Monthly Archives: October 2015

Here’s how you can earn interest under “Gold Monetisation Scheme”

This scheme allows customers to deposit their gold and earn interest rates fixed by designated banks subject to checking the gold at the time of collection and purity centers notified by the government.

Entry to this scheme is a minimum deposit of 30 grams having 995 fineness (includes bars, coins, stones,jewellery and other metals) and there is no maximum limit to the deposit. Deposits can also be in the form of joint deposit of two or more.

Principle on maturity and interest will be purely as per the  NAV (rate of gold at that time).The depositor has an redemption option in cash or in gold. This shall be specified at the time of entering this scheme, later on which cannot be amended.

This scheme has 3 deposit which includes Short term(1-3 yrs),Medium term (5-7 yrs) and long term (12-15 yrs) having a minimum lock-in period, however penalty charges will be incurred for pre maturity withdrawals.

The objective of the scheme is to mobilize a part of an estimated 20,000 tonnes of gold held by households and institutions in the country and to reduce India’s reliance on the import of gold. The Cabinet had approved the scheme last month.

A Private Limited Co. can now take loan from relatives of “Director”

Many of us are aware of the restriction imposed on private companies of borrowing  loans from shareholders and their relatives. Here is a turning point in which an amendment had been made on this issue, which is as follows:

On September 15, 2015, Ministry of Corporate affairs has amended the rules and has allowed private companies to borrow loan from relatives of directors in addition to that of directors.

Hence from September 15 onward , Private limited companies can borrow any amount of loans from directors and their relatives as mentioned below :

  • HUF of director
  • Spouse
  • Father
  • Mother
  • Son
  • Son’s Wife
  • Daughter
  • Daughter’s husband
  • Brother
  • Sister

The Company has to ensure that above relative from whom money is received, furnishes a declaration in writing to the company at the time of giving the money that the amount is not being given out of funds acquired by him by borrowing or accepting loans from others.

Following is the link for downloading the above mentioned circular for your ready reference.

To see the Relevant MCA Circular Click Here

In case of any queries, feel free to contact our office.

How to interview an accountant for your company

Entrepreneur or CEOs howsoever good his is, he is always worried if the accountant he is appointing really understands the concepts that business needs him to know. This is the problem not only with the science graduates and less educated businessmen. Even with the commerce graduate CEOs loose the grip on what can he expect from his accountant.

How to measure whether the accountant is a good performer or a not so good one. What’s the yardstick to see if the accountant or a finance guy is efficient enough for the business he is responsible for in the organization.

Let’s look at the ways to measure this

1. Discuss case studies with him without true nos and understand the responses he would give in the similar situation.Click here to download a basic JD format.

2. Talk about a case study that the person would have handled in a situation he experienced in his previous company.

3. Get him to do hands on for half a day as a test and see how is reacts in a live situation

4. Make him talk with your Chartered Accountant or Tax Consultant for gauge the technical understanding needed for your business. We have been helping many of our clients for senior position recruitment decisions.

Look at our previous post on What to look for in an Accountant? Talking about the capabilities of the accountants.

What should be a process for recruiting an accounts person in an organization?

1. Develop and publish a a clear Job description for the accountant. Below is a broad format for the same.

2. Nowadays circulating on the relevant Whatsapp groups, your Linkedin profile and FB page would definitely generate a few interesting CVs for the accountants.

3. Once you have got the CVs of the accountants, filter them and shortlist the interesting once based on requirement, qualification, experience, Salary expected by them, etc.

4. Do an HR interview to understand the attitude which is the most critical piece of a person. See if he is having sound family background, value system, communication skills, enthusiasm and readiness to learn, etc.

5. Do a technical round with the case studies and questions relevant for your requirement. He can also visit your CA if the CA is unable to come just to make it happen with him. In today’s time, even the skype can help.

6. Once you are sure about the capability, negotiate fare salary. Please don’t push it too below the market as you are not having the capability to manage the attrition on this side if he get’s a higher proposal.

Another important mantra is to monitor on a constant periodical frequency. Gap can be widened as and when we keep on gaining confidence. Missing the review is dangerous and may land you into a mess, waste of time and money.

Accountant once set, many things can fall in place for the company and free up a lot of time to do the real cream work for otherwise tied up CEO. CEO’s highest productive time is to search right people!!

What to look for in an Accountant while recruiting?

Every one of us is or would have been looking out for an accountant. A person who can do billing, handle basic data entry of receipt and payment, do bank reconciliation and generate summaries for filing IT, do accounts payable and receivable Vat and TDS returns. This blog is mainly for the companies with turnover of Rs. 1Cr. to Rs. 25Cr. into a new age service enterprise, a startup or a traditional trader or a professional like an architect or a Lawyers.

This type of routine accounting talent is in real shortage. People who have been qualified as B.com, BCAF, etc are normally considered to be fit for the same. Some with higher expectations look out for CAs, ICWAs, etc. Apart from the qualification one looks for experience. Experience gives an edge technically and communication wise. Also one understands the business models quickly and takes up small financial decision making freeing up management time to an extent. One also should have knowledge of accounting software like Tally, Quickbooks, etc and also spreadsheet software. This makes accountant more accountable!!

Let’s build a talent need matrix for Finance and accounting (F & A) function. This can include talent expectation in terms of capability and salary thereof.  Download the matrix for your ready reference from here http://bit.ly/1WR4iX3.

Attributes

Knows Basic Accounting

Knows basic accounting package

Basics of VAT, TDS, Service Tax, etc.

Calculation of VAT, service tax, TDS with sections and return names.

Uploading of the returns online on the Government Websites

Passing of Depreciation entries, ledger reviews and Stock Adjustment, etc

Team Management

Effective Communication and Bargaining Power

Salary Levels for Metros

Salary Levels for Non-Metro cities

Sales and Purchase Entries Yes yes                
Bank Reconciliation, Basic Journal Entries, Jvs, etc. Yes yes       Partly        
Summaries for VAT Returns, TDS Returns, Service Tax Returns and So on Yes yes Yes Yes Yes          
supervision of timely deposit of cheques and vendor payments Yes Yes                
MIS (Management information system) generation. Monthly Budgets, Sales by Client, Aeging Reports, Profitability, Stock position, etc. Yes Yes       Yes Yes      
Cashflow projections, decisions on buying the capital assets, etc. Yes Yes       Yes        
Handling the Audit queries, Decision on Tax applicability, handling the tax notices, Structuring of the entities, etc. Yes Yes Yes Yes   Yes Yes Yes    
Handling Banking Relationships like OD / CC / Term Loans with the banks with optimum interest rates, etc. Yes Yes         Yes Yes    
Development of Accounting Systems and Processes and implementation Yes Yes Yes Yes Yes Yes Yes Yes    

The above table comprehends the attributes, skillsets and capabilities that one is looking out for into an an accountant vs what can be the salary that one should be paying for the same.

This also initiates the discussion as to whether one should do this inhouse and manage the accountants which is not his core job or outsource. What if an institution takes up the responsibility with similar cost. This calls for a decision as to whether one should be creating the ecosystem for the F & A division to be automated by investing for a while in the function or one will leverage on a ready made talent wherein we just need to set expectations and say shoot to an institution. Nowadays options are available either side. Few don’t even invest in computer systems and software licenses as they think that it’s best to use the scarce resource for the core job instead of accounting which is mundane for them and too technical to measure the performance on!!

Decision on this is a CEO’s job and he continues to be deliberating on time and again!!  All depends on how the CEO perceives his time to be spent :-)

ICAI elections are nearing.. what’s the duty mandated to the central council?

ICAI elections are up. We all Chartered Accountant members would be receiving huge number of SMS, WHATSAPP from all over. Few of us would be personally visited by candidates soliciting our “First Preference Vote”. This bombardment may make us more confused as to who is entitled to my first preference vote? A friend’s friend or a relative or a suitable person for the profession at large. Some may also have the question as to what’s the real role of this so much sought after and prestigious CENTRAL COUNCIL. I was facing similar pressure from all sides. With curiosity on who is capable to be a council member at the center, just had a look Section 15 at the Duties of Central Council as laid down by the Chartered Accountants Act 1949. Functions of Council with highlights for a quick read….

(1) The Institute shall function under the overall control, guidance and supervision of the Council and the duty of carrying out the provisions of this Act shall be vested in the Council.

(2) In particular, and without prejudice to the generality of the foregoing powers, the duties of the Council shall include —

(a) to approve academic courses and their contents;

(b) the examination of candidates for enrolment and the prescribing of fees therefor;

(c) the regulation of the engagement and training of articled and audit assistants

(d) the prescribing of qualifications for entry in the Register;

(e) the recognition of foreign qualifications and training for the purposes of enrolment;

(f) the granting or refusal of certificates of practice under this Act;

(g) the maintenance and publication of a Register of persons qualified to practice as chartered accountants;

(h) the levy and collection of fees from members, examinees and other persons;

(i) subject to the orders of the appropriate authorities under the Act, the removal of names from the Register and the restoration to the Register of names which have been removed;

(j) the regulation and maintenance of the status and standard of professional qualifications of members of the Institute;

(k) the carrying out, by granting financial assistance to persons other than members of the Council or in any other manner, of research in accountancy;

(l) the maintenance of a library and publication of books and periodicals relating to accountancy;

(m) to enable functioning of the Director (Discipline), the Board of Discipline, the Disciplinary Committee and the Appellate Authority constituted under the provisions of this Act;

(n) to enable functioning of the Quality Review Board;

(o) consideration of the recommendations of the Quality Review Board made under clause (a) of section 28B and the details of action taken thereon in its annual report; and

(p) to ensure the functioning of the Institute in accordance with the provisions of this Act and in performance of other statutory duties as may be entrusted to the Institute from time to time.

Above is the extract of such duties as laid down by ICAI Act.

The above list surprised me that the COUNCIL at the CENTRE is a policy making body for the overall betterment of the accounting profession and NOT for running programmes, seminars, etc. It should rather be laying down the suitable policies for the regional councils like WIRC of ICAI to run the programs effectively for overall professional development.

Infact, the CA Regulations specifically provide that programmes are to be conducted by the Regional Councils and branches with guiding role for Central Council and its Committees. One sometimes gets the feeling that the only role left and carried out by the Central Council and its Committees is that of organising events with very little coming out in terms of policy for common members’ consumption!

The above means awareness based selection and not NO voting. Please vote – but be aware of what is the impact of your vote on the overall profession in long term.

Let’s, on this backdrop set right our priorities for posterity with judge us too.

।। य एष सुप्तेषु जाग्रति।। He who is awake amidst all the sleeping ones.