Applicability of Pronouncements/Legislative Amendments/Circulars etc.

for November, 2013 Intermediate (IPC) Examination

Paper 1: Accounting
A. Pronouncements Accounting Standards 1, 2, 3, 6, 7, 9, 10, 13 and 14 are covered in the syllabus. (Text of all applicable Accounting Standards are available in the Appendix I of Volume I of Accounting Study Material revised in November, 2012.) B. Announcement relevant for November, 2013 examination 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.

Paper 5: Advanced Accounting

A. Pronouncements Accounting Standards 4, 5, 11, 12, 16, 19, 20, 26 and 29 are covered in the syllabus. (Text of all applicable Accounting Standards are available in the Appendix II of Volume I of Advanced Accounting Study Material revised in November, 2012.) B. 1. Notification/Announcement relevant for November, 2013 examination 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.

3.

Clarification on Debenture Redemption Reserve (DRR) Ministry of Corporate Affairs vide Circular no. 04/2013 dated 11 February, 2013 has clarified the adequacy of DRR for various institutions/companies as follows: All India Financial Institutions (AIFIs) regulated by Reserve Bank of India and Banking Companies for both public as well as privately placed debentures Other Financial Institutions and NBFCs registered with the RBI under Section 45-IA of the RBI (Amendment) Act, 1997 if debentures issued through public issue if privately placed debentures Other companies including manufacturing and infrastructure companies (including listed and unlisted companies) 25% Nil 25% Nil

Every company required to create/maintain DRR shall before the 30th day of April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next following year. 4. 5. Maintenance of Cash Reserve Ratio at 4.00 per cent for all banks vide circular DBOD. No. Ret. BC. 76/12.01.001/2012-13 dated January 29, 2013. Statutory Liquidity Ratio for Local Area Banks be reduced from 25 per cent to 23 per cent of their Net Demand and Time Liabilities (NDTL) with effect from the fortnight beginning August 11, 2012. Review of the Prudential Guidelines on Restructuring of Advances by Banks/Financial Institutions Reserve Bank of India has reviewed the prudential guidelines on restructuring of advances by banks/ financial institutions vide circular no. DBOD.No.BP.BC.63/21.04.048/2012-13 applicable for all scheduled commercial banks excluding RRBs dated November 26, 2012 and has decided: i) To enhance the provisioning requirement for restructured accounts classified as standard advances from the existing 2.00 per cent to 2.75 per cent in the first two years from the date of restructuring. In cases of moratorium on payment of interest/principal after restructuring, such advances will attract a provision of 2.75 per cent for the period covering moratorium and two years thereafter; and that Restructured accounts classified as non-performing advances, when upgraded to standard category will attract a provision of 2.75 per cent in the first year from the date of upgradation instead of the existing 2.00 per cent.

6.

ii)

In accordance with the above, loans to projects under implementation, when restructured due to change in the date of commencement of commercial operations (DCCO) beyond

the original DCCO as envisaged at the time of financial closure and classified as standard advances would attract higher provisioning at 2.75 per cent as against the present requirement of 2.00 per cent as per the details given below: Infrastructure projects Particulars Provisioning Requirement If the revised DCCO is within two years from the 0.40 per cent original DCCO prescribed at the time of financial closure If the DCCO is extended beyond two years and upto four years or three years from the original DCCO, as the case may be, depending upon the reasons for such delay (Ref.: DBOD.No.BP.BC.85 /21.04.048/2009-10 dated March 31, 2010) Non-infrastructure projects Particulars If the revised DCCO is within six months from the original DCCO prescribed at the time of financial closure If the DCCO is extended beyond six months and upto one year from the original DCCO prescribed at the time of financial closure (Ref.: DBOD.No.BP.BC.85 /21.04.048/2009-10 dated March 31, 2010) Provisioning Requirement 0.40 per cent 2.75 per cent From the date of such restructuring for 2 years. 2.75 per cent From the date of such restructuring till the revised DCCO or 2 years from the date of restructuring, whichever is later.

All other extant guidelines on Income Recognition, Asset Classification and Provisioning pertaining to advances will remain unchanged. Note: (Common for Intermediate (IPC) Paper 1 and Paper 5) Non-Applicability of Ind ASs for November, 2013 Examination 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 Indian Accounting Standards vis--vis IFRS. (Students may note that Ind ASs are not applicable in November, 2013 Examination. However, Accounting Standards as specified in the syllabus are applicable for them in November, 2013 examination.)

Paper 4: Taxation
Applicability of Finance Act, Assessment Year etc. for November, 2013 examination (1) The amendments made by the Finance Act, 2012 in income-tax and service tax;

(2) (3)

The provisions of income-tax law as applicable for the assessment year 2013-14; The significant notifications and circulars issued upto 30th April, 2013 (incometax and service tax)

(The Study Materials 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 in income-tax and service-tax and notifications and circulars issued between 1.5.2011 and 30.4.2012 in income-tax are also separately discussed in the publication Supplementary Study Paper-2012.)

Paper 6: Auditing and Assurance

I. S.No 1 Standards on Auditing (SAs) SA SA 200 Title of Standard on Auditing Effective Date Overall Objectives of the Independent Auditor and the April 1, 2010 Conduct of an Audit in Accordance with Standards on Auditing Agreeing the Terms of Audit Engagements Quality Control for Audit of Financial Statements Audit Documentation April 1, 2010 April 1, 2010 April 1, 2009

2 3 4 5 6 7 8 9 10 11

SA 210 SA 220 SA 230 SA 240 SA 250 SA 260 SA 265 SA 299 SA 300 SA 315

The Auditors responsibilities Relating to Fraud in an April 1, 2009 Audit of Financial Statements Consideration of Laws and Regulations in An Audit of April 1, 2009 Financial Statements Communication with Those Charged with Governance April 1, 2009 Communicating Deficiencies in Internal Control to Those April 1, 2010 Charged with Governance and Management Responsibility of Joint Auditors Planning an Audit of Financial Statements April 1, 1996 April 1, 2008

Identifying and Assessing the Risks of Material April 1, 2008 Misstatement through Understanding the Entity and its Environment Materiality in Planning and Performing an Audit The Auditors Responses to Assessed Risks April 1, 2010 April 1, 2008

12 13

SA 320 SA 330

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

SA 402 SA 450 SA 500 SA 501 SA 505 SA 510 SA 520 SA 530 SA 540 SA 550 SA 560 SA 570 SA 580 SA 600 SA 610 SA 620 SA 700 SA 705 SA 706 SA 710 SA 720

Audit Considerations Relating to an Entity Using a April 1, 2010 Service Organization Evaluation of Misstatements Identified during the Audits Audit Evidence April 1, 2010 April 1, 2009

Audit Evidence - Specific Considerations for Selected April 1, 2010 Items External Confirmations Initial Audit Engagements-Opening Balances Analytical Procedures Audit Sampling April 1, 2010 April 1, 2010 April 1, 2010 April 1, 2009

Auditing Accounting Estimates, Including Fair Value April 1, 2009 Accounting Estimates, and Related Disclosures Related Parties Subsequent Events Going Concern Written Representations Using the Work of Another Auditor Using the Work of Internal Auditors Using the Work of an Auditors Expert April 1, 2010 April 1, 2009 April 1, 2009 April 1, 2009 April 1, 2002 April 1, 2010 April1, 2010

Forming an Opinion and Reporting on Financial April 1, 2012 Statements Modifications to the Opinion in the Independent Auditors April 1, 2012 Report Emphasis of Matter Paragraphs and Other Matter April 1, 2012 Paragraphs in the Independent Auditors Report Comparative Information Corresponding Figures and April 1, 2011 Comparative Financial Statements The Auditors Responsibility in Relation to Other April 1, 2010 Information in Documents Containing Audited Financial Statements

II.

Statements

1. Statement on Reporting under Section 227 (1A) of the Companies Act, 1956. 2. Statement on the Companies (Auditors Report) Order, 2003. III. Guidance Notes 1. Guidance Note on Audit of Inventories. 2. Guidance Note on Audit of Debtors, Loans and Advances. 3. Guidance Note on Audit of Investments. 4. Guidance Note on Audit of Miscellaneous Expenditure. 5. Guidance Note on Audit of Cash and Bank Balances. 6. Guidance Note on Audit of Liabilities. 7. Guidance Note on Audit of Revenue. 8. Guidance Note on Audit of Expenses. 9. Guidance Note on Provision for Proposed Dividend.