What to do with the long pending unpaid Earnest Money Deposit (EMD) accepted by a Government Company?
we found that there are so many unpaid (for more than 5 years) EMDs. Also there is no terms and conditions with respect time period for release or request for release of EMD in Notice Inviting Tender.
Dear Mam,
You can include an observation in your report based on the ageing of outstanding EMDs.Like upto 1 Year, 1-3 years & more than 3 years, etc or How much is against Completed POs/WO....
Generally, Deposit made or sum paid at the time of Quotations/NIT are non refundable & should be recognised as Misc. Income in the P/L A/c.
Whereas Deposit made after Purchase/Work order is placed, are Refundable deposits, which should be refunded as per the terms of Purchase Order/Work Order.
You should seek a written confirmation of the fact that those are Refundable or Not?
Based on the above, you can accordingly specify your observation in your report.
Karia Overseas
Ahmedabad
CA
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