SOCIETY NEWS

The Internal Audit Committee of BCAJ prepared its annual calendar of events and other knowledge-sharing initiatives back in the month of July, 2021. All the events / webinars were bifurcated into four major categories, viz., Internal Audit, Risk Management, Technology and Forensic Studies. The Committee also initiated a plan for a ‘Blog a Month’ styled ‘Internal Audit Matters (Pun Intended)’ which was a collaborative space for issues to be discussed and concerns to be voiced and also to help find solutions. The activities undertaken by the IA Committee during the July to September quarter are summarised below:

A. Blogs
The Blogs were launched in August, 2020 and till date the IA Committee has published 14 posts on various topics related to Internal Audit. Bloggers include several veterans from the field of Internal Audit. The Blogs have garnered a total of 14,000+ views and received 400+ comments. The Blogs published during the quarter were:

B. Workshop on ‘Conventional and Novel Techniques for Forensic Investigations’
The IA committee, jointly with Chetan Dalal Investigation & Management Services (CDIMS – renowned for conducting forensic and investigation assignments), initiated an E-learning course on Forensic Accounting and Investigation Studies. Over 60 participants have enrolled for the course and about 25 have successfully completed it. As one of the events for course promotion, a half-day workshop was arranged on 27th August at which about 75 attendees were present. CA Chetan Dalal and CA Mahesh Bhatki were the speakers at the workshop. On behalf of the BCAS, the course was coordinated by CA Vishal Mandani, a member of the IA Committee.

Organised via the Zoom software, the workshop covered two topics: 1) Theory of Inverse Logic in Fraud Investigation using the conventional and novel methods with unique and unusual case studies, and 2) Data Analysis using the Novel Quantification Model.

The welcome speech was delivered by President CA Abhay Mehta who pointed out that fraud investigation is one of the evolving areas for qualified professionals since the number of frauds is increasing every day. Further, different methods are being adopted by fraudsters and it is the need of hour to detect such frauds using novel investigation techniques. CA Manish Sampat introduced CA Chetan Dalal and also shared his own experiences gained while working with him on various professional assignments.

CA Chetan Dalal explained the practical approach of using the Theory of Inverse Logic in detecting fraud with the help of various case studies. In one of his case studies, he explained that a person can see a star despite the fact that it may have collapsed by the time its light reaches the earth – because of the tremendous time taken by light to travel. Various case studies relating to insurance claim frauds, misappropriation of assets by fraudsters, etc., were explained along with suggested methods to identify the red flags and carry out systematic investigation.

CA Mahesh Bhatki described how to carry out Data Analysis using a novel quantification model with the help of case studies and examples. The use of Excel and other casewares for carrying out different types of Data Analysis was explained through practical examples to identify the red flags and pursue further analysis to detect frauds.

Participants asked questions related to writing reports post-forensic audit and the benefits of various tools / casewares available for forensic audit. CA Uday Sathaye made the closing remarks and CA Kishore Iyer proposed the vote of thanks.

C. Revival of MOU between BCAS and IIA Bombay Chapter
During the quarter, representatives of BCAS and IIA Bombay Chapter (‘IIA BC’) interacted closely to revisit the MOU entered into in 2017 and review the activities undertaken under it so far. The objective was to ideate and deliberate the areas where there is scope for stronger association and prepare an action plan to implement ideas.

The meeting was successful with both the parties committed to activate the MOU through a series of innovative and interesting initiatives all through the year. Various joint events, activities and initiatives to advocate Internal Audit, Joint Internal Audit Training Programmes, Events and Activities to bring BCAS and IIA members on the same platform, to plan some joint publications, to host a few lecture meetings every year with experienced speakers and so on were identified.

D. Curtain-Raiser Event with IIA BC
A virtual curtain-raiser event was organised by BCAS along with IIA Bombay Chapter on 18th September to announce the above-mentioned initiatives. The event was organised to provide detailed insights into various certification programmes offered by IIA globally as well as the CIA challenge examination specifically designed for Chartered Accountants who wish to build their career in IA. The speakers, both from IIA BC, were CA Percy Amalsadiwalla, the current president of IIA BC, and CA Chetan Thakkar, member of the BOG of IIA BC.

The event commenced with a welcome address by CA Mihir Sheth, Vice-President of BCAS. The opening remarks about the new initiatives planned jointly with IIA BC and the curtain-raiser event were made by CA Nandita Parekh, Co-Chair of the IA Committee of BCAS. Both speakers were introduced by CA Nirav Mehta, a member of the IA Committee.

CA Chetan Thakkar opened the technical sessions by describing the mission, goals and objectives of the global institute IIA, global statistics of its members / affiliates / countries, etc., benefits of IIA memberships of IIA India, various certifications offered globally by IIA, CIA exam fees and resources available for study.

CA Percy Amalsadiwalla shared information about the CIA Challenge exam, a single exam specifically designed for eligible members of the 17 qualified accounting bodies of various countries, which includes ICAI members. The speaker scrolled through various FAQs designed by the IIA for the CIA Challenge exam which included eligibility, documentation, registration process, syllabus, schedule, fees, etc. He also announced a special offer to all BCAS members desirous of taking the CIA Challenge examination, preferential rates for becoming IIA members, namely, 10% discount in membership fees for the year 2021-22 and waiver of one-time registration fees of Rs. 1,500 for a short window between 18th September and 15th October. The questions posed by the participants were addressed by both speakers.

The event was attended by 107 participants. The vote of thanks was proposed by CA Atul Shah, Convener of the IA Committee of BCAS. The event is available for viewing on YouTube video link: https://www.youtube.com/watch?v=_vt6kbuj5Ww.

Or, watch it at:

E. Workshop on An overview of Tableau and Power BI
A unique virtual workshop to explore new possibilities on Audit Analytics with the ‘magic of data visualisation’ for internal auditors was organised by the IA Committee. It was designed in such a way that it provided training for two hours every day for four days from 22nd to 25th September.

The welcome address was delivered by President CA Abhay Mehta. Opening remarks about the workshop and the introduction of speakers was done by CA Uday Sathaye, Chairman of the IA Committee.

Mr. Asif Rampurwala and Ms Sajeela Sagar gave an overview of the Tableau on the first day. Ms Sagar conducted the interactive workshop on the Tableau on the second day. Ms Deephika S. conducted the interactive workshop on Power BI on the third and fourth days.

The workshop was attended by 36 participants of different age groups (including six young members and five senior citizens) from different cities (24 from Mumbai and 12 from other cities). The workshop was quite interactive and the participants were pleased with the knowledge gained by them.

The votes of thanks for the speakers were proposed by Ms Purvi Malani, a Convener of the IA Committee, and Ms Mitalee Chovatia, a member of the IA Committee.

‘EXPECTATIONS MANAGEMENT’ BY MAHATRIA

The Human Development Study Circle arranged a Zoom meeting on ‘Expectations Management’ by Shri Mahatria on 10th August. It featured a video screening followed by a discussion led by CA Vinod Kumar Jain.

The meeting commenced with the screening of a video on ‘Expectations Management’ delivered by Shri Mahatria from Infinitheism. Initially, Mr. Manohar from Infinitheism shared information about various activities and works being undertaken by Shri Mahatria and Infinitheism.

He revealed that for over 25 years Shri Mahatria has been empowering millions across the world to live a life of ‘Holistic Abundance’. He helps people to overcome their belief systems and conditioning and to discover breakthroughs in health, wealth, love, bliss and a spiritual connect. People from all walks of life find their success, purpose, peace, happiness, faith and miracles with Infinitheism, the path of holistic abundance.

In the video, Shri Mahatria explains the importance of discipline for any nation or individual to grow. It is very important to give one hour to the body through exercise, etc., only then can the body take care of itself for the next 23 hours. He said that when seeker and giver meet with strong intensity, transformation takes place, otherwise it is only a mere exchange of information.

Shri Mahatria pointed out that people continue with their childish behaviour – first they cry for a Rs. 60 car in childhood and then for a Rs. 60 lakh car in adulthood. This ‘crying’ becomes acute with anger, frustration, disappointment, depression, unhappiness, sadness, envy, jealousy, etc. He noted that if we squeeze a lemon, lemon juice will come out, and when we squeeze a grape grape juice will come out. Similarly, what is inside will come outside – when life squeezes us, what comes out of us is that which is inside us.

We need to channelize our emotions. There is no point in cribbing or spitting our emotions; it is better to give them a direction. Our life’s greatest turning point may be a big setback… Most of our frustration comes from our choices like standing below a mango tree and expecting oranges to fall at our feet. We have a right to choice; consequences are always born of existential (God) forces.

Out of every choice, as per the design of life, there are four possible consequences – getting what is expected, getting more, getting less or getting the opposite. Life is not linear but cyclical. No matter what you get, you need to go back and execute the next choice. Good results can be seen as motivators and negative results will bring experience and maturity.

Shri Mahatria concluded by suggesting that we follow CAR, or Change the changeable, Accept the unchangeable, or Remove yourself from the unacceptable.

After the video presentation, CA Vinod Jain explained in brief the learning from this video.

PRE-PACKAGED RESTRUCTURING

President CA Abhay Mehta welcomed the participants at the lecture meeting on ‘The Pre-packaged restructuring – The way to go’ organised by BCAS on 1st September.

The speaker, CA Sajeve Deora, started with the  introduction and history of bankruptcy law as introduced in British India and then amended by various laws and authorities in the post-Independence era. The Government introduced the Insolvency Law in 2016 but it was found to be wanting in some aspects relating to MSME businesses.

 

MSME businesses are peculiar in certain aspects like predominantly being managed by the promoter, dependency on the promoter’s skills, personalised relationship between the promoter and stakeholders, and hence replacing the promoter from the management can be difficult for the business, apart from the high cost of CIRP (Corporate Insolvency Resolution Process) for the MSME business entity.

Pre-packaged restructuring as it stands today is available only for MSMEs. It provides an opportunity to them to act before the creditors take action. However, it is expected that management should be acting in a bona fide manner and not to defraud its creditors and other stakeholders. The promoters would be able to restructure the debts and assets of the business with the support and sacrifice of all stakeholders, including Government, pension funds, creditors, lenders, etc.

The speaker also shared his experience of international practices for Pre-packs in the UK, the USA and Germany.

Speaker CA Sajeve Deora then dealt with various important aspects of PPIRP (Pre Package Insolvency Resolution Process) covering:
• Eligibility criteria,
• Process of initiating PPIRP and filing the application,
• Process during formulation of resolution plan,
• Removal of promoters by CoC (Committee of Creditors) during PPIRP,
• Duties and powers of promoters / management during PPIRP,
• Restructuring process under resolution plan,
• Contents of resolution plan,
• Approval of resolution plan,
• Termination of PPIRP,
• Suggested / model timelines for PPIRP,
• Implementing sustainable restructuring.

Later, he responded to all the queries raised by the participants.

The meeting concluded with a vote of thanks.

Youtube Link – https://www.youtube.com/watch?v=W9W7l4px1Aw
QR Code

 ‘VALUATION PRINCIPLES AND DEFINITION OF CONSIDERATION UNDER GST’

The Indirect Tax Study Circle’s meeting on the above subject was organised on 13th September through the Zoom process.
x
This was the Indirect Tax Study Circle’s fifth meeting of the year 2021-22. It was addressed by Group Leader CA Umang Talati and Mentored by CA Deepak Thakkar.

Group Leader CA Umang Talati had prepared six case studies on the law and practical issues covering Valuations and Considerations under GST. The presentation broadly covered the nuances of the definition of Consideration as well as Valuation Issues on:

1. Write-back of deposits,
2. Vaccination drives during the pandemic for employees, vendors, relatives,
3. Pure agent concept for tour operators and different models of valuations of package tours,
4. Valuation implications of TDR,
5. Can cryptocurrency be considered as consideration?
6. Job work valuations.

The participants took active part in the discussion on all the case studies and the issues were discussed at length. Mentor CA Deepak Thakkar made exhaustive comments on a variety of aspects covered in all different case studies. Around 60 participants benefited from the active discussion lead by the Group Leader and the Mentor.

UNDERSTANDING THE LAW AND SCIENCE OF KARMA

The Human Resources Development Committee of the BCAS organised a meeting, presented by CA Vijay Mehta, on ‘Understanding the Law and Science of Karma,’ on Tuesday, 14th September, on the virtual online platform.

The discussion was focused on Karma from the perspective of Law and Science.

The Law of Karma is based on the law of causality. Since it is based on natural and universal law, it is governed automatically and requires no interference from anyone to operate or control it. The rules are universally applicable to all living beings. The Law of Karma gives justice equally to all without any exception. The example of the 19th Tirthanker was cited in support of its universal application and justice irrespective of position. However, an exception from its ambit was carved out for Sidhha Jiva. They are the ones who have destroyed the reason / cause, namely, attachment and aversion (Raag and Dwesh) necessary for Karma to bond with the Soul.

To better understand the law, Karma is compared to a Court, a Doer (Karta) with an Accused, and a third person who only executes the judgment of the Court / judge as a Jailor. Drawing a parallel, anyone fighting with the Jailor, who is ordered to give punishment, increases the sentence ordered by the Court. The importance of periodicity of seeking immunity was explained in a nutshell. The procedure for lifetime immunity was explained with compounding fees, as decided by Guru, to be compensated to get rid of bad Karma.

The science of Karma is based on the principle that every action has its reaction in the opposite direction. Karmaisa Karmic particle mixes with the Soul like water with milk. These Karmic particles are grouped atoms of matter known as Karman Vargana. They get bonded to a soul like a magnet attracting iron particles. The Soul continuously engages in Raag and Dwesh, which creates a magnetic force to attract karmic particles. This Karma gives its effect upon maturity. Functionally, Karma covers and vitiates the virtues of Souls. Bondage of Karma is the leading cause for the Soul not experiencing and experiencing its virtues diversely. Karma is broadly classified and named in eight categories for eight significant virtues of the Soul. For example, the quality of infinite knowledge of the Soul covered by Karma is called Gynavarniya Karma.

The four stages of Karma, namely, influx, bonding, silent period and ripening, were explained in a nutshell. During the third stage or the silent period, it is possible to reduce past bad Karma (Paap Karma) and increase past good Karma (Punya Karma) if one knows the Science of Karma.

Summing up, Karma is portrayed as the enemy since it causes a never-ending cycle of birth, death and misery. But knowing the Science of Karma is important because it is only during human life that this knowledge can be put into action.

INTERPLAY OF NEW AND OLD PENALTY PROVISIONS UNDER THE INCOME-TAX ACT, 1961

The Direct Tax Laws Study Circle Meeting on ‘Interplay of new and old penalty provisions under the Income-tax Act, 1961’ was held online on 17th September.

The Group Leader, CA Krishna Upadhyay, gave a comprehensive analysis of the erstwhile section 27(1)(c) of the Act. The provisions of section 270A were also discussed at length with illustrations. The exceptions to under-reported income were discussed in detail. Further, the differences between 270A and 271(1)(c) were highlighted by the Group Leader.

Thereafter, he discussed in detail the immunity provisions of section 270AA with illustrations. The session ended with the speaker making his concluding remarks and suggesting practical steps to be taken on receipt of a penalty notice.

ENERGY SECURITY, FOOD SECURITY AND DEFENCE SECURITY – LEADING TO OVERALL ECONOMIC SECURITY

The International Economics Study Group held its meeting on 28th September to discuss ‘Energy Security, Food Security and Defence Security – Leading to Overall Economic Security’. CA Shalin Divetia led the discussion and presented his thoughts on the subject.

He presented AtmaNirbhar – the Holistic Approach to National Security – and provided crucial aspects of each of the critical issues. As regards Food Security, India is a net exporter of agri-related products but edible oil and pulses have still to be imported; India will overcome this hurdle very shortly.

Energy Security is very critical due to our overdependence on oil imports but the Government is bridging the gap with ethanol blending and renewable energy.

As regards Defence Security, India has focused on Make in India, although it is one of the largest importers of arms, to overcome  the shortfall and the current initiatives are paying rich dividends which got further strengthened by PLI. With this, India appears to be on the path to economic security with Forex reserves climbing to all-time highs.

CA Harshad Shah presented his thoughts on ‘China’s Evergrande Debt crisis – Cause and Effects’, and highlighted that Evergrande is the second largest real estate developer (and also the world’s most indebted real estate firm) and any adverse development could spill over to China’s real estate sector (which is highly overleveraged) and contributes about 29% of the GDP; but any mess-up in this sector could spiral into a potential debt crisis as China is also highly leveraged with a debt-to-GDP ratio of around 300%.

But then China has the comfort that most of its debt is financed by very high domestic savings of 45%. Evergrande’s woes are merely the symptom of a much bigger problem as Chinese regulators have introduced ‘3 red lines’, a stress test and Mr. Xi’s slogan of ‘common prosperity’. The measures include making housing more affordable and ridding the property market of speculation. But any accident or misstep could result in a domino effect and downturn in the economy, debt crisis, unemployment and probable social unrest.