Understanding Accounting Standards in India: Are They Mandatory?

Accounting standards are crucial guidelines that ensure uniformity and consistency in financial reporting. In India, the accounting standards are established and enforced by the Institute of Chartered Accountants of India (ICAI). But are these accounting standards mandatory for businesses operating in India? Let's explore the answer to this question in detail.

Yes, accounting standards are mandatory for businesses in India. The ICAI has issued several accounting standards that are applicable to different aspects of financial reporting, such as revenue recognition, inventory valuation, fixed assets, leases, and more. These standards are designed to bring transparency and accuracy in financial reporting, making it easier for businesses, investors, and other stakeholders to understand the financial performance and position of a company.

As per the Companies Act, 2013, which governs the corporate sector in India, companies are required to comply with the accounting standards issued by the ICAI. Section 133 of the Companies Act mandates the adoption of Indian Accounting Standards (Ind AS) for certain classes of companies, such as listed companies, companies with a net worth of Rs. 500 crores or more, and companies with an annual turnover of Rs. 500 crores or more. For other companies, the accounting standards issued by the ICAI are applicable.

Non-compliance with accounting standards can result in penalties and fines, and may also impact the credibility of a company's financial statements. Additionally, listed companies are required to comply with the accounting standards to meet the listing requirements of stock exchanges in India.
Apart from being mandatory, adhering to accounting standards also has several benefits for businesses. It ensures that financial statements are prepared in a consistent manner, allowing for easy comparison of financial performance over time. It also enhances the credibility and reliability of financial statements, which is crucial for attracting investors and obtaining financing from banks and financial institutions. Furthermore, compliance with accounting standards reduces the risk of financial fraud and misrepresentation, as it promotes transparency and accuracy in financial reporting.

Conclusion:

In conclusion, accounting standards are mandatory for businesses in India, and non-compliance can have legal and financial implications. Adhering to these standards not only ensures compliance with regulatory requirements but also enhances the credibility of financial statements and promotes transparency in financial reporting. Businesses operating in India should make it a priority to comply with the accounting standards issued by the ICAI to maintain good corporate governance practices and build trust among stakeholders.

Understanding the Procure to Pay Process: From Identifying Needs to Making Payments

Procure-to-pay (P2P) is a critical process in any organization.

It involves the entire process of determining the need for a good or service, selecting a supplier, creating a purchase order, receiving goods, and finally making payment. This process is essential to ensure that the organization acquires the required goods and services effectively and efficiently while complying with all internal and external regulations.

The P2P process is divided into three parts.

Need Identification and ordering

The first step is to determine the demand for the good or service. This is done by departments that require goods or services. The department communicates its requirements to the purchasing department, which then begins the process of selecting a supplier. Purchasing is responsible for selecting vendors based on various factors such as cost, quality, delivery time, and vendor reputation.

Once a supplier has been selected, the purchasing department creates a purchase order (PO) with all the necessary details such as the description of the good or service, the quantity, the delivery date and the agreed price. PO is sent to selected vendor for delivery of goods / services.

Receipt of Goods / Services

The next step is the receipt of goods or services. When the goods or services are received, they will be inspected to ensure that they meet the specifications stated in the purchase order. Important step here is to immediately report any discrepancies to the seller and take corrective action.

Payment

The final step in the P2P process is payment. Once the goods or services have been received and approved, the invoice is checked against the purchase order to ensure that all details are correct. Any discrepancies will be resolved prior to payment. Payment is made according to the terms agreed between the seller and the organization.

The P2P process is vital for any organization as it ensures the effective and efficient supply of required goods and services. This process helps reduce costs, increase efficiency and comply with all regulations. Organizations with effective P2P processes can reduce the time and effort required to acquire goods and services, resulting in significant cost savings.

Conclusion

Finally, the Procure-to-Pay process is a critical process for any organization. It involves several steps, from determining the need for goods or services, selecting suppliers, creating purchase orders, receiving goods, and making payment. An effective P2P process can help organizations reduce costs, increase efficiency, and ensure compliance with all regulations. Therefore, it is imperative to have an effective P2P process in place to keep the organization running smoothly.

Incorporating an LLC in Delaware State with a Non-US Citizen: A Guide

 

Delaware is known as one of the most business-friendly states in the United States, making it an attractive destination for entrepreneurs, including non-US citizens. If you're a non-US citizen looking to start a limited liability company (LLC) in Delaware, this guide will walk you through the process.

Step 1: Choose a Business Name

The first step in incorporating an LLC in Delaware is choosing a business name. Delaware requires that your business name must be unique and distinguishable from other businesses registered in the state. You can check the availability of your desired name by conducting a business name search on the Delaware Division of Corporations website.

Step 2: Appoint a Registered Agent

A registered agent is a person or company that accepts legal documents on behalf of your LLC. In Delaware, the registered agent must have a physical address in the state and be available during normal business hours. Non-US citizens can appoint a registered agent who is a resident of Delaware.

Step 3: File the Certificate of Formation

The next step is to file the Certificate of Formation with the Delaware Division of Corporations. This document outlines the basic information about your LLC, such as its name, purpose, and management structure. You can file the Certificate of Formation online or by mail.

Step 4: Create an Operating Agreement

An operating agreement is a document that outlines the rules and regulations for running your LLC. This document is not required by Delaware law, but it is highly recommended. Your operating agreement should cover important details such as the distribution of profits and losses, voting rights, and decision-making processes.

Step 5: Obtain an EIN

An Employer Identification Number (EIN) is a tax identification number that allows your LLC to pay taxes, open bank accounts, and hire employees. Non-US citizens can apply for an EIN online or by mail.

Step 6: Comply with Tax Obligations

Your LLC must comply with state and federal tax obligations, including paying annual franchise taxes to the Delaware Division of Corporations.

In conclusion, incorporating an LLC in Delaware with a non-US citizen is a straightforward process that requires careful planning and attention to detail. By following these steps, you can set up a solid foundation for your business and take advantage of the many benefits Delaware has to offer.

Five things you need to know about starting business

Start your own business! This might sound impossible, but it isn’t. Even if you already have a part-time job or a source of income on the side, starting any kind of business can still be very exciting and fulfilling, especially when you’re creating something new and fresh. That said, things like taxes, finances, and everything else that goes into starting a business can be overwhelming, and they might even seem too complicated for some people. Luckily, there’s actually a lot less to getting started than you think. Here are five easy tips to set things in motion so you can enjoy this amazing world we live in while being sure about things like business licenses and insurance.

1. Understand How Small Businesses Are Formed

Before you get started with anything, be sure to know what type of business you want to be, how soon you want to open, and whether you’ll have any trouble managing the team already in place. You’ll also need to decide on an idea for why you want this business up and running, which will determine whether you need help getting it off the ground. There are several different types of businesses, each with their own strengths and potential pitfalls. As long as you stay informed and make good decisions, you should be able to find a way to run a successful small business.

2. Get The Necessary Permits & Licensing In Order

The first step in opening a business is finding out where all of the necessary paperwork comes from—and who needs it. One of the most important documents a person needs to have open their doors is either a state-issued sales tax license, local business license, occupational licenses, state-issued permits, building permit, registration for general business purposes (like retail store), or various other licenses as well. Depending on what sorts of businesses you want to start, you may want more or fewer licenses to go along with having a storefront, making online orders, conducting business through email, taking advantage of certain safety precautions, etc. Many places offer these types of “passport” items free of charge, and they often include access to information about your location and specific licensing requirements. Check out your area’s website or call for licensing services before purchasing them all—that makes sure they know how much you require and what exactly your company will look like. Be prepared to pay fees for some licenses while filling out applications can be quite time-consuming, and depending on what sort of operation you want to do, you may not be able to cover them at all.

3. Choose A Legal Name For Your Company

Once you’ve decided on a name (or two), it’s time to pick one that’s easy enough to spell and pronounce without using silly or confusing words like “the” or “the” instead of “the business.” Remember that no matter how attractive a business name sounds, many people aren’t going to use it in order not to sound stupid. If possible, try coming up with something clever and original and choose a nickname for your company, such as Mr. Cool or Mrs. Smartie Pants to keep its identity and personality under wraps. Once you’ve made up your mind, visit your town’s registrar to begin completing business name-check forms. Then, submit the form and wait for approval. Afterward, send the completed application to that same office so it can be processed and then submitted for registration with the relevant authority. It will take anywhere from 30 minutes to a few hours, depending on how quickly the offices process them.

4. Plan Out Your Finances So You Have Time (& Resources) At Hand When Reaching Clients And Investors

Setting aside a little bit of cash and a reasonable amount of investments is always smart. Most states require that when starting an S corporation, you must have at least $150,000 in cash, real estate, and personal property; plus, some other assets, such as equipment and inventory. Before applying for an S corporation, you’ll be given a list of necessities, but once you’ve been approved, you can build up whatever assets you wish with your initial startup capital. If you’re planning on selling the company to another individual or private owner, be aware that you won’t receive any share of profit in exchange for the stock you bought. Also, note that many states require shareholders to become LLCs for the sake of taxes.

5. Find Legal Help With Certain Issues

While you’re setting up shop, make sure you consult with the appropriate legal help as needed. It could range from simple matters like registering for Taxes, drafting contracts, resolving conflicts with employees or other parties, and more serious issues like accounting for profits, determining liability if a customer gets sued, and handling patent infringement lawsuits. Make sure to hire someone that’s familiar with the law and is properly trained in order to handle these situations professionally. You might end up spending more time doing research and consultation than actually opening the doors of your dream enterprise. But hey, don’t worry. Doing your due diligence and talking to someone prior to actually putting in the work will save you countless headaches down the line. Plus, the knowledge is worth the cost of the consultant. Who knows—maybe even those who get hurt by yours will tell others about your experience when you need it!

Fall and Rise of India : The DeMo Demon.

With recent publishing of annual report published by RBI and as everyone was waiting for the test results of Demonetisation or the DeMo, we came face to face with the Demon. 98.96% of the scrapped notes came back to banking channel and only 1.04% got scrapped. These results are still subject to the note counting process which is still going on.

Indians have deposited total of 15.28 Lakh Crore rupees in their bank accounts during demonetisation period. Assuming that every citizen in out country is honest tax payer and have every paisa accounted, this is a great achievement for Govt to bring back the money in circulation in banking systems.

As India has become country of economists, post demonetisation, there was heavy criticism of govt post RBI. The criticism was based on assumption that only motive of DeMo was to put currency out of circulation and eradicate it, thus eradicating black money. Well! it is not so, the basic intention of demonetisation was provide govt and taxmen a trail, so that they can reach to the tax evaders and can plug in the ways to generate black money once and for all. Had it been a "change your currency" scheme, eradication of black money would never have possible, instead it would have just deferred the generation. Now that govt is having information of all the honest tax-payers of the country, who have deposited the accounted money in their bank accounts, it is easy for taxmen to put in some good data analytic tools, draw patterns or pie charts and finally chain the demons. Thereby generating huge tax inflow for govt.With another plug in the hole: GST, govt is all set to bring in even common man, a small trader or a business tycoon on same platform and in banking channel. 

I recently read a post on facebook saying that India is a cash based economy and thus it should never be changed. DeMo has merely caused inconvenience to the public at large, slowdown and nothing else, much like burning a city to find a criminal. Let's take a look at it:

First assuming that India is cash based economy and letting it be one for sake of convenience is not very acceptable. If a cashless system could replace the existing one, which would benefit the country in long term, it should be accepted with open arms. 

Second, the question is how could slowdown in India be because of DeMo? While assuming that all of the demonetised currency was accounted for and has been deposited in bank, there should not be any problem with fund flows at ground level. The persons in trade dealing in cash, could now write a cheque and make payments or more technically sounds one can go for better option. The payment settlement modes have been made really quick and thus I see no liquidity crunch in economy, although there is cash crunch.

All govt is asking the taxpayers to honestly pay their taxes on their net income. The black money menace has been part of our economy for more than 4 decades and it is high time to eradicate it now. Demonetisation followed by GST was more of change in methods to do business. With GST regime now in functions cost of goods sold has gone down in almost all industries. With more and more transparency in transactions and giving govt their share of reasonable tax, we are ultimately moving towards a better economy and stronger nation.

The Statement Beneath!

As Hon'ble Finance Minister Mr.Arun Jaitely completed his budget speech, people of India came to know he means business. A balanced finance budget with main focus on stable growth and tit-bit giveaways FM showed opposition that "sach me ache din aane wale hain". Now focus of govt is merger of shadow economy of India into mainstream by bring in the black money. The main focus of govt now is to bring in black money back in the economy which has been drained out by scams.As said old sins, cast a long shadow, so it will take time and in as expert reckon more scams and of larger magnitude are yet to be revealed.

With more and more scams coming in picture, FORENSIC AUDITORS' and FRAUD DETECTORS' importance will increase. These are the professionals with special skills who can detect frauds in financial sector, which for any other person is like finding needle in haystack. Equipped with special data analytics tools, a forensic auditor specialises in scrutinising records to find any fraud, leakage or any other kind of financial damage to the organisation. Also, he can help in collection of evidences required in any other kind of fraud.
Technologically Forensic Auditor is panache, having all the modern equipments, gadgets and knowledge of how a fraudster could have used any equipment to perpetrate a fraud, any kind of fraud it may be. Forensic audit is not mere a task to read financial statement between the line but to understand scrutinise the statement beneath. The professional will scrutinise the data to extract something evidence that stands as valid evidence is court of law.

The question now is what are the required skills to be a forensic auditor? A forensic auditor not a demigod. To be a good forensic expert following are the skill set one should have:

1. Ability to derive "trail" of the an event. With simple observations, use of common sense and technical knowledge of the field a person can detect biggest of the frauds and their perpetrators with utmost ease.
2. "Think like a fraudster" .Unless a professional cannot think like a fraudster and cannot vulnerabilities in system and ways to exploit those, reaching and rooting out a fraud would be a mammoth task.

This blog is merely a prelude to immensely vast field of Financial Forensics. The field has immense scope for budding professionals and seasoned campaigners of the financial advisory field. Still unexplored this field is very promising,all one needs is to read "not between the lines" but The statement Beneath.