Ex CC member raises queries on ANNUAL Audited Accounts of ICAI for 2018-19

Very sorry state of affairs of Audited Accounts of 2018-19, looking to the nature of queries raised. Will any body reply....If in the Institute accounts, so many discrepancies are pointed out, how members can be expected to make compliances......

Queries on ANNUAL Audited Accounts of ICAI,.for 2018-19, published in Gazette of India..... By ex CC member Shashi kant Barve ji.....

I have requested clarifications from ICAI, New Delhi, in respect of a few  matters relating to  Annual Accounts for 20118-19. Have any other CA members requested for explanations on any other points please?

1. UNAUDITED accounts of the Northern India Regional Council have been consolidated—Serious
Governance Issue-! (Note 25..17) ---Council can dissolve the NIRC as per Regulation 158 --Whether failure to get accounts audited be “Other Misconduct” under Sec 21/22 of the C A Act-!

2. Major Issues in Fixed Assets Schedule—Note No.9 --It is not clear---How can there be a net credit balance of Rs. 2 Lacs on Library Books when the rate of depreciation is 100%. How can the  amounts of Cost of Transfer/Deletion be lower than corresponding amount of Transfer/Deletion from Accumulated depreciation in case of Building and Computers ,in the asset schedule.

3. Foreign Exchange Gain / Loss not disclosed—AS 11.

4. Contradictory Remarks in different Notes-!-Contribution to Provident Fund is normally considered to be  a Defined Contribution Plan and not a Defined Benefit Plan-! Note 2..15 and Note 26

5. SEGMENT REPORTING needs be followed for Students  Activities segment—AS 17 

6. World Congress of accountants event 2022 Appropriation in I and E account)— Plan Rs. 4500 Lacs – Whether a Self Financing Event as per CPE Advisory-?-Such a huge Expense whether warranted and permitted-?  Cost/Benefit Analysis be informed.

7. Non Compliance with Regulation 197—Budget Vs Actuals—Not given--

8. Insurance of Buildings, Computers  ,assets/inventories—Not shown. Are these assets  insured or not?

9. Certain Notes in English Version of CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2019 are not appearing in Hindi Version thereof—e.g. Notes: 

1) Cash and Cash Equivalents represent cash on hand and balances with banks (Refer Note... 17)..  2) Figures in brackets represent outflows.

10. Expense on Research not disclosed  although activities undertaken—No utilization of Research Fund--

11. Advance to Employees not displayed in Advance to Employees although mentioned so-!  How can the relevant Provision be a long term liability if it is being settled in the current year-!

12. Serious matter of abnormal Loss of Rs. 572 Lacs on Project Parivartan—Note no. 25..07—Who is accountable for initial non implementation and  for raising the delayed Claim-? Not clear whether a Provision made or Expensed off--

13. Accounting of Interest on earmarked fund investment needs a check .Interest income on earmarked funds investment has gone up  by Rs. 549 Lakhs ( Note 20)  while Earmarked Funds investments have gone down  Rs. 16765 Lacs (Note 13).

14.  Earmarked Funds going up but Earmarked Fund Investments going down—Needs a check —

15. Huge amount of Sinking Fund creation whether Warranted / Permissible---—Sinking Fund even on Library Books created-?—Partly Duplication of Sinking Fund-- Figures Not tallying with other Notes- There is already a Reserve created as Education Reserve  to the extent of 50% of cost of additions (net of deductions if any) to Fixed Assets` 

16.  When a separate Benevolent Fund entity exists, whether new Transfer from Membership Fee to Member Benevolent Fund whether permissible-! Amount not tallying per Note.

17. Issues related to  “Reserves” or “Funds”.- (i)      Transfer to Reserve not routed through Income and Expenditure Account----Note no. 2.11.(v) (b) -  There is No utilization at Education Reserve at all.

18.  Capital Work in progress outstanding for last many years Rs 5555 Lacs--Whether Impairment provision made ?

19. Study Circles Accounts need be incorporated. In ICAI Accounts—Study Circles are Extended arms of ICAI—They are not allowed to be separate entities to be registered under any other Act—

20. Responsibility  be fixed for payment of  Stamp Duty –Nagpur Property-

21. Right to receive Land included as Land---

22. Profit/Loss on disposal of Securities whether correctly disclosed  as NIL when there are huge disposal of Securities in Crores of Rupees-!

23. Issues relating to one time support to ICAI Registered Valuers Organization wherein Equity is also held--- Whether permissible and approved as per C A Act..

24. Employee Benefit expense Reduction -- Not getting reconciled with other Notes-

25. Very old Provision—Branch Employees Scheme 2014 -- Rs. 3500 Lacs- Note 25.15—--Why a Long Term Provision-!

26. Huge Loss on Seminars for Members Rs. 552 Lacs  getting partly squared off by Seminars for Students/ Non Members etc. Rs.. 359 Lacs----C A Day event and other non fee contributory events whether permissible -!

27. Huge Expenses on Meetings—Almost Double as compared to 2016-17 –Whether warranted—

28. Huge Professional Fees---Rs. 9557 Lacs--  Must be including huge Legal Consultants/Legal Expenses—Whether includes expenses for defending cases against any past/present Elected Members on the Council

29. Election Expenses not disclosed separately although it involves substantial expenditure and it is not incurred every year. Please inform the amount  and reason.

30. Prior Period Adjustments –at Gross level are quite high at Rs. 1098 Lacs—

31. Issues in Publications Stock Accounting—What is profit on this activity-!

32..  Domestic Travelling up by 25%. This is high and need analysis of reasons.

33. .Inter Branch Reconciliation—Major amounts at Gross Debit/Credit  level—

34. Qualifications in Branch Audit Reports whether considered for all Branches—e.g. Pune Branch Obsolete Stocks-

35. WIRC Accounts –Whether the changed Auditors Report and changed Financial Statements were considered-? 

36. Internal Audit Reports whether have indicated any shortfalls—

37. Physical verification of assets  appears not  to have been completed. Considering the high values of assets what is the time plan for completing the verification/reconciliation-!

38.. Adjustments of Advance Fees would create operating problems in the absence of availability of the Lists of advance fees of Students and Members—Is it not an issue of a material nature  to be so considered as a Matter of Emphasis by the Auditors---! What is its effect on the financials ? Note 25.21.

39. Rise effected in Fees  directly has resulted in extra Surplus and hence the same appearing to be  Unwarranted  and needs be  changed and reduced—

40. The  Annual Report has not been signed by the Council Representatives/ Secretary as per the copy. Please inform the reasons.

41. Please indicate whether the procedures as used by the Central Govt and/Or Central Govt. undertakings/Corporations are applicable for use in respect of the following matters in case of ICAI and if not the reasons for the same—Staff Recruitments, Tendering process for all contracts for goods and services, Accounts subject to CA and AG Audit ( Comptroller and Auditor General) please.

42. What are the reasons for non compliance of Section 18(5B) of The C. A. Act 1949, if any, in respect of disclosure / forwarding of Annual Report/Annual Accounts for 2018-19 to C A Members.

( Reference (No. 346 , The Gazette Of India -Extraorinary)-- 70th annual Report )

Posted by: Sreenivasa Rao <ngs_rama_1@yahoo.com>   in one of the members yahoogroups. He can be reached at the mentioned email id.