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Certification of Company Accounts

Certification of Company Accounts. Govt Accounts : Maintained on cash basis. No profit making hence no P&L A/c & B/S. Slide 2.2. Accounting : Art of recording, classifying and summarizing monetary transactions and events and interpreting the results thereof. Govt Accounts :

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Certification of Company Accounts

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  1. Certification of Company Accounts Govt Accounts : Maintained on cash basis. No profit making hence no P&L A/c & B/S. Slide 2.2 Accounting : Art of recording, classifying and summarizing monetary transactions and events and interpreting the results thereof.

  2. Govt Accounts : Maintained on cash basis. No profit making hence no P&L A/c & B/S. Company Accounts : Comparison between Govt Accounts & Company Accounts. Slide 2.2

  3. Companies Act 1956 Maintenance of books of accounts on – accrual basis & according to double entry system of accounting. Schedule VI the Act : Part – I : Format of B/S and disclosures to be made under various heads Part – II : Requirements of disclosure in the P&L A/c. Slide 2.2

  4. Audit Committees / Management Audit • Steps involved : • Identification of objectives of orgn. • Break-up of objectives into detailed targets & plans. • Review of organization structure. • Performance evaluation. • Suggestion of a realistic course of action. • Slide 2.2 Management audit is an audit to examine, review and appraise various policies & actions of mgmt on the basis of certain standard.

  5. Accounting Standards Slide 2.2 • Section 211 (3B) : • According to this sec., • the deviation from the AS • the reasons for such deviation • the financial effect, if any, of such deviation • should be made by way of a disclosure in the accounts. Issued by the ICAI Describe the a/ctg principles Methods of applying these principles Ensure true & fair view of the financial statement Enjoys legal recognition

  6. AS mainly applicable in BSNL & MTNL AS 1 : Disclosure of accounting policies AS 2 : Valuation of Inventories AS 6 : Depreciation Accounting AS 9 : Revenue recognition AS 10 : Accounting for fixed assets AS 15 : Accounting for retirement benefits in the financial standards. Slide 2.2

  7. Trial Balance & Financial Statements Trial Balance : A list of debit & credit of the balances taken out from ledger including Cash & Bank balance. • Objective : • to ascertain arithmetical accuracy of ledger accounts • to help in locating errors • to help in preparation of final accounts. • Slide 2.2

  8. Financial Statements Basic Statements : Income Statement or Trading and P&L A/c Statement of Financial Position or Balance Sheet • Additional statements : • Statement of Retained Earnings • Cash Flow statement • Slide 2.2

  9. Trading Account Profit and Loss A/c Determines the Gross Profit or Loss Only Direct Expenses taken into account here Comparison of Closing Stock with the previous year Provides safety against possible losses • Determines the Net Profit or Loss • All indirect expenses taken into account here • Discloses all losses & gains of that accounting period • Slide 2.2

  10. SAP (Standard Accounting Practices) • SAP 1 : Describes the basic principles which govern the auditors professional responsibilities. • SAP 2 : Describes the overall objectives and scope of audit of financial statements. • SAP 3 : Documentation • Slide 2.2 The Auditors while discharging their functions have to ensure that the Standard Accounting Practices are complied with.

  11. The sources & uses of funds raised during the period are reflected in the FFS whereas cash & cash equivalents alone are taken in CFS. Ratio Analysis : A means to analyze the financial health & working of the company Cash Flow and Fund Flow Statements : • Common ratios : • Liquidity ratios • Profitability ratios • Debt equity ratios • Price earnings ratios Slide 2.2

  12. Commercial Accounts Basic records to be checked : Journal Bank & Cash book Bank Reconciliation statement General ledgers Sub-ledgers Trail Balance & Financial statements Slide 2.2

  13. Commercial Accounts Records It includes following schedules for detail checking : Land Builiding Work in progress Sundry Debtors schedule Claims receivables General ledger Notes to Accounts & Auditors report Permanent File Slide 2.2

  14. Types of Audit : Internal Audit Statutory audit Management Audit / Audit Committee Systems Audit Govt Audit – Propriety Audit – Certification of Accounts MAOCARO Requirements CAG’s Directives Slide 2.2

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