Chartered Accountancy

October 2014 Vol SJ5 Issue 10
ICAI Devising New Course Curriculum : Matching Stakeholders' Expectations
CONTENTS
InsideOctober
EDITORIAL BOARD
3.
Message - President
4.
Message - Vice President
5.
Message - Chairman, Board of

Studies
Charting New Frontiers: The

Emerging Role of Chartered
Accountants
Tax Audits
President and Editor-in-Chief

CA. K. Raghu, Bengaluru
Vice-President
CA. Manoj Fadnis, Indore
Chairman and Editor
CA. M. Devaraja Reddy, Hyderabad
Vice-Chairman
CA. Prafulla Premsukh Chhajed, Mumbai
Members
CA. Anuj Goyal, Ghaziabad
CA. Babu Abraham Kallivayalil, Kochi
CA. Charanjot Singh Nanda, New Delhi
CA. Mukesh Singh Kushwah, Ghaziabad
CA. Nihar Niranjan Jambusaria, Mumbai
CA. Sanjeev K. Maheshwari, Mumbai
CA. S. Santhanakrishnan, Chennai
CA. Shyam Lal Agarwal, Jaipur
CA. Subodh Kumar Agrawal, Kolkata
CA. Sumantra Guha, Kolkata
CA. Tarun Jamnadas Ghia, Mumbai
CA. Vijay Garg, Jaipur
CA. Vijay Kumar Gupta, Faridabad
CA. V. Murali, Chennai
Shri Gautam Guha, New Delhi
Shri J.S.Deepak, New Delhi
Shri Manoj Kumar, New Delhi
Shri Salil Singhal, Gurgaon
Shri Sidharth Kumar Birla, New Delhi
Co-opted Members
CA. Ananthanarayana Pai K
CA. C S Gupta
CA. M R Krishnamurthy
CA. Prashant Shekhar Panda
CA. Prerak Agarwal
CA. Ravinder Singh Kalra
CA. Sunil Kumar Gulati
Director Board of Studies
Shri Vijay Kapur
Editorial Support
Prem Bhutani, Deputy Director
K. Sudhakaran, Assistant Director
Office
Board of Studies
The Institute of Chartered Accountants of India,
ICAI Bhawan, A-29, Sector-62, Noida-201 309.
Phone : 0120-3045938
Correspondence with regard to subscription,
advertising and writing articles
Email : writesj@icai.in
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Head Office
The Institute of Chartered Accountants of India,
ICAI Bhawan, Indraprastha Marg, New Delhi-110 104.
http://www.icai.org
12 Examination
31 Announcement
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Editor: CA. M. Devaraja Reddy

Printed and published by Shri Vijay Kapur, on behalf of The Institute of
Chartered Accountants of India, New Delhi. Published at the Institute's Office
at Indraprastha Marg, New Delhi and printed at International Print-O-Pac Ltd.,
B-204, 205, Okhla Industrial Area, Phase-1, New Delhi.
The views and opinions expressed or implied in THE CHARTERED ACCOUNTANT
STUDENT are those of the authors and do not necessarily reflect those of ICAI.
Unsolicited articles and transparencies are sent at the owners risk and the publisher
accepts no liability for loss or damage. Material in this publication may not be
reproduced, whether in part or in whole, without the consent of ICAI.
DISCLAIMER: The ICAI is not in any way responsible for the result of any action
taken on the basis of the advertisement published in the Journal.
October 2014 I The Chartered Accountant Student
MESSAGE
Presidents
Communication
Dear Students,
Be the change that you wish to
see in the world. Take to heart
these words of Mahatma Gandhi,
one of the greatest change
masters that ever lived. Everyone
thinks of changing the world, but
no one thinks of changing
themselves. The problems facing the world today are great,
and it will surely take the greatness of millions of people
working together towards a common goal to overcome them.
Changing the world does not happen overnight, but it wont
happen by not making an effort either. The time to act is
now, and our role is just as important as the next persons.
We all know that all significant changes throughout history
have occurred not because of nations, armies or
governments. They happened as a result of the courage and
commitment of individuals like Albert Einstein, Abraham
Lincoln, Thomas Edison and Rosa Parks. They might not
have done it alone, but they were, without question, the
change makers. As Mother Teresa said that I alone cannot
change the world, but I can cast a stone across the waters
to create many ripples. Hence, we need to begin with the
foundation, which is us only. If we cannot do it, then how
can we expect other people to?
Working Towards a New Curriculum
As a result of the unprecedented changes induced by
technology and globalization, all professions including
Chartered Accountancy profession are forced to re-think
their method of management and delivery of services. We
have to think globally but act locally. Chartered
Accountancy is one of the most dynamic subjects of the
world. Dynamism and professionalism is the life blood of
Chartered Accountancy. So, to keep pace with the changing
situation of the world we have also to change, by addition
and subtraction of the existing curriculum of the Chartered
Accountancy education in India. Otherwise, in future, it
will lose its importance and will turn into a relic of the
past. The Committee for Review of Education and Training
(CRET), is in the process of formulating a new scheme of
education and training for the new incumbent to the CA
course. With the advent of globalization, it has become
increasingly important to mainstream the CA curriculum
with innovative pedagogic methods.
Examination: Do not mix up with Festivities
As you know, the month of October marks the onset of festive
season in India. From the start of October till the end of
November, it is the time when the entire country is tinged in
colours of celebrations, enthusiasm and devotion. It also
reminds you that your examinations are round the corner
and those of you who submitted the applications have to
start preparations on a war footing. I would like to inform
you that the Board of Studies has already published the
Suggested Answers of May/ June 2014 Examinations and the
Revision Test Papers, RTPs of November 2014 Examination.
The RTPs have also been hosted on the Institute website.
The Examiners Comments on the May/June 2014 is also

published in the latter pages of this Journal.
For many people, exam time is the most stressful part of
their academic life. With so much riding on the outcome,
there can be a high degree of pressure to perform well.
Practicing under Exam Conditions
Knowing the course material is necessary but not sufficient
to guarantee success on the exam - you also need to be able
to communicate the answers effectively under exam
conditions. Practice using sample questions in the same
format as the exam and answer them in a simulated test
environment. The sample questions can be sourced from
old exams, which are often similar from year to year with
small changes. Even though you are only practicing, it is
better to write full answers to the questions so you can work
through the entire thought process.
The practice session should serve as a feedback loop. Check
the answers to the practice questions to diagnose your
strengths and weaknesses. Mock tests being conducted by
various branches of the Institute will be helpful to analyze
your grey areas and rectify them. Those who are appearing
for the ensuing examinations should invariably appear in
the mock tests to avoid the last minute stress and strain.
If you are weak in an area, go back and study it further to
address any gaps. In this context, I would like exhort you
to have a thorough and careful reading of the Institute
publication How to face CA examinations. This book will
definitely help you to boost your confidence level and will
guide you to the right track.
In my earlier communications, I had mentioned about the
changes in the Companies Act. Quite number of sections
and provisions of the new Companies Act, 2013 are
applicable for November 2014 examinations both at IPCC
and Final level. Make sure that you all have updated about
those changes before the commencement of the examination.
Taking Care of Yourself
Dont forget to take care of yourself during the exam
preparation. It is very important to be in good mental and
physical condition for the exam. A small amount of stress can
get you psyched, but too much mental or physical strain can
be detrimental to your performance. The last thing you want
to do is to sabotage your efforts by ignoring your well-being.
After you finish studying, take some time to relax. Dont
stay up too late if you can help it and try to get a good
nights sleep. Eat before the exam to build your energy, but
avoid heavy foods that can make you drowsy.
Keep a positive attitude about the exam. Think of it as a
way to demonstrate your knowledge and not as some
imposing challenge. Go to the exam focused and relaxed you have done the work, now its time to reap the rewards.
Best wishes
CA. K. Raghu
President,
The Institute of Chartered Accountants of India
MESSAGE
Vice Presidents
Communication
My Dear Students,
At the outset, I would like

to offer my rich tributes to
the Father of the Nation,
Mahatma Gandhi on his
145th birth anniversary on
October 2, 2014. We can learn a lot from the life
and work of Gandhi ji. The Mahatmas humility,
perseverance, respect to others and following
path of truth have made him a highly revered
person both in India and abroad. The virtuous
personality taught us how simple concepts can
be highly powerful. I am convinced that following
the traits enunciated by Mahatma can help us in
our professional and personal lives. It would not
be an exaggeration to say that in certain respects
the independence, integrity and excellence, the
hallmark of Chartered Accountancy profession,
are linked to the traits of Mahatma Gandhi. As a
student, you should endeavour to imbibe at least
some of his traits to succeed in life.
These are the formative years of your life. Lessons
learnt and values imbibed now would go long
way and would define the level of success you
achieve. In our profession, honesty is highly
important. So you must start inculcating this trait
right from now. You should have honesty towards
the studies as well as the practical training. There
should not be a single day when you have not
advanced in studies or learnt something in
practical training.
As far as study efforts are concerned, common
problems observed in the approaches followed
by the students are delay in efforts, not following
a time table, doing selective study, ignoring
certain subjects and not using pen and paper in
their preparations. In last one month or so we
have received queries from some students trying
to figure out applicable edition of study material
for the forthcoming November, 2014
examination. I feel these students need to put
little more effort as hardly any time is left.
Students are expected to refer to study materials,
revision test papers, supplementary study
materials, suggested answers and follow the
announcements hosted by Board of Studies on
the website to remain up-to-date.
4
It has also been noticed that some of the students

ignore practical training. Articleship training
helps you to understand the practical relevance
of theoretical concepts and provide you a sound
knowledge base. The theoretical education and
articleship training will synergistically help you
to pass examinations and also lead to success in
future professional lives. So, take them seriously
in an honest manner.
The Chartered Accountancy course is a highly
popular course that is being pursued by the students
of all economic strata. Although it is a highly
affordable course, some students belonging to
humble sections may find resource crunch. With a
view to provide equal opportunity to such students,
the Institute has been extending Scholarship
facilities under various schemes. The Institute has
recently increased the number of scholarships being
given annually under the Need Based and Weaker
Sections category from 100 to 200 in respect of
Intermediate (IPC) students and from 100 to 300
for the students of Final Course. The children of
the deceased members of ICAI undergoing CA
Course shall also be eligible for scholarship under
this category if financial assistance is provided to
spouses of the deceased members from the
Chartered Accountants Benevolent Fund.
The programmmes on General Management
Communication skills (GMCS) and Information
Technology
training
are
effectively
complementing your skill-sets. It has been
decided to implement the 100 hours Advanced
IT Training with effect from 1st October, 2014. It
has also been decided to grant further three
months extension to students, who were
registered for Practical Training on or after 1st
May, 2012 and have completed one year of their
Practical Training but have not completed GMCSI, to complete the same latest by 31st December,
2014. You must do these programmes at the
earliest to meet the regulatory requirements.
Wish you all the best
Yours sincerely,
CA. Manoj Fadnis

Vice President
The Institute of Chartered Accountants of India
MESSAGE
Chairmans
Communication
Dear Students,
Everything can be stable for

sometime but time doesnt
halt for anyone in this world.
The time has again come to
wish you all the best for your
forthcoming examinations. I wish all of you who
intend to appear in the forthcoming examinations
to study well and make full utilization of the various
educational aids and time provided to you. Just give
in your best and I assure you that success will be
yours. I have full faith in Bhagavat Geetas Shalok,
which says
karmanyevaadhikaaraste maa phaleshu kadaachana |
maa karmaphalaheturbhuu maatesangotsvakarmani ||
meaning thereby a person has the right towards
action alone and not towards the fruit of action. Let
not the fruit of action be the motive for acting. Also,
let there not be any attachment to inaction. I convey
my best wishes to all of you who could not pass the
examinations in your previous attempts, and urge
you to put in your best efforts. Just believe in yourself
and move with an optimistic approach and the result
will definitely be good. As said by Swami Vivekanda
Go on bravely. Do not expect success in a day or a
year. Always hold on to the highest. Be steady. Avoid
jealousy and selfishness. Be obedient and eternally
faithful to the cause of truth, humanity, and your
country, and you will move the world.
Students need not panic and undergo stress. You
should read a publication by the Institute How to
face CA examinations. This book will really boost
your confidence and will show you the right track
and will also make you understand that a certain
change in approach can help you to face the
examinations with more ease and confidence. Mock
tests conducted by various branches will also be
worthwhile, to analyze your grey areas and improve
upon them. So get in touch with the branches and
appear in such mock tests to avoid the panic and
stress while appearing for the main examinations.
Perhaps you all are aware of the changes in the
Companies Act. A lot of sections and provisions of
the new Companies Act, 2013 at both IIPCC and
Final level are applicable for November 2014
examinations. So you need to focus on such changes
and prepare yourself accordingly. The Board of
Studies considering these changes have hosted
Supplementary Study Papers pertaining to the

provisions and sections applicable for the
forthcoming exams at the Institute website.
Revision Test Papers are also available at the website
to make you understand level of question paper, so
please read and try to solve such papers to get an
idea of your preparation and your weak areas.
Most of you are facing a lot of problems in the
Information Technology paper at IIPCC level and
Information System Control and Audit at Final
level. It is my suggestion that you understand the
concepts rather than trying to learn them by heart.
Make efforts to read and write down the concepts.
Writing down and making various notes will prove
to be quite helpful in such technical papers. Since
Technology is the need of the hour, you are required
to excel in such papers so as to survive in todays
competitive world.
The Executive Committee recently considered the
recommendations of the Board of Studies regarding
enhancement of number of Scholarships for the
category of Need Based and Weaker Sections. The
above decision shall be effective from October, 2014
onwards. The Executive Committee also decided
to grant further three months extension to students
who were registered for Practical Training on or
after 1st May, 2012 and completed one year of their
Practical Training but not completed the GMCS-I,
are required to complete GMCS-I Course latest by
31 st December, 2014 considering the requests
received from Regional Councils and Branches as
well as the extended date of Tax Audit. Considering
the importance of IT, ICAI is going to implement
an advance course on Information technology for
its students. The Executive Committee approved
the recommendations of the Board of Studies to
implement 100 hours Advanced IT Training with
effect from 1st October, 2014. Students who have
registered for their practical training on or after 1st
August, 2012 would be required to undergo 100
Hours Advanced IT Training any-time after
completing 2nd year of practical training but before
appearing in their Final Examination. The fee for
Advanced ITT course would be ` 6,000 per student,
which shall be charged by the respective POUs.
Wishing you all a very Happy and a Prosperous Diwali.
Yours sincerely,
CA. M. Devaraja Reddy

Chairman, BOS
5
ARTICLE
Charting New Frontiers: The Emerging Role of

Chartered Accountants
Prem J Bhutani
Present Scenario
Imagine ABC Associates, a traditional Chartered
Accountants Firm, in India. It is the time to file tax
returns in India and the whole firm is busy with paper
work. There is lot of information to be entered into
the computers, then checking and rechecking have to
be done to make sure everything is correct. When it is
not the tax season, the firms partners are busy getting
data from its clients, doing write-up work, and staying
abreast of regulations and compliance issues. All these
leave little time to them to help their clients with
important, and more interesting, tax planning and
strategic issues. In nut shell, doing nut and bolt
functions of gathering and entering clients data,
preparing financial reports and tax returns and doing
audit of the companies take the toll of most of the
chartered accountants now a days. But the business
world is changing. Automation is replacing manual
data collection and input. New softwares and
analytical tools are being developed which are making
the job of data entry, book keeping and filing returns
much easier and more sophisticated. The time is fast
approaching when accounting professionals no longer
will focus on preparing financial reports and tax
returns, but ensure that automatically downloaded
data complies with regulatory and tax law
requirements. Although the information technology
is making the job of professional accountants much
easier and faster but then there is an increased risk of
cyber crime, frauds and scams necessitating
strengthening of audit and risk assessment processes
and evolving finer accounting capabilities for having
an effective risk management in place. Moreover, with
firms increasingly operating in multi-nations, the
complexities of business have increased many folds.
These firms are faced with multitude of products,
processes, systems, regulatory requirements,
governance procedures, organizational structures and
cultures. These firms are now expected to know not
only their local laws, rules, processes and procedures
but also of the countries in which they are operating.
The recent financial scams have once again
underlined the importance of good corporate
governance practices and business ethics. Besides
these, the expectations of the public from corporate
are rising. Companies now need to ensure
stakeholders, suppliers and governmental institutions
6
that they are socially responsible entities and that they

are managing their resources so as to accomplish
sustainable development. In short, there is a move
towards integrated reporting, compliance and
governance.
Future Role of Chartered Accountants
In the system which is evolving, chartered
Accountants would need more than excellent core
accounting and auditing skills as they would be
expected to shoulder wide-reaching responsibilities,
and to contribute to strategy and the forward
development of the organization rather than just
balancing the books. In short, traditional financial
recording and reporting role of the chartered
accountants would pave way for the strategic decision
making role. This would prompt the profession to
sharpen skills in non- traditional areas as well. Under
the emerging complex business scenario, training of
the future chartered accountants needs to be
reinforced to better prepare them for new evolving
system. They need to be rigorously trained in the new
emerging areas so that they are well equipped to face
the challenges thrown by the modern world,
efficiently and effectively. The new evolving system
would necessitate being:
Global Chartered Accountant: The impact of
globalization, in the context of business and finance,
is to be found in many areas: cross-border mergers
and acquisitions, global marketing, foreign direct
investment and outsourced operations and the like.
Global business has demanded for international skills
in accounting, finance, law and management.
Analogously, there have been important developments
in accounting in the international sphere. These
include developments in international standards
regarding, financial reporting, auditing, education and
training, professional development, ethics, practical
experience requirements, corporate governance and
sustainability reporting, driven by bodies such as the
International Federation of Accountants, the
International Accounting Standards Board and the
Global Reporting Initiative.
The future chartered accountant will have to be a
global accountant who is trained in a manner that he
The contributor is Deputy Director, ICAI
ARTICLE
is equipped with the latest accounting , auditing,
taxation, law and other professional tools which are
useful not only in the national but also in the
international arena. This way he will be able to face
the competitive world with greater ease and aplomb.
Global Chartered
Accountant
Risk Manager
Integrated
Reporting Expert
Enhanced Risk Management Capabilities: In view

of increased volatility in the economic world and
enhanced vulnerability to cyber threats, there is a
move towards adopting enterprise risk management.
The future accountants will need to be thoroughly
coached in new accounting capabilities to embed
effective risk management.
The Role of the Institute of Chartered Accountants
of India (ICAI)
IT expert
Corporate
Governance Expert
Evolving Role of Chartered Accountant

An expert knowledge of Information Technology
(IT): Since technology is progressively making inroads
in the accounting profession, the Chartered
Accountant in future will need to be as much an IT
guy as he is an accountant these days. He will be
expected to have knowledge of all relevant softwares
and analytical tools having a bearing on his profession.
Expert in Corporate Governance and Business
Ethics: Trust is the hallmark of the accountancy
profession. But in recent past, there have been a
number of examples of abuse of trusted power. In fact,
the accountancy profession is being challenged to
ensure that accounting regulations and standards
prevent their recurrence. There has been a stress on
improved corporate governance and ethical practices.
This underlines the need to train the future chartered
accountant in good corporate governance practices
and business ethics so that the profession upholds
the respect and worth attached to it.
Adept at Integrated Reporting: Companies of today
cannot work in isolation. They need to ensure
stakeholders, suppliers and governmental institutions
that they are managing their resources so as to
accomplish holistic development comprising of
financial and non financial parameters. The
accountancy profession will have to finds ways as to
how will financial and non financial information be
presented in the annual accounts and the future
professionals will have to be trained in the light of
broader integrated reporting role.
ICAI is well aware of the emerging needs and

expectations of all the stakeholders and society from
it. Therefore, it takes steps to ensure that its Members
present as well as future- are well armed to face the
economic and non economic challenges. The ICAI is
increasingly using technology in delivering education
to its students. Cloud Campus, e-lectures and on line
mentoring are increasingly being used to provide
education at the door step of students who are wide
spread within the country and outside it. The adoption
of modified version of international standards on
accounting and auditing, providing training in
profession relevant softwares etc. and providing post
qualification training in cotemporary professional
areas, all aim at ensuring that the emerging
professionals do not lag behind in any way.
Putting in the New System of Education and Training
The ICAI, from time to time, also reviews its system
of education and training and makes it more
contemporary. The ICAIs special committee for this
purpose, called Committee for Review of Education
and Training (CRET), reviews the system periodically
to make it relevant, contemporary and up to date. The
present system of education and training is based on
the recommendations of 2004-05 CRET. The CRET
was recently constituted in 2013. It was reconstituted
in 2014 under the Chairmanship of the President,
ICAI. The CRET is in the process of formulating a new
scheme of education and training for the new
incumbent to the course. It has used a multi pronged
strategy for this purpose. Five Regional levels CRET
had brain storming sessions, followed by a mega
discussion by the Council of ICAI. The discussions
revolved around five basic areas namely, Entry
Requirements, Practical Training, Theoretical
Instructions, Assessment and Accounting Technician
Course. High levels of consultations have also been
held with Members, Academicians and Users of CA
services to seek their views and suggestions. Different
questionnaires relating to members, students and
academicians, having a bearing on the system of
education and training, have been prepared, uploaded
on the Institutes website and their responses have
7
ARTICLE
been collected and analyzed. The prevalent and
corresponding system of education and training of
various international accountancy bodies have been
deeply analyzed. The relevant literature in this regard
has also been carefully studied. Once the whole exercise
gets completed, the Institute will frame a new model
outlining the entry requirements, stages of education,
name and number of papers, course curricula, level of
ENT
CEM
N
U
O
ANN
expected competency, duration of training, time of

training, nature of assessment at different levels and all
the related decisions having an impact of CA education
and training. The basic aim behind all this exercise is to
put in place a system of professional education and
training for the chartered accountants, which is not only
dynamic, contemporary and consistent with the
requirements of the stakeholders but also stable.
Postponement of Date of Applicability of

Advanced ITT course
As per Regulation 29(c)(iv) of The Chartered Accountants Regulation 1988, students who have
registered for Practical Training on or after August 1st, 2012 were required to complete Advanced IT Training
before admission to the Final Examination. Having regard to infrastructure and other facilities, the Council
of the Institute decided to defer the implementationdateof Regulation 29(c)(iv) from August 1, 2012 to
February 1, 2013. Accordingly, 100 Hours Advanced ITT course will now be applicable to those students
who have registered for Practical Training on or after February 1st, 2013 but before appearing in the Final
Examination in terms of Regulation 29(c)(iv) of the Chartered Accountants Regulations, 1988.
Students are, however, advised to complete the Advanced ITT well in advance before appearing in the
Final Examination so as to avoid any hardship at a later date.
11.09.2014
Director, Board of Studies
Announcement
In addition to the Announcement(s) published elsewhere in this issue, the following Conventions/Conclaves
for CA students have also been planned as of September, 2014. For further details, please contact the
respective RC/Branch.
S.N Branch
1.
2.
3.
4.
5.
6.
7.
8.
9.
Name of the Programme
Ahmedabad National Convention

Gurgaon
Ernakulam
Hyderabad
Salem
Thrissur
Bhopal
Faridabad
Hubli
National Convention
National Convention
All India Conference
Regional Conference
National Conclave
National Conclave
National Convention
National Convention
Dates
Contact Details
nd
rd
Phone: (79) 3989 3989, 2768 0946, Email: ahmedabad@icai.in
th
th
Phone: (124) 4268 867, Email: gurgaon@icai.org
22 & 23 Nov, 14
29 & 30 Nov, 14
nd
rd
Phone: (484) 2369 238, 2372 953, Email: ernakulam@icai.org
th
th
Phone: (40) 2331 7026, Email: hyderabad@icai.org
th
th
Phone: (427) 2318 813, Email: salem@icai.org
th
th
Phone: (487) 2253 400, Email: trichur@icai.org
th
th
Phone: (755) 2558 066, Email: bhopal@icai.org
th
th
Phone: (129) 4018 598, Email: faridabad@icai.org
th
th
2 & 3 Dec, 14
4 & 5 Dec, 14
6 & 7 Dec, 14
6 & 7 Dec, 14
6 & 7 Dec, 14
6 & 7 Dec, 14
6 & 7 Dec, 14
th
th
Phone: (836) 2288 337, 2283 081, Email: hubli@icai.org
10.
Bilaspur
National Convention
13 & 14 Dec, 14
Phone: (775) 2428 611, Email: bilaspur@icai.org
11.
New Delhi
National Convention
17th & 18th Dec, 14
Phone: (11) 3989 3990, 3021 0601-605, Email: nirc@icai.in
12.
Coimbatore
National Convention
18th & 19th Dec, 14
Phone: (422) 4270 056/58, Email: coimbatore@icai.org
13.
Aurangabad National Convention
19th & 20th Dec, 14
Phone: (240) 2342 157, Email: aurangabad@icai.org
14.
Mumbai
(WIRC)
National Convention
20th & 21st Dec, 14
Phone: (22) 3367 1400, Email: wro@icai.in
15.
Bangalore
International Conference 27th & 28th Dec,14
16.
Udupi
National Conclave
17.
18.
19.
8
Ludhiana
Karnal
Pune
National Convention
National Convention
National Convention
5th & 6th Jan, 15

th
th
rd
th
10 & 11 Jan, 15
23 & 24 Jan, 15
st
Phone: (80) 3056 3500, Email: bangalore@icai.org

Phone: (820) 2536 603, Email: udupi@icai.org
Phone: (161) 5091 043, Email: ludhiana@icai.org
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ARTICLE
Tax Audits
CA Parveen Kumar
he tax regulators need specific information to make assessment of whether the

person is paying tax as applicable in the Act. This concept was first introduced in
Finance Act 1984 with effect from Assessment Year 1985-86. The tax audit report
provides such specific information in order to help tax department make correct
assessment. Section 44AB of the Income tax act 1961 (Act) stipulates requirement of Tax
Audits. In this article we will discuss various aspects of tax audits like to whom it is
applicable, who can carry out these audits etc. We will also discuss position of auditing
standards in tax audits and see how the reports are prepared. What should be the
methodology of audit and what kind of documents and audit working papers should be
collected by the auditor?
Recently there had been significant changes in the reporting under tax audit through notification no. 33/14
dated 25 July, 2014. The Institute of Chartered Accountants of India (ICAI) has published a Guidance Note
(revised 2014) on Tax Audit, which can be referred by the auditors to have clarifications on various matters.
Applicable to whom
Section 44AB of the Act is applicable to every person, which might be Individual, Partnership Firm, Association
of Persons, Hindu Undivided Family, Limited Liability Partnership or a Company, if this person is carrying on:
1.
Business and his total sales, turnover or gross receipts exceed one crore rupees in the previous year or
2.
Profession and his gross receipt exceed twenty five lakh rupees in the previous year
You may note that limits mentioned above have undergone changes in the past. There are other sections of
the Act (Section 44AE, 44BB and 44BBB) which require a person to pay taxes on deemed profits and if that
person is claiming income less than such deemed profits, he will also be required to get the Tax Audit done
under this section.
Similarly a person carrying business can pay tax on deemed income under section 44AD. If a person is
carrying out business and his income is more than exemption limit under Income Tax Act, but lower than
deemed income in any previous year, he will be required to get tax audit done.
Who can carry out Tax Audits?
Section 288 of the Act mentions about qualifications of tax auditors. The explanation defines accountant
means a chartered accountant within the meaning of the Chartered Accountants Act, 1949. Hence one can
safely take a view that only a chartered accountant can carry out tax audit.
The tax audit is required to be carried out by such accountant and report to be signed by the accountant
before due date of submission of tax return. Particulars of such report are discussed later in this article.
Position of Auditing Standards
Tax audit is an audit as required by statute and presently it is mandatory for all chartered accountants to
apply auditing standards while carrying out any audit. These Auditing Standards are issued by the ICAI. As
per Standard of Auditing (SA700) audit report to mention responsibility of management and auditor besides
other information. The ICAI exempted application of this standard for tax audit reports related to previous
year (2013-14). Interestingly, tax audit report is requirement of the Act and the format of the report also has
been defined in the Act. One may ask a question that if the Act requires reporting in a particular format, and
if such format is not according to the auditing standard, what should be the stand or position. A view is taken
by various experts that the reporting should be done in such cases as required by the law. So many experts
have taken this view that tax audit reports should be according to the format as prescribed by the Law.
As per auditing standard, following information should be part of audit reports.
The contributor is a Member of ICAI. (Mem.No. 88810)
ARTICLE
Title
Auditors ReportContents
Addressee
Introductory
Management Responsibility
Auditors Responsibility
Auditors Opinion
Other Reporting Responsibilities
Signature of the Auditor
Date of the Auditors Report
Place of Signature
As per regulations, specific formats have been defined to report on tax audit matters. If accounts of the
business of a person have been audited under any other law, the Tax Audit report will be as defined in form
no 3CA. This format is given below.
FORM NO. 3CA
[See rule 6G(1)(a)]
Audit report under section 44AB of the Income - tax Act, 1961, in a case where the accounts of the business
or profession of a person have been audited under any other law
*I / we report that the statutory audit of M/s. _____________ ( Name and address of the asseessee with Permanent
Account Number) was conducted by *me / us / M/s. ___________________________________________________in
pursuance of the provisions of the______________Act, and*I/we annex hereto a copy of *my / our / their audit
report dated _______________________along with a copy of each of :(a) the audited *profit and loss account / income and expenditure account for the period beginning from
____________________ to ending on ____________
(b) the audited balance sheet as at, _____; and
(c) documents declared by the said Act to be part of, or annexed to, the *profit and loss account / income
and expenditure account and balance sheet.
2. The statement of particulars required to be furnished under section 44AB is annexed herewith in Form
No. 3CD.
3. In *my / our opinion and to the best of *my / our information and according to examination of books of
account including other relevant documents and explanations given to *me / us, the particulars given in the
said Form No.3 CD are true and correct subject to the following observations/qualifications, if any:
a.
b.
c.
...................................................
**(Signature and stamp/Seal of the signatory)
Place : ______________
Name of the signatory .............
Date : ______________
Full address ...........
10
ARTICLE
If accounts of business of a person has not been audited under any other act, then the report will be prepared,
signed and submitted by the Tax Auditor in Form 3CB. The format of report is given below.
FORM NO. 3CB
[See rule 6G(1)(b)]
Audit report under section 44AB of the Income - tax Act 1961,
in the case of a person referred to in clause (b) of sub - rule (1) of rule 6G
1. *I / we have examined the balance sheet as on, _________, and the *profit and loss account / income and
expenditure account for the period beginning from ________________ to ending on __________________,
attached herewith, of ________________________ (Name), _______________ (Address), ____________ (Permanent
Account Number).
2. *I / we certify that the balance sheet and the *profit and loss / income and expenditure account are in
agreement with the books of account maintained at the head office at ___________ and ** ___________ branches.
3.
(a) *I / we report the following observations / comments / discrepancies / inconsistencies; if any:

(b) Subject to above, -
(A) *I / we have obtained all the information and explanations which, to the best of *my / our knowledge and
belief, were necessary for the purpose of the audit.
(B) In *my / our opinion, proper books of account have been kept by the head office and branches of the
assessee so far as appears from*my / our examination of the books.
(C) In *my / our opinion and to the best of *my / our information and according to the explanations given to
*me / us, the said accounts, read with notes thereon, if any, give a true and fair view :(i) in the case of the balance sheet, of the state of the affairs of the assessee as at 31st March, ;and
(ii) in the case of the *profit and loss account / income and expenditure account of the *profit / loss or
*surplus / deficit of the assessee for the year ended on that date.
4. The statement of particulars required to be furnished under section 44AB is annexed herewith in Form
No.3CD.
5. In *my/our opinion and to the best of *my / our information and according to explanations given to *me /
us, the particulars given in the said Form No.3 CD are true and correct subject to following observations/
qualifications, if any:
a.
b.
c.
...................................................
***(Signature and stamp/seal of the signatory)
Place : ______________
Name of the signatory .............
Date : ______________
Full address ...........
If you notice carefully, both these forms requires an auditor to give his opinion on true and correctness of the
information being provided in form 3CD. Please note that true and correct is more specific than giving
opinion on true and fair as required in other audits like the companies act. The auditor has to carry out
specific procedures to ensure that his information is correct and in case of any doubt he must qualify his
report or give disclaimer as per guidance given in the auditing standards.
(To be continued in November, 2014 Issue)
11
EXAMINATION
Examiners Comments on the Performance of the

Candidates Final Examination May 2014
PAPER 1: FINANCIAL REPORTING
Specific Comments
Question 1.
(a) Most of the candidates failed to comprehend that
an employee would have got 5 increments @ 10%
per year to be entitled to get the benefit of lump
sum payment in the sixth year of service. Few
candidates, who worked out the last drawn salary
correctly, did not multiply the same by 5 i.e. the
number of years completed as the payment was
to be made for each completed year of service.
(b) This question is based on the requirements of AS
29 Provisions, Contingent Liabilities and
Contingent Assets. Few candidates answered the
problem on the basis of AS 4 considering the case
as an adjusting event. Some candidates gave their
answers from income-tax perspective instead of
financial reporting and few suggested adjustment
as deferred tax asset or deferred tax liability.
(c) In the question, it was specifically mentioned that
the supplier will deliver free of cost certain heavy
duty cables etc. having MRP of ` 5.75 lakhs, still
the candidates added this cost in determining the
cost of new machine. Hence, most of the candidates
erred in arriving at the correct cost of the new
machine. Further, the candidates calculated CST
on the new machine also ignoring the fact that the
prevailing CST rate, given in the question, was in
respect of the old machine. Some of the candidates
proceeded the calculation of cost of new machine
from the amount paid to the supplier which resulted
in wrong computation of the cost of the new
machine and profit/loss on machine exchanged.
(d) A small number of candidates took the period before
rights and after rights as 3 months and 9 months in
place of 4 months and 8 months for calculating EPS
for the year 2013-14 including effects of rights issue.
However, majority of the candidates performed well
in this part of the question.
Question 2.
Many candidates deducted preference dividend while
computing the net assets available to equity
shareholders. Whereas some of the candidates did not
deduct preference dividend and preference share
capital from Future Maintainable Profit and Net Assets
available for equity shareholders respectively. Many
candidates failed to compute liability for tax provision
12
required in respect of adjustments given in the

question, which would have been deducted while
computing the Net Trading Assets. In computing net
trading assets, some candidates erred in adjustments
of Land & Building, Trade receivables and bank balance.
Question 3.
Overall performance was good in this question.
However, some of the candidates got confused while
applying either the direct method or indirect method
of consolidation for chain holding. The candidates
were also not aware that Notes are integral part of
Balance Sheet in terms of Revised Schedule VI and
are required to be prepared for providing the required
information and the main balance sheet is not to be
loaded with detailed information.
Question 4.
(a) Many candidates wrongly calculated the number
of employees to whom SARs was announced as
1060 instead of 1040 by adding the number of
attritions in each year irrespective of the length
of service.
(b) The answers exhibited lack of knowledge of the
candidates on RBI norms for provisioning in case
of assets of NBFCs dealing with Hire Purchase.
Few candidates applied the percentage of
provision to the amount of interest also instead
of the net book value of the asset.
(c) The question mentioned that ordinary shares are
quoted at a premium of 500%. To calculate the
same, the candidates erroneously calculated the
market value of ordinary shares by multiplying
the nominal value of shares by 5 instead of 6.
Many candidates added Reserves and Statutory
Fund in working out market value. Some
candidates mistakenly took value of secured
debentures as ` 5,00,000 instead of ` 50,00,000.
Question 5.
Many candidates erroneously calculated the sales value
of shares held by foreign company as ` 50 instead of `
60. Some candidates deducted the amount of tax from
amount of gain instead of deducting the same from total
consideration. Also few candidates in determining the
intrinsic value of shares of A Ltd. skipped to consider
the value of investments in B Ltd. at ` 60.00 per share.
Question 6.
(a) Many candidates added provident fund (PF) for
EXAMINATION
computing the tax amount, though, it was
specifically given in the question that PF
contribution was tax exempt. Some candidates
added calls in arrear instead of deducting the same
from equity share capital. The share capital given
in question paper was number of shares, and the
students ought to have computed the amount of
share capital, but they mistakenly considered the
figure of number of shares as amount of share
capital. Similarly, the number of debentures given
in the question was considered as amount of
debentures by the candidates.
Question 7.
(a) In working out the operating cycle of KAY Ltd.,
some of the candidates wrongly added the period
of holding of packing material twice as it was
given twice in the question paper i.e. lead time
and holding period. While some of the candidates
erred by deducting the period of credit in
computing the operating cycle. Many candidates
generally came to the conclusion that as the credit
period is of 12.5 months, the liability will be noncurrent. They failed to understand that whether
the liability is current or non-current is to be
tested with reference to the reporting date and
accordingly it has to be classified.
(b) The candidates reflected poor knowledge of the
SEBI (Mutual funds) Regulations. They were not
aware of the limits up to which mutual funds can
invest in unrated debt instruments. They gave a
general reply that as the instruments are unrated,
the investment cannot be made.
(c) Some candidates failed to give correct definition
for Timing Difference and Permanent
Difference. However, they were able to provide
number of examples for timing difference and
permanent difference.
(e) Many candidates dealt the problem with reference
to AS 4 instead of AS 9. Therefore, they failed to
provide correct answer to the question. They
failed to explain that in case of interim dividend,
right to receive gets established when the same
is declared by the board and in case of final
dividend right to receive gets established when
the same is approved by the shareholders in the
annual general meeting (AGM).
PAPER 2: STRATEGIC FINANCIAL
MANAGEMENT
Specific Comments
Question 1.
(a) This short question on valuation of shares was
well answered by most of candidates.
(b) This question involved evaluation of alternatives

systems. On an average, candidates had answered
well, however few candidates were unable to deal
with the concept of EAC for two alternatives with
different lives.
(c) The question involved the calculation of effective
cost of Commercial Paper. In this question
performance of majority of candidates has not
been found satisfactory as given information was
not properly applied showing poor conceptual
understanding of the cost components of
Commercial Paper. Further some candidates even
ignored the minimum balance in calculations.
(d) This short question on Foreign Exchange has been
well answered by majority of candidates.
Question 2.
(a) In this question of International Capital
Budgeting, overall performance has not been
found satisfactory because of following reasons:
Incremental cash flow was not calculated
properly.
Allocated share of fixed cost was added in
cost.
Candidates were unable to calculate
additional cash flow after tax properly.
Some candidates even were unable to keep
track of the problem hence went wrong.
(b) This question was based on valuation of shares
in the context of an acquisition proposal. In this
question, the overall performance was of average
level as most of them were unable to calculate
minimum and maximum value of shares. Further
even some candidates instead of acquisition of
XYZ Ltd. by PQR Ltd. confused it with the merger
of both the companies.
Question 3.
(a) This question involved the calculation of Net
Asset Value (NAV) of units of mutual fund.
Despite being an easy question, the overall
performance was found average as majority of
candidates considered the information of
operating expenses as relevant and deducted the
same from cash in hand though it was irrelevant.
(b) This question was related to a decision to take
forward cover in a foreign exchange transaction.
Overall performance was found of average level.
Some candidates had calculated the hedging loss
by deducting Forward Rate from Expected or
Future Rate instead of Spot Rate on date of export.
Question 4.
(a) This question called for calculation of weighted
13
EXAMINATION
Average Cost of Capital (WACC) and using the
same to calculate EVA. Majority of candidates had
correctly calculated the WACC but went wrong
in calculation of EVA. The common error noticed
was considering Net Income as EBIT instead of
PAT. Even some candidates gone wrong in the
calculation of cost of Equity by considering
market risk premium as Market Return.
(b) This question involved calculation of value of a
firm. The overall performance was found below
average as most of candidates could not
coordinate given information for budgeted 3
years. Further due to lack of conceptual
knowledge, some candidates even had taken
working capital instead of change () in Working
Capital. Some candidates even ignored
depreciation in calculation of FCF.
Question 5.
(a) This question involved evaluation of Factoring
of Book Debts. The performance was below
average as most of the candidates were unable to
calculate amount of reduction in Debtors and
Interest Cost.
(b) This question is based on Foreign Exchange has
been answered well by the majority of candidates.
However, some candidates have ignored the note
of calculating rates in multiple of 0.0001 and
hence went wrong. Even some candidates could
not apply exchange margin correctly. Hence
overall performance was found of average level.
Question 6.
(a) This question was based on Bond Valuation. The
overall performance has been found satisfactory.
However, in some cases candidates calculated
correctly up to Conversion Value of Bond but
further went wrong.
(b) This question requires calculation of flat interest
and effective rate of interest of EMI Schemes.
Overall performance in this question has been
found below average as majority of candidates
could calculate flat rate correctly but could not
calculate Effective Rate of Interest.
(c) This theoretical question has been attempted well
by majority of candidates. However, some
candidates have made generalized presentation
or instead of writing contents of Project Report
had written about Project Report only.
confused Traditional Approach with MM

Approach of Irrelevance of Dividend.
(b) In this theoretical question, the performance was
found below average indicating lack of clarity of
concept. Some candidates explained in detail Call
and Put option instead of factors affecting value
of option. Even some candidates though
mentioned the points but not elaborated them.
(c) In this theoretical question, overall performance
was found poor as candidates confused the
concept of FRA with currency Forward
Agreement. In some case though candidates have
explained Forward Contract but could not relate
it with Interest Rate.
(d) In this theoretical question relating to American
Depository Receipt, overall performance has been
found below average due to lack of conceptual
knowledge. Further even some candidate
confused it with Fixed Deposit with Bank. Some
candidates were not clear about the concept of
custodian bank.
(e) In this question, overall performance was found
of average level. Some candidates were not clear
about the concept of balancing Financial Goal vis-vis Sustainable Growth.
PAPER 3: ADVANCED AUDITING AND
PROFESSIONAL ETHICS
Specific Comments
Question 1.
(a) Candidates, in general, have no clear perception
of AS-29 & SA-570. Most of them considered it as
contingent liability and thus opined that there is
no need to make provision.
(b) Some of the candidates discussed about SA 210
but failed to highlight the aspects to be considered
for acceptance of the assignment as per SAE 3400
and audit evidence to be obtained for reporting
on the projected financial statements.
(c) Candidates, in general, discussed only about SA
240 and SA 580 and gave correct conclusion but
they have no idea of the reporting requirement
as per paragraph 4(xxi) of CARO, 2003.
(d) Most of the candidates correctly referred to the
relevant SA but failed to explain negative
confirmation and the need to obtain further
evidence by the auditor to resolve the doubt.
Question 7.
Question 2.
(a) In this theoretical question, overall performance

was found of average level as some candidates
could not differentiate between two approaches
to Dividend Policy. Even some candidates
(b) Majority of Candidates gave correct conclusion

in most of the situation but failed to give correct
reference to the relevant clause.
14
EXAMINATION
(c) Candidates, in general, correctly referred to the
consequence of not providing relevant
information to the Institute in the application but
further mixed it with clause 11 for seeking
permission of the council before engagement in
other business.
(d) Many Candidates were confused about the
question as to how a CA can be both in service as
well as practice. Consequently, most of the
candidates mixed their answer with wrong clause
and explanation but gave correct conclusion.
Question 3.
(b) Candidates failed to mention the important
aspects of financial statements to be reviewed by
the audit committee and they mostly discussed
only about competence of the CA to become
member and composition of the audit committee.
(c) Candidates, in general, have fair idea of the rule
regarding minimum transfer to reserve but failed
to explain the rule regarding transfer of higher
percentage.
(d) Most of the candidates have only general idea of
the topic and placed more reliance on various
clauses of professional misconduct under CA
Regulation Act, 1949 rather than the facts of the
case.
Question 4.
(b) Candidates, in general, have fair idea of the
relevant paragraph of the CARO, 2003 but in the
first part their answer lacked understanding of
the exact reporting requirement.
(c) Most of the candidates correctly mentioned most
of the points requiring current period
consolidation. However, some candidates mixed
their answer with permanent consolidation
adjustment.
Question 5.
(b) Majority of the candidates showed lack of
knowledge of the topic and explained only general
points related to collection of premium and
payment of commission rather than outstanding
premium.
(c) Many candidates discussed only about
verification of stock but failed to explain
verification program of receivables.
Question 6.
(a) Candidates failed to understand the requirement
of the question about planning for performance
audit and instead discussed mainly about
performance and functioning of sugar industry.
(b) Most of the candidates concluded correctly but

their answer lacked knowledge of the scope of
operational auditor.
(c) Majority of the candidates failed to mention the
approach for investigation asked in the question
and only discussed about requirement of section
235 & 237 and various type of investigation under
the company and other laws.
(d) Many candidates were not able to correctly
mention the various areas to be excluded from
the scope of peer reviewer and instead mentioned
those areas which are within the scope of peer
reviewer.
Question 7.
Short Notes
(a) This question was not attempted by most of the
candidates. Those attempted lacked the
knowledge of the topic and gave only general
answer.
(e) Candidates, in general, discussed mostly about
the concept of misstatement and only few of the
candidates mentioned about fixing of monetary
limit by the auditor.
PAPER 4: CORPORATE AND ALLIED LAWS
Specific Comments
Question 1.
(a) The performance of the students was satisfactory.
Though some of the students could not mention
that the Central Government is authorised only
to order for the conduct of a special audit of any
company under section 233A of the Companies
Act, 1956.
(b) Performance of the students was average. Most
of the students were unaware of the three
conditions provided under the Companies
(Declaration of Dividend out of Reserves) Rules,
1975 to declare dividend out of accumulated
profits of the company.
(c) Many students fairly attempted this question.
They were able to answer properly with regards
to amount of compensation payable by M/s ZYX
Ltd. to Mr. AMR under section 294A(2) of the
Companies Act, 1956.
(d) Performance of majority of the students was poor
in this part. Many of them did not know the power
of the Central Government to remove a member
of SEBI. Many students did not attempt this part
in spite of the fact that the part was under
compulsory question.
15
EXAMINATION
Question 2.
Question 6.
(a) Performance of the students was average. Most

of the students gave the answer in very general
nature. They were very well aware of the
provisions of section 297 of the Companies Act,
1956 but many of them did not know how to
implement the provisions in the three conditions
given in the question.
(a) (i) Performance of the students was very poor.

They did not have the knowledge of the
additional matters to be reported by the
Auditor of a Producer Company under
Section 581ZG of the Companies Act, 1956.
(b) Performance of the students was quite satisfactory

in the first part of the question. Though drafting
of Board resolution in second part of the question
for providing guarantee in respect of a loan to be
obtained by a director was not upto the mark.
Question 3.
(a) Almost all the students attempted this question
properly. They answered correctly the provisions
of section 209 of the Companies Act, 1956 related
to the maintenance of the books of account.
(b) Most of the students were unaware of the
conditions for issue of bonus shares under SEBI
(Issue of Capital and Disclosure Requirements)
Regulations, 2009. They were lacking the
knowledge of the SEBI Regulations.
Question 4.
(a) Most of the students were not able to explain the
remedies available to the company under Section
621A of the Companies Act, 1956. Their answers
were general. The performance of the students
was below average in this question.
(b) Performance of the students was below average
in this question. Many of them did not know the
provisions of Sections 388B, 388C, 388D and
388E of the Companies Act, 1956 regarding
powers of the Company Law Board and the
Central Government in such matters.
Question 5.
(a) Most of the students could not explain the
relevant provisions of sections 433, 434 and 439
of the Companies Act, 1956 correctly, perhaps for
the reason that they were advised by the Board
of Studies to study only the general provisions
relating to winding up as covered in paragraph
9.4 of the study material. The question asked does
not fall within these provisions as covered under
the said Paragraph of the Study Material.
(b) Performance of the students was average. Most
of the students were unaware of the provision of
section 35 of the Banking Regulation Act, 1949
regarding power of the RBI and the Central
Government to inspect banks and give directions
in this matter.
16
(ii) The performance of the students was quite

satisfactory in this question. Most of them
correctly stated the list of documents
required to be delivered by a foreign
company at the time of establishment of a
place of business in India as per section 592
of the Companies Act, 1956.
(b) Most of the students were not able to explain the
power of the CLB to call for the meeting under
section 186 of the Companies Act, 1956. The
performance of the students was below average
in this question.
Answer 7.
(a) Students performance in this part was found
average. Some of the students were confused
regarding acquisition of residential flat and a farm
house on the outskirts of Mumbai by Mr. V.
(b) Performance of the students was below average
in this question. Many students did not have the
knowledge of the term Predatory Pricing under
the Competition Act, 2002.
(c) The performance of the students was satisfactory
in the question
(d) Many of the students did not explain the meaning
of the term non-performing asset and asset
reconstruction used in the SARFAESI Act, 2002
correctly. The performance of the students was
poor in this question.
(e) The performance of the students was poor in this
question. Majority of them did not explain the
meaning of the term Money Laundering and even
did not clearly mention the provisions under
Prevention of Money Laundering Act, 2002
related to punishment.
PAPER 5: ADVANCED MANAGEMENT
ACCOUNTING
General Comments
It is evident that majority of the examinees did not
prepare extensively and probably went for selective
reading. This is evident as they lacked in depth
knowledge of the various topics of the subject required
for sitting in professional examination at this level. As
they lacked fundamental knowledge, they also lacked
in conceptual ability to tackle the questions in correct
EXAMINATION
manner. Consequently, the overall performance of the
examinees was not satisfactory. The examinees must
understand that there is no short cut to success. They
must study more intensively and practice to solve
numerical problems from the study material, practice
manual, revision test papers and past years question
papers.
Specific Comments
Question 1.
(a) This was a practical question related to
calculation of maximum amount of inspection cost
to be incurred for accepting export order and % of
discount to be given on export price if product is
accepted without inspection. Performance of the
examinees was average. Those who could not
attempt this question were due to lack of
knowledge of the concept of Relevant and
Irrelevant Cost.
(b) This was a practical question relating to
decision to further process or not by using
incremental cost revenue approach. The
performance of the examinees was poor. They
failed to find out inputs for the various processes
after taking into account the normal loss.
Moreover the question asked for incremental
cost - revenue approach, which was not adopted
by many examinees.
(c) This was a theory question from the topic Total
Quality Management. Average performance of
the examinees was observed.
(d) This was a practical question relating to topic
Assignment Problem in which examinees have
to calculate least cost route for a traveling
salesman. This was not well answered by most
of the examinees. The circular movement required
by the salesman was not worked out by most of
the examinees.
answer correctly was due to inability in preparing

simulation sheet correctly showing daily arrival,
servicing and closing job figures. It is apparent
that the examinees lack practice to solve such
common situations.
Question 3.
(a) This was practical problem related to topic
Standard Costing in which examinees were
required to analyse the variances of revenue and
cost over the year to bring reasons for change in
profit and prepare the profit reconciliation
statement. This was not well answered by many
examinees. It clearly showed that the examinees
had not prepared well to answer such type of
question.
(b) This was a practical problem relating to topic
Linear Programming using Simplex Method.
Poor performance of the examinees was observed.
It clearly showed that the examinees had not
prepared well to solve this type of problem.
Question 4.
(a) This was a practical problem relating to topic
Activity Based Costing in which examinees were
required to calculate operating income of each
distribution channel. This was well answered by
most of the examinees.
(b) This was a practical problem on Project
Crashing in which examinees were required to
calculate normal duration and its cost and to
calculate lowest cost and associated time and
lowest time and associated cost. Performance of
majority of examinees in the question was
observed satisfactory. However, some examinees
failed to find out lowest cost and associated time
and lowest time and associated cost correctly.
Question 5.
(a) This was a practical question regarding decision

to manufacture or sub contract and to calculate
corresponding profits and breakeven point. This
was not well answered by many examinees. The
allocation of assembly hours among the products
to be manufactured internally was wrong. Only
few examinees worked out breakeven point
correctly. The last part of the question requiring,
examinees to advise best strategy if assembly
hours is not limiting factor evoked unclear
answers as they lacked conceptual knowledge.
(a) This was a practical question relating to topic

Transfer Pricing in which examinees were
required to calculate weighted average transfer
price and to calculate total profits at various levels
of external demand. Average Performance of
examinees was observed. Many examinees failed
to appreciate that the question itself stipulated
that X must satisfy the demand of Y before
making external sales. This requirement closed
the possibility of X meeting external demand of
19,000 or 35,000 units. The examinees failed to
work out the weighted average prices per unit
correctly.
(b) This was a practical, question relating to topic

Simulation. Average performance of the
examinees was observed. Those who could not
(b) This was a theoretical question relating to the

basic concept of Relevant Costing. This was well
answered by most of the examinees.
Question 2.
17
EXAMINATION
Question 6.
(a) This was a practical problem relating to topic
Budget and Budgetary Control. Examinees
were required to find the number of units of
product to be sold, its selling price per unit and
preparation of production budget, material
purchase budget. This was well answered by
most of the examinees.
(b) This was a practical problem relating to
computation of changes in operating income due
to industry market size factor, productivity and
product differentiation and to reconcile the profits
of both years. This was not well answered by the
examinees.
(c) This was a theoretical question relating to the
basic concepts of Assignment and
Transportation. Performance of most of the
examinees was below average. Answer clearly
showed lack of conceptual knowledge on the part
of examinees.
Question 7.
(a) to (e) This question comprises five theoretical
parts and examinees were required to answer any
four.
(a) This was question relating to Pareto Analysis
and same was well answered by most of the
examinees.
(b) This question relates to benefits of Customer
Profitability Analysis was not well answered by
many examinees.
(c) Question relating to classification of items under
the three measures used in Theory of Constraints
was well answered by many examinees.
(d) Question relating to VAM and Least Cost Method
of topic Transportation Problem was well
answered by many examinees.
(e) Question relates to North West Corner Method of
topic Transportation Problem. Examinees
performance was average.
PAPER 6: INFORMATION SYSTEMS CONTROL
AND AUDIT
Question 1.
It was a simple case study based question comprising
of four sub parts.
(a) Most of the candidates gave a generalized answer
about what is SRS but could not describe the
contents of SRS for a typical software
development. Performance was not up to the mark
in this question.
18
(b) Not many candidates could provide the complete

provisions for the Section. Some candidates
mixed up the Retention of Electronic Records
with Recognition of Electronic Records. Hence,
the performance was poor.
(c) Most candidates answered poorly. Many discussed
the Role of Auditors in general instead of
explaining the Role of Auditor in information
processing system design through SDLC.
(d) Only few candidates provided the correct answer.
Most of the candidates did not have the
conceptual clarity of Control and Objectives of
System Development and Maintenance. Hence,
performance was not up to the mark for this part.
Question 2.
(a) Only few candidates answered well in this part.
Many pointed out; in general, the application of
computers
in
Finance
Management
Management and many others described the
General benefits of ERP instead of key facilities
available in Treasury Cash Management of an
ERP. The performance was poor in this part.
(b) The performance of the candidates in this part
was average. Many candidates provided the
answers reasonably or partially correct whereas
few candidates presented the general idea of
Access Control.
(c) Several candidates explained the basic principle
of Water Fall approach and got confused with
strengths and weaknesses of other approaches.
Question 3.
(a) Many candidates could not define even the
popular concepts of Encryption, Public Key and
Private Key. The performance in this part was
average.
(b) Several candidates explained well. Some
candidates did not cover the Restorative
Information Protection and even those who
covered could not explain well. The performance
was average in this part.
(c) Many candidates did not cover all aspects of
Disaster Recovery Plan and instead gave general
answers not specific to IT assets. Some candidates
focused only on backup procedures and provided
details about various back-ups.
Question 4.
(a) This part dealing with the Common threats to
cyber crimes was answered well by the
candidates. Hence, performance was very good
for this question.
EXAMINATION
(b) Many candidates wrote the first part ie..
Advantages of Continuous Audit Techniques
well, but not fair in the second part ie.. its
disadvantages. Some candidates provided a
generalized answer.
(c) Only few candidates could discuss the
Methodology of a developing a BCP. Hence,
overall performance was not satisfactory.
Question 5.
(a) Several candidates attempted this question in
good manner.
(b) Several candidates attempted this question
satisfactorily but some of the candidates named
the Categories of software Maintenance
properly but could not explain them
appropriately.
(c) Only few candidates could answer it properly.
Without explaining the specific section and subsections, many narrated the scenario and gave
the ultimate judgment whether service provider
can get exemption or not.
Question 6.
(a) It was least attempted question and those who
attempted, performed below average in this part.
(b) Some candidates performed satisfactorily. Some
candidates discussed ERP System instead of TPS.
(c) Many candidates elaborated the types of
Insurance Policies in general. Only few
candidates understood the scenario and found the
correct type of policy and discussed Third Party
Insurance.
Question 7.
(a) Several candidates answered satisfactorily.
(b) Several candidates answered satisfactorily.
(c) Many candidates elaborated about the general
ideas of Risk Assessment.
(d) Many candidates did well.
(e) Only few candidates answered this sub-section.
Even among those, only few wrote well.
PAPER 7: DIRECT TAX LAWS
Question 1.
(b) For sub-part (ii), most of the candidates have
wrongly answered that commercial property is
exempt if the same is given on rent for more than
300 days. They were not aware that the condition
of letting out for a minimum period of 300 days
is applicable only for exclusion of let-out
residential house property from the definition of

asset and not commercial property. As regards
other sub-parts, many of the candidates could not
substantiate their answers with proper reasoning.
Question 2.
(a) Most of the candidates have not understood the
tax treatment of foreign exchange loss actually
incurred on payment to a supplier of raw material.
Further, many of them have disallowed the entire
expenditure on professional charges and rent on
which tax has not been deducted in respect of
service tax component alone. Some of the
candidates have not provided for additional
depreciation while some others have wrongly
allowed deduction under section 32AC. A few
candidates were not aware of the enhanced limit
of ` 35,000 under section 40A(3) in relation to
transport operator.
Question 3.
(a) Very few candidates have attempted this question
and those who have attempted showed lack of
knowledge of the transfer pricing provisions.
(b) This question was attempted by very few
candidates. The candidates were not aware of
whether Form 3CA can be revised, and if so, the
grounds on which it can be revised.
Question 4.
(b) Candidates were not aware that the TDS
provisions under section 194A are not applicable
on payment of interest by the firm to its resident
partners. Further, many candidates were not
aware that Indian branch of a foreign bank
transacting the business of banking in India is a
banking company to which the Banking
Regulation Act, 1949 applies, and hence, TDS
provisions under section 194A are not applicable
to income credited or paid to such bank.
(c) Many candidates have not mentioned that the
deeming fiction under section 50 (i.e., deeming
capital gain on transfer of depreciable assets to
be short-term capital gains) applies only with
reference to sections 48 and 49, and the same is
not applicable for the purpose of claiming
exemption of capital gains under section 54F.
(d) Candidates exhibited lack of knowledge of the
provisions relating to the Settlement Commission.
They were not aware of the interpretation of the
term Consideration by the High Court to mean
independent examination of the evidence and
material brought on record before the Settlement
Commission.
19
EXAMINATION
Question 5.
Specific Comments
(a) Most of the candidates were not aware that the

reason to believe for issuing notice under
section 148 must be of the Assessing Officer and
not of the revenue audit team.
Question 1.
(b) Even though the candidates were aware of the

remedies available for an assessee who is
aggrieved by the orders mentioned thereunder,
they were not aware of the prescribed time limits
within which appeal has to be filed before the
relevant appellate authority/High Court.
Question 6.
(a) Many of the candidates have calculated
depreciation for windmill @100% or 80%
instead of 15%. Some candidates were confused
between the provisions of section 32AC and
section 32(1)(iia). They have wrongly
mentioned that both investment allowance and
additional depreciation are not applicable in
case of firm. Further, candidates have not
included the cost of imported machinery
acquired but not installed during the previous
year for computing the written down value of
the block of assets.
Question 7.
(a) Most of the candidates have not mentioned the
conditions for allowing the deduction under
section 91. Further, the quantum of deduction
under section 80C and section 80D were not
supported with reasons.
(b) Some candidates were not aware of either the
Delhi High Court ruling in CIT v. Japan Airlines
Co. Ltd. (2010) 325 ITR 298 or the Madras High
Court ruling in CIT v. Singapore Airlines Ltd.
(2013) 358 ITR 237. They have instead stated
that TDS provisions are not attracted since
Airport Authority of India is a Government
organization.
PAPER 8 : INDIRECT TAX LAWS
General comments
The overall performance of the candidates was
average. Majority of the candidates were not as
comfortable solving computational problems as other
questions based on the provisions of law. They did
not provide the explanatory notes in the
computational problems which carry marks. Many
candidates failed to attempt the complete paper as
they appear to have spent unduly extra time in solving
computational problems. Candidates should keep
their answers brief and to the point.
20
(a) Although different rates of excise duty were given

in the question with respect to clearances of
Factory A and Factory B, majority of the
candidates wrongly clubbed the assessable value
of dutiable clearances of both the factories.
Consequently, they failed to arrive at the correct
amount of excise duty payable in cash.
(b) Many candidates wrongly took entire credit of
additional customs duty under section 3(1) of the
Customs Tariff Act, 1975 in the year of receipt of
capital goods instead of 50%. Although the
question provides the assessable value of product
P (which is being captively consumed), some
candidates took the assessable value as 110% of
this value on account of incorrect application of
rule 8 of the Central Excise Valuation Rules.
(c) While providing the reasoning for not charging
service tax on a service, most of the candidates
got confused among the negative list of services
and exemptions from service tax.
(e) Only a very few candidates could correctly
determine the relevant exchange rate and the
period for which interest was due.
Question 2.
(c) Some candidates were not conversant with the
interest free period allowed for payment of
customs duty and maximum period of storage
allowed for warehousing without warehousing.
Question 5.
(c) Most of the candidates were not aware of penal
provisions in customs law on attempt to export
goods improperly.
Question 6.
(a) Some candidates provided general and vague
answers instead of providing the procedure to be
followed by the Authority for Advance Rulings
on receipt of application for advance ruling as
required by the question.
(b) Most of the candidates correctly provided the
time-limit for issuance of show cause notice, but
failed to mention that in case service of the notice
is stayed by an order of a Court, the period of
such stay should be excluded in computing the
said period.
Question 7.
(a) Many candidates wrongly stated the purpose of
furnishing bonds instead of stating the types of
bonds presently in vogue.
EXAMINATION
Examiners Comments on the Performance of the

Candidates Intermediate (IPC) Examination (IIPCE)
May 2014
PAPER 1: ACCOUNTING
Specific Comments
Question 1.
The answers of the candidates reflected inadequate
knowledge of the Accounting Standards.
(a) Most of the candidates could not ascertain the
correct value of closing stock. Many of them were
not aware with the term replacement cost and
therefore, could not provide the correct total cost
of closing stock in situation (i) & (ii).
(b) Majority of the candidates could not calculate the
correct amount of depreciation in the given
situations.
(c) Number of candidates could not give correct
calculations for the loss on disposal of office
equipments and depreciation on the new
machinery and also could not narrate the proper
adjustments for Fixed Assets in context of the
relevant Accounting Standard.
(d) Most of the candidates were not able to compute
amount of loss to be provided for and the amount
to be charged to revenue in the current year as
per AS 7. The extract of the profit and loss account
as required in the question was either not given
or was incorrect, if given by them.
Question 2.
(a) Many candidates failed to give the Statement of
Profit and Loss in the required format of Revised
Schedule VI (Now Schedule III to the Companies
Act, 2013).
(b) Few candidates erred in computation of sales ratio
which resulted in incorrect division of profits and
expenses between pre and post incorporation
periods.
Question 3.
Few candidates erred in (i) Calculation of depreciation
and adjustment on sale and purchase of machinery;
(ii) Treatment for tax provision in profit and loss
account; (iii) Fixed assets shown in the Balance Sheet
and depreciation thereon and (iv) Adjustment for
partly repaid loan and calculation of interest thereon.
Consequently, they could not prepare the Trading
Account and the Balance Sheet, as required in the
question.
Question 4.
A number of candidates erred in the (i) Calculation of
purchase consideration; (ii) correct amount of
debentures issued for discharge of Debentures of
Sristhi Ltd.; (iii) Preparation of Equity shareholders
account, Realization account and Debentures account
in the books of Shrishti Ltd.; (iv) Journal entries for
taken over of Assets and Liabilitiesin the books of Anu
Ltd. Few among them passed journal entries in the
books of Srishti Ltd. instead of Anu Ltd.
Question 5.
(a) The answer of the candidates exhibited their poor
study on the topic of Hire Purchase and Instalment
Sale. Majority of the candidates could not correctly
calculate the interest included in each instalment
and depreciation on Van and also erred in
preparation of Ganesh Enterprises Account.
(b) Few candidates gave single investment account
for Bonds and Shares instead of two separate
accounts and therefore, got confused in
calculations. Thus they were not able to give the
required investment accounts in the books of
Smart Investments.
Question 6.
Majority of candidates passed the entries regarding
adjustment of goodwill and profit and loss on
revaluation through partners capital account instead
of partners current accounts. Few candidates made
cash entries in partners capital accounts in spite of
the fact that it was clearly stated in the question that
existing partners will not bring cash for further capital.
Few among them also erred in computation of new
profit sharing ratio.
Question 7.
(a) Some candidates erred in calculation of the
correct subscription income for the year ending
March 31, 2014 and failed to give required
presentation under appropriate heads in the
Extract of Income and Expenditure account and
Balance Sheet.
(b) Lack of conceptual clarity in the context of AS 3
was observed among a section of candidates. They
were not able to give correct advice on the
treatment of the given items in preparation of cash
flow statement.
21
EXAMINATION
(c) Some candidates described how to calculate
average due date instead of giving definition of
average due date and also gave incorrect instances
for when average due date can be used.
(d) Most of the candidates did not give the answer
in accordance with AS 6 as asked in the question.
(e) Few candidates were not able to give the required
journal entries for Bonus Issue.
PAPER 2: BUSINESS LAWS, ETHICS AND
COMMUNICATION
Specific Comments
Question 1.
(a) In respect to the question related to agency coupled
with interest covered under section 202 of the
Indian Contract Act, 1872, most of the candidates
have not answered the question properly and
instead of stating that the Principal cannot revoke
the contract of agency when it is coupled with
interest, they simply answered on the contract of
agency. Many candidates failed to explain the
relevant provision of the Indian Contract Act, 1872.
There were lack of conceptual clarity at large.
(b) With respect to question related to membership
of holding company given under section 42 of
the Companies Act, 1956, large number of
candidates have given wrong answer by stating
that a company has to surrender its shares when
it becomes a subsidiary to the holding company.
(d) This part of the question related to the factors to
make oral communication effective were
answered by majority of the Candidates were
general in nature. Number of students were
confused and answered on the good listening
skills, and importance of oral communication.
Question 2.
(a) With respect to the part (i) of the question related
to the Payment of Bonus Act, 1965 , due to lack of
knowledge of the provision stated under section
3, large number of candidates have wrongly stated
that the employees of the unit incurring losses can
claim bonus on the ground that the unit incurring
losses is part of single establishment.
Whereas with respect to part (ii) of the question
on the Payment of Gratuity Act, 1972, some
students failed to mention section 8 related to
the recovery of gratuity .
Question 3.
(a) This question pertains to the provisions related to
the joint liability covered under sections 42, 43 and
44 of the Indian Contract Act, 1872. With respect to
22
the second part related to the practical problem,

very few candidates have answered correctly. Some
students have wrongly interpreted 1/5 of 1,50,000
instead of 1/5th of 50,000 (share of the F).
Question 4.
(a) With respect to question related to Information
Memorandum given under the Companies Act,
1956, large number of candidates have been
confused with information memorandum as
memorandum of association of a company.
Further, the answers given by the candidates were
vague and it indicates lack of adequate
preparation on the part of the candidate.
(c) With respect to the drafting of the notice, most of
the candidates could not even give a proper
format of the notice of the Board meeting. A large
number of candidates have confused the board
meeting with the Annual General Meeting or
Extraordinary General Meeting of the company
and passed the resolutions in the given question.
Question 5.
(a) In respect to part (ii) of the question related to
the notice of dishonor under the Negotiable
Instruments Act, 1881, large number of
candidates have answered the question wrongly
by stating that serving of notice of dishonour is
necessary under the Negotiable Instruments Act,
1881. Many students without mentioning the
provisions, concluded the answer.
(b) With respect to the question related to the ordinary
matters to be considered at AGM of a company
dealt under section 173(1)(a) of the Companies Act,
1956, most of the candidates have answered the
question wrongly by stating that the company has
to pass a special resolution for transacting special
business. Some of the students answered that
ordinary matters are day to day business.
Question 6.
(a) With reference to the question on the restrictions
on the alteration of the Articles of Association
covered under section 31 of the Companies Act,
1956, most of the candidates have given the
procedure for alteration of Articles of Association
of a company instead of giving the limitations/
restrictions in respect of such alterations under
the Companies Act, 1956. Some students confused
the question with the memorandum of association
and stated name clause, object clause etc.
(b) With respect to the question on the drafting of
the gift deed, most of the candidates have given
general answers regarding the gift deed instead
of furnishing the answer in the legal format.
EXAMINATION
Question 7.
Specific Comments
(a) Pertaining to the question related to the transfer

of liability as per the section 17 B of the
Employees Provident Funds and Miscellaneous
Provisions Act, 1952, most of the candidates
could not state that the liability of transferor and
transferee companies is joint and several, but
the liability of the transferee company is limited
upto the period of date of transfer and to the
extent of net assets acquired by the transferee
company.
Question 1.
(b) In relation to the Question on the Return of

allotment as covered section 75 of the companies
Act, 1956, most of candidates have wrongly
stated that return of allotment means the return
that is required to be filed by a company when
it refunds the excess money received from the
public. Students failed to explain the provision
correctly.
(c) With respect to the question related to the
incorporation of company using the phrase
Electoral Trust under the Companies Act, 1956,
most of the candidates have wrongly stated that
Mr. Prabhu cannot incorporate a new company
using the words Electoral Trust as part of the
name. Students were lacking the knowledge of
an amendment made vide General Circular No.
12/2013, dated 28.6.13 by the MCA.
(e) With regards to the question on the threats
adversely affecting the fundamental principles of
ethics, most of the candidates have given vague
answers without stating clearly the threats
existing in environment which adversely affect
the fundamental principles of ethics. Some
students confused the questions with the
essentials of oral communication, formal,
informal communications etc.
PAPER 3: COST ACCOUNTING AND FINANCIAL
MANAGEMENT
General Comments
Overall performance of the candidates was average.
Being a problem oriented paper candidates should
practice as many numerical questions as possible
under examination conditions by referring to the study
material, suggested answers, practice manual, etc.
Performance revealed lack of in-depth knowledge and
rigorous study. The candidates need to understand
the subjects conceptually and also polish up their
presentation skills. Further, working notes to practical
problems were either absent or not exhibited by some
of the candidates. Some candidates attempted
different parts of the same question at random instead
of answering them consecutively.
(a) This was a practical question relating to topic

Marginal Costing which required calculation
of break-even sales, margin of safety etc. This
question was well attempted by examinees.
However, few of them failed to calculate P/V
ratio using change in profit to change in sales
formula.
(b) This was a practical question relating to preparation
of a memorandum reconciliation account. In this
question most of the examinees presented the
solution in statement format instead of preparing
memorandum account as per the requirement of
question. Moreover, many examinees could not do
the correct adjustment while preparing profit
reconciliation. Overall performance of the
examinees in this question was below average.
(c) Majority of the candidates were able to prepare
Trading and Profit & Loss Account on correct lines
and in proper format. However, few candidates
calculated stock turnover ratio by taking sales
instead of cost of goods sold.
(d) Majority of the candidates were able to compute
correct figure of weighted average cost of capital
(WACC). However, some candidates did not show
proper steps in arriving at the final figure of WACC.
Question 2.
(a) This was a practical question from the topic
inventory control of Material. Requirement of this
question was divided into three parts. In the first
and second part of the question, examinees were
required to calculate E.O.Q and time interval
between the two orders. These first two parts were
well attempted by the examinees but in the third
part of the question requiring the examinees to
calculate percentage of discount to be negotiated
with the supplier of goods if the company places
order for the goods in quarterly basis. Unlike the
performance in first two parts, in this part
performance was not good as most of the examinees
could not comprehend the requirement of this part
of question correctly and committed mistake.
(b) Majority of the candidates were able to compute
Earnings per share, Operating Leverage, Financial
Leverage and Combined Leverages on correct
lines and in proper format. However, most of the
candidates did not comment on them.
Question 3.
(a) This was also a practical question from the topic
Process Costing where examinees were required
to prepare Process account and profit & loss
account for the processes. Examinees failed to
23
EXAMINATION
apply the required concept and consequently
failed to calculate cost per unit of abnormal loss,
units transferred and profit/ loss. In a nutshell
performance of the examinees was average in this
question.
(b) A large percentage of the candidates were unable
to solve the question and make recommendation
on correct lines. The candidates could not calculate
annual cash inflows on correct lines and worked
out rest of the problem accordingly and ended up
with incorrect answers. Commission figure was
not considered by some candidates while
computing the cash inflow. Few candidates failed
to work out the Profitability Index for the machine.
Question 4.
(a) This practical question was from the topic
Standard Costing; examinees were required to
calculate overhead variances. In this question,
performance of the examinees has revealed the
lack of understanding of the concept of variance
analysis on the part of the examinees.
Performance of the examinees in this question
was below the average level.
(b) Majority of the candidates have solved this
question correctly and with proper working notes.
However some candidates failed to arrive at
correct amount of funds from operations and
treatment of provision for tax.
Question 5.
(a) This was a theoretical question part requiring
examinees to distinguish between cost control
and cost reduction. An average level of
performance was observed in this question.
(b) This was also a theoretical question requiring
examinees to explain explicit costs and
engineered costs. Poor performance was observed
as most the examinees could not explain the
concept properly.
(c) A large percentage of candidates could not write
about the emerging issues affecting the future
role of Chief Financial Officer (CFO) on correct
lines. They simply wrote about the traditional
role of a CFO.
(d) Most of the candidates were not able to
adequately express and explain the concepts of
Global Depository Receipts (GDRs) and
American Depository Receipts (ADRs). They
gave vague answers.
Question 6.
(a) This was a practical question on Contract costing
requiring the examinees to prepare contract
account, account of contractee, profit/ loss
24
account and balance sheet. Most of the examinees

failed to present all the requirements of the
problem correctly and properly. This showed lack
of practice of the problems on the part of the
examinees. Overall performance of the examinees
was average in this question.
(b) This numerical problem relating to estimation of
working capital on cash cost basis was well
attempted by most of the candidates. Only a
handful of the candidates could not compute the
figures of Work-in-Process, debtors and provision
for contingencies correctly.
Question 7.
(a) This was a theoretical question requiring
examinees to distinguish between the allocation
and apportionment of cost. Most of the examinees
could not answer this question correctly.
(b) This was a theoretical question requiring
examinees to describe the salient features of
budget manual. Most of the examinees instead of
giving answer for budget manual written the
salient features of budget. This shows how
examinees do not read the question carefully.
(c) Majority of the candidates were not able to
explain the concepts of Concentration banking
and Lock Box System correctly.
(d) A large percentage of the candidates have written
about the concept of Debt Service Coverage Ratio
(DSCR). However, most of them did not mention
the formula correctly.
(e) (i) Most of the candidates were unable to write
the names of the financial instruments
related to international financial market.
(ii) This was also a theoretical question requiring
candidates to state the cost unit of four
industries. This question was well attempted
by the examinees.
PAPER 4 : TAXATION
General Comments
Although the overall performance of the candidates
was satisfactory, most of them lacked conceptual
clarity. Despite clear instructions, many candidates
did not provide explanatory notes in the
computational problems.
Specific Comments
Question 1.
(A) Some of the common mistakes/deficiencies
noticed are
(i) Lack of knowledge that facility of laptop
provided by the employer to Mr. Kamal is an
EXAMINATION
exempt perquisite irrespective of its use for
personal or official purpose or both.
(ii) Lack of knowledge of the provisions of
section 56(2)(vii) relating to taxability of gifts
under the head Income from other sources.
(iii) Deduction under section 80C wrongly
allowed in respect of tax saver deposit with
Nationalised Bank in the name of his married
son, though it is available only if the deposit
is in the name of the assessee himself.
(iv) Provision of deduction under section 80C in
respect of the entire premium of ` 25,000
paid towards the life insurance policy taken
for his married daughter, without considering
that the same has to be restricted to 10% of
actual capital sum assured i.e., ` 20,000,
being 10% of ` 2,00,000.
(v) Not providing for exemption of ` 1,500 under
section 10(32), while including the income
of minor son in the hands of Mr. Kamal.
(B) Knowledge of the candidates pertaining to negative
list of services was generally not apposite.
Resultantly, majority of the candidates wrongly
considered supply of farm labour and testing of
soil of farm land as chargeable to service tax.
(C) Many candidates were not aware that under VAT,
one to one correlation between inputs and outputs
is not required. They wrongly established such
correlation while answering the question.
Question 2.
(A) Most of the candidates showed lack of knowledge
of section 32AC. Majority of the candidates were
not able to arrive at the correct written down value
as on 01.04.2014, which is necessary for
computing depreciation for A.Y.2015-16. This is
because they were not aware that additional
depreciation has to be deducted whereas
investment allowance under section 32AC is not
to be deducted while computing the written down
value. Consequently, their computation of
depreciation for the A.Y 2015-16 was not correct.
(B) Most of the candidates did not gross up the
amount of professional fee received net of TDS.
Consequently, they failed to correctly solve the
problem.
Question 3.
(A) Most of the candidates have allowed exemption
to Ms. Rakhi in respect of reimbursement of
medical expenses on treatment of her mother-in
law dependent on her, within the overall limit of
` 15,000, whereas mother-in law does not fall
within the definition of family, even though she
is dependent on Ms. Rakhi. Many of the

candidates were not aware of the exemption and
taxability provisions pertaining to medical
treatment expenses of minor son abroad and
consequent expenditure on travel and stay abroad
incurred by the employer.
(C) Few candidates mistakenly wrote the provisions
relating to registration under VAT instead of
stating the circumstances under which VAT
registration can be cancelled.
Question 4.
(A) Many of the candidates have answered the
question without concluding which house has to
be treated as self occupied and which one as
deemed to be let out. This reflects the lack of
understanding of the requirement of the question.
Further, some of the candidates have allowed
deduction of ` 55,000 instead of ` 30,000 for
interest on money borrowed for repair of house
property II, where the same is treated as self
occupied property. Some of the candidates have
wrongly allowed deduction for municipal taxes
for house property I, even though it was not paid
during the previous year.
(B) Although many candidates gave the correct
example of bundled services, they could not
define the term bundled service properly.
(C) A few candidates provided vague answers instead
of enumerating the deficiencies of VAT system
in India.
Question 5.
(A) Many of the candidates were not aware that while
determining the tax on long term capital gains,
the unexhausted basic exemption limit of `
2,00,000 can be reduced. They were also not
aware of the rebate of ` 2,000 available under
section 87A from tax payable, where the total
income does not exceed ` 5,00,000. Hence, their
tax computation was incorrect.
(B) and (C) Most of the candidates correctly arrived
at the conclusion as to whether the statement is
true or false. However, majority of them could
not secure full marks as they failed to provide
proper reasoning for the conclusion.
Question 6.
(A) Candidates exhibited lack of knowledge of the
provisions of set-off and carry forward of losses.
Further, they could not substantiate their
answers with proper reasoning for carry forward
of losses.
(B) Majority of the candidates were not aware that
deduction under section 80CCG is available only
25
EXAMINATION
if the gross total income does not exceed ` 12
lakhs. They were also not aware that the
deduction is restricted to 50% of actual
investment or 50% of ` 50,000, whichever is
lower, for resident individual-assessees whose
gross total income does not exceed ` 12 lakhs.
(C) Many candidates correctly concluded that service
tax shall be charged on the expenditure incurred
by Mr. X in course of provision of taxable services.
However, their answer was not supported with
correct reasoning for the same.
Question 7.
(A) In part (1), candidates were not aware of the
provisions of section 194IA. They were also not
aware that there is no threshold limit for
deduction of tax at source under section 194J in
respect of directors sitting fees. In part (2), many
of the candidates have not noticed that the return
filed by Mr. Vineet is a belated return and hence,
cannot be revised. Further, they were not aware
that in the absence of Karta of the HUF, the return
can only be signed by any other adult member of
the HUF, whether male or female. In part (3), some
candidates have not mentioned that advance tax
liability arises only where such tax payable is `
10,000 or more. Further, they have also not
mentioned that senior citizens, who do not have
any income chargeable under the head profits
and gains from business or profession, are not
required to pay advance tax.
PAPER 5: ADVANCED ACCOUNTING
Specific Comments
Question 1.
The answers of the candidates reflected inadequate
knowledge of the Accounting Standards.
(a) Few candidates were not able to give the required
answer in line with provisions of AS 4
Contingencies and Events occurring after the
balance sheet.
(b) Most of the candidates could not explain the
nature of assets and failed to show the required
treatment of interest as per AS 16 Borrowing
Costs.
(c) Many of them were not well versed with the
provisions of AS 19 Leases and therefore could
not answer the question.
(d) Few among them were not able to give the restated
basic earnings per share for the rights issue, in
line with provisions of AS 20 Earnings per share.
Question 2.
Majority candidates failed to prepare schedule of cash
26
payments amongst the partners by Highest Relative

Capital Method.
Question 3.
(a) Most of the candidates could not draw the
Debentures account and Debenture Redemption
Sinking Fund Account. They also could not give
the necessary working notes.
(b) Many candidates got confused regarding the
condition given in the question that the benefit
of firm underwriting is not given to the individual
underwriter and gave calculations on the basis
of alternative assumption. Consequently, they
failed to give the correct liability of each
underwriter.
Question 4.
Few candidates did not consider Debentures while
calculating purchase consideration. Consequently,
they did not arrive at the basis of issue of shares in
Amalgamated Company to the shareholders of the
existing companies and failed to draw up the Balance
Sheet of the Amalgamated Company as at 1st April,
2014, the date of completion of amalgamation
Question 5.
(b) Many candidates were not able to calculate
premium/Claims for Direct and Indirect Business
separately in the books of the insurance company.
Question 6.
(a) Very few candidates gave correct journal entries
in the books of independent branch to rectify/
adjust the items given in the question.
(b) Some of the candidates though calculated
unrealized profit correctly but failed to co-relate
it with the concerned department. Few among
them failed to give the correct adjustment for
Managers commission.
Question 7.
(a) Few candidates were not able to calculate
provision for unsecured portion correctly.
(b) Many candidates could not give correct
classification of the given items under the
appropriate heading of the balance sheet as per
Schedule VI of the Companies Act (Now Schedule
III to the Companies Act, 2013).
(c) Few candidates wrongly answered the question
on the basis of receipt of grant instead of refund.
(d) Most candidates failed to list the criteria for
calculation of refund amount.
(e) Majority candidates were able to give the
conditions to be fulfilled by a joint stock company
to buy back its own equity shares.
EXAMINATION
PAPER 6: AUDITING AND ASSURANCE
Specific Comments
Question 1.
(a) Majority of the candidates have no clarity about
Statements and Guidance Notes. They have
mentioned mandatory or recommendatory to both.
(c) Some of the candidates wrongly related the
payment of interest out of capital during
construction with Borrowing Cost.
(d) Candidates showed lack of understanding of the
topic and mentioned irrelevant points viz,
Original Audit Report getting modified, various
type of reports etc in place of Modified Report
and disclosure pattern of an Emphasis of Matter
paragraph.
Question 2.
(iv) Many candidates failed to explain all three
conditions relating to exemption from CARO
correctly.
(ix) Candidates have no clarity about Section 293A
and simply mentioned as Government company
cannot donate, unaware of the initial 3 years
restriction.
Question 3.
(c) Candidates could not extend intricately to the
Court Notifications to be checked, Credit
Managers aspect or the acknowledgement receipts
issued to the debtors.
(d) Majority of the candidates commented upon mere
separation part of the ensuing period, without
establishing that it hits Purchases or Sales and
their elaboration.
Question 4.
Question 6.
(a) Instead of call for Comparative Analysis whether
between two periods, actual with budgeted, Debtors
Ratio which again need two factors, candidates
wrongly mentioned as Confirmation from debtors,
their scheduling under Secured/Unsecured, Ageing
Schedule more than 6 months etc.
Question 7.
(b) Most of the candidates mentioned the issue w.r.t.
CLB and not Central Government which happens
to be the right authority.
(c) Technical advantages as elaborated were
missing, rather candidates wrote about how to
take sample, its representation, time saving, etc
erroneously.
(d) Candidates attempted in a very general manner
rather than commenting on the intricate part of
the audit through computer.
(e) Rather than mentioning the facts as specifically
required, candidates went ahead quoting about
Managements Responsibility, Auditors Opinion
etc. which had no call in the answer.
PAPER 7: INFORMATION TECHNOLOGY AND
STRATEGIC MANAGEMENT
SECTION A: INFORMATION TECHNOLOGY
Specific Comments
Question 1.
Being compulsory question, almost all the examinees
answered this question.
(a) Most of the examinees could name devices using
device drivers but could not explain the concept
of Device Drivers.
(b) Many candidates explained financial and other

conditions instead of operating conditions.
(b) Though some examinees got confused between

Bit and Byte; many of the examinees responded
fairly well in this part.
(c) Most of the candidates explained all the qualities

of the auditor like skill, competence,
confidentiality etc. and failed to answer correct
meaning of professional skepticism.
(c) Many examinees could not differentiate between

Backup and Recovery and performance was
poor in this part.
Question 5.
(a) Many Candidates misunderstood the question
which was about precautions in adoption text
checking technique and mentioned the general
considerations in framing a system of Internal
check.
(b) Most of the candidates explained all the points
of Government audit or attempted in a general
manner as an Audit Programme under normal
course of Audit.
(d) The function of the Transport Layer in TCP/IP

was not majorly understood by the examinees.
Internet Layer was confused with Internet
Browser.
(e) Most of the examinees provided the literal
meaning of Integrity and Authenticity and not
with reference to e-Commerce.
Question 2.
(a) This is a question on describing the Benefits of
Database Management Solution, where most of
27
EXAMINATION
the examinees answered fairly well, but some
examinees answered generally and instead
explained about the DBMS.
(b) This question is on features of Operating Systems.
Many examinees could attempt fairly well in
Multiprogramming, Multiprocessing, and
Multitasking; but most of the examinees were not
able to explain Multithreading.
Question 3.
(a) Most of the examinees could explain about
Threat but could not explain the three types of
Network Security Threat.
(b) Most of the examinees could explain about
Distributed Database but gave a generalized
answer while explaining the Methodologies of
distribution of a database.
Question 4.
(a) & (b) Most of the examinees did not attempt this
question based on Application Servers and 3tier architecture.
Question 5.
(a) In this question, only few examinees could
answer satisfactorily on SDSL connection and
Satellite connection.
(b) This question on explaining Step by step online
transaction processing in an e commerce
environment was attempted by almost all the
examinees and their performance was satisfactory.
Question 6.
This is the flowchart based question. Most of the
examinees did fairly well, however, few examinees
made mistakes in computing Service Tax and Total
Amount to be paid.
Question 7.
In this question, short notes on any four of Firewall,
Data mining, VoIP, Object Oriented Programming
and Front End Communication Processors were
required to write.
(a) Many examinees had the conceptual clarity about
Firewall but could not write to-the-point answer.
(b) Most examinees confused the term Data Mining
with Database Searching and thus could not
perform well in this part.
(c) Most of the examinees did not attempt this part
and those who attempted did not have the
knowledge about it.
(d) Most of the examinees were not aware of Object
Oriented Programming and could not attempt
this part properly.
28
(e) Most of the examinees confused the term Front

End Communication Processors with
Multiplexers.
SECTION B: STRATEGIC MANAGEMENT
General Comments
Although some of the candidates were able to write
good answers, the performance in general was found
lacking in terms of conceptual clarity, language and
presentation. Answers in many cases were sketchy
and unplanned. Some of the examinees have also
wasted their time by writing more than what was
required. They should avoid unnecessary lengthy
text.
It was also felt that the students need to put-in more
efforts to improve the understanding of the subject.
Apart from the subject matter they also need to work
on the vocabulary, language and presentation of the
answers. Performance can be improved if the students
are able to develop habit of regular reading and
writing.
Special Comments
Question 8.
(a) The performance of most of the candidates was
below average. Some candidates have confused
the mission statement with the vision statement
of a company.
(b) Many candidates have vaguely explained the
factors without highlighting those that are
influencing the competence of employees.
(c) Substantial number of candidates have explained
the factors of macro environment in general
terms. They were not able to bring out the types
of information required to determine external
opportunities and threats relating to macro
environment.
(d) The performance was average as examinees have
either given the meaning or the characteristics of
corporate strategy instead of what the corporate
strategy ensures.
(e) A number of candidates were not able to write
that corporate culture has negative connotations
as well.
Question 9.
(a) In most of the cases candidates understood the
part (i) related to concept of stability strategy.
However, in part (ii) the performance was average
as examinees were not able to support their
answers with appropriate reasoning.
(b) The performance was below the expected level
as many examinees lacked clarity on the stages
in strategic management process.
EXAMINATION
Question 10.
The answers, in general, were good as candidates
understood the concept of business process
reengineering.
Question 11.
(a) Many examinees have written the traits of a good
leader instead of the leadership role played by
them in pushing for good strategic execution.
Accordingly, the performance was below
average.
(b) The answers were found to be lacking in
substance. Many examinees wrote about
functional strategy instead of functional structure.
(b) In a large number of cases candidates have

explained the meaning of SWOT analysis instead
of its significance.
Question 13.
(a) The performance was good as the answers were
based on concepts with sound reasoning.
(b) In a majority of cases answers lacked conceptual
knowledge. It appeared that many candidates
have avoided learning these concepts.
Question 14.
Question 12.
(a) In a few cases examinees fumbled and have

given wrong answers. Some have also explained
the product life cycle instead of experience curve
reflecting their confusion and lack of knowledge.
(a) A few candidates were not able to explain that

the organisations focus on multiple objectives.
Otherwise the performance was good as
the answer written were mostly on expected
lines.
(b) Candidates, in general, understood the concept of

strategic business units and were able to explain
its characteristics. However, understanding of
production system was found to be below the
expected level.
T
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Final Paper 1: Financial Reporting Study Material and

Practice Manual
NT
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Availability of Subject-wise compilation of Suggested

Answers of Intermediate (IPC) &
Final Examinations.
Final students may note that Chapter 5 Consolidated Financial Statements of the Group
Companies of the Study Material and Practice Manual, hosted on the website, has been modified to
incorporate the Companies (Specification of Definitions Details) Rules, 2014 and further updated to reflect
the latest provisions. The updated chapter has been hosted on the institutes website. Students may refer
to the link www.icai.org>>Students>>BoS Knowledge Portal>>Final Course>>Paper-1: Financial
Reporting>>Study Material, Practice Manual>>Chapter 5: Consolidated Financial Statements of Group
Companies for the same.
We are pleased to inform that the Board of Studies has brought out the following subject-wise
Compilation of Suggested Answers of past 10 years PCC/IPCC/Intermediate (IPC) and Final Examinations.
These compilations will serve as a useful and handy reference guide for the students while preparing for
their forthcoming examinations.
Intermediate (IPC) Course
Paper-1 Accounting
Paper-3 Part-I: Cost Accounting
Paper-3 Part-II: Financial Management
Paper-5 Advanced Accounting
Paper-6 Audit and Assurance
Paper-7 Part-I: Information Technology
Paper-7 Part-II: Strategic Management
Final Course
Paper-1 Financial Reporting
Paper-2 Strategic Financial Management
Paper-5 Advanced Management Accounting
Paper-6 Information Systems Control and Audit
The aforesaid Compilations are hosted on the Institutes website as well as their printed copies are also
available at Sale Counters of Regional Offices and Branches.
29
EXAMINATION
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, PART III,
SECTION 4, DATED 29th AUGUST, 2014]
THE INSTITUTE
OF
CHARTERED ACCOUNTANTS
OF INDIA
New Delhi, the 29th August, 2014

NOTIFICATION
No.1-CA(7)/166/2014.- In exercise of the powers conferred by sub-section (1) of section 21 of the Chartered
Accountants Act, 1949 (38 of 1949), and in supersession of the Notification No. 1-CA(7)/121/2008 Dated 19TH
August, 2008, the Council of the Institute of Chartered Accountants of India hereby designates Shri C.S. Ravi,
Joint Secretary of the Institute as the Director (Discipline) to head the Disciplinary Directorate and for making
investigations in respect of any information or complaint received by it. He shall perform such functions as
are assigned to him under the said Act and the rules and regulations framed thereunder.
Sd/T. Karthikeyan
Secretary
NT
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Attention: Intermediate (IPC) Course students

November 2014 Examination
NT
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Availability of Suggested Answers of Intermediate

(IPC) & Final Examinations of May, 2014.
Paper 2: Business Laws, Ethics and Communication

Non applicability of Sections 407 to 414 of the Companies Act 2013, for the Intermediate (IPC) Examination
to be held in November 2014
It is hereby informed that Sections 407 to 414 of the Companies Act, 2013 relating to NCLT and NCLAT
(notified on 12th September, 2013) formed part of the syllabus of the abovementioned paper as applicable
for November, 2014 examinations. Consequently, the said sections were also incorporated in, Para 1.19 of
Unit 1 from Page Nos. 22 to 26 of the Supplementary Study paper prepared for the said examinations.
However, keeping in view the fact that the NCLT and NCLAT are not in operation till date, students are hereby
informed that the notified Sections 407 to 414 of the Companies Act, 2013 are not applicable for Intermediate
(IPC) examination, to be held in November 2014 (Paper 2: Business Laws, Ethics and Communication).
We are pleased to inform that the Suggested Answers for Intermediate (IPC) and Final Examinations
held in May 2014 are hosted on the Institutes website as well as their printed copies are also available at
Sale Counters of Regional Offices and Branches.
Students are advised to benefit from the above publication while preparing for their forthcoming
examinations.
Corrigendum
Intermediate (IPC) Course
Corrigendum to Practice Manual of Part-II: Indirect Taxes of Paper 4: Taxation
Students are advised to ignore Question nos. 14 and 15 of Chapter-4: Valuation of Taxable Service given at
page nos. 4.13-4.15 in the printed copy of Practice Manual of Part-II: Indirect Taxes of Paper 4: Taxation
[April and July 2014 (Reprint) edition].
30
ANNOUNCEMENT
ENT
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On Line Articles Placement Portal for selection of

Articled Assistants by CA Firms/Individual
Chartered Accountants in practice
The Board of Studies of the ICAI has been providing Optional Online Placement facility for selection
of Articled Assistants by CA Firms/Individual Chartered Accountants in practice through its Articles
Placement Portal on pan India basis. It provides a platform to the firms of Chartered Accountants/ Individual
Chartered Accountants in practice having vacancies for Articled Assistants to shortlist eligible students
for selection of articled assistants, and call them for Interview at their offices, as per date and time convenient
to them. The eligible candidates who have passed Group-I or both Groups of the Intermediate (Integrated
Professional Competence) Course or have been admitted under the Direct Entry Scheme and are willing to
join articled training can register themselves on the portal. The services to the Online Placement Portal are
available free of charge for both CA Firms/Individual Chartered Accountants in practice and students and
they can register themselves online through the Portal at http://bosapp.icai.org.
The services on the Portal would be available for two months, twice a year from the date of registration by
the firms/ Individual Chartered Accountants in practice. Similarly the biodata of a student will also be
available on the portal for a maximum period of 2 months from students registration. The candidates
shortlisted by CA Firms/ Individual Chartered Accountants in practice would be informed by e-mails
through the Portal, to appear for interview at their respective Offices, at the designated date and time.
Detailed guidelines are available at the institutes website www.icai.org and on the Portal. In case of any
further clarification, please contact the Board of Studies, ICAI Bhawan, A-29, Sector-62, Noida-201309,
Tel. No. 0120-3045930/931; eMail: bosapp@icai.org.
CA. M. Devaraja Reddy
Chairman, Board of Studies
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Intermediate (IPC) Course Students: November 2014

Examination
Applicable sections of the Companies Act, 2013- for Group II: Paper 6 Auditing &
Assurance Intermediate (IPC) November 2014 Examination,
Students may note that given below is the list of sections of the Companies Act, 2013 (notified on 12th Sept,
2013) which are applicable for Group II: Paper 6 Auditing & Assurance subject Intermediate (IPC) Level
November 2014 Examination.
S. No. Section No of the
Companies Act, 2013
Description of Section
39
Allotment of Securities by Company
51
Payment of Dividend in proportion to amount paid-up
70
Prohibition for buy back in certain circumstances
133
Central Government to Prescribe Accounting Standards
180
Restrictions on Powers of Board
181
Company to contribute to bona fide and Charitable Funds
182
Prohibitions and restrictions regarding political contribution
183
Power of board and other persons to make contribution to

National Defence Fund etc.
These sections are also discussed for the convenience of the students as Academic Update in view of
Legislative Amendments in the Companies Act, 2013 in Group II: Paper 6 Auditing and Assurance
Revisionary Test Paper for November 2014 Examination at following link:
http://220.227.161.86/34566rtp_nov14_ipcc-6.pdf
31
ANNOUNCEMENT
NT
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Online Mentoring on ICAI Cloud Campus http://cloudcampus.icai.org
The ICAI Cloud Campus launched by Honble Finance Minister on CA Day July 1, 2014, enables
Students to learn anytime and from anywhere using e-Learning, Audio Lectures, Video Lectures and Online
Mentoring. Students can even learn through Mobile Enabled e-Learning facility on the Students Learning
Management System (LMS) on their Mobile Phones/Smart Phones/Tablets. Online Mentoring is one of the
major value added features on the Cloud Campus. The schedule of online mentoring sessions from 3.00
p.m. to 4.00 p.m. is as follows:
Online Mentoring Schedule
Date
Course Topic
Faculty
Oct 7
Final
Paper 6: Information System Control and Audit Chapter-5 Acquisition,

Development and Implementation of Information Systems
Ms Sukriti Arora
Board of Studies
Oct 14
IIPC
Paper 1: Accounting Chapter -14 Issues in Partnership Accounts
CA. Seema Gupta

Board of Studies
Oct 28
Final
Paper 1: Financial Reporting Chapter-5 Consolidated Financial Statement CA. Shilpa Agrawal
Board of Studies
Nov 5
CPT
Section A: Fundamentals of Accounting Chapter-8 Partnership Accounts
CA. Seema Gupta

Board of Studies
Nov 11
CPT
Section C: General Economics Section-I Micro Economics Price

Determination in Different Markets
Ms. Prem J Bhutani

Board of Studies
Nov 18
CPT
Section D: Quantitative Aptitude Part-2 Statistics Chapter-12

Correlation and Regression
Dr. N V Ravi
Board of Studies
Nov 25
CPT
Section B: Mercantile Laws Chapter-1: Indian Contract Act,1872

- An Overview
Ms. Nisha Gupta

Board of Studies
Students are advised to make register on the ICAI Cloud Campus for the Online Mentoring Sessions and
provide specific questions/queries that they need to be discussed, and benefit from this online facility.
Links to access the aforementioned webcasts are also available on the http://cloudcampus.icai.org under
Online Mentoring.
CROSSWORD
September, 2014
Solution
11
12
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18
30
13
16
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19
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21
28O
29L
36
39
32
34
23
E
O
20
T
31
35
38
25
33
32
14
24
T
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22
26
T
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37
40
ANNOUNCEMENT
National Convention for CA Students Jalgaon

Dates: 12th & 13th December 2014
Venue: Senate Hall, North Maharashtra University, Jalgaon
Organized by: Board of Studies, ICAI
Hosted by: Jalgaon Branch of WIRC of ICAI & Jalgaon Branch of WICASA
Theme: Dedicated to Bridge Talent & Opportunity
DAY-1
11.00 am to 01.00 pm
Technical Session 1 Companies Act 2013

(i) Inter-corporate Loan, Loan to Directors, Acceptance of Deposits (Chapter V &
Sec. 185 to 187), (ii) One Person Company, (iii) Auditors Responsibilities in Case
of fraud by Corporate
02.00 pm to 03.00 pm
Special Session
03.00 pm to 05.00 pm
Technical Session 2 Service Tax

(i) Reverse Charge & Partial Reverse Charge, (ii) Negative List under Service Tax,
(iii) Construction Industry including Works Contract
DAY-2
09.30 am to 11.30 am
Technical Session 3 Information Technology

(i) Excelling in Excel- Financial Analysis, (ii) Social Networking Websites- New
Avenue to Expand the Business?, (iii) Cloud Computing- Opportunities and
Challenges
11.30 am to 01.00 pm
Spiritual/Motivational Session
02.00 pm to 04.00 pm
Technical Session 4 Direct Tax

(i) Scrutiny Assessment, (ii) Valuation Under Wealth Tax, (iii) Domestic Transfer
Pricing
The Inaugural Session will be on Day-1 and the Valedictory Session on Day-2
Students are requested to register for the Conference at the earliest as per the following details:Registration fees
` 400/- per student
Accommodation @ `1000/- per student for 2 Days.
Payment Mode
Cash/DD/Cheque to be drawn in favour of Jalgaon Branch of WIRC of ICAI payable at

Jalgaon.
For registration queries contact:-
Jalgaon Branch of WIRC of ICAI, ICAI Bhawan, Plot no.10, Gajanan Colony, Ring Road, Jalgaon
Phone: 0257-2224305,2232213 & Email - jalgaon@icai.org & Website- www.jalgaon-icai.org
Students are invited to contribute papers for presentation (1500 to 2000 words) for topics in Technical Sessions
and submit for approval a soft copy of the Paper at jalgaon@icai.org by 31st October 2014 and a hard copy of
the same along with Students Photograph (with his/her name on the back of the photograph), Registration
Number, Course pursuing, complete postal address, Mobile, Landline numbers and e-mail ID be also sent to
the Branch. Paper Presenters selected for presentation of paper at the Conference are exempted from payment
of registration fees. All selected outstation Paper Presenters will be reimbursed to and fro AC 3 tier railway
fare by the shortest route on production of necessary proofs (both ways ticket). To & fro arrangements will be
made by Jalgaon branch for the students staying in Jalgaon. Interested students may register for cultural
programme before 15th November 2014 at the Branch.
CA. M. Devaraja Reddy CA. Prafulla Premsukh Chhajed
Conclave Chairman &
Conclave Co-Chairman &
Chairman
Vice-Chairman
Board of Studies, ICAI
Board of Studies, ICAI
CA. Jayesh R Lalwani

Chairman
Jalgaon Branch of WIRC
CA. Kaushal K. Mundada

Vice Chairman
Jalgaon Branch of WIRC &
Chairman, Jalgaon Branch of
WICASA, 09823116005
33
CROSSWORD
1
10
12
19
14
15
20
16
6
11
13
17
21
22
24
25
26
28
29
31
34
37
35
ACROSS
1. As per Schedule III to the Companies Act, 2013, a
reserve specifically represented by earmarked
investments.
5. A recently constituted committee by ICAI council
to look into the CA course curriculum.
9. The foremost investigating police agency in India
under the jurisdiction of the Government of India.
10. An entry in account.
11. As per the Companies Act, 2013 _____ company
is exempt from inclusion of cash flow statement
as a part of its financial statements?
12. To __________ ones wagon means treat someone
vengefully.
13. A formal expression of opinion or choice, either
positive or negative, made by an individual or
body of individuals.
14. _______ Fridays is an American restaurant chain
focusing on casual dining.
17. A formal organization composed of parents,
teachers and staff that is intended to facilitate
parental participation in a school.
18. A telecommunication medium that is used for
transmitting and receiving moving images and
sound.
20. Exemption under section 54 and 54F is available
for investment in ___________ residential house
situated in India.
21. ____- vera : A widely used plant in the cosmetics
being marketed as variously having rejuvenating,
healing, or soothing properties.
23. Pledging assets against a loan.
25. A point of intersection.
26. An operating system used in computers in 80s and
90s: MS- ____.
27. A student of Chartered Accountancy as to do 100
hours of ______ training before starting articled
training.
28. Twisted or crooked.
30. Start
31. COBIT 5 framework describes ________ categories
of enablers.
34. Lead - ___ factors are important in market research.
36. An intergovernmental military alliance based on
the North Atlantic Treaty which was signed in 1949.
37. ________ can be appointed as an auditor.
38. Plural of I.
34
18
23
27
30
32
33
36
38
DOWN
1. Method of inventory valuation.
2. Now known as Axis bank.
3. Subsequent
4. The computational process of discovering patterns
in large data sets.
6. A French phrase requesting for a response from
the invited people.
7. Text-based graphical substitutes for body language
over the Internet are known as _______.
8. Informal Bye.
9. 150 in roman numerals.
15. The part of value of a business that is based on
good customer relations, high employee morale
and other factors.
16. Statutory auditor appointed shall not render the
services of _______ audit.
19. Which types of errors are detected by assemblers?
21. _______________ is used to indicate a location or
place.
22. 51 in roman numerals.
24. A political and economic organization of ten
countries located in Southeast Asia.
29. Informal term for wager.
32. A multi-point destination based system of
taxation, with tax being levied on value addition
at each stage of transaction in the production/
distribution chain.
33. Consolidation of Financial Statement is _______
mandatory as per Section 129 of the Companies
Act, 2013 for the companies having one or more
subsidiaries.
GLIMPSES
ICAI President CA. K. Raghu hands over certificate to a newly

qualified member at the Convocation ceremony at
Ahmedabad while ICAI Vice-President, CA. Manoj Fadnis,
Chairman, Board of Studies, CA. M. Devaraja Reddy, Vice
Chairman, Board of Studies, CA. Prafulla Chhajed along with
Central Council members CA.Dhinal Shah, CA. Tarun
Jamnadas Ghia and CA. Jay Chhaira share the dais.
ICAI President CA. K. Raghu, Vice-President, CA. Manoj

Fadnis, and Central Council members CA.Sanjay Agarwal,
CA. Sanjiv Chaudhary and CA. Vijay Gupta along with
newly-qualified members at the Convocation ceremony at
Chandigarh.
ICAI President CA. K. Raghu hands over certificate to a newlyqualified member at the Convocation ceremony at Delhi
while ICAI Vice-President, CA. Manoj Fadnis, along with
Central Council CA.Sanjay Agarwal, CA. Sanjiv Chaudhary,
CA. Charanjot Singh Nanda and CA. Vijay Gupta share the
dais.
ICAI President CA. K. Raghu hands over certificate to a newly

qualified member at the Convocation ceremony at Mumbai
while ICAI Vice-President, CA. Manoj Fadnis, Vice Chairman,
Board of Studies, CA. Prafulla Chhajed along with Central
Council members CA. Tarun Jamnadas Ghia, CA. Jay
Chhaira and CA. Nilesh Vikamsey share the dais.
ICAI Vice-President, CA. Manoj Fadnis and Chief of Staff

(Southern Army Command)Lt.Gen. K. Surendranath jointly
hands over certificate to a newly qualified member at the
Convocation ceremony at Pune while Chairman, Board of
Studies, , CA. M. Devaraja Reddy, Vice Chairman, Board of
Studies, CA. Prafulla Chhajed along with Central Council
members CA. Tarun Jamnadas Ghia, CA. Jay Chhaira and
CA. S. Zaware share the dais.
ICAI President CA. K. Raghu inaugurates the Information

Technology Lab at Sirsa Branch in the presence of VicePresident, CA. Manoj Fadnis, Chairman, Board of Studies,
CA. M.Devaraja Reddy and Central Council member CA.
Sanjiv Chaudhary.
35
REGISTERED: DL- (C)-01/1280/2012-2014

LICENSED TO POST WITHOUT PREPAYMENT U(C)-208/2012-2014
POSTED AT LODHI ROAD HO ON 26th to 30th September 2014
Date of Publication: 26.09.2014
ICAI President CA. K. Raghu inaugurates the National Convention for CA Students at
Guntur by lighting the auspicious lamp in the presence of Vice-President, CA. Manoj
Fadnis, Chairman, Board of Studies, CA. M. Devaraja Reddy and other dignitaries.
ICAI President CA. K. Raghu addressing the National Convention for CA Students at
Guwahati while Vice-President, CA. Manoj Fadnis, Chairman, Board of Studies, CA.
M.Devaraja Reddy, Central Council Member, CA. Sumantra Guha and EIRC
Chairman, CA. Subhash Chandra Saraf and other dignitaries share the dais.
ICAI President CA. K. Raghu inaugurates the Reading Room at Aurangabad in the
presence of Vice Chairman, Board of Studies, CA. Prafulla Chhajed and Central
Council Member CA.Dhinal Shah and other dignitaries.
ICAI President CA. K. Raghu inaugurates the ITT Lab at Aurangabad in the presence
of Vice Chairman, Board of Studies, CA. Prafulla Chhajed and other dignitaries.

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October 2014 Vol SJ5 Issue 10

ICAI Devising New Course Curriculum : Matching Stakeholders' Expectations

Message - Vice President

Message - Chairman, Board of

Charting New Frontiers: The

President and Editor-in-Chief

Editor: CA. M. Devaraja Reddy

October 2014 I The Chartered Accountant Student

The Examiners Comments on the May/June 2014 is also

At the outset, I would like

It has also been noticed that some of the students

CA. Manoj Fadnis

Everything can be stable for

Supplementary Study Papers pertaining to the

CA. M. Devaraja Reddy

Charting New Frontiers: The Emerging Role of

that they are socially responsible entities and that they

October 2014 I The Chartered Accountant Student

Enhanced Risk Management Capabilities: In view

Evolving Role of Chartered Accountant

ICAI is well aware of the emerging needs and

expected competency, duration of training, time of

Postponement of Date of Applicability of

Name of the Programme

Ahmedabad National Convention

Phone: (79) 3989 3989, 2768 0946, Email: ahmedabad@icai.in

Phone: (124) 4268 867, Email: gurgaon@icai.org

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17th & 18th Dec, 14

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19th & 20th Dec, 14

Phone: (240) 2342 157, Email: aurangabad@icai.org

20th & 21st Dec, 14

Phone: (22) 3367 1400, Email: wro@icai.in

International Conference 27th & 28th Dec,14

5th & 6th Jan, 15

Phone: (80) 3056 3500, Email: bangalore@icai.org

he tax regulators need specific information to make assessment of whether the

October 2014 I The Chartered Accountant Student

Name of the signatory .............

Full address ...........

October 2014 I The Chartered Accountant Student

(a) *I / we report the following observations / comments / discrepancies / inconsistencies; if any:

Name of the signatory .............

Full address ...........

Examiners Comments on the Performance of the

required in respect of adjustments given in the

(b) This question involved evaluation of alternatives

confused Traditional Approach with MM

(a) In this theoretical question, overall performance

(b) Majority of Candidates gave correct conclusion

October 2014 I The Chartered Accountant Student

(b) Most of the candidates concluded correctly but

(a) Performance of the students was average. Most