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Can we do it legally, pls share tour honest views

758 views 1 replies

C.A Alok Mukherjee

service

462 Points Joined February 2008

Can anybody Share me his views honestly.

If a policy is framed out and passed in an audit committee meeting tlike this

"That any expenditure with a maximum limit of Rs 5000 to be considered as not a material amount and will be accounted for in normal account head of the next financial year if the same is relates to last financial year and if received at any period after the end of last financial year but after a cut off date fixed for submission of unaudited financial result for the directors."

My question if this is passed and accepted as a policy by the board or the audit Committee

a. Will it be prejudicial or will it really affect the accounting standard or accounting policy?

The intension is to eased up the operation and nothing else.

c. If, so what are the points supporting our favor from, audit, tax and other compliance matters?

Replies (1)

Mitesh

28 Points Joined October 2009

Dear friend,

The best way is to show the expense in p/l appropriation account.

In case co. wants to disclose it in p/l a/c, then it should show it as " prior period expense / last year exp not claimed in earlier year" while preparing its final account.

As far as tax point of view is concerned it should be ignored in the current year.In case the company wants to claim the expense, it would be better to revise the last year return and claim it in last year.

From audit point of view , the auditor should get a copy a such resolution passed by the committee or board and the same should be mentioned by him in his report.