The CAG is an authority which is established by the Constitution of India.

Appointment

The CAG is appointed by the President of India on recommendation from the Prime Minister of India. He shall hold office for a term of 6 years or upto the age of 65 years, whichever is less.

On being appointed as CAG, he takes the oath of affirmation before the President of India.

Role

The CAG is also the head of the Indian Audit and Accounts Department. He also acts as the External auditor of the Government owned companies.

Audit

The CAG audits all the receipts and expenditures (both incurred within India or outside India) of the Government of India, the State Governments and the bodies and authorities those are substantially financed by the Government.

Government expenditure audit

It includes the following aspects :-

• Audit of sanction – This is to ensure that there has been a proper sanction by the competent authority.
• Audit of Performance – This is to ensure that the varied programmes , projects and schemes, in which huge amount of expenditure or investment is done, is being performed economically and is expected to give the best results.
• Audit of Propriety – This is to ensure that the expenditure was incurred with due regard to the principles of financial propriety.
• Audit against rules and regulations – This is to ensure that the expenditure incurred is in accordance with the applicable rules, regulations and law as framed by the competent authority.
• Audit against provision of funds – This is to ensure that there is proper consideration for the creation of provision of funds from which the expenditure can be incurred, as authorized by the competent authority.

Government revenue audit

It include the following aspects :-

• Assessment of revenues.
• Procedure of collection of revenues.
• Implementation.
• Monitor over irregularities and frauds.
• Reviews and suggestions.

Audit Report

The Audit report of CAG is considered by the  Public Accounts Committee, which is the special committee in the parliament of India and the state legislatures.

Removal from office

The CAG cannot be removed from the office other than through a procedure of impeachment or proven misbehavior or incapacity.

Audit Advisory Board

The Audit Advisory Board exists whose function is to advise the CAG in matters regarding the audits and also suggest CAG, the improvements it can have in its performance. The members of the Board function in an honorary capacity.

Remuneration

The salary of CAG is equivalent to the salary of a Supreme Court Judge.

Powers

The CAG shall have power as prescribed under the CAG Act, 1971.

Following are the names of CAG and their tenure of office as CAG:-

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HUF (Hindu Undivided Family) is a family with common ancestors having lineal male descendents as its members including their wives and the unmarried daughters. HUF need not have a contractual agreement; it is formed as a status. HUF includes Hindu families. Sikhs, Jains, Buddhists can also set up HUFs.

How to create an HUF?

An HUF is automatically constituted with the marriage of a person. You do not need a formal written agreement to create an HUF. You can apply for a PAN straightaway after your marriage.

There are two Schools of Law under HUF –

• Dayabhaga -  Prevalent in West Bengal and Assam. Here the son acquires the right in the family property only after the death of his father.
• Mitaakshara – Prevalent in rest of India. Here the son acquires the right in the family property right from his birth.

Karta, Member and Coparcener of an HUF

1. Who is KARTA?
   Karta is the person who manages the affairs of the family.
2. Is it necessary that the Karta should be the senior most member of the family?
   No, it is not necessary for the Karta to be the senior most member of the family. Any other male member of the family can be the Karta with the consent of the other members of the family.
3. Should there be two male members in HUF?
   Not necessarily. Even one male member with the female members can be the set up of an HUF.
4.  Who is a Coparcener?
   The person who acquires by birth the interest in the family property. The coparcener enjoys the right to enforce partition.
5.  Can only 1 member or a coparcener form a HUF?
   No
6. The HUF continues to exist in the hands of the female members after the death of the male member.
7. Adopted child can become the member. He cannot become the coparcener.
8. A widow cannot be the Karta of the HUF as she is not the coparcener.
9. The daughter after her marriage ceases to be a member of her father’s HUF. After marriage she becomes the member of her husband’s HUF.

Partition of HUF

1. Oral partition is allowed under HUF.
2. Partial partition of HUF is not recognized under the Income Tax Act.
3. ITO can enquire about the details of the partition.
4. If the property cannot be divided physically, it can be done by the book entries.
5. Coparceners can demand the partition of an HUF.

Taxation of HUF

1. HUF is a separate entity for income tax purposes under the provisions of Section 2(31) of the Income Tax Act.
2. Tax slab for the HUF is same as the individual tax slab.
3. Apart from the basic exemption of tax, section 80C deduction of upto Rs. 1 lakh is also allowed.
4. Gifts received by the members of the HUF can be treated as an HUF property.
5. Under the Wealth Tax Act also, separate exemptions are available in the HUF property and individual property.
6. The insurance compensation received by the sons on their father’s death is assessable as the individual income and not the HUF income.
7. Assets distribution in the course of partition would not attract any capital gains tax.
8. No gift tax liability.
9. No clubbing of incomes u/s. 64.
10. If Karta is a partner in the partnership firm and he derives salary from it, it will be treated as his personal income unless the salary has a direct connection with the investment of the funds of the family.
11. If a member gets the salary from the firm in which he is a partner, it is to be treated as his individual income unless it is the part of the return on the investment of the HUF.
12. Karta can receive the salary from the HUF for looking into its affairs only if it is genuine and there stands a valid bona fide agreement.

Can an HUF become a partner in a partnership firm?

HUF cannot become a partner in a partnership firm in its own name. The Karta or a member can represent the HUF in a firm.

The bill was first introduced by Shree Shanti Bhushan in 1968. It was passed through the Lok Sabha in 1969 but could not be passed in the Rajya Sabha. Various versions have been introduced in the number of years, but could never be passed in any of these years.

Anna Hazare states that there are three major factors for which it is necessary to adopt the Jan Lokpal Bill, the following are:

1. The rising corruption in india.
2. The outlook is to provide the upliftment of the society and the progress of the whole nation.
3. It would provide justice to the common man.

Anna hazare believes that the Jan Lokpal Bill would not provide full guarantee of getting rid of corruption but surely if it is drafted properly, it would provide a break on corruption to a large extent.

Anna Hazare went on a fast unto death in April, demanding the bill as drafted by the civil society be accepted. After 4 days of his fast, the government agreed to form a committee with equal number of representatives from the both sides to draft the Lokpal Bill together.

The Drafting Committee

The Drafting Committee was formed on 8^th April,2011. But it failed to agree on the terms of the compromised bill, and the government introduced its own version of bill in the parliament in august 2011.

In the First Meeting of the Joint Drafting Committee(JDC) for drafting the Lokpal Bill, the following were the representatives:

Chairmen- Co-chaired by Pranab Mukherjee (from the political area) and Shanti Bhushan (from the Civil Society)

From the government side:

• P.Chidambaram, Minister of Home Affairs
• Pranab Mukherjee, Finance Minister
• Kapil Sibal, Minister for communications and Information Technology
• Veerappa Moily, Minister of Corporate Affairs
• Salman Khurshid, Minister of Law

From the Civil Society:

• Anna Hazare, the Social Activist
• Shanti Bhushan, Former Minister of Law and Justice
• Prashant Bhushan, Lawyer
• N. Santosh Hedge, Lokayukta(Karnatka)
• Arvind Kejriwal, the RTI Activist

Salient Features of the Jan Lokpal Bill

• Lokpal- the Institution at the centre and Lokayukta- in each state would be established.
• Complete independence from the government, politicians and bureaucrats.
• The loss caused to the government by the corruption would be recovered during the time of the conviction from the guilty.
• Investigation is targeted to be completed within 1 year of complaint and the trial should be completed within the next 1 year, so that the guilty is in the jail within 2 years.
• There would be imposed a financial penalty on the guilty officers for not doing the work of the citizens during the prescribed time, in the government office. The penalty money would be given to the complainant as compensation for the loss.
• Problems and delays intentionally done in ration card, passport, voter card making or filing a complaint to the police, etc, Lokpal would get it done maximum in a month and the guilty would be in the jail in the 2 years.
• The Lokpal Members would be selected through a transparent  and participatory process as its members would be selected by the judges, citizens and constitutional authorities and not by any politicians.
• Lokpal would have the power to prosecute any politician, officer or judge.
• Lokpal would take the responsibility for the protection of the people who raise their voices against corruption.

Some Differences between Jan Lokpal Bill and Govt.’s Lokpal Bill

• 21st rank in CA Final May 2011
• 23rd rank in PCC JUne 2009
• Qualified Company Secretary-Final(CS) in Dec’ 2010
• State Topper in ICSE, 2005 (94% Score), Carmel School, Giridih.
• Amongst top 10 in State level in CBSE, 2007, from DPS-Ranchi, with 91% score

I used to study daily and always tried to utilize the time available. I also discussed some topics with friends and we used to clear each other doubts. I used to solve practical problems on my own. Further I also referred to the past questions asked by institute. Revision test papers issued by the ICAI, was also of immense help. Further, the focus was on concept clarity rather than just solving the sums. Preparing summary of all important points helps in quick revision during the exams. I ensured that I was in a position where I could revise all the topics before the exam day.

It should be strictly regular study. Crash course can land one into troubles. CA Final syllabus is humongous and so it would also be very impractical to go for crash course study. The questions set in the examinations are more application oriented, so only regular study can help in answering it.

It would be very risky to go for selective study, for one never knows which area they can grill upon. In most of the situations it is the most unlikely topic which appears in the paper.

Beating about the bush will surely not help. Be simple and to the point. One risks losing his credibility before the examiner, if he just fills up the paper, without much content into it.

I went for an average of 10 hrs of study. I personally do not believe that there can be a rule set for it. It is a subjective issue.

No. I had initially planned for that, but just couldn’t manage it because of time constraint.

• Accounts
  Mr. Deepak Chaudhary’s study material, ICAI study material, Compilation, D.S. Rawat
• MAFA
  Mr. Sanjay Saraf’s notes and study material, Compilation.
• Audit
   ICAI study material, Padhuka Prakashan’s Reference Book, Compilation.
• Corporate Law
  Munish Bhandari’s Reference Book, Compilation.
• Cost
  Mr. Deepak Chaudhary’s study material, ICAI study material, Compilation
• MICS
  ICAI study material, Compilation
• Direct Tax
  Mr. Vivek Soni’s study material, notes and case studies, Compilation.
• Indirect Tax
  Mr. Vivek Soni study material, notes and case studies, Bangar’s Reference Book

The study material has good quality questions which strengthens the concept. So the study material should be referred by the students. I think Practice Manual is an absolute must.

Yes. It is essential to keep track of one’s preparations.

Yes, definitely. The papers set in the exam are application oriented and tests the concept of the student. Articleship is of immense help in audit, account and tax papers. It solidifies the concept read in the text books. Further it helps us in understanding the concepts, laws and rules from practical point of view. If you have done something practical, you understand that thing better and you also remember it for a long period of time.

Self study. According to me retention is better in such case.

It was a tough task staying away from home but talking to parents regularly relieved me a lot. I also got a lot of moral support from my sister and my brother in law, who stays here in Kolkata and were in constant touch with me.

I used to take lot of fresh fruits, milk and other nutritious drink. Besides I avoided junk food during the exam period.

No. I believed that distracts me from my focus and can also be very misleading.

As goes the famous adage, Necessity is the mother of all invention, the same holds true in case of the Extensible Business Reporting language. Last few decades have witnessed metamorphism in corporate sector globally. Enron debacle, WorldCom, Xerox and Global Crossing crisis, and the post Satyam era back home, has made it the need of the hour to come out with a flawless financial reporting process. The numerous corporate governance failures across the globe have resulted in demand for complete transparency in financial reports as well as related financial reporting and corporate governance processes.

From the perspective of the regulators, such failures have forced them to demand extensive and detailed information from the companies. However, due to the paper form of information, acute shortage of staff and the sheer magnitude of the financial data involved, even the regulators have struggled to undertake a detailed, meaningful and extensive analysis and review of the financial information in their possession. As one of the measure to sort out the problem, government agencies (including MCA) moved from accepting paper-based filing and processing to electronic filing and processing. Although the government agencies have implemented systems capable of electronic processing, there are no Electronic Data Interchange (EDI) among agencies in the implemented systems. This has resulted in lack of coordination between government agencies.

All these factors have resulted in a great urgency to find the most appropriate business solution to address the aforesaid issues and challenges. The requirement of the day is to find new means of communication of voluminous data between different computer systems. To use the computer terminology – the need is to have another language of communication between systems. The extension of the communication is the meaningful analysis of the data on the recipient system. The extensible Business Reporting Language (XBRL) has come to our rescue in effective reporting and analysis of data.

WHAT IS XBRL?

XBRL is a language for electronic communication of business and financial data which is revolutionizing business reporting around the world. It has emerged as de facto standard for communication between businesses over the Internet.  It is an open, royalty-free software specification being developed through a process of collaboration between accountants, major companies, organizations, government companies and technologists from all over the world. Together, they formed XBRL International, a not-for-profit organization, which is now made up of over 650 members, which includes global companies, accounting, technology, government and financial services bodies. XBRL is the tool that the companies can use to make their financial filings more interactive and this can help the regulators, etc. to do more meaningful analysis and data mining.

HOW DOES XBRL WORK?

XBRL is a powerful and flexible version of XML, or ‘Extensible Markup Language’ which has been developed specifically to meet the requirements of business and financial information. XBRL allows labels in any language to be applied to items, as well as accounting references or other related information, making the data interactive. The powerful structure of XBRL allows very efficient handling of business data by computer software. It supports all the standard tasks involved in compiling, storing and using business data. One more important feature of XBRL is explained in its name. XBRL is easily expandable, so companies and other organizations can adopt it to meet a variety of requirements – hence the word ‘extensible’. To put it simply, XBRL can be treated as analogous to a bar code. Instead of treating financial information as a block of text, as is the case with an HTML or a PDF file, XBRL provides a code or a “tag” for each item of data making it possible for the data to be treated “interactively” or “intelligently”. Interactive data allows the creation of documents that are machine-readable, so that computers can quickly extract the desired data. For e.g., every fact in an annual report, every number in a company’s financial statements, gets a unique code that tells the software what the item represents and how it relates to other items in the report. Interactive data ‘tags’ all of the key facts in these large documents so that software can instantaneously recognize them and serve them up to the user. This tagging allows users to immediately pull out exactly the information they want, and instantly compare it to the results of, say, other companies, performance in past years, industry averages, etc.

TAGGING OF DATA/XBRL TAXONOMY

The tagging process can be understood with following example:-

Say the Balance sheet of an entity is as follows:-

Tagging is to be done not only for financial data but also for non financial data. For example we have to do tagging for disclosures in the notes to accounts as well. The collection of XBRL tags (called as the taxonomy) would be modeled to accommodate all amount and disclosures that must be reported under GAAP. To put it differently, if presentation of a financial number or disclosure is required under GAAP, a corresponding tag for that item should exist in the taxonomy.To make this data interactive, the entity will use software to affix an XBRL tag to each number on the balance sheet. For example, the tag affixed to the R90 “Cash” amount will have a descriptive name, such as “Cash.” Once the tag is affixed, any software capable of reading XBRL will be able to determine that the Rs. 2,00,000.00 represents cash, under the tag “Cash” and that is a current asset, and that the amount is to be included in the “Current Assets” and “Total Assets” sub-totals. The tag also provides a definition, the currency in which the amount is being reported (e.g. Rs, US$, etc.), and the related period for which the amount is being reported (e.g., as of 31st March, 2011). Similar tags can be defined for the other items of the Balance sheet, the Profit and Loss Account and even for the information which is contained in the Notes to Accounts in the financial statements.

XBRL DOCUMENT

An XBRL document comprises the taxonomy and the instance document. The XBRL taxonomy is already discussed above. An XBRL instance document is a business report in an electronic format created according to the rules of XBRL. It contains facts that are defined by the elements in the taxonomy it refers to, together with their values and an explanation of the context in which they are placed.

BENEFITS OF XBRL

The benefits of XBRL shall be:

• Improved data quality

• Improved service delivery

• Improved coordination between government agencies

• Improved monitoring and reduction in non-compliance

• Data-based policy formulation

• Green initiative as there will be no need to take paper printouts and re-key the information.

• Businesses will save time and cost as their reporting burden will come down.

• Professionals shall be able to analyze client businesses in a better way. Also, they can move up the value chain by becoming business advisors instead of processors of information.

XBRL IN INDIA

SEBI and XBRL: – SEBI is in the process of adopting XBRL for financial reporting. As a pilot project, SEBI is in the process of adopting XBRL Taxonomy for various data reporting by mutual funds. SEBI is also simultaneously working on a project named SUPER-D (SEBI Unified Platform for Electronic Reporting and Dissemination). It is a comprehensive filing and dissemination platform for all the listed companies, Mutual Funds and Intermediaries. With this project, SEBI proposes phased implementation of filing/reporting by Mutual Funds, listed companies, financials of Asset Management Companies, Scheme and their annual reports in XBRL.

RBI and XBRL

The Reserve Bank of India – the banking regulator of the country, has already initiated XBRL filings for various regulatory reports from Banks with RBI.

MCA and XBRL

The Ministry of Corporate Affairs has made it mandatory by issuing a circular for Companies falling under a certain criteria to file their financials in XBRL format. As per the General Circular No. 09/2011 17/70/2011 –CL.V dated 31st March, 2011, and General Circular No. 25 /2011, dated 12th May, 2011 it has been decided by the Ministry of Corporate Affairs to mandate certain class of companies to file Balance Sheets and Profit and Loss account for the year 2010-2011 onwards by using XBRL taxonomy. The Financial Statements required to be filed in XBRL format would be based upon the Taxonomy on XBRL developed for the existing Schedule VI, as per the existing, (non converged) Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006.

The mandate is to be implemented in phases. Under Phase 1 the following class of companies has to file the Financial Statements in XBRL Form only from the year 2010-2011:-

(i) All companies listed in India and their subsidiaries

(ii) All companies having a paid up capital of R5 crore and above or a turnover of R100 crore or above, excluding banking companies, insurance companies, power companies, Non-Banking Financial Companies (NBFCs) and overseas subsidiaries of these companies. All unlisted companies were also given the similar exemption. It is estimated that around 20,000 companies will be covered in this phase.

Read a recent circular dated 28th July, 2011 by Ministry of Corporate Affairs which says that “All companies falling in Phase-I class of companies (excluding exempted class) are permitted to file their financial statements without any additional fee upto 30/11/2011 or within 60 days of their due date, whichever is later.”

HOW TO CREATE AN XBRL DOCUMENT?

Financial statements in XBRL can be created in many ways:

Option 1 – Rely on full service providers:

Experienced XBRL service providers can provide a full turnkey solution and usually offer solutions to create the full XBRL document conforming to regulatory requirements from the base annual report document (Microsoft Word, PDF formats, etc.) prepared by the company. This option internationally has been one of the most popular routes.

Option 2 – Bolt on software route:

In this option, companies buy an XBRL authoring tool, create an instance document based on the MCA filing manual instructions using the tool, get the XBRL instance document validated and then file with the MCA. Once a company prepares the XBRL document for one year, business rules built into the software can leverage intelligent mapping and reduce the extent of tagging from the second year onwards. This route presupposes XBRL readiness from the internal team to understand the MCA taxonomy and create the XBRL document, often also leveraging on the services of auditors and XBRL experts.

Option 3 – Integration with in-house accounting software:

Companies can consider partial or full integration of XBRL software with their existing software drive process for creation of annual reports. Full integration would typically commence from trial balances downstream while partial integration methods can start with financial reporting statements and subsequent assembly of additional reporting information. The level and sophistication can vary with company requirements and complexity of annual report creation. One way to approach this route is to explore partial integration and evolve into a full integration model coterminous with the expected migration to the IFRS converged accounting standards.

TRAINING IN XBRL

XBRL India shall be conducting hands-on training programmers on XBRL across the country. XBRL India will conduct seminars and webinars on XBRL and will provide standardized background material on XBRL. XBRL India will also launch e-learning courses and develop XBRL tools to empower stakeholders across the country.

CONCLUSION

XBRL as a reporting language is becoming popular across the world and it is essential for us to be a part of this reporting revolution in India.

1. Awarded as All India 2^nd Rank in C.A. Final Course, May 2011 (1^st Attempt)
2. Awarded as All India 39^th Rank in Professional Competence Course, 2009 (1^st  Attempt)
3. Awarded as All India 8^th Rank in Common Proficiency Test, August, 2007 (1^st Attempt)
4. Batch Topper in Senior Secondary (94% Score), Sophia Senior Sec. School, 2007.
5. State level 19^th position, in merit list of Secondary Examination, 2005, Rajasthan Board  of Sec. Examination, with 92% score.

She is very good in dramatics, quiz competitions, debates, speech competitions etc. and has won many prizes & certificates in school and in various religious ceremonies.

Firm dedication and discipline combined with time management. There are no shortcuts, “Shortcuts will only cut you Short“. Regular studies are very important and I utilized last minutes for revisions.

• Munish Bhandari for Law
• Padhuka for Audit
• Singhania for Direct Tax
• Practise Manual & Study Modules of the Institute for rest of the subjects

Smart studies do pay, but only during your revisions. For regular studies, one has to be comprehensive.

As I said, I referred the book by the author Singhania. Apart from that the compilation of past year questions was of immense help. It provides an idea about what type of questions are usually asked and we in turn can make a strategy about how to answer them.

• Be regular in your preparation.
• For theory papers to the point and clear answers with special emphasis on reference to the Law/Standard/Act is a good strategy that can be followed.
• The focus should be on the extent of syllabus that you have to cover rather than on the no. of hour of studies.
• Tuitions, no doubt, provide guidelines but ultimately it is your own efforts which bear fruits.
• Articleship helps students in framing their answers well in accounts and tax papers and especially in audit.

Talk to your family, friends, teachers. Go for little refreshment whatever you enjoy like. Avoid junk food, don’t go for the meals once and for all, take it in parts.

Go for the best minimum time you should take for one particular question, because even the paper setter will not set an unrealistic paper. So mock papers as such I did not go for.

Yes, set realistic target according to the amount of time available and the syllabus to be covered and try to cover even beyond that.

You are in pressure only when you give less and expect more. There is no pressure when you are honest & sincere in your efforts. Have faith in the Almighty, sooner or later, your efforts will be surely recognised.

Self Study is good when you on your own can manage to motivate and boost up yourself when you are down, and group study is good when you can learn by the examples set by others. Both have their own merits and demerits, but I believe “Group Study for extensive studies and Self Study for the intensive one”.

“Group Study for extensive studies and Self Study for the intensive ones.”

I had been regular enough in the preparation period, so exam days were no exception. Sleeping time for me has been from 11PM to 6AM throughout my preparation days and also during exam days.

B2B – Business To Business

B2C – Business To Customer

CAO - Chief Accounting Officer

CAGR - Compound annual growth rate

CAPM - Capital asset pricing model

CEO - Chief Executive Officer

CFA - Chartered Financial Analyst

CFO - Chief Financial Officer

CFS - Consolidated Financial Statement

CIF - Cost Insurance With Freight

CIMA - Chartered Institute of Management Accountants

COGS - Cost of Goods Sold

COO - Chief Operating Officer

CPA - Certified Public Accountant

CVP - Cost Volume Profit

EBIT - Earnings before interest and taxes

EBITDA - Earnings before Interest, Taxes, Depreciation, and Amortization

EDI - Electronic Data Interchange

EPS - Earnings per share

FOB - Freight On Board

FIFO - First In, First Out

GAAP - Generally Accepted Accounting Principles

GDP - Gross Domestic Product

GP - Gross Profit

IPO - Initial Public Offering

LIBOR - London Interbank Offered Rate

LIFO - Last In, First Out

LLC - Limited Liability Company

LBO - Leveraged Buyout

NAV - Net Asset Value

NOPAT - Net Operating Profit After Tax

NPV - Net Present Value

P/E - Price-to-earnings ratio

ROA - Return on assets

ROCE - Return On Capital Employed

ROE - Return on Equity

ROI - Return on Investment

SCM - Supply Chain Management

SOX - Sarbanes-Oxley

WACC – Weighted Average Cost Of Capital

XBRL – eXtensible Business Reporting Language

YTD – Year To Date

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