of the company and of whose nomination notice has been given to the members of the company not less than fourteen days before the date of the meeting.
(iv) Tenure of office of the first auditor.—The first auditor(s) shall hold office until the conclusion of the first annual general meeting of the company and then be eligible for re-appointment.
Appointment of Auditor other than first auditor
As per Section 224(1) every company shall, at each annual general meeting, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting.
Appointment of auditor shall be an ordinary business
As per section 173(l)(a)(iv) of the Act, the appointment of, and the fixing of the remuneration of the auditors shall be an ordinary business to be transacted at an Annual General Meeting of a company. Only an ordinary resolution is to be passed for this purpose except, in the circumstances stated u/s 224A requiring the passing of a special resolution.
Re-appointment of the retiring auditor(s) [Section 224(2)]
As per section 224(2), a retiring auditor shall be re-appointed subject to the limit on maximum number of audits as stated u/s 224(1B). However, in the following cases, a retiring auditor shall not be reappointed:—
(i) he is not qualified for re-appointment;
(ii) he has given the company a notice in writing of his unwillingness to be re-appointed;
(iii) a resolution has been passed at that meeting appointing somebody instead of him or providing expressly that he shall not be re-appointed; or
(iv) where notice has been given of an intended resolution to appoint some other person or persons in the place of a retiring auditor, and by reason of the death, incapacity or disqualification of that person or of all those persons as the case may be, the resolution cannot be proceeded with.
Deemed re-appointment == Require some action on the part of the company
As per Department's Circular No. 5/72, dated 21-2-1972, the appointment or reappointment of auditors at the annual general meeting is one of the items of ordinary business to be transacted at such a meeting. As provided by section 224(2) of the Act at any annual general meeting, a retiring auditor shall be re-appointed except, in four types of cases referred to therein. The expression shall be re-appointed, postulates some action on the part of the company resulting in the auditor getting re-appointed or automatically re-appointed at the annual general meeting.
It has been clarified that passing of the resolution for that purpose at the annual general meeting is essential for the re-appointment of the retiring auditor who is still qualified and willing to act. Till this is done, a retiring auditor cannot be said to have been re-appointed as contemplated by the section. In this view, it is not correct to say that in the absence of the resolution to the effect that the retiring auditors shall not be re-appointed; the retiring auditors shall stand re-appointed as auditors of the company.
Appointment of auditor is mandatory at each annual general meeting
The auditor(s) appointed at the last annual general meeting ceases to hold office at the conclusion of the next annual general meeting. Therefore, the auditor(s) must be appointed at each annual general meeting to hold office till the conclusion of the next annual general meeting. It has been held in the case of the Institute of Chartered Accountants v Jnanendranath Saikia (1955) 25 Comp Cas 53, 55 (Assam) that the appointment of auditor is mandatory in the annual general meeting for the ensuing year.
Intimation as to appointment
A company is required to give intimation of appointment to every auditor(s) so appointed within seven days of the appointment as desired by section 224(1). The intimation may be given in form of a letter on the letter head of the company by a responsible officer of the company.
Written certificate from auditor regarding eligibility must be obtained
The company shall, before making any appointment or re-appointment of auditor(s) at any annual general meeting, obtain a written certificate to the effect that the appointment or re-appointment, if made, shall be in accordance with the limits specified in section 224(1B) of the Act.
LIMIT ON NUMBER OF AUDITS
The expression 'specified number' means—
(i) in the case of a person or firm holding appointment as auditor of a number of companies each of which has a paid-up share capital of less than rupees twenty-five lakhs, twenty such companies;
(ii) in any other case, twenty companies, out of which not more than ten shall be companies each of which has a paid-up share capital of rupees twenty-five lakhs or more.
In computing the specified number of companies in respect of which or any part of which any person or firm has been appointed as an auditor, whether singly or in combination with any other person or firm, shall be taken into account in computing the specified number as defined in Explanation I of section 224(1C).
COMPANES NOT COUNTED IN THE LIMIT ON NUMBER OF AUDITS
The following types of companies shall be excluded from reckoning specified limits, in terms of share capital:—
(a) Guarantee companies (Department's Letter No. 8/12/(224)/74-CL-V, dated 28-9-74)
(b) Foreign companies (Circular No. 21 of TSF No. 35/3/75-CL-III, dated 24-9-1975)
As mentioned above, as per the Companies (Amendment) Act, 2000 private companies will not be taken into account for counting the 20 number of companies audit as specified as per sub-section (1B) of section 224.
(c) Branch audit of the Indian Companies not counted for calculating the specified number.
(d) Foreign Company
Obligation of the auditor to give intimation to the Registrar
Every auditor appointed under section 224(1) by a company in annual general meeting shall inform the Registrar in writing that he has accepted, or refused to accept the appointment [Section 224(1B)]. The information shall be given in e-Form 23B within a period of thirty days from the date of appointment.
However, first auditors appointed by the Board of directors of a company pursuant to section 224(5) are under no obligations to give notice of their appointment to the Registrar.
Appointment of auditor by the Central Government (Regional Director) [Section 224(3)]
Section 224(3) provides that if no auditors are appointed or re-appointed at an annual general meeting of a company, the Central Government may appoint a person to fill the vacancy. Therefore, the power of the Central Government to appoint auditors becomes exercisable when no auditors are appointed or reappointed at an annual general meeting of a company.
The Company is required to give intimation electronically to the Regional Director (Powers of the Central Government were delegated to the Regional Director) vide Notification No. GSR 288(E) dated 31st May, 1991) in new e-Form 24A prescribed by Notification No. GSR 56(E) dated 10th Feb., 2006.
Obligation has been cast on the company that within seven days of the Central Government's power u/s 224(3) becoming exercisable, it shall give a notice of that fact to that Government; and if a company fails to give such notice, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
Consequences of failure to pass a special resolution at an AGM for appointment of an auditor under section 224A:—
(a) it shall be deemed that no auditor or auditors had been appointed by the company at its annual general meeting; and
(b) the power of the Central Government under section 224(3), to appoint auditors becomes exercisable.
CASUAL VACANCY [Section 224(6)]
Meaning of casual vacancy in the office of auditor(s)
The expression 'casual vacancy' has not been defined in the Companies Act, 1956. Simply stated, a casual vacancy in the office of an auditor means a vacancy caused in the office of an auditor by his death, disqualification, resignation, etc.
Section 224(6) governs this aspect and relevant provisions are stated hereunder:—
(a) The Board may fill any casual vacancy in the office of an auditor, but while any such vacancy continues, the remaining auditor or auditors, if any, may act.
(b) Any auditor appointed in a casual vacancy shall hold office until the conclusion of the next annual general meeting.
Powers of the Board to fill up the casual vacancy only in case of death or disqualification of auditors
In terms of section 224(6)(a) where a casual vacancy arises in the auditors appointed by a company due to death or disqualification, the Board of directors may appoint another auditor.
Only members in general meeting may fill up the casual vacancy caused by resignation of auditors
If any casual vacancy in the office of an auditor is caused by the resignation of an auditor, such vacancy shall only be filled by the company in general meeting and the Board has no power to fill up the casual vacancy in this case.
The auditor appointed in a casual vacancy shall hold office till the conclusion of the next annual general meeting. If a casual vacancy arises, the remaining auditors if any, will continue to Act.
REMOVAL OF AUDITORS [Section 224(7)]
Board of directors has no power to remove an auditor
The Board of directors of a company has no powers to remove an auditor appointed by the company in general meeting. Accordingly, the said auditor can be removed only by the company in general meeting after receiving the previous approval of the Central Government under section 224(7). Powers has been delegated to the Regional Director vide Notification No. GSR 288(E), dated 31-5-1991.
Removal of auditor(s) with the prior approval of the Central Government
As per Section 224(7) an auditor can be removed before expiry of his term only by the company in general meeting after obtaining the previous approval of the Central Government (Power has been delegated to the Regional Director).
PROCEDURE for removal of auditors
The company shall take further action as prescribed in section 225 and make an application to the concerned Regional Director in e-Form 24A.
Time limit
The application has to be filed for appointment within seven days of the annual general meeting and for removal before general meeting.
REMUNERATION OF AUDITORS [Section 224(8)]
Section 224(8) discusses the manner of fixation of remuneration of auditors. Following are the provisions in this regard:
ü Remuneration of first auditors
Fixed by the Board, if the Board does not fix such remuneration then remuneration of auditors shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.
ü Remuneration of other than first auditors
The remuneration of auditors other than first auditors shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.
ü Remuneration of auditors appointed to fill up causal vacancy
Fixed by the Board, if the Board does not fix such remuneration then remuneration of auditors shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.
ü Remuneration of auditors appointed by the Central Government
The remuneration may be fixed by the Central Government. But if the CG does not fix such remuneration then company in general meeting may fix the remuneration.
Remuneration includes all expenses allowed by the company
For the purposes of section 224(8), any sums paid by the company in respect of the auditors' expenses shall be deemed to be included in the expression "remuneration".
Dear Members and Students,
The Article mentioned below contained brief provisions about Company Audit. This file is very useful for quick reference and preparation for CA Final and PCC Company Audit. This Article is in continuation of my previous Article on same subject.
For part-I please follow the link below:
Appointment of auditor by passing special resolution in certain cases [Section 224A]
As per Section 224A, if not less than 25% of the subscribed share capital of a company is held by specified institutions, whether singly or in any combination of others, appointment of auditors in such companies shall be made by a special resolution passed at the annual general meeting of the company. Specified Institutions means:—
(i) a public financial institution or a Government Company or Central Government or any State Government, or
(ii) any financial or other institution established by any Provincial or State Act, in which a State Government holds not less than 51% of the subscribed share capital, or
(iii) a nationalised bank or an insurance company carrying on general insurance business.
MATERIAL DATE FOR DETERMINATION OF THE 25% OF THE SUBSCRIBED SHARE CAPITAL
The Department has clarified by Circular No. 2 of 1976, dated 5-6-1976 that the material date for determination of the 25% of the subscribed share capital of the company is held by specified institutions, whether singly or in any combination of others will be the date of the annual general meeting at which the special resolution is required to be passed.
Generally, Articles of Association of companies provide for closure of the Register of members before annual general meeting during a period not exceeding thirty days at any one time, it is unlikely that the position regarding shareholding in the company will be different between the date or issue of notice and the date of the annual general meeting.
Course of Action where a change in the shareholding pattern occurred
In exceptional cases, where a change in the shareholding pattern in the company has taken place, between the date of issue of notice of the annual general meeting and the date of actual passing of the resolution regarding appointment of auditor, the company may either,—
(i) adjourn the meeting to another date, and later issue the required notice in accordance with law and thereafter pass the special resolution required to be passed u/s 224A of the Companies Act, 1956; or
(ii) omit or pass over the item on the agenda regarding appointment of auditor.
In the event of the company adopting the procedure at (ii) above, the situation would be then covered by section 224A (2) of the Act.
Important==Where any company referred to in section 224(1) omits or fails to pass at its annual general meeting any special resolution appointing an auditor or auditors, it shall be deemed that no auditor has been appointed by the company at its annual general meeting and then Regional Director shall have powers under section 224(3) for appointment of auditors.
The company shall file e-Form 23 read with Section 192 electronically along with certified copy of the special resolution & explanatory statement within 30 days of passing of resolution.
APPOINTMENT OTHER THAN A RETIRING AUDITOR [Section 225]
As per section 225 a special notice of a resolution to be moved at an annual general meeting for appointing an auditor other than the retiring auditor or removing of an existing auditor is given to the company in the manner as prescribed under the Act.
Requirement of special notice to the company
Section 225(1) provides that special notice shall be to be given by a member and such special notice must comply with the requirements of section 190. Following two types of resolutions or notice may be given under section 225 of the Act:—
(a) resolution at an annual general meeting for appointment of a person other than a retiring auditor as auditor; and
(b) resolution at an annual general meeting providing expressly that retiring auditor shall not be reappointed.
As per Department's Circular No. 5 of 1972, dated 21-2-1972 special notice shall be required for such resolution. Any non-compliance with the provisions of the said section would render such a resolution illegal and ineffective. Section 190 which provide a resolution requiring special notice applies to special notice under section 225.
Company’s duty on receipt of notice
1. It is duty of the company to intimate members on receipt of such notice immediately and where it is not possible, give notice to the members by advertisement in the newspaper circulating in the place of its registered office, not less than seven days before the meeting.
2. On receipt of notice under section 225(1) of the Act, for the removal of a retiring auditor the company shall send a copy of the notice to the retiring auditor forthwith. It is advisable to send the same by registered post with acknowledgement due.
Circulation of the retiring auditors' representation to all the members
On receipt of representation from auditor on the notice for their removal, the company shall circulate the same to all the members of the company, if possible.
Contravention of the provision of section 225 would attract penalty to the company under section 629A.
Acceptance of the position as auditor previously held by a retiring auditor without first communicating to the existing auditor shall be deemed to be guilty of professional misconduct as contemplated by clause (8) of the First Schedule to the Chartered Accountants Act, 1949.
Internal auditor cannot be appointed as statutory auditor(s)
Circular No. 29 of 1976, dated 27-8-1976 states that the internal auditor is appointed by the management and hence is in the position of an employee, whereas the statutory auditor is appointed by the company under section 224 and is required to perform the duties imposed on him under section 227 and the Rules/Orders issued thereunder.
Statutory Auditor cannot write books of account of the company
The acceptance of the book keeping work of the above nature is likely to place the statutory auditor in a vulnerable position in the matter of free expression of his professional opinion as an auditor on the annual accounts of the company. Such a practice deserves to be discouraged.
POWERS AND DUTIES OF AUDITORS
Powers of auditors to access books of accounts and to require information and explanations
Following are the rights of an auditor as per section 227(1) of the Companies Act, 1956:—
(i) Right of access at all times to the books and accounts and vouchers of the company.
(ii) Entitlement to require from the officers of the company such information and explanations as the auditor may think necessary for the performance of his duties as an auditor.
(iii)Powers to receive all notices of general meetings and to attend it. [Section 231]
Default in the provisions of sections 225 to 231 makes the company and every officer of the company who is in default punishable with fine which may extend to Rs. 5,000. [Section 232]
ü Duties of auditors to enquire and make report
Sections 227(1A) and 227(4A) lay down certain important duties of the auditors. The auditor has mandatory duties to inquire and report the following:—
(a) whether loans and advances made by the company are properly secured and on terms which are not prejudicial to the interests of the company or its members;
(b) whether transactions which are represented merely by book entries are not prejudicial to the interests of the company;
(c) In case of a non-investment or a banking company, whether so much of the assets of the company as consist of shares & debentures have been sold at a price less than purchase price;
(d) whether loans and advances made by the company have been shown as deposits;
(e) whether personal expenses have been charged to revenue account;
The auditor shall make a report to the members of the company on the accounts examined by him, and on every other document declared by Companies Act to be part of or annexed to the balance sheet or profit and loss account. The auditor has duty to state in his report that whether in his opinion the accounts give the requisite information and give true and fair view.
ü Duties towards comments on the compliance of the Accounting Standards
Section 227(2)(d) requires that the auditor to make comments whether the profit and loss account and balance sheet complied with the Accounting Standards u/s 211(3C).
ü Duties to report disqualification of directors in certain cases
It is an obligation on the auditors to make comments in his report whether any director is disqualified from being appointed as director under section 274(1)(g) of the Act.
QUALIFICATIONS AND DISQUALIFICATIONS OF AUDITORS [Section 226]
Section 226 of the Companies Act, 1956 contains provisions as regards qualifications and disqualifications of auditors for all types of companies, whether public or private including section 25 company and a Government Company.
Must be a Chartered Accountant for appointment as auditor
A person shall not be qualified for appointment as auditor of a company unless he is a chartered accountant within the meaning of the Chartered Accountants Act, 1949.
A Chartered Accountant's firm may be appointed as auditor
A firm whereof all the partners are practicing chartered accountants in
Whereas the appointment of a proprietary concern as auditor shall be made in the name of the individual i.e., the proprietor. [Vide Circular No. 8/229/56-PR, dated 20-3-1957]
Certain category of persons not qualified for appointment as auditor
Section 226(3) states that none of the following persons shall be qualified for appointment as auditor of a company:—
(a) a body corporate;
(b) an officer or employee of the company;
(c) a person who is a partner, or who is in the employment, of an officer or employee of the company;
(d) a person who is indebted to the company for an amount exceeding 1000, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees;
(e) a person holding any security of that company after a period of one year from the date of commencement of the Companies (Amendment) Act, 2000 i.e. 13th December, 2000;
For the purposes of section 226, "security" means an instrument, which carries voting rights;
(g) a person if he is, by virtue of section 226(3), disqualified for appointment as auditor of any other body corporate which is that company's subsidiary or holding company or subsidiary of that company's holding company. [Section 226(4)]
Appointment of a relative of a director as an auditor should not be made
In the legal sense a relative of a director of a company is not disqualified for appointment as an auditor. However, the council of the ICAI has suggested that a CA shall not accept the audit of a company where he is relative of the company's MD or WTD and he believes that he would not be in a position to express his independent opinion.
Deemed vacation of office of an auditor in case of disqualifications
As per section 226(5), if an auditor becomes subject, after appointment, to any of the disqualifications specified in sections 226(3) and 226(4), he shall be deemed to have vacated his office.
COST AUDIT [Section 233B]
Requirement to maintain cost records
Section 209(1)(d) states that if the company pertains to any class of companies engaged in production, processing, manufacturing or mining activities and the class of companies is required by the Central Government to include such particulars in the Books of accounts shall keep at its registered office proper Books of accounts with respect to utilisation of material or labour or to other items of cost as may be prescribed by the Central Government.
Requirement for audit of cost accounts in certain cases
Section 233B deals with the cost audit. Accordingly, the Central Government may, by order, direct that an audit of cost accounts of the company shall be conducted in the specified manner by an auditor who shall be a Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959.
However, if the CG is of the opinion that sufficient number of qualified cost accountants are not available, the CG may, by notification direct that for such period as may be specified in the said notification, such CA may also conduct the audit of cost accounts of companies and thereupon a chartered accountant may be appointed to audit the cost accounts of the company.
APPOINTMENT OF COST AUDITOR
Appointment of cost auditors shall be made with the previous approval of the CG
On receipt of an order from the CG, the cost auditor shall be appointed by the Board of directors with the previous approval of the Central Government. [Section 233B(2)]
The Board shall obtain a certificate of eligibility from the cost auditor to the effect that the appointment, if made, will be in accordance with the provisions of sub-section (1B) of section 224.
Application for approval of the Central Government
The company shall make an application to the Central Government electronically in e-Form 23C. Cost audit shall be in addition to the statutory audit. Further it is an obligation on a company to provide facilities for conducting cost audit. [Section 233B(6)]
Cost auditor shall have same powers and duties as of the statutory auditors and he is required report to the Central Government. [Section 233B(4)]
Cost auditor will not be appointed as internal auditor of a company
Circular No. 1/83, dated 20-1-1983 =The Department is of the view that the cost auditor should not also be the internal auditor of a company for the period for which he is conducting the cost audit.
BRANCH AUDIT [Section 228]
Vide Circular F. No. 8/16(1)/61-PR, the term "branch office" includes any establishment engaged in any production, processing or manufacture. Branch Office of a company registered under the Companies Act, 1956 may be located in
Appointment of auditor for branch office in
Where a company has a branch office, the accounts of that office shall be audited by the company's auditor appointed under section 224 or by a person qualified for appointment as auditor of the company under section 226.
Appointment of auditor of branch office situated outside
In case a company has a branch office and branch office is situated outside
(a) company's auditor, or
(b) a person qualified for appointment as auditor of the company under section 226, or
(c) an accountant duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of the country.
Right of company's auditor in relation to branch audit
Where the accounts of any branch office are audited by a person other than the company's auditor, the company's auditor—
(a) shall be entitled to visit the branch office, if he deems it necessary to do so for the performance of his duties as auditor; and
(b) shall have a right of access at all times to the books and accounts and vouchers of the company maintained at the branch office.
Members in general meeting may appoint separate branch auditor
Where a company in GM decides to have the accounts of a branch office audited otherwise than by the company's auditor, the company in that meeting shall appoint a person qualified for appointment as auditor of the company under section 226 or authorise the Board of directors to appoint such a person in consultation with the company's auditor. [Section 228(3)(a)]
Branch auditor shall have the same powers and duties as the company's auditor
The person appointed as branch auditor shall have the same powers and duties in respect of audit of the accounts of the branch office as the company's auditor has in respect of the same. [Section 228(3)(b)]
Report of branch auditor
Vide Circular No. 10(l)-CL-VI/6l, dated 27-4-1961, the branch/internal auditor shall forward his report on the accounts of the branch direct to the statutory auditor.
Remuneration of branch auditor
The branch auditor shall receive such remuneration as may be fixed either by the company in GM or by the Board of directors of so authorised by the company in GM. [Section 228(3)(d)]
SPECIAL AUDIT [Section 233A]
Central Government's order for a special audit
The Central Government may order for a special audit, if it is of the opinion:—
(a) that the affairs of any company are not being managed in accordance with sound business principles or prudent commercial practices; or
(b) that any company is being managed in a manner likely to cause serious injury or damage to the interests of the trade or business to which it pertains;
(c) that the financial position of any company is such as to endanger its solvency;
Who may conduct special audit
The Central Government may, by the same or different order, appoint either a CA or the company's auditor himself to conduct such special audit under section 233A. Further, the aforesaid CA may or may not be a CA in practice within the meaning of the CA Act, 1949.
Powers and duties of special auditors
The special auditor shall have the same powers and duties in relation to the special audit as an auditor of a company has under section 227. [Section 233A(3)]
Contents of report by the special auditor
The report of the special auditor shall, as far as may be, include all the matters required to be included in an auditor's report under section 227 and, if the Central Government so directs, shall also include a statement on any other matter which may be referred to him by that Government. [Section 233A(4)]
Report by the special auditors to the Central Government
The special auditor shall, instead of making his report to the members of the company, make the same to the Central Government. [Proviso to section 233A(3)]
Action by the Central Government on report of special auditor
On receipt of the report of the special auditor, the Central Government may take such action on the report as it considers necessary in accordance with the provisions of this Act "or any other law for the time being in force": [Section 233A(6)]
Central Government's powers to direct for furnishing information to the special auditor
The Central Government may, by order, direct any person specified in the order to furnish to the special auditor within specified time such information or additional information as may be required by the special auditor in connection with the special audit and on failure to comply with such order such person shall be punishable with fine which may extend to five thousand rupees. [Section 233A(5)]
Expenses in connection with special audit shall be determined by the Central Government
The expenses of, and incidental to, any special audit under section 233A (including the remuneration of the special auditor) shall be determined by the Central Government (which determination shall be final) and paid by the company and in default of such payment shall be recoverable from the company as arrears of land revenue.
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The Points seems to be simple but it may cost you a lot if you missed the one :-
- Get there on time - make arriving at the exam on time as simple and straightforward as possible so you feel relaxed.
- Take care of the technicalities - budgeting time, bringing the right equipment, writing legibly, improving weaker answers before polishing good ones.
- Read the instructions.
- Breathe deeply and don't panic.
- Answer the question. Establish what it asks for; then recall, select the relevant material, organise it, and formulate your answer.
- Please let me know your views about above tips.
Going blank in an examHere are two things you can do if you find that you have gone completely blank and you don't know what to do. The first thing you can do is approach it on a physical level and begin breathing very deeply. Just let your mind go blank, flow with it for a few minutes breathing in and out as deeply as you can. Close your eyes if you like and just come around gently once your body is feeling more relaxed. If you are just about to start writing on a certain question and your mind goes blank, just start writing anything at all on some scrap paper. Perhaps write the name of the topic, scribble down anything you can think of about the subject, and just see what happens. Hopefully this should jog your memory and get you thinking about the topic again. If it still does not work though, skip the question and come back to it later. Don't spend precious time agonising over something that will probably return to you as your mind is prompted by other material on the exam. ** I am not sure whether it wll work perfactly. |
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Strategies for multiple choice and short-answer questions
- Survey the test to see how many different kinds of questions are being asked, to get a perspective on the exam.
- Check the marks allotted against the time available for each question, reading the instructions carefully.
- Do not read elements into the question which are not there. Underline words and phrases so that you realise what is there.
- Watch for absolute words or phrases, for example the words not or no, always, or never.
- Do not assume that a proposition is false just because it is unfamiliar (and vice versa).
- Check your answers. Make sure you know if a penalty is applied for guesses which are incorrect.
- Remember that all of the questions should be related to the course you are doing. Think about the questions in terms of the course objectives and your understanding of what your lecturer was trying to achieve.
Exam revision plan
Click on the highlighted text to see the comments.
- Make a list of all your subjects' exams and a brief descripttttion of the type of examination for each. (2 minutes)
- For each one, note down what kind of revision you want to do and where you will start. (10 minutes)
- How many days are there between now and the start of exams? Estimate how many of these days you can use as revision days. (5 minutes)
- Using the notes you have made, work out a revision plan for yourself. (5 minutes)
- Consider factors which will affect you in carrying out this plan. Make two separate lists: one of helping factors, such as membership of a study group or enthusiasm for the course; and the other of hindering factors, such as noisy accommodation or a tendency to panic. (5 minutes)
- Now, look for ways of boosting the helping factors and reducing the hindering factors. Write them down. (10 minutes)
But most important: Start thinking about revising now, then do it!
One More Fight
(Dedicated to all CA Final Students)
Your bright future is waiting for you
Now your dreams will come true
Problems are tall, you are small
Some more time and you will achieve your goal.
The time is demanding more commitment
Other liabilities are also subsequent
You will have to be more fast and frequent
Come on Dude, now show your talent.
Full of enthusiasm and confidence
Do hard work and don’t be tense
One more fight and there is rest
To win this one also, try your best.
"ALL THE BEST ONCE AGAIN"
THANKS THANKS THANKS
CAclubindia
Study groups
Should I study by myself or in a group?
Informal study groups can work well if: