Welcome to Accountancy Portal

Dr D V Ramana Ph.D, Professor, Accounting, Xavier Institute of Management, Bhubaneswar.

Dr. D V Ramana has converted his teaching notes into an e-book. This is opened for the students on a pilot basis to get their feedback and suggestions for improvement.

Visit http://www.accounting-ebook.com/

The e-book contains videos on various topics on finance. Dr D V Ramana would like inputs from you on this project. You will be glad to know that he is also working on IFRS e-book project.

I congratulate him for his efforts on Financial Accounting e-book and wish him All the best for his future projects.

PS: Dr Ramana is a subscriber of Management Accountant Blog. If you are interested to make a guest post on the projects you have undertaken or your article on specific topic that would help the readers, I would be happy to post the same on the blog. Please contact me.

Regards,

Santosh Puthran

Never mind showbusiness, there’s no business like the accountancy business. Accountancy firms have a licence to print money because they enjoy access to a state-guaranteed market for auditing. Companies, hospitals, schools, charities, universities, trade unions and housing associations have to submit to an audit, even though the auditor might issue duff reports. Anyone refusing their services faces a prison sentence.

Major company audits are the most lucrative and that market is dominated by just four global auditing firms. PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young have global revenues of over $80 billion (£41bn) a year, which is exceeded by the gross domestic product of only 54 nation states. These firms dominate the structures that make accounting and auditing rules.

Following the Enron and WorldCom debacles and the demise of Arthur Andersen, the auditing market has become further concentrated in those four firms. Many major companies looking for global coverage find that the auditor choice is very restricted.

Click here to read Prem Sikka’s column in Guardian

Cheers,

Santosh Puthran

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Corporate governance is the process by which companies are controlled and directed - a company’s board is ultimately responsible for this. The key to good corporate governance is having the right strategy, leadership and control structures in place to produce and sustain the delivery of value to shareholders.

Good corporate governance, and its visibility, gives confidence to all associated with a company that it is being managed well and that value is being created. Our objective in this report is to summarise the key elements of the Company’s governance structure and relate this to the principles in the UK ’s Combined Code on Corporate Governance – a code of good practice for listed companies.

THE BOARD

“Every company should be headed by an effective board, which is collectively responsible for the success of the company.” Combined Code – Main Principle A.1

CHAIRMAN AND CHIEF EXECUTIVE

“There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision.” Combined Code – Main Principle A.2

BOARD BALANCE AND INDEPENDENCE

“The Board should include a balance of executive and non-executive directors (and in particular independent non-executive directors) such not no individual or small group of individuals can dominate the board’s decision making.” Combined Code – Main Principle A.3

APPOINTMENTS TO THE BOARD

“There should be a formal rigorous and transparent procedure for the appointment of new directors to the board.” Combined Code - Main Principle A.4

INFORMATION AND PROFESSIONAL DEVELOPMENT

“The Board should be supplied in a timely manner with information in a form and of a quality to enable it to discharge its duties. All Directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge.” Combined Code - Main Principle A.5

Source: Chicks drinking

PERFORMANCE EVALUATION

“The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.” Combined Code - Main Principle A.6

RE-ELECTION

“All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. The board should ensure planned and progressive refreshing of the board.” Combined Code - Main Principle A.7

FINANCIAL REPORTING

“The board should present a balanced and understandable assessment of the company’s position and prospects.” Combined Code - Main Principle C.1

INTERNAL CONTROL

” The board should maintain a sound system of internal controls to safeguard shareholders’ investments and the company’s assets.” Combined Code - Main Principle C.2

RELATIONS WITH SHAREHOLDERS

“There should be a dialogue with shareholders based on the mutual understanding of objectives. The Board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. Combined Code” – Main Principle D.1

AUDIT COMMITTEE AND AUDITORS

The board should establish formal and transparent arrangements for considering how they should apply the financial reporting and internal control principles and for maintaining an appropriate relationship with the company’s auditors. Combined Code Main principle C.3

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Sources:

1. Corporate Governance - BAE website
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3. Corporate Governance - Wikipedia

The ongoing debate about protecting the term ‘accountant’ has again raised its head, as a report was ‘accidentally’ posted on the ICAEW website a couple of weeks ago which laid out its plans to fragment the profession by systematically dividing it into ‘tiers’. The document, entitled ‘Report on IFA Activities’, is designed to give the ICAEW an overview of the Institute of Financial Accountants’ activities during 2007 and contains a detailed strategy regarding the structure of the accountancy profession. Not surprisingly, the report proposes that CCAB bodies, such as the ICAEW, become the top tier of the profession with only their members able to use the term ‘accountant’; financial accountants, technicians and bookkeepers would create the lower tiers.

Source: Sunset Fishing

The FINANCIAL — London, The movement towards International Financial Reporting Standards (IFRS) as the leading financial reporting framework for the global capital markets has gathered pace faster than most people expected, according to Ernst & Young.

Dr. Allister Wilson of Ernst & Young says the remarkable success of the adoption of IFRS in 2005 across Europe and in other countries around the world is due to a number of factors. In particular he cites the courage, vision, and commitment shown not only by the members of the International Accounting Standards Board (IASB), but also by national governments, securities’ regulators, corporations, and the auditing profession.

Read more on FinChannel

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Regards,

Santosh Puthran

Keeping pace with international practices, AS-22 was introduced by the Indian Institute of Chartered Accountants (ICAI) and deferred tax accounting was made mandatory for all Indian listed companies.

As per AS-22, a company is liable to provide for deferred tax liability on the first day it accounts for such income. The basic premise being that revenues and expenses of an accounting period should meet matching principle and disparity in computing income for tax and book purposes should be appropriately resolved.

Differences between the two sets of computation of income can be classified into two categories; permanent and timing differences. Permanent differences arise with respect to expenditure legitimately incurred but are wholly or partially disallowed for tax purposes.

Such expenses do not give rise to deferred tax provision. Temporary differences are those that arise due to timing reasons. A typical example is provision for depreciation with varying rates for book purposes and tax purposes. Rates prescribed for company law are minimum rates, taking into consideration useful life of the asset.

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Regards,

Santosh Puthran
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Being a member of ICWAI, some of the posts are specific to India. The word “Chartered” a hot debate in India.

This topic has really caught up in Indian accounting arena and ICWAI has taken up with MCA to change the name of ICAI and ICWAI. What a false pride the word “Chartered” has in India when none of the specialised bodies formed by Act of Parliament has this word in their name.

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We have tried to highlight that foreign accounting have made inroads in India. They have a strong muscle and resources to take on any accounting body in India. So big brother ICAI, please be careful when you are down playing your sister institutes. In long run, you may find yourself in same boat. Yes …. same boat…as the Indian Bodies quarrel amongst each other… their resources would only buy a boat and not a ship !!!

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It is worth mentioning the inspiring short story emails from Rajesh Seshadri posted in CMA_India Yahoogroup. . You should make a point to visit website Reach (Resources Enriched & Amassed for Children) promoted by Rajesh Seshardri appreciate his efforts for the noble cause.

This is one of the best email from Rajesh Seshadri which I am reproducing on MA blog. This fits best the aspirations of the Management Accountants.

The Japanese have always loved fresh fish. But the waters close to Japan have not held many fish for decades. So to feed the Japanese population, Fishing boats got bigger and went farther than ever. The farther the fishermen went, the longer it took to bring in the fish. If the return trip took more than a few days, the fish were not fresh. The Japanese did not like the taste.

To solve this problem, fishing companies installed freezers on their boats. They would catch the fish and freeze them at sea. Freezers allowed the boats to go farther and stay longer. However, the Japanese could taste the difference between fresh and frozen and they did not like frozen fish. The frozen fish brought a lower price . So fishing companies installed fish tanks. They would catch the fish and stuff them in the tanks, fin to fin.

After a little thrashing around, the fish stopped moving. They were tired and dull, but alive. Unfortunately, the Japanese could still taste the difference.

Because the fish did not move for days, they lost their fresh-fish taste. The Japanese preferred the lively taste of fresh fish, not sluggish fish .

So how did Japanese fishing companies solve this problem? How do they get fresh-tasting fish to Japan? If you were consulting the fish industry, what would you recommend?

Scroll down for answer :

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Here is How Japanese Fish Stay Fresh:

To keep the fish tasting fresh, the Japanese fishing companies still put the fish in the tanks. But now they add a small shark to each tank. The shark eats a few fish, but most of the fish arrive in a very lively state. The fish are challenged. Have you realized that some of us are also living in a pond but most of the time tired & dull, So we need a Shark in our life to keep us awake and moving? Basically in our lives Sharks are new challenges to keep us active and lively ….

Challenge yourselves!!

This should be motto of every Management Accountant…. So Challenge Yourselves to stay ahead.

Regards,

Santosh Puthran
AICWA

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