Relevant Amendments for CA IPC May, 2013 Exam

A student who has passed Common Proficiency Test (CPT) and Senior Secondary Examination (10+2 examination) conducted by an examining body constituted by law in India or an examination recognized by the Central Government as equivalent thereto may join the Integrated Professional Competence Course (IPCC) of The Institute of Chartered Accountants in India (ICAI).

Further, the Chartered Accountants (Amendment) Regulations, 2012 gives the eligibility for graduated students for direct entry in CA Intermediate (IPC) Course.

In terms of Notification No/1-CA(7)/145/2012 dated 1st August 2012, “Integrated Professional Competence Examination(IPCE)”, stands renamed as “Intermediate (IPC) Examination” and would be known accordingly, with effect from May 2013 examination onwards.

CA Institute has provided the curriculum to IPC for only working knowledge of core and allied subjects to accountancy profession. The students of IPC have to undergo nine months study course in order to develop a strong theoretical base for their better result.

Therefore, CA IPC students must read and learn all Institute’s Pronouncements and other Notifications which are most important for the coming Examination May, 2013 as sited below:

A. Pronouncements

1. Accounting Standards (AS):

a) AS 1 Disclosureof Accounting Policies.

b) AS 2 Valuationof Inventories.

c) AS 3 CashFlow Statements.

d) AS 6 Depreciation Accounting.

e) AS 7 Construction Contracts (Revised).

f) AS 9 Revenue Recognition.

g) AS 10 Accountingfor Fixed Assets.

h) AS 13 Accountingfor Investments.

i) AS 14 Accountingfor Amalgamations.

B. Other Notifications

The Ministry of Corporate Affairs (MCA) has issued 35 converged Indian Accounting Standards (Ind ‘AS’) without announcing the applicability date. These Ind ASs are not applicable for the students appearing in May, 2013 Examination.

A) The Companies Act, 1956:

1) Delegation of power to Regional Directors: The Ministry of Corporate Affairs vide Notification F.No.1/1/2003-CL.V dated 30th August, 2012, has delegated the powers from the CLB (Company Law Board) to the Regional Directors under Sections 17, 18, 19, 141 and 188 of the Companies Act, 1956.

2) Guidelines for declaring a financial institution as Public Financial Institution: The Ministry of Corporate Affairs vide General Circular No. 10/2012 dated 21st May 2012 & 34/2011 dated 2nd June 2011,framed certain criteria for declaring a Financial Institution as Public Financial Institution under Section 4A of the Companies Act, 1956.

3) Delegation of power from Central Government to Registrar of Companies: The Ministry of Corporate Affairs vide Notification No. S.O.1538(E) dated 10th of July, 2012, delegates the powers and functions vested in the Central Government to the Registrar of Companies under the Sections 21, 25, 31(1), 108(1D), 572 of the Companies Act,1956.

4) Delegation of power to the Regional Directors: The Ministry of Corporate Affairs vide Notification No. S.O.1539(E) dated 10th of July, 2012, delegates the powers and functions vested in the Central Government to the Regional Directors at Mumbai, Kolkata, Chennai, Noida, Ahmedabad & Hyderabad under the Sections 17,18,19, 22, 224, 188, 297 394A of the Companies Act,1956.

5) Notifying of certain sections of Companies (Second Amendment) Act, 2002: The Ministry of Corporate Affairs vide Notification No. S.O.1540(E) dated 10th of July, 2012, notified certain sections of the Companies(Second Amendment) Act, 2002 to come into force from 12th of August, 2012.

B) The Companies Bill, 2011: Not Applicable.

A. Pronouncements

1. Accounting Standards (AS):

a)  AS 4 Contingenciesand Events Occurring after the Balance Sheet Date.

b) AS 5 NetProfit or Loss for the period, Prior Period Items and Changes in Accounting Policies.

c) AS 11 TheEffects of Changes in Foreign Exchange Rates (Revised).

d) AS 12 Accountingfor Government Grants.

e) AS 16 Borrowing Costs.

f) AS 19 Leases.

g) AS 20 Earnings Per Share.

h) AS 26 Intangible Assets.

i) AS 29 Provisions,Contingent` Liabilities and Contingent Assets.

B. Other Notifications

2. Maintenance of Cash Reserve Ratio at 4.25 per cent.

3. All 35 converged Indian Accounting Standards (Ind AS): Not Applicable (For details plz. see point No. B of Paper 1).

4) 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.

5) Clarification on Para 46A of Accounting Standard (AS)11 relating to "The Effects of Changes in Foreign Exchange Rates".

In order to resolve the problems faced by industry in proper implementation of Para 46A of AS 11 inserted vide notification number G.S.R. 914(E) dated 29.12.2011, on account of Para 6 of AS 11 and Para 4(e) of AS 16, MCA had further clarified vide Circular No. 25/2012 dated 09.08.2012 that Para 6 of AS 11 and Para 4(e) of the AS 16 shall not apply to a company which is applying clause Para 46A of AS 11.

Newly Inserted Para 46A of AS-11: (1) In respect of accounting periods commencing on or after the 1st April, 2011, for an enterprise which had earlier exercised the option under paragraph 46 and at the option of any other enterprise (such option to be irrevocable and to be applied to all such foreign currency monetary items), the exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, can be added to or deducted from the cost of the asset and shall be depreciated over the balance life of the asset, and in other cases, can be accumulated in a ‘‘Foreign Currency Monetary Item Translation Difference Account” in the enterprise’s financial statements and amortized over the balance period of such long term asset or liability, by recognition as income or expense in each of such periods, with the exception of exchange differences dealt with in accordance with the provisions of paragraph 15 of the said rules.

(2) To exercise the option referred to in sub-paragraph (1), an asset or liability shall be designated as a long-term foreign currency monetary item, if the asset or liability is expressed in a foreign currency and has a term of twelve months or more at the date of origination of the asset or the liability:

Provided that the option exercised by the enterprise shall disclose the fact of such option and of the amount remaining to be amortized in the financial statements of the period in which such option is exercised and in every subsequent period so long as any exchange difference remains unamortized.”

I. Statements

1. Statement on Reporting under Section 227 (1A) of the Companies Act, 1956

2. Statement on the Companies (Auditor’s Report) Order, 2003 (2005 Edition)

II. Standards on Auditing (SAs)

NOTE: Effective date means that the SA is effective for audits of the financial statements for periods beginning on or after the specified date.

III. Guidance Notes /Study Guide / Monograph

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

CA institute has clarified vide announcement dated 14th February, 2013 that the following amendments of income-tax, service tax and VAT as well as the BOS publications shall be applicable for CA IPCE May 2013 examination:

1) The amendments made by the Finance Act, 2012 in income-tax and service tax.

2) The provisions of income-tax law as applicable for assessment year 2013-14.

3) The significant notifications and circulars issued upto 31st October, 2012 (income-tax and service tax).

4) Study Material on Taxation (Vol. I): November, 2012 edition of the Study Material is based on the provisions of the Income-tax Act, 1961, as amended by the Finance Act, 2012 and applicable for A.Y.2013-14, and the significant notifications and circulars issued upto 30.6.2012.

5) Practice Manual on Taxation (Vol. II):  In November, 2012 edition Practice Manual, questions set at the past PE-II, PCC, and IPCC level examinations of chartered accountancy course have been modified and adapted and answered on the basis of the provisions of law applicable for A.Y.2013-14.

6) Study Material and Practice Manual on Part II: Service tax and VAT. (Vol. III): CA institute has recommended the students appearing in May 2013 examination to read November, 2012 edition of the Study Material, since the concept of taxation of services has undergone a complete change from a positive to negative approach. Therefore, the service tax portion of the Study Material has been completely revamped.

7) Supplementary Study Paper - 2012 (Taxation): This publication explains the amendments made by the Finance Act, 2012 in income-tax and service tax as well as the significant circulars and notifications in income-tax issued between 1.5.2011 and 30.4.2012.

8) Revision Test Paper (RTP) for May 2013 Examination: The RTP for May 2013 would, therefore, contain the significant notifications and circulars issued after the date up to which they are covered in the November 2012 edition of the Study Material on Taxation, till 31st October, 2012.