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Internal Audit - MCQ Test

on May 02, 2021

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Need of Revisional Authorities under Tax laws

Need of Revisional Authorities under Tax laws There is an utmost importance of Revisional authorities under Tax laws (both under Income Tax Law and GST Law) to safeguard and protect the interest of revenue as they act as a reviewer of the orders passed by the lower authorities which fall under their respective jurisdictions. Under Income Tax Act, 1961 there exists a provision under section 263 and 264 where Commissioner of Income tax can revise the orders passed by its subordinating authorities i.e. A.O. falling under its jurisdiction. The main reason behind introducing this provision under Income Tax Act, 1961 was to prevent its subordinating authorities to take bribe from assesse by passing Assessment Orders which are prejudicial to the interest of revenue, therefore section 263 was introduced to give the powers to CIT to revise the assessment orders if found prejudicial to the interest of revenue. On the contrary, the situation may occur when A.O. may pass such an assessment o...

TEAM SICASA Ballari for the year 2021-22

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Beneish's M-Score – Tool to identify the fraud in Financial Statement

Beneish's M-Score – Tool to identify the fraud in Financial Statement Before Starting, the first question comes to our mind that how can we detect fraud in Financial Statements using this Score? For this, we need to understand what is Beneish’s M-Score? It is a mathematical Model created by Professor M. Beneish, who published a paper named “The Detection of Earnings Manipulation” in June 1999, in which he uses eight Financial Ratios to ascertain the possibility of manipulation in Financial Statements. Now the question comes as what are Eight Financial Ratios? Eight Financial Ratios are: 1. Days Sales in Receivables Index (Net Receivablest / Salest) / (Net Receivablest-1 / Salest-1) 2. Gross Margin Index (GMI) [(Salest-1 - COGSt-1) / Salest-1] / [(Salest - COGSt) / Salest] 3. Asset Quality Index (AQI) [1 - (Current Assetst + PP&Et + Securitiest) / Total Assetst] / [1 - ((Current Assetst-1 + PP&Et-1 + Securitiest-1) / Total Assetst-1)] 4. Sales Growth Index (S...

One Day before Auditing Exam -CA IPCC/Inter - Part 1

Questions on Standards on Auditing - IPC: Just For Practice-summary questions on all Standards of Auditing Question 1 : “The auditors should consider the effect of subsequent events on the financial statement and on auditor’s report” according to SA 560 – Comment. Answer: Effect of Subsequent Events: SA 560 “Subsequent Events” , establishes standards on the auditor’s responsibility regarding subsequent events. According to it, ‘ subsequent events ’ refer to those events which occur between the date of financial statements and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report. It lays down the standard that the auditor should consider the effect of subsequent events on the financial statements and on the auditor’s report. The auditor should obtain sufficient appropriate evidence that all events upto the date of the auditor’s report requiring adjustment or disclosure have been identified and to identify such events. The a...

Waiving-off Condonation Fees due to late filing of application Form 18 related to Members and Firms amidst COVID-19 Pandemic till 30th July, 2021

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Accounting Standard 12 - Accounting for Government Grants

AS-12 ACCOUNTING FOR GOVERNMENT GRANTS 1. Introduction To help discharge this duty, the government undertakes promotional activities, provides incentives and grants to businesses. The grants received from the government are in various forms such as subsidies, incentives, duty drawbacks among others. AS 12 deals with grants given by the government but does not covers: i) The accounting for grants which reflect the effect of price changes ii) Assistance by the government other than grants like tax exemption, etc iii) Participation of government in organization’s ownership 2. Meaning of Government Grant The assistance was given by the government in cash or kind with certain specific conditions. These do not include such grants from the government which cannot be measured reasonably. Also, the transactions with the government which cannot be separately identified from normal trading of the organization are not considered as a grant. For eg:- Receipt of cash on the sale of packaged drinking...

Why Stock Market Crashes and its reason

In this article we will try to understand the reasons of stock market crashes and measures taken by SEBI to tackle the same, but before coming on to our main discussion, let us first understand what actually stock market crash is, As per technical definition, it is a sudden dramatic decline of stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic selling and underlying economic factors. I know you haven’t understood the above definition as it is little bit technical, don’t worry we will deeply analyse the same with demand and supply example; Stock Market Crash is nothing but a steep downfall of stock indices like Sensex, Nifty 50 and many other small and mid cap indices and its listed shares; gradually due to rapid dumping of shares in the market usually by big investors like FII’s, DII’s which ultimately creates panic among the investors and they also start selling their holdings (shares) with a fear of losing more and more value of investment whi...

Concept of Tax Information Exchange Agreement in India with Tax Havens and Secrecy Jurisdictions

There is a great and importance of Tax Information Exchange Agreement in India because as per section 90(1) of Income Tax Act, 1961, Government of India i.e. Central Government can enter into Double Taxation Avoidance Agreement with other countries so as to avoid double taxation of income in both the countries. The basic concept behind DTAA is to ensure that there should not be undue hardship in the hands of tax payers i.e. income earned in one country should not be taxed twice because of source and residence criteria in both countries and most importantly DTAA contains article usually article no. 26 which deals with Exchange of Tax Information which provides for various tax and financial information about the resident persons who have invested or have any significance financial presence in that territory to the other territory. But what about other countries where there is no provision of income tax for taxing the income i.e. Tax haven Countries and Secrecy Jurisdictions. Yes, there a...

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Internal Audit - MCQ Test

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