CA FINAL ISCA , NMQs Chapter 1, Governance.

Question
Discuss key benefits of COBIT 5 framework.
Answer-
The key benefits of COBIT 5 framework are as follows:
• A comprehensive framework such as COBIT 5 enables enterprises in achieving
their objectives for the governance and management of enterprise IT.
• The best practices of COBIT 5 help enterprises to create optimal value from IT by maintaining a balance between realizing benefits and optimizing risk levels and resource use.
• Further, COBIT 5 enables IT to be governed and managed in a holistic manner for the entire enterprise, taking in the full end-to-end business and IT functional areas of responsibility, considering the IT related interests of internal and external stakeholders.
• COBIT 5 helps enterprises to manage IT related risk and ensures compliance,
continuity, security and privacy.
• COBIT 5 enables clear policy development and good practice for IT management including increased business user satisfaction.
• The key advantage in using a generic framework such as COBIT 5 is that it is useful for enterprises of all sizes, whether commercial, not-for-profit or in the public sector.
• COBIT 5 supports compliance with relevant laws, regulations, contractual agreements and policies.

Circulars issued by CBDT from Nov 2015 to April 2016.

Significant Circulars issued by CBDT applicable for CA Final Nov 2016

Circular No - 18/2015
Date - 2/11/15
Subject- Whether in the case of banks, expenses relatable to investment in non-SLR securities need to be disallowed under section 57(i), by considering interest on non-SLR securities as “Income from other sources".
Clarification by CBDT-  In CIT v. Nawanshahar Central Cooperative Bank Ltd. [2007]160 Taxman 48, the Supreme Court held that investments made by a banking concern are part of the business of
banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and Gains of Business and Profession
Even though the above mentioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i), the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.

Circular No - 21/2015
Date- 10/12/2015
Subject - Revision of monetary limits for filing of appeals by the Department before the ITAT and High Courts and SLP before Supreme Court
Clarification by CBDT - Appeals/SLP shall not be filed in cases where tax effect does not exceed the monetary limits given hereunder –
`10 lakhs, in case of appeal before ITAT;
`20 lakhs, in case of appeal before High Court; and
`25 lakhs, in case of appeal before Supreme Court.
Further, appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. The above limits would apply equally to cross objections under section 253(4) and references to High Court under sections 256(1)and (2).


Circular No - 22/2015
Date - 17/12/15
Subject - Allowability of employers contribution to welfare funds of employees remitted after due date under the relevant Act but before the due date of fi ling of return under section 139(1).
Clarification  by CBDT-  If the assessee deposits any sum payable by it by way of tax, duty, cess or fee by whatever name called under any law for the time being in force, or any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, on or before the ‘due date’ applicable in his case for furnishing the return of income under section 139(1), no disallowance can be made under section 43B.This clarification is based on Supreme Court decision in CIT v. Alom Extrusions Ltd. (2009) 185 Taxman 416.
It is further clarifi ed that this Circular does not apply to claim of deduction relating to employee’s contribution to welfare funds which are governed by section 36(1)(va) of the Income-tax Act,
1961.

NMQs- CA Final Paper 4 Corporate & Allied Laws

Topic- Inspection, Inquiry and Investigation
Question-
A notice was sent to Mr. Left by the registrar to furnish the information related to a business transacted during his tenure in the X company. Mr. Left ignored the notice considering that he is no more an employee of X company. Registrar issued the summon against Mr. Left. Explain in the light of the Companies Act, 2013 about the liability of the
Mr. Left in the given case.

Answer-
Power of the Registrar to call for information, explanation or documents: According to section 206(1) of the Companies Act, 2013, where on a scrutiny of any document filed by a company or on any information received by him, the Registrar is of the opinion that any further information or explanation or any further documents relating to the company is necessary, he may by a written notice require the company—
(a) to furnish in writing such information or explanation; or
(b) to produce such documents,within such reasonable time, as may be specified in the notice.
Further, proviso to sub-section (2) of section 206 provides that where such information or explanation relates to any past period, the officers who had been in the employment of the company for such period, if so called upon by the Registrar through a notice served on them in writing, shall also furnish such information or explanation to the best of their knowledge.
In the given instance, Mr. Left is a past member of the company. Registrar by serving notice asked Mr. Left to furnish the information related to the business transaction made during his tenure. So as per the above provision, where such information or explanation relates to any past period, the officers who had been in the employment of the company for such period, if so called upon by the Registrar through a notice served on him, he has
a duty to give such information/Explanation to the best of his knowledge. Mr. Left is liable to provide such information.

NMQs for CA FINAL Nov 2016 Paper -3 AAPE Topic SA 220

Very Important  Question
Question
M/s Sureshchandra & Co. has been appointed as an auditor of SC Ltd. for the
financial year 2014-15. CA. Suresh, one of the partners of M/s Sureshchandra &
Co., completed entire routine audit work by 29th May, 2015. Unfortunately, on the
very next morning, while roving towards office of SC Ltd. to sign final audit report,
he met with a road accident and died. CA. Chandra, another partner of M/s
Sureshchandra & Co., therefore, signed the accounts of SC Ltd., without reviewing the work performed by CA. Suresh. State with reasons whether CA. Chandra is right in expressing an opinion on financial statements the audit of which is performed by another auditor.
Answer
Relying on Work Performed by Another Auditor: As per SA 220 “Quality Control for an Audit of Financial Statements”, an engagement partner taking over an audit
during the engagement may apply the review procedures such as the work has
been performed in accordance with professional standards and regulatory and legal requirements; significant matters have been raised for further consideration; appropriate consultations have taken place and the resulting conclusions have been documented and implemented; there is a need to revise the nature, timing and extent of work performed; the work performed supports the conclusions reached and is appropriately documented; the evidence obtained is sufficient and
appropriate to support the auditor’s report; and the objectives of the engagement procedures have been achieved.
Further, one of the basic principles, which govern the auditor’s professional
responsibilities and which should be complied with wherever an audit is carried, is that when the auditor delegates work to assistants or uses work performed by other auditor and experts, he will continue to be responsible for forming and expressing his opinion on the financial information. However, he will be entitled to rely on work performed by others, provided he exercises adequate skill and care and is not aware of any reason to believe that he should not have so relied. This is the fundamental principle which is ethically required as per Code of Ethics.
However, the auditor should carefully direct, supervise and review work delegated. He should obtain reasonable assurance that work performed by other
auditors/experts and assistants is adequate for his purpose.

In the given case, all the auditing procedures before the moment of signing of final report have been performed by CA. Suresh. However, the report could not be signed by him due to his unfortunate death. Later on, CA. Chandra signed the
report relying on the work performed by CA. Suresh. Here, CA. Chandra is allowed
to sign the audit report, though, will be responsible for expressing the opinion. He may rely on the work performed by CA. Suresh provided he further exercises
adequate skill and due care and review the work performed by him.

NMQs for CA Final Paper -4 CAL

Chapter -O & M
Ques:-
Examine the merits of the following petitions made under Sections 397 and 398 of the Companies Act, 1956 in the light of judicial pronouncements made in this regard:
(i) A group of shareholders holding 12% of the issued share capital of Unique Products Limited have filed a petition before the Company Law Board alleging various acts of illegal, invalid and irregular transactions entered into in the name of the Company.
Ans:-
(i) According to Sections 399(1)(a) of the Companies Act, 1956, a group of shareholders of Unique Products Limited must hold atleast 10% of the issued share capital of the Company or satisfy other requirements under section 399(1) of the Companies Act, 1956. Since the group holds 12% of the issue capital they are entitled to file a petition before
the Company Law Board under sections 397 and 398 of the Companies Act, 1956 by alleging that the affairs of the Company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members of the Company.
However, on the basis of Sheth Mohanlal Ganpatram V. Shri Sayaji Jubilee Colton and Jute Mills Company Ltd., mere illegal, invalid or irregular transactions entered into in the name of the company do not constitute a ground for invoking the provisions of section 397 unless it is proved that they are oppressive to any shareholder or prejudicial to the interest of the company or to the public interest.
Thus, in the present case, the petition filed by the group of shareholders will fail unless they can prove to the satisfaction of the Company Law Board that the acts complained of in the petition are oppressive and prejudicial to the interest of the company and the public interest. And that to wind up the company would unfairly prejudice such member or members, but that otherwise those facts would justify the making of a winding up order on the ground that it was just and equitable that the Company should be wound up.

NMQs for CA FINAL Paper -4 CAL

Chapter- O& M
Ques:-
The profits of ABC Limited for the financial year 2014-2015 fell considerably due to recession. The Board of directors of the company, therefore, bonafide did not recommend any dividend for the year. At the Annual General Meeting of the company, a group of members objected to the Board's decision and wanted the Board to make recommendation for dividend. On refusal by the Board, the members, who feel oppressed by the Board's decision to skip the dividend, move to the Company Law Board and complain against the Board on the ground of oppression and mismanagement.
Examining the provisions of the Companies Act, 1956, decide:
(i) Whether the members contention shall be tenable?
(ii) Whether the act of Board of Directors not to recommend any dividend shall amount to oppression and mismanagement?
Ans:-
Oppression & Mismanagement: Under sections 397 and 398 of the Companies Act, 1956, members may apply to the Company Law Board in cases of oppression and mismanagement. However, bona fide decisions consistent with the company’s memorandum and articles are not to be equated with mismanagement even if they turn
out to be wrong in the circumstances or these cause temporary losses. The Court will not permit the machinery created by the sections to be used by the minority for compelling the majority to come to terms, where the company is honestly managed. Directors’ bona fide decision not to declare dividend and to accumulate available profits into reserves is not mismanagement. (Thomas Vettom (V.J.) vs. Kuttanad Rubber Co. Ltd. (1984) 56 Com. Cases 284 (Ker).
Thus in the given case, the group of members who complain to CLB against the decision of the Board not to declare any dividend and to accumulate available profits into reserves, would not succeed, as the act of directors does not amount to mismanagement.
Furthermore, the shareholders cannot compel the Board to recommend a dividend. The Board’s recommendations are placed in the general meeting. In the general meeting company can reduce the dividend, but cannot increase the dividend as recommended by the Board. Therefore, the members cannot compel the company to declare dividend and cannot charge the directors with oppression or mismanagement.
Applying the above, answers to the question shall be as under:
(i) The contention of shareholders/members shall not be tenable.
(ii) The act of the Board of directors who acted bona fide, not to recommend any
dividend shall not amount to oppression or mismanagement.

NMQs for Coporate Law & Allied Laws.

Chapter Prevention of O & M

Ques :-
A petition by majority shareholders complaining oppression by minority shareholders.
Give your answer according to the provisions of the Companies Act, 1956.
Ans :-
Right not confined to minority: According to section 399, the right to apply for relief under section 397/398 is given to 100 members or 1/10th of the total number of members or any member or members holding not less than 1/10th of the issued share capital of the company. There is nothing in this section which suggests even indirectly that unless the application is made by minority shareholders it is not maintainable. The right to apply is, therefore, not confined to oppressed minority of the shareholders alone. It was held by Calcutta High Court in Re. Sindhri Iron Foundry (P) Ltd. that the oppressed majority also might apply for relief under section 397. Therefore, the petitioners are likely to succeed in
getting relief provided the other condition laid down in section 397 (i.e. that to wind up the company would unfairly prejudice such members, but that otherwise the facts would justify the making of a winding-up order on just and equitable ground) is satisfied, even though the Delhi High Court held a contrary view in Suresh Kumar Sanghi v. Supreme
Motors Ltd.

SOME WHATSAPP TEXT MESSAGES THAT  WILL MAKE YOUR MOTHER'S DAY.

Tell your mother what she means to you through these heartfelt messages.

She's the classic attorney who never fails to bring you out of the chaos you create each time. No matter how much you argue with her, your mother has always been there to wipe away that tear, hold you close and love you anyway.

There is no way you can pay her back for all the sacrifices she's made for you. Though a 'thank you' may seem too small, it's important to let her know how special she is to you.

Below are 10 different messages for the different equations you may share with your mother this Mother's day.

1. If you are away from her:

All my life I kept wishing to grow older so I could finally move out and do my own thing. But now I wish I could just turn back time to be a child and hug my mom again.

I cried endlessly when you weren't there, but I promise that I won’t let tears mar the smiles that you’ve given me always.

Hoping to see you soon. Take care. Happy Mother's Day!

2. If you've been fighting with her:

Mom as I'm growing up each day, I've realised that I fight with you so much.

Even when all you want is for me to win the fight with the demon inside my head.

I love you mom. Happy Mother's Day!

3. If you're a chaotic teen:

You hear my pain when everyone else goes deaf

You always make smile when I think I can't.

You listen to my secrets and make them yours.

You give me a hug when I can't find my voice.

You wipe away the tears that the world makes me weep.

You mean more to me than you'll ever know.

You're my best friend and angel mother.

Happy Mother's Day Mom!

4. If you're sorry for what you did:

I'm sorry for the things I've done

That put you through so much, not fun

I'm sorry for bad times gone past,

Those times are regretful, not a blast

You are my mother, this much is true

also a friend who's there when I'm blue

I wish more times I would have listened to you,

To not mouth off and be so rude

It's taken me this long to see

That we've taken you for granted,

All of us, not just me.

You've always been there through good times and bad,

Never once have you left us, much like dad

Most of all I wanted to say,

We all love you, respect you, and thank you for all what you gave us.

We love you. A very Happy mother's day!

5. For your mother-in-law:

Thank you mom for the amazing person you brought up and I married.

One day I'm sure he/she will realise what you are to him/her.

I know it's hard, but I'll always try and love him/her the same way you did.

Wish you a very amazing Mother's Day and be prepared, we're showing up tonight.

We love you!

6. If you're a grown man

I'm a son to an amazing mother, a husband to a beautiful wife

and will be a parent of an enormously little person someday.

I know I never say it, but I want you to know that I'm what you made me, all the same.

I know there's nothing that can be done to pay your sacrifices but

I will try being a blend of you and dad. I will try being a father who is motherly.

Thank you Maa!

7. If you are a grown daughter

I know we don't talk much, I'm always involved or I act that I am,

But I want you to know that I miss you, your tactics and your cover ups.

Thank you for all the unwanted advises which now are starting to make sense,

You're are an incredible person and I want my children to think of me as the same,

And for that I'll have to be you. I can't promise, but I'll try.

Take care. I love you and I'll see you soon!

8. If you're a mother-to-be:

Before you were a Mom -

You slept as late as you wanted and never worried about how late you got into bed. You cleaned your house and never tripped over toys or forgot words to a lullaby.

You never worried about how poisonous can plants be or never thought about immunizations.

You had never been puked on - pooped on - spit on - chewed on, or peed on. You had complete control of your mind and My thoughts.

You never looked into teary eyes and cried, never got gloriously happy over a simple grin.

You never held a sleeping baby just because I didn't want to put it down. You never felt your heart break into a million pieces when you couldn't stop the hurt.

You never knew that something so small could affect your life so much.

You never knew that I could love someone so much. You never knew you would love being a Mom.

Now, your daughter is at the same stage you were. And will try being the best of you.

Thank you Mom, Love you always.

9. If she is growing old:

Your hands are now twisting with age and years of work,

Your hand now needs my gentle touch to rub away the hurt.

Your hands are more beautiful than anything can be.

Your hands are the reason I am me.

Happy Mother's Day mom!

10. Thank you mom!

Your arms were always open when I needed a hug. Your heart understood when I needed a friend. Your gentle eyes were stern when I needed a lesson. Your strength and love has guided me and gave me wings to fly. Happy Mother's Day!

Mothers hold their children's hands for a short while, but their hearts forever. Happy Mother's Day!