When I told my mom that I wanted a professional woman as my wife, she got
me one; a Chartered Accountant.

She uses LIFO method while taking out the refrigerated food. She thinks I
am no good at figure work. Fine with me, for now she handles the budget of
the house.

Initially she used to send me a bill at the month end, but when I told her
that I am not her client but her husband, she asks for the money in
advance. The expenses had been rising steadily over the months, so

one day I snooped into the papers maintained in a current file.

No wonder! She was charging conveyance and overtime to the house budget.
 
She is crazy, I tell her but she corrects me. "No my darling, I am the
auditor." I fail to see the light.

Every scrap of the paper in our house is filed.

She tells me as per some Ordinance she must keep a copy of every thing for
at least ten years before destroying it.

I am worried.

The other day we had an hour-long fight. Later, I got to know that she had
charged that hour to a client of hers, in the time sheet. My time was put
down as unoccupied.

She says that she loves me and I tell her that I love her too. However, she
never believes me. She says that there is susceptibility of it being a
misstatement. Duh! She wants my representation on this & Expert opinion of
some Expert!

Not a long time back my brother's wedding was to be solemnized. Wedding
cards had been sent. After some time I started receiving a steady trickle
of letters. I was puzzled until my wife explained that external evidence
was more reliable. She had called for confirmations from all those to whom
cards were sent.

When she cooks, my wife at times does not go by recipe. Where the recipe
says add half-teaspoon vinegar, one tsp black salt or one teacup of water,
she ignores them. She says that they are not material when taken in context
of whole meal being prepared.

She is crazy, I tell you. Surprisingly everybody calls her an auditor,
instead. I checked the dictionary and it did not state that auditor is a
synonym for crazy. The dictionary must be outdated. When we got married,
she had given me an Engagement Letter and I Had said how cute-how sweet.Now
she gives it to me every year saying that her standards state that it must
be sent anew if there is any indication that I have misunderstood the
objective and scope of engagement. Huh!

Apart from sending me the engagement letter once again she says I can't get
rid off her just like that. She says that she has the right of being heard
before I appoint some one else. It seems I must keep reading one local and
another English newspaper published and circulated in the vicinity of our
house for more details.

Phew! For a minute, I thought that we had jeopardized our going concern
status. Duh! Dare I say so?? I am told by one of my female colleagues who
is married to a CA that the scenario is even worse when the guy is a CA.

Apparently he capitalised the wedding expenses as preliminary expenses and
is writing it off every year.

Also the time he spent dating his wife before marrying her is still under
consideration for valuation under AS-26...valuation of intangible assets.

So guys please think twice....should u really marry a CA? And yes please
discount it by the appropriate rate to arrive at the present value of the
risk of doing so

Are you ready for the debate? Okay, let me start with a basic and very familiar sight as an example. Imagine a young girl (no offence towards the gender) aged around 20 years offering prayers to God before taking her meal to thank HIM for giving her a meal for the day which many couldn’t even think of.

But have you ever thought what the real thing that she does is? Here is what I have analysed the real mindset behind her prayer - she Thank God for giving her a meal which in the first place is an act of selfishness. Point no.2 is that she forgets the people around her in the world who couldn’t afford even a half of what she has got. So at this juncture instead of praying for asking for one meal a day for the deserving she is contended with what she has got and prays for what she has already got. But the person who believes in self-belief will not waste his time praying rather he would think about his next step. You can ask me how? Let me explain, a person who proclaims self belief will always thinks positively as against the person who believes in prayer who thinks about the negative aspect and resorting to prayer to wish for a positive outcome and thereby losing one’s self confidence. You might ask me on what grounds that person having self-confidence will always think positive.

There is no such evidence with which I’m telling this but there is a small analysis which one needs to do, to accept what I have told earlier. What is that analysis? Here comes the analysis, a person who is having self-belief and doesn’t believe in prayer naturally doesn’t have an option to think nothing but the positive outcome. To be much simpler, such a person cannot afford to think negative because he couldn’t even pray to wish for a positive outcome as he doesn’t believe in prayer itself. So this leaves him with no choice but to think positive which results in a self confidence that leaves him with no fear.

This creeps up another question that how can I say a person with self-belief doesn’t have fear? He has no fear because when the outcome what he expects turns out to be negative he has no one to blame except himself. So he doesn’t have the luxury of blaming others and it’s very difficult to blame one’s own self. This makes him start thinking what made his efforts go in vain. He will come out with a better and stronger effort the next time and he will strive hard until he tastes the success and he will feel ownership for the success because it was all his effort which has got him the success.

But when it comes to a person who prays faces the heat on the first attempt, he will easily gets dejected and puts the blame on someone else. It might even be the same HIM to whom they prayed for their success.  So they keep wasting their time in blaming and criticizing their fate instead of thinking how to achieve their goal until they realize they have wasted so much of time by then it would be too late.

Okay I can sense the discontent on whatever I have given above as all these are my personal ideas. But I have attempted to make you understand what I’m up to with a few live but simple happenings around the world and most importantly around and within us.  To make my examples more categorical and simpler, I have bi-furcated the ideas into three parts: Silly example, Political and Life oriented.


SILLY EXAMPLE:

As a student everyone wanted (pray) to secure a first rank (assuming at least one-third of that lot put in the same effort to secure the first rank), but in reality the first rank is secured by only one and he climbs to the top of the ladder. What do you think the reason behind it? When you say everything is possible with the help of prayer why can’t that first rank holder be 'You" when you have put the same effort? So it all boils down to the effort which one puts. And interestingly that first rank holder might be a person who never prays at all!!!! So can I say it’s all because of efforts and not because of prayers? Think again Humans!!!

POLITICAL EXAMPLE:

Everyone around the world knows that the muslims are the most vigorous people who prays regularly. At the same time most of us know the situation that exists in Pakistan and Afghanistan.  There was a bomb blast inside a mosque, the people killed were not the evils but the people who prayed and who were praying. Do you think those people who lost their lives were praying for their life to be ended – NEVER.

The politicians in the world are known for their corruptions and they are the people responsible for war, prise rise, farmer suicides, food crisis, homeless people and the list goes on. In spite of all these, the politicians still continue to lead a successful life. These politicians are successful even after people’s continuous prayers against them. The so called richest God in India is in a place called Tirupathi in Andhra Pradesh. But the place is well known for lots and lots of farmer suicides as they were denied a single piece of bread a day. If a prayer can do miracles why this happens very close to one of the richest Gods in the world? Why surveillance cameras, reserve polices and securities with weapons guarding the temples and jewels? Can’t the savior of all save himself? Think again mates!!!!

LIFE ORIENTED EXAMPLE:

Everyone knows that person born on earth is supposed to die one day. Then why people go for continuous prayers to save the life of their dear ones? When such prayer is not fruitful why they don’t think about the reason behind their prayers yielding no result? So, when making you live or leaving you to die are not connected with prayers what is the use of praying? What is the use of looking for a doctor? It’s the effort of the doctor which saves the life of a person and not the prayer. This can be proved by saying without praying for a person if a person is treated by a doctor, the life of that person might be saved. But do you think the other way around is possible? Doesn’t it ring a bell inside your head?

I end my first ever blog and ideology with a famous dialogue from a famous regional movie – 'I never said God doesn’t exist, all I said was if HE exists it would have been nice.' ('Kadaval illai nu yaar sonnathu, irundha nalla irukkum.')


By Prabhu Govindarajan

ONLY 2%  STUDENTS  SOLVED THIS IN CAT EXAM ..........

5+3+2 = 151022

9+2+4 = 183652

8+6+3 = 482466

5+4+5 = 202541

THEN ;

7+2+5 =  

FIND OUT THE ANSWER,IF  U R BRILLIANT..

Direct Taxes Code a.k.a DTC a much expected new tax structure designed to make the Indian tax laws as simple as it can be and to improve the tax compliance in the country on an overall basis. The Government at the draft stage of the code told that the code will bring variety of benefits for both the companies and the individuals by reducing the tax rates for companies and increasing the slab rates for the individuals. The code also consolidates income tax and wealth tax. The concepts like “Assessment year” and “Previous year” are abolished and new terminology called “Financial year” is introduced for the first time in the Indian Income Tax Law. But the few areas which made few butterflies to fly in the stomach of many were the concepts like EET, taxing MAT based on the gross assets, removing various tax exemptions. This brought dissent from various people including professionals and experts and with the revised discussion paper the DTC was made relatively a people/tax payer friendly code.

The government in the original draft has messed up with the method of taxing Capital Gains. But the bill passed in the parliament contains decently modified capital gain taxation.

The DTC introduced in the Lok Sabha is completely a different one compared to the original draft. The tabled one has much lesser benefits and exemptions. The new code is expected to be made applicable form 1^st April 2012 as against the original proposed date of 1^st April 2011.

Here come the highlights of the DTC as it stands today:

1. The tax rates and slabs are –

          Men and women are at par in DTC

1. Various items earlier allowed as deduction under Chapter VI A are removed under the new DTC. Items such as Unit Linked Insurance Plans (ULIPs), Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures bonds, house loan principal repayment, etc. are not considered for allowing deductions. However, the concept of EEE is retained in the place of proposed EET.
2. The deduction on income for investments has been retained at Rs. 1,00,000/-. Further an additional Rs. 50,000/- is allowed as deduction for contribution towards pure insurance.
3. Exemption of Rs. 1,50,000/-per year for interest on housing loan for self-occupied property is retained.
4. The levies surcharge and education cess are abolished.
5. Income from House Property : Standard deduction has been reduced to 20% of Gross Rent from the previous 30%. Concept of deemed to be let out is abolished in DTC.
6. Medical Reimbursement benefits have been increased to Rs.50,000/- from the current limit of Rs. 15,000/-.
7. Dividend Distribution Tax has been fixed at a rate of 15%.
8. A very bad news for the NRIs is the change in definition of residential status. A person will be a resident in India if he satisfies the following two conditions :

(a) for a period, or periods, amounting in all to one hundred and eighty- two days

or more in that year; or

(b) for a period, or periods, amounting in all to—

(i) sixty days or more in that year; and

(ii) three hundred and sixty-five days or more within the four years

immediately preceding that year.

Foreign Company are to be treated as resident in India if the control and management of its affairs is situated wholly or partly in India in the financial year.

1. MAT has been proposed to be taxed at 20% of the Book profits and not on the Gross assets as proposed earlier.
2. Capital gain Long term is now from asset held more than one year.
3. Indexation Base year to be changed to 01.04.2000 from 01.04.1981 so no tax on gains realised between 1981 to 2000.
4. No Tax on Long term capital gain on securities & equity linked mutual funds, For short term capital gain tax rate is 50 % of normal slab rate applicable to the asseessee.
5. There is no relaxation to the tax payer in the case of short term capital gains. Tax will be required to be paid on the STCG as any other income on the normal rates.

Folks wait for more information and latest updates on DTC in the coming days.

I hope the information provided above was helpful. The readers are welcome to add their points on latest developments in DTC.

Part 2 
 
SCOPE LIMITATIONS 
 
Intentional omissions have been made in respect of concepts that a professional CA is expected to have mastered and also in respect of concepts which for a mind like mine seems nothing more than Greek and Latin 
 
A) REVENUE RECOGNITION 
 
The broad principles in IFRS are generally followed without any further guidance or exceptions for certain industries 
USGAAP guidance on revenue recognition is detailed, extensive and specific to industries 
Indian GAAP does not provide a comprehensive guidance, thereby guidance being taken from legal considerations, past practices 
 
A1) SALE OF GOODS - RECOGNITION CRITERIA 
 
Probability of economic benefit, reliable measurement of revenue, transfer of significant risks and rewards associated with ownership, entity does not have any effective control over the goods, reliable measurement of costs – IFRS 
Indian GAAP also has similar requirements as in above, except that when costs cannot be reliably measured, it influences the timing of revenue recognition 
 
A2) SALE OF SERVICES - GENERAL 
 
When the outcome of a transaction can be reliably estimated, use percentage of completion method. When the outcome cannot be reliably estimated, then recognize revenue only to the extent of recoverable costs. However, if recovery of costs itself is uncertain, revenue recognition would need to be deferred. Revenue can be recognised on a straight line basis, where services are covered over an indeterminate number of acts over a specified period of time - IFRS 
Indian GAAP similar to IFRS, except that completed services contract method are used in certain cases 
 
A3) SALE OF SERVICES - RIGHT OF REFUND 
 
Agreements containing a refund clause should be evaluated to determine if the outcome of the contract can be estimated reliably and if the entity would be able to obtain economic benefit from it. Where reliable estimate is not possible, recognise revenue to the extent of recoverable costs incurred - IFRS 
Indian GAAP does not provide any specific guidance. However, in practice, the evaluation would be similar to that in IFRS, but a zero profit model is not used 
 
A4) MUTIPLE ELEMENT ARRANGEMENTS 
 
Though revenue recognition is done separately for each transaction, in certain cases, it becomes necessary to split a transaction into components or to combine two or more transactions so that they reflect the substance of the transaction. Evidence for fair value in such cases can either be the normal price that is charged or cost plus mark up - IFRS 
Indian GAAP does not provide any specific guidance 
 
A5) MULTIPLE DELIVERABLE AGREEMENTS - CONTINGENCIES 
 
When a portion of the amount allocable to a delivered items is contingent upon the delivery of additional items, then IFRS imposes limitations on the amount allocable to the delivered item. A thorough consideration of all factors is necessary to draw a conclusion 
Indian GAAP does not provide any specific guidance 
 
A6) MULTIPLE ELEMENT ARRANGEMENT - CUSTOMER LOYALTY PROGRAM 
 
IFRS requires that awards/credits earned by the Customer would need to be accounted on the basis of multiple element arrangement 
Indian GAAP has no specific guidance on the issue. Generally, revenue is not split and only an estimated liability for redemption of goods or services is recorded 
 
A7) COMBINING AND SEGMENTING CONTRACTS 
 
Under IFRS, a group of contracts are combined and treated as single, when they are negotiated as part of a package and other specified conditions are met. Further, where a contract consists of construction of more than one asset, each asset is to be viewed as a separate construction contract, if acceptance and rejection of proposal can take place asset wise and costs&revenue cane be measured asset wise 
Indian GAAP – Similar to IFRS 
 
A8) BARTER TRANSACTIONS 
 
IFRS – A non monetary barter transaction of similar goods and services is not considered to have commercial substance and hence, the profit or loss is not recognised. In non advertising barter transactions, measurement is based on the fair value of items/services received or else on basis of fair value of items/services rendered (where fair value of receipts cannot be reliably determined). In case of advertising barter transactions, recognition is with reference to fair value of services provided 
Indian GAAP – No specific guidance, hence practice is to either not record the transaction or record it at cost or fair value 
 
A9) EXTENDED WARRANTY 
 
In case of IFRS, revenue from sale should be deferred and recognised over the period of warranty.  
No specific guidance in Indian GAAP 
 
A10) DISCOUNTING OF REVENUE 
 
Discounting of revenue under IFRS is done when revenue inflow is deferred. An imputed interest rate is used for determining the amount of revenue to be recognised and now and the interest income that has to be recognised over the period of time 
Discounting not required under Indian GAAP 
 
B) EXPENSE RECOGNITION - SHARE BASED PAYMENTS 
 
B1) SCOPE 
 
IFRS includes accounting for all employee and non employee arrangements.  
SEBI guidelines apply only to listed entities and ICAI GN is recommendatory in nature. There is no guidance for awards issued to non employees 
 
B2) CLASSIFICATION 
 
Under IFRS, classification is as – Equity settled, cash settled share based payment transaction and share based payment transaction with choice of settlement 
Sebi guidelines cover only Employee Stock Option Scheme and Employee Share Purchase Scheme – similar to equity settled award. ICAI GN is similar to IFRS. 
Under IFRS, share settled awards are classified as equity awards even if there is variability in number of shares due to a fixed monetary value to be achieved. ICAI prescribed treatment is similar to IFRS. 
Under IFRS, awards that offer the employees the choice of settlement in stock or in cash should be treated as a compound instrument. ICAI GN is similar 
 
B3) AWARD FOR GOODS OR NON EMPLOYEE TYPE SERVICES 
 
IFRS requires measurement of fair value to occur when the goods are received or as non employee type services are rendered. Awards can be valued by reference to the fair value of the goods or services received by the entity. However, if the fair value of equity instruments is greater than the fair value of goods or services received, that difference is an indication that unidentified goods or services have been or will be received and need to be accounted for. Immediate recognition of expense related to them would be appropriat 
Indian GAAP does not provide any specific guidance on the subject matter 
 
B4) MEASUREMENT METHODS 
 
Measure fair value of employee services received by reference to 1) grant date fair value of equity instruments issued, intrinsic value used in rare cases 2) fair value of liability incurred (cash settled) – IFRS 
Both SG and GN provide an option to use either fair value or intrinsic value method 
 
C) ASSETS NON FINANCIAL ASSETS 
 
Non financial assets refer to intangible assets, plant and equipment etc 
Under IFRS, replacement of parts may be capitalised when general recognition criteria are met.  
Indian GAAP charges replaced components to income 
 
C1) FREQUENCY OF REVALUATIONS 
 
Under IFRS, revaluations have to be kept sufficiently up to date to ensure that the carrying amount does not differ materially from fair value 
 
Under Indian GAAP, frequency of revaluation is not specified 
US GAAP does not permit revaluation 
 
C2) RATE OF DEPRECIATION 
 
As per IFRS, depreciation is charged over the useful life of the asset. If the useful life of major components of the asset vary, then they are charged to depreciation separately 
Under Indian GAAP, the statute prescribes minimum rates of depreciation. However, where useful life determined by the management is shorter than as envisaged by the statute, then the higher rates would be used. Generally, Component wise approach is not followed  
Under IFRS, depreciation on revalued portion cannot be recouped from the revaluation reserve.  
Indian GAAP permits it 
 
C3) CHANGE IN DEP METHOD OR LIFE 
 
Change in depreciation method and life of asset is considered as change in accounting estimates and are reflected in the charge for the current and prospective period – IFRS 
Under Indian GAAP, change in depreciation method is given a retrospective effect and the impact is recorded in the period of change. On revision of life, the unamortised amount is charged prospectively 
 
C4) PERIODIC REVIEW OF ESTIMATES 
 
Periodic review of depreciation method, residual value and useful life at each balance sheet date are required in IFRS.  
Indian GAAP does not specifically call for such periodic review 
 
C5) CAPITALISATION OF DISMANTLING AND RESTORATION COSTS 
 
IFRS requires the capitalisation of costs of dismantling and removing the items or restoring the site, based on managements best estimate, when an obligation exists. The standard also prescribes a per tax discount rate for this purpose 
Indian GAAP requirements are similar except that there is no need for discounting and there is no specific requirement for capitalisation. An indirect reference is provided through the standard dealing with Provisions 
 
D) TREATMENT OF GOVERNMENT GRANTS 
 
Under IFRS, Grants in the form of non depreciable assets are taken to income on a systematic basis taking into consideration the costs incurred to meet the obligation. Specific prohibition in taking the amount to Shareholders Funds 
Indian GAAP is similar to IFRS, except that it provides an alternative treatment to take the amount to Capital Reserve as part of Shareholders Funds 
Under IFRS, on refund of grant relating to a depreciable asset, the revised depreciation is to be computed retrospectively and charged to expense immediately 
Indian GAAP does not require a retrospective effect to depreciation. Prospective effect would suffice 
 
E) INTANGIBLE ASSETS 
 
Under IFRS, Intangible assets are accounted using either the cost model or the revaluation model as per the policy choice of the Company 
Indian GAAP prohibits Revaluation model 
Under IFRS, if the asset has a finite life, then they are amortised from the date when the asset is available for use, else the asset with an indefinite life are tested at least annually for impairment 
Under Indian GAAP, all intangible assets are amortised over their estimated useful life, with a rebuttable presumption that the useful life does not exceed ten years  
 
F) INVESTMENT PROPERTY 
 
Under IFRS the subject matter includes Property (land and/or building) held in order to earn rentals and/or for capital appreciation. The definition does not include owner occupied property or property held for sale in ordinary course of business 
Indian GAAP defined the subject matter as Property (land and building) not intended to be occupied substantially for use by or in the operations of the investing enterprises 
Under IFRS, the entity can choose between the fair value and depreciated cost models for all investment property 
Under Indian GAAP, investment property is treated as long term investment and carried at cost less depreciation and provision for diminution in value of investment 
IFRS provides detailed guidance in cases of transfers/reclassification from Investment Property to Inventories or Owner occupied property 
No specific guidance is available under Indian GAAP 
 
G) IMPAIRMENT OF LONG LIVED ASSETS 
 
IFRS requires an impairment test for intangible assets with indefinite useful lives or not yet ready for use.  
Indian GAAP requires annual test for impairment only for intangible assets that are amortised for a period longer than ten years and for intangible assets not yet ready for use