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proper BOA kept or Not ??

658 views 4 replies

hello everyone,

i am doing internal audit of a pvt ltd company(mfg) and found that following entry is passed

PF Employer contribution a/c ---dr1000

 To Bank a/c---1000

provision entry  is not passed i.e.

PF employer contribution a/c dr---1000

  To PF employer contribution payable a/c--1000

As per section 209(3) of the companies act proper BOA shall not be deemed to be kept unless the following conditions are satisfied

Ture & Fair View

Accrual Basis

Double Entry

My questin is there violation of section 209(3)

Replies (4)

No there is no violation. There is two types of accounting

first debit expense and credit expense payable account and then made payment entry.

Second Debit expense and credit bank account.

 

Provision entry required only at year end.

If this was not made at year end then this was a violation otherwise not

agree with sunil.........

Sec. 209(3) , Books is said to be true & fair if it gives a true & fair view of the state of affairs of its company or branch.  the books must not supress any transaction and shall follow accrual basis of accounting. Generally, the accrual entry is required to be passed, if the period of payment is different from the period to which such expense is related. in your case, if the period of payment is different from the period of relevance of such expense, qualify this fact in the report if the amount is material.  

you should look into substance of transaction

pasing a payable enrty and then cancelling it with a cash enrty

or straight away passing a cash entry

will have no effect on actual transaction i.e. recording of expence(Emp. Cont. to PF)


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