Applicability of Pronouncements/Legislative Amendments/Circulars etc.
for November, 2013 – Final Examination
Paper 1: Financial Reporting
A. Pronouncements
I. Statements and Standards
1. Framework for the Preparation and Presentation of Financial Statements.
2. Accounting Standards - AS 1 to AS 32.
II. Guidance Notes on Accounting Aspects
1. Guidance Note on Treatment of Reserves created on Revaluation of Fixed Assets.
2. Guidance Note on Accrual Basis of Accounting.
3. Guidance Note on Accounting Treatment for Excise Duty.
4. Guidance Note on Terms Used in Financial Statements.
5. Guidance Note on Accounting for Depreciation in Companies.
6. Guidance Note on Availability of Revaluation Reserve for Issue of Bonus Shares.
7. Guidance Note on Accounting Treatment for MODVAT/CENVAT.
8. Guidance Note on Accounting for Corporate Dividend Tax.
9. Guidance Note on Accounting for Employee Share-based Payments.
10. Guidance Note on Accounting for Credit Available in respect of Minimum Alternate
Tax under the Income Tax Act, 1961.
11. Guidance Note on Measurement of Income Tax for Interim Financial Reporting in
the context of AS 25.
12. Guidance Note on Applicability of Accounting Standard (AS) 20, Earnings per
Share.
13. Guidance Note on Remuneration paid to key management personnel – whether a
related party transaction.
14. Guidance Note on Applicability of AS 25 to Interim Financial Results.
15. Guidance Note on Turnover in case of Contractors.
16. Guidance Note on the Revised Schedule VI to the Companies Act, 1956.B. Announcements
1. Presentation of Foreign Currency Monetary Item Translation Difference Account
(FCMITDA)
In the Revised Schedule VI format, no line item has been specified for the presentation of
“Foreign Currency Monetary Item Translation Difference Account (FCMITDA)”.
Therefore, the Council of the Institute at its 324th meeting held on March 24-26, 2013 at
New Delhi, decided that debit or credit balance in FCMITDA should be shown on the
“Equity and Liabilities” side of the balance sheet under the head ‘Reserves and Surplus’
as a separate line item.
2. Criteria for Classification of Entities and Applicability of Accounting Standards
Due to recent changes in the enhancement of tax audit limit, the Council of the ICAI has
recently decided to change the 1st criteria i.e. determination of SME on turnover basis for
Level II entities from Rs. 40 lakhs to Rs. 1 Crore with effect from the accounting year
commencing on or after April 01, 2012.
Notes:
1. Students are expected to have thorough knowledge of the Accounting Standards (AS 1 to
AS 29) and Guidance Notes on various aspects issued by the ICAI.
2. As far as AS 30, 31 and 32 are concerned, in view of the complexities involved, the
questions involving conceptual issues (not involving application issues) may be asked.
Since a separate topic of ‘Financial Instruments’ is included in the curriculum, simple
practical problems based on AS 30, 31 and 32 may be asked.
(Text of all applicable Accounting Standards and Guidance Notes are available in the
Appendices, Volume II of Financial Reporting Study Material.)
Non-Applicability of Ind ASs for November 2013 Examination
3. The Core Group was constituted by the Ministry of Corporate Affairs (MCA) for
convergence of Indian Accounting Standards with International Financial Reporting
Standards (IFRS). This Core Group decided that there will be two separate sets of
Accounting Standards viz.
(i) Indian Accounting Standards converged with the IFRS (Known as Ind AS)
The MCA has hosted on its website 35 converged Indian Accounting Standards (Ind
AS) without announcing the applicability date. These are the standards which are
being converged by eliminating the differences of the existing Indian Accounting
Standards vis-à-vis IFRS.
(ii) Existing Accounting Standards
The companies not falling within the threshold limits prescribed for Ind AS
converged with IFRS compliance in the respective phases shall continue to use
these standards in the preparation and presentation of financial statements.
Students may note that Ind ASs are not applicable for the students appearing in
November, 2013 Examination
I. Professional Topics/Subjects
1. Code of Ethics
II. A.Framework for Assurance Engagements
II. B.Engagements and Quality Control Standards on Auditing (SQC/SA/SRS/SRE/SAE)
S.No SA Title of Standard on Auditing Effective Date*
1 SQC 1 Quality Control for Firms that Perform Audits and
Reviews of Historical Financial Information, and
Other Assurance and Related Services
Engagements
April 1, 2009
2 SA 200 Overall Objectives of the Independent Auditor and
the Conduct of an Audit in Accordance with
Standards on Auditing
April 1, 2010
3 SA 210 Agreeing the Terms of Audit Engagements April 1, 2010
4 SA 220 Quality Control for Audit of Financial Statements April 1, 2010
5 SA 230 Audit Documentation April 1, 2009
6 SA 240 The Auditor’s responsibilities Relating to Fraud in
an Audit of Financial Statements
April 1, 2009
7 SA 250 Consideration of Laws and Regulations in An
Audit of Financial Statements
April 1, 2009
8 SA 260 Communication with Those Charged with
Governance
April 1, 2009
9 SA 265 Communicating Deficiencies in Internal Control to
Those Charged with Governance and
Management
April 1, 2010
10 SA 299 Responsibility of Joint Auditors April 1, 1996
11 SA 300 Planning an Audit of Financial Statements April 1, 2008
12 SA 315 Identifying and Assessing the Risks of Material
Misstatement through Understanding the Entity
and its Environment
April 1, 2008
13 SA 320 Materiality in Planning and Performing an Audit April 1, 2010
14 SA 330 The Auditor’s Responses to Assessed Risks April 1, 2008
15 SA 402 Audit Considerations Relating to an Entity Using a
Service Organization
April 1, 201016 SA 450 Evaluation of Misstatements Identified during the
Audits
April 1, 2010
17 SA 500 Audit Evidence April 1, 2009
18 SA 501 Audit Evidence - Specific Considerations for
Selected Items
April 1, 2010
19 SA 505 External Confirmations April 1, 2010
20 SA 510 Initial Audit Engagements-Opening Balances April 1, 2010
21 SA 520 Analytical Procedures April 1, 2010
22 SA 530 Audit Sampling April 1, 2009
23 SA 540 Auditing Accounting Estimates, Including Fair
Value Accounting Estimates, and Related
Disclosures
April 1, 2009
24 SA 550 Related Parties April 1, 2010
25 SA 560 Subsequent Events April 1, 2009
26 SA 570 Going Concern April 1, 2009
27 SA 580 Written Representations April 1, 2009
28 SA 600 Using the Work of Another Auditor April 1, 2002
29 SA 610 Using the Work of Internal Auditors April 1, 2010
30 SA 620 Using the Work of an Auditor’s Expert April1, 2010
31 SA 700 Forming an Opinion and Reporting on Financial
Statements
April 1, 2012
32 SA 705 Modifications to the Opinion in the Independent
Auditor’s Report
April 1, 2012
33 SA 706 Emphasis of Matter Paragraphs and Other Matter
Paragraphs in the Independent Auditor’s Report
April 1, 2012
34 SA 710 Comparative Information – Corresponding
Figures and Comparative Financial Statements
April 1, 2011
35 SA 720 The Auditor’s Responsibility in Relation to Other
Information in Documents Containing Audited
Financial Statements
April 1, 2010
36 SA 800 Special Considerations-Audits of Financial
Statements Prepared in Accordance with Special
Purpose Framework
April 1, 201137 SA 805 Special Considerations-Audits of Single Purpose
Financial Statements and Specific Elements,
Accounts or Items of a Financial Statement
April 1, 2011
38 SA 810 Engagements to Report on Summary Financial
Statements
April 1, 2011
39 SRE 2400 Engagements to Review Financial Statements April 1, 2010
40 SRE 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the
Entity
April 1, 2010
41 SAE 3400 The Examination of Prospective Financial
Information
April 1, 2007
42 SAE 3402 Assurance Reports on Controls At a Service
Organisation
April 1, 2011
43 SRS 4400 Engagements to Perform Agreed Upon
Procedures Regarding Financial Information
April 1, 2004
44 SRS 4410 Engagements to Compile Financial Information April 1, 2004
* ‘Effective date’ means that the SA is effective for audits of the financial statements for
periods beginning on or after the specified date.
III. Statements
1. Statement on Reporting under Section 227 (1A) of the Companies Act, 1956
2. Statement on the Companies (Auditor’s Report) Order, 2003
IV. Guidance Notes/Study Guide/Monograph
1. Guidance Note on Independence of Auditors.
2. Guidance Note on Audit Reports and Certificates for Special Purposes.
3. Guidance Note on Audit under Section 44AB of the Income-tax Act.*
4. Guidance Note on Audit of Abridged Financial Statements.
5. Guidance Note on Audit of Inventories.
6. Guidance note on Audit of Debtors, Loans and Advances.
7. Guidance note on Audit of Investments.
8. Guidance note on Audit of Miscellaneous Expenditure.
9. Guidance Note on Audit of Cash and Bank Balances.
10. Guidance Note on Audit of Liabilities.
11. Guidance Note on Audit of Revenue.12. Guidance Note on Audit of Expenses.
13. Guidance Note on Sections 227(3)(e) and (f) of the Companies Act, 1956.
14. Guidance Note on Certificate of Corporate Governance
15. Guidance Note on Computer Assisted Audit Techniques (CAATs).
16. Guidance Note on Audit of Payment of Dividend.
17. Guidance Note on Audit of Capital and Reserves.
18. Guidance Note on Provision for Proposed Dividend.
19. Guidance Note on Auditing of Accounts of Liquidators.
20. Guidance Note on Section 293A of the Companies Act and the Auditor.
21. Guidance Note on Audit of Consolidated Financial Statements.
* Guidance Note on Audit under section 44AB of the Income-tax Act, 1961 (2005 edition)
alongwith the Supplementary Guidance Note on Tax Audit under section 44AB (forming part of
the publication “Guidance Note on Fringe Benefit Tax” published in September, 2006). It may
be noted that the Guidance Note on Fringe Benefit Tax is not relevant for the examination
Applicability of relevant Circulars/Notifications/Regulations etc.
Subject Amendment Content Links For
Reference
The
Companies
Act, 1956
Appointment
of Cost
Auditor by
companies
The Ministry of Corporate Affairs vide
General Circular No. 36/2012 dated
6
th November, 2012 has provided
some changes in the procedure for
the appointment of cost auditor under
section 233B of the Companies Act,
1956 to be followed by the
companies and the cost auditor.
https://www.mca.go
v.in/Ministry/pdf/G
eneral
Circular_36_2012.
pdf
The
Companies
Act, 1956
Filing of Cost
Audit Report
and
Compliance
Report in
XBRL mode
The Ministry of Corporate Affairs vide
General Circular No. 43/2012 dated
26th December, 2012 has decided
that all cost auditors and the
companies concerned are allowed to
file their Cost Audit Reports and
Compliance Reports for the year
2011-12 with the Central Government
in the XBRL mode, without any
https://www.mca.go
v.in/Ministry/pdf/G
eneral
Circular_43_2012.
pdfpenalty, within 180 days from the
close of the company’s financial year
to which the report relates or by
January 31, 2013, whichever is later.
The
Companies
Act, 1956
Companies
(Directors
Identification
Number)
Rules, 2006
The Ministry of Corporate Affairs vide
Notification No. G.S.R. 173(E) dated
15th March, 2013 has issued
Companies Directors Identification
Number (Amendment) Rules, 2013
by amending the Companies
(Directors Identification Number)
Rules, 2006.
https://www.mca.go
v.in/Ministry/pdf/G
az_noti_GSR173-
E_dated_15mar20
13.pdf
The SEBI
Act, 1992
SEBI (Issue
of Capital and
Disclosure
Requirement)
Regulations,
2009
SEBI vide Notification No. LADNRO/GN/2012-13/32/4947 dated 27th
February, 2013 has issued SEBI
(Issue of Capital and Disclosure
Requirements) (Amendment)
Regulations, 2013 by amending SEBI
(Issue of Capital and Disclosure
Requirement) Regulations, 2009.
https://www.sebi.go
v.in/cms/sebi_data
/attachdocs/13619
65458649.pdf
Non-Applicability of the following Circulars/Notifications for November, 2013 examination
S.No. Subject Matter Content
1. Companies (Second
Amendment) Act,
2002
[relating to Winding
up]
Not Applicable
[Only General Provisions of winding up as covered
under Paragraph 9.4 of the study material is
applicable for the examination.]
Since, new provisions as introduced by the Companies
(Second Amendment) Act, 2002, have not yet been
completely notified so such provisions are not applicable
from the examinations point of view.
However, certain problems have been covered under
para 9.4 of the study material which are applicable for
the students in the relevant examination.
2. Provisions relating to
Revival and
Rehabilitation of
Sick-Industrial
Companies
Applicability of Finance Act, Assessment Year etc. for November, 2013 Examination
(1) The amendments made by the Finance Act, 2012 in Direct Tax Laws & Indirect Tax
Laws;
(2) The provisions of Direct Tax Laws as applicable for the assessment year 2013-14;
(3) The significant notifications and circulars issued upto 30th April, 2013 (DTL and
IDTL).
(The Study Materials of Direct Tax Laws and Indirect Tax Laws relevant for May, 2013 and
November, 2013 examinations are updated based on the provisions of law as amended by the
Finance Act, 2012 and significant circulars and notifications issued up to 30.6.2012. The
amendments made by the Finance Act, 2012 and notifications and circulars issued between
1.7.2011 and 30.6.2012 are also separately discussed in the publication “Supplementary
Study Paper-2012”. The publication “Select Cases in Direct and Indirect Tax Laws” relevant
for November 2013 examination contains a discussion of recent significant select cases in
Direct and Indirect Tax Laws.)
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