COMPANY ACCOUNTS AND AUDITING PRACTICES - ICSI

STUDY MATERIAL

EXECUTIVE PROGRAMME

COMPANY ACCOUNTS AND

AUDITING PRACTICES

MODULE II PAPER 5

ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727 email info@icsi.edu website icsi.edu

i

? THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

TIMING OF HEADQUARTERS

Monday to Friday Office Timings ? 9.00 A.M. to 5.30 P.M.

Public Dealing Timings Without financial transactions ? 9.30 A.M. to 5.00 P.M.

With financial transactions ? 9.30 A.M. to 4.00 P.M.

Phones 41504444, 45341000

Fax 011-24626727

Website icsi.edu

E-mail info@icsi.edu

Laser Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, and Printed at M P Printers/3000/July 2014

ii

EXECUTIVE PROGRAMME ? COMPANY ACCOUNTS AND AUDITING PRACTICES

Finance and accounting have assumed much importance in today's competitive world of business wherein corporate organisations have to show the true and fair view of their financial position. Thus, the application of accounting in the business sector has become an indispensable factor. Company Secretary has to provide the complete and accurate information about the financial operations of the company to management for decision making. This emphasizes that the books of account are to be maintained accurately, up-to-date and as per the norms.

The subject `Company Accounts and Auditing Practices' is very important for the students. In the course of his work, a Company Secretary is expected to have the working knowledge of Company Accounts. He should also have the working knowledge of auditing concepts such as verification, vouching, and internal control. This will help a company secretary in carrying out his duties in a more professionalized manner. The entire paper has been discussed in fifteen study lessons. In starting nine study lessons we have discussed about the Share Capital, Debentures, Final Accounts of Companies, Corporate Restructuring, Consolidation of Accounts, Valuation of Shares and Intangible Assets, Liquidation of Company, Corporate Financial Reporting and Accounting Standards. At last six lessons, we have discussed about Auditing Concepts, types of Company Audit, Internal Control and its Review, Audit engagement and documentation.

In this study every efforts has been made to give a comprehensive coverage of all the topics relevant to the subject. In all study lessons the requisite theoretical framework for understanding the practical problems in the subject has been explained and wherever necessary practical illustrations have been given to facilitate better understanding. At the end of each study lesson a brief about the lesson have been given under the caption `Lesson Round Up' as well a good blend of theoretical and practical questions have been given under the caption `Self Test Questions' for the practice of students to test their knowledge. In fact, this being a practical paper, students need to have good theoretical knowledge and practice to attain the requisite proficiency and confidence.

This study material has been published to aid the students in preparing for the Company Accounts and Auditing Practices paper of the CS Executive Programme. It is part of the education kit and takes the students step by step through each phase of preparation stressing key concepts, pointers and procedures. Company Secretaryship being a professional course, the examination standards are set very high, with emphasis on knowledge of concepts, applications, procedures and case laws, for which sole reliance on the contents of this study material may not be enough.

Therefore, in order to supplement the information/contents given in the study material, students are advised to refer to the Suggested Readings mentioned in the study material, Student Company Secretary e-bulletin, Business Dailies and Journals.

In the event of any doubt, students may write to the Directorate of Academics the Institute for clarification at academics@icsi.edu.

Although due care has been taken in publishing this study material yet the possibility of errors, omissions and/ or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf.

Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged if the same are brought to its notice for issue of corrigendum in the `Student Company Secretary' e-bulletin.

This study material is based on those sections of the Companies Act, 2013 and the rules made there under which have been notified by the Government of India and came into force w.e.f. April 01, 2014 (Including amendments / clarifications / circulars issued there under upto June, 2014). In respect of sections of the Companies Act, 2013 which have not been notified, applicable sections of Companies Act, 1956 have been dealt with in the Study Material.

iii

SYLLABUS

MODULE 2 ? PAPER 5: COMPANY ACCOUNTS AND AUDITING PRACTICES

Level of Knowledge: Advance Knowledge Objective: To acquire knowledge and understanding of the concepts, principles and practices of company accounts and auditing in accordance with statutory requirements.

PART A: COMPANY ACCOUNTS (70 MARKS)

1. Share Capital ? Issue of Shares: at Par, at Premium, at Discount, on Conversion and for consideration other than Cash; Forfeiture and Re-issue of Shares, Buyback of Shares, Redemption and Conversion of Preference Shares, Bonus Shares, Rights Issue, ESOPs, ESPS, Sweat Equity Shares ? Alteration of Share Capital ? Underwriting of Shares

2. Debentures ? Issue of Debentures: at Par, at Premium, at Discount and for consideration other than Cash ? Accounting Treatment and Procedures ? Redemption of Debentures ? Conversion of Debentures into Shares

3. Final Accounts of Companies ? Conceptual Framework, Preparation and Presentation of Financial Statements, Schedule VI, Interpretation and Scrutiny of Balance sheet ? Treatment of Profit Prior to Incorporation, Preoperative and Preliminary Expenses ? Preparation of Final Accounts under Company Law

4. Corporate Restructuring ? Concept and Accounting Treatment as per AS ? Methods of Amalgamations Accounting ? The Pooling of Interests Method ? The Purchase Method ? Consideration ? Treatment of Reserves, Goodwill and Pre-Acquisition & Post-Acquisition Profit ? Accounting in the books of Transferor and Transferee ? Merger and De-merger ? Acquisition of Business ? Internal Reconstruction iv

5. Consolidation of Accounts ? Holding and Subsidiary Companies - Accounting Treatment, Disclosures and Consolidation of Accounts

6. Valuation of Shares and Intangible Assets ? Valuation of Shares, Methods of Valuation, Price Earning Multiple Valuation, Discounted Cash Flow (DCF) Method ? Valuation of Intangibles: Brand, Goodwill and IPRs

7. Liquidation of Company ? Preparation of Statement of Affairs including Deficiency /Surplus Account

8. Corporate Financial Reporting ? Various Requirements of Corporate Reporting ? Value Added Statements: Economic Value Added (EVA), Market Value Added, Shareholders' Value Added

9. Accounting Standards ? Relevance and Significance ? National and International Accounting Standards and Authorities ? Adoption, Convergence and Interpretation of International Financial Reporting Standards (IFRS) and Accounting Standards in India

PART B: AUDITING PRACTICES (30 MARKS)

10. Auditing Concepts ? Nature, Scope and Significance of Auditing ? Basic Principles Governing an Audit ? Overview of Auditing and Assurance Standards- National and International

11. Types of Company Audit ? Statutory Audit ? Internal Audit ? Branch Audit ? Joint Audit ? Special Audit ? CAG Audit

12. Internal Audit ? Forms of Audit - Propriety Audit, Compliance Audit and Efficiency Audit ? Nature, Scope and Techniques of Internal Audit; Functions and Responsibilities of Internal Auditors; Organisational Status of Internal Auditing Function, Internal Audit vis-?-vis Statutory Audit

v

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download