By P. N. Shah, H. N. Motiwalla, Chartered Accountants
ICAI & Its Members
1. Disciplinary case :
In the case of U.V. Bendikar v. C.A. N. G. Kulkarni
the articled clerk of the member lodged a complaint against the member. In this
complaint, it was alleged that the member did not give his consent for transfer
of articleship as requested for by the complainant. It was also alleged that the
member had not paid stipend to the articled clerk and that the articled clerks
were asked to work for more than 35 hours in a week and that they were asked to
work on all public holidays and also on Sundays.
The Disciplinary Committee as also the Council of ICAI found
the member guilty of professional misconduct under clause (i) of Part II of the
second schedule of the C.A. Act. According to the Council, the member was guilty
of non-compliance with Regulations 32 B (Non-payment of monthly stipend) and 45
(Excess working hours). The Council recommended to the High Court to award
punishment of ‘Reprimand’ to the member.
The Bombay High Court has accepted the above recommendation
of the Council. According to the High Court, under Regulation 32B, a member is
required to pay stipend to the articled clerk on a month-to-month basis and the
member has no option to make payment in lump sum at any time. The High Court has
also accepted that the member’s office was open from 9.30 a.m. to 8.30 p.m. on
all 365 days and articled clerks were required to attend the office work even on
Sundays and public holidays. Thus, the articled clerks were asked to work for
more than 35 hours in a week.
(Refer Pages 1744-1746 of C.A. Journal-April, 2008)
2. Disclosure of Internal Consumption in the Profit & Loss Account :
The Expert Advisory Committee (EAC) has recently given an
opinion on the above issue (C.A. Journal April, 2008 P. 1686-1691) as under :
(i) The company owns and operates (i) gas pipeline of natural
gas, (ii) gas-based LPG manufacturing plants in different parts of the country,
(iii) an integrated gas-based petrochemical plant for producing polymers, and
(iv) LPG pipelines for transmission of LPG. The company has a number of
accounting units which record and maintain the accounts for the respective
business activities carried out by them.
(ii) There are inter-unit transfers of materials manufactured
in the respective units. Each unit records raw materials, fuel, etc. received
from the other unit and debits the price to ‘Raw Materials’ A/c. and/or ‘Power,
Fuel and Water Charge’ A/c. The unit transferring the material credits the
amount to ‘Other Income’ A/c. In the final consolidated Profit & Loss A/c. of
the company, these items appear on the debit side as expense and on the credit
side as other income.
(iii) The auditors objected to the above and observed that
disclosure of internal consumption in Profit & Loss account under the head
‘Income’ on the credit side and ‘consumption’ on the debit side was not proper.
(iv) The following two questions have been considered by EAC :
(a) Whether the disclosure of internal consumption of gas
separately from ‘Sales’ on the ‘Income’ side of the Profit & Loss account with
corresponding debit to ‘Raw Material Consumed’ and ‘Power, Fuel and Water
Charges’ on the ‘Expenses’ side of the Profit & Loss account by the company is
correct and in compliance with AS-9.
(b) In case the answer to (a) above is in the negative, an
appropriate method of accounting and disclosure to be followed by the company
for such internal consumption of gas, which will comply with the requirements
of AS-9, AS-17 and clause 2 of Part II of Schedule VI to the Companies Act,
1956, may kindly be suggested.
(v) EAC has given the following opinion :
(a) The disclosure of consumption of gas separately from
‘Sales’ on the ‘Income’ side of the Profit & Loss account with corresponding
debit to ‘Raw Material consumed’ and ‘Power’, Fuel and Water Charges’ on the
‘Expense’ side of the Profit & Loss account by the company is not correct even
though it is not shown as ‘revenue’ within the meaning of AS-9.
(b) The Committee is of the view that intersegment transfer
entries should be ignored while generating the financial statements of the
enterprise as a whole, even though these have to be considered for segment
reporting purpose under AS-17. This will ensure that there is no double
booking of the consumption and at the same time statistical information
required to be disclosed under Part II of Schedule VI to the Companies Act,
1956 would be available without including any profit element. For this
purpose, depending upon the basis of inter-segment pricing, some adjustments
may be needed, so that apart from quantitative information, financial value of
information disclosed is proper. In this regard, ‘Statement’ gives detailed
guidance. In other words, the Committee is of the view that merely for the
purposes of AS-17, it is not appropriate to bring various elements of
inter-segment transfers as a whole. Segment reporting can be done on the basis
of the information otherwise available with the company.
3. CPE credit requirement for Members :
In March, 2008 issue of BCA Journal (Page 710), it was
reported that members, unless exempted, may undergo unstructured programmes of
learning for specified period in each rolling three-year period. For members in
practice, this period is 30 CPE credit hours and for others it is 15 CPE credit
hours over a period of 3 years.
The following is the indicative list of unstructured CPE
activities :
-
Web-based learning modules
- Self-learning modules and courses (use of audiotapes, videotapes, correspondence courses, computer-based learning programmes)
- Reading and individual home study
- Group or bilateral discussion on technical issues
- Acting as visiting faculty or guest faculty at the various universities/management institutions/ institutions of national importance
- Participation in CPE teleconferencing programmes without the supervision of the POD
- Providing solutions to questionnaires/puzzles available on web/professional journals
- Internal training programmes being organised by firms of Chartered Accountants with seven or more partners.
It is reported that a self-declaration given by a member about participation in such activities each year will be accepted by ICAI for giving CPE credit. It appears that in ‘Group or bilateral discussion on technical issues’ attendance in seminars, work-shops, study circle meetings, etc. organised by any professional association, society or other similar body will be recognised for unstructured programmes.
4. ICAI News:
(Note: Page Nos. given below are from CA. Journal for April, 2008)
i. Annual Membership Fees:
As reported earlier, the Annual Membership Fees payable by members to ICAI have been revised as under w.e.f. 1-4-2008.
(Pages 1629, 1779-1781)
ii. Quality Review Board:
The Central Government has constituted the Quality Review Board under Chapter VII (a) of the C.A. Act consisting of following members:
(a) Shri K. N. Memani – Chairman
(b) Shri A. K. Awasthi,
(c) Shri P. S. Sharma,
(d) Shri Dr. B. C. Jain,
(e)Shri Dushyant Tyagi,
(f)Shri R. Vasudevan,
(g)Shri Ved Jain,
(h)Shri Jayant Gokhale,
(i)Shri Manoj Fadnis,
(j) Shri K. P. Khandelwal, and
(k) Shri G. Ramaswamy.
(Page 1789)
(iii) ICAI publications:
The following new publications are issued by ICAI :
a) Compendium of Opinions, Vol. XXV
b)Insurance Broking
C) Canadian Advantage (A Research Study on Canadian Business Opportunities).
