e-NewsLetter e-NewsLetter - Baroda Branch of WIRC of ICAI

The Institute of Chartered Accountants of India
(Setup by an Act of Parliament)
BARODA BRANCH OF
WESTERN INDIA CHARTERED ACCOUNTANTS
STUDENTS ASSOCIATION (WICASA) OF
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
Organized by :
Board of Studies - The Institute of
Chartered Accountants of India
Hosted by :
Baroda Branch of WIRC of ICAI
&
Baroda Branch of WICASA
ll Tamso ma
Jyotir Gamaya ll
Lead me from Darkness to Light
25 All India CA Students' Conference
th
Friday & Saturday, July 6 & 7, 2012
at Sir Sayajirao Nagar Gruh, Akota, Baroda, Gujarat
The
Insight
VOL. VI l JULY 2012
e-NewsLetter
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”

Managing Committee Members
Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
CA. Ashish Parikh Chairman 9825231545
Mr. Sharukh Pathan Vice Chairman 8905094384
Ms. Hiral Jethva Secretary 9714778552
Mr. Mehul Thakkar Treasurer 8905564940
CA. Nayan Kothari Ex-officio 9824433445
Mr. Kanji Hadiya Member 9687969764
Mr. Mohd.Atiq Qureshi Member 9998570095
Mr. Dipesh Thakkar
Editorial Board
Member 9898940652
CA. Ashish Parikh Editor
Mr. Mohd.Atiq Qureshi Joint Editor
Ms. Hiral Jethva Member
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
ICAI Bhawan, Post Box No. 7100, Indraprastha Marg,
New Delhi - 110002. Tel. : +91 (11) 39893989
E-mail : president@icai.org � Website : www.icai.org
WESTERN INDIA CHARTERED ACCOUNTANTS STUDENTS
ASSOCIATION
ICAI Bhawan, 27, Cuffe Parade, Post Box No. 6081, Colaba,
Mumbai - 400 005. Tel. : +91 (22) 39893989
Email : wirc@icai.in � Website : www.wirc-icai.org
BARODA BRANCH OF WICASA
“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012.
Telefax : +91 (265) 2681115, 2680593
E-mail: wicasa.baroda@gmail.com � Web : www.baroda-icai.org
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transparencies are sent at the owner's risk and the publisher accepts no liability for loss or
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the consent of ICAI.
Students are requested to kindly send article / paper of interest to wicasa.baroda@gmail.com.
The same may be published in the newsletter subject to availability of space & editing.
WICASA COMMUNITY :
Be a part of the “WICASA Baroda” now also on FACEBOOK Community. Exchange views and
news. Be updated about forthcoming events of WICASA.
STUDENTS’ STUDY CIRCLE :
Join now .... where in students can exchange knowledge with the help of group discussion.
Contact Mr.Kanji Hadiya-9687969764
BRAIN TRUST SESSION :
Join now… where a group of students can discuss on predetermine questions and moderator
(from CA fraternity) will elaborate the discussion and conclude. Contact Ms. Hiral Jethva-
9714778552
SPORTS ACTIVITIES:
Join now…where in students can participate in Indoor-Outdoor games for overall development.
Contact Mr. Dipesh Thakkar-9898940652
WICASA HELPLINE :
Students are invited to send their feedback suggestions or grievances to
wicasa.baroda@gmail.com or contact Mr. Sharukh Pathan-8905094384, Mr. Mehul Thakkar-
8905564940
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
Dear Students,
It gives me great pleasure to note the commemoration of
our “25th All India CA Students’ Conference” being
organized by the Board of studies, ICAI and hosted by
Baroda Branch of WICASA of the WIRC of ICAI on 6th & 7th
July 2012 at Baroda.
The theme of the conference is “Tamso Ma Jyotirgamaya –
Lead me from Darkness to Light” The two-day Conference
aims at putting light on a variety of subjects in way provide
an aid to whole of CA Students fraternity in gaining
expertise on diverse subjects that a Chartered Accountant
undertakes in his day to day practice.
This conference is being organized in which students from
different parts of the nation have registered & will give
them a common platform to explore their aptitude and to
exchange views.
I am very glad to announce that we got 1200+ participants
for the conference & we have to stop registration before 10
days of the commencement of the Conference. All the
Students are working day & night sincerely from last 2
months for the success of Conference. I am thankful to all
of them.
I wish “All the Best” to all the participants for the grand
success of this mega event.
Eager to see you on the days of Conference.
Regards,
CA. Ashish Parikh
VOL. VI l JULY 2012 2
“Nothing ventured, nothing gained.”
Chairman’s
Communication

Forthcoming Forthcoming Events Events
Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
TH
25 ALL INDIA CA STUDENTS' CONFERENCE
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
VOL. VI l JULY 2012 3 “Whatever happens, take responsibility”
Program Details
* Confirmation Awaited
For Registration & further details Contact contact : : BARODA BRANCH OF WIRC OF ICAI, ICAI Bhawan, Kalali- Tandalja Road, Tandalja, Baroda - 390 012 Gujarat, India.
Ph. 0265- 2681115, 2680593 E-mail : wicasa.baroda@gmail.com Web : www.baroda-icai.org
Past Events : May
DATE TYPE OF EVENT
NAME OF EVENT ATTEN.
05/06/2012 ITT Batch Commencement of "98th ITT Batch" for PCC/IPCE Students 38
08/06/2012 Interaction with President Meeting with President CA. Jaydeep Shah & WICASA Chairperson Shruti Shah 250+
08/06/2012 Meeting WICASA Committee Meeting with President CA. Jaydeep Shah &
WICASA Chairperson
Shruti Shah 7
11/06/2012 Oreintation Batch Commencement of "34th Orientation Batch" 51
16/06/2012 Meeting All Committee Meeting for "25th All India CA Students Conference" 75+
17/06/2012 Meeting Meeting with Ahmedabad branch of WIRC of ICAI 3
18/06/2012 G.M.C.S Commencement of "34th G.M.C.S. Batch" 51
23/06/2012 Banking A/c scheme for NRI Study Circle Meeting by Udit Patadiya 7
30/06/2012 Meeting WICASA Committee Meeting with CA. Ajay Wadhwa 13
30/06/2012 Meeting WICASA Committee Meeting with CA. Madhukar Hireganga -
BOS Vice- Chairman 13

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
General Tips To Overcome An Interview
Contributed by : Vishal Mochi, CA Final Student
TYPICAL QUESTIONS THAT AN INTERVIEWER WOULD ASK
1. Tell me about you
The most often asked question in interviews. You need to
have a short statement prepared in your mind. Be careful
that it does not sound rehearsed. Limit it to work/Studyrelated
items unless instructed otherwise. Talk about
things you have done well at your college and how you
wanted to perform in the first job.
2. Why Should We Employ You?
For this question, your answer should list out strengths
that you feel are relevant to the job. Given below are
some answers which could help you with your answers.
However, structure them to suit your requirements.
� I have good co-ordination skills.
� Good analytical skills.
� I can persuade people to see my point of view, and get the
work done.
� My greatest asset is my ability to motivate people.
� Even during emergencies, I do not loose my cool.
� I have good entrepreneurial skills.
� I have consistently met my deadlines and targets.
� Can say “no” to people when required to do so!
� I am very co-operative with my sub-ordinates, and would
like to see them grow.
� I am a good team player.
� I am very flexible, and have the ability to work hard under
difficult work conditions.
� I have the experience and knowledge relevant to this job.
(Here, give appropriate details and examples)
3. Do You Have Offers From Other Companies?
This is of course a difficult question to answer. Obviously,
you must have applied to other companies if you are
looking for a job or would have some offers from other
companies already. Therefore, do not lie that you have
not. However, you are on thin ice here! The interviewer
could be checking your honesty. On the other hand,
he/she may also be trying to find out how focused you
are - are you applying randomly, or is there a wellplanned
strategy?
Whatever your answer, it should match your career goals.
4. What Salary Are You Expecting?
Try not to get into salary details early in the interview. If
pressed, you could say that it all depends on the job, and
would like to talk about it after a job offer. Say this in a
convincing tone. In case you are asked this question in
your latter interviews, give a direct answer. Do not sound
apologetic while quoting the figure you have in mind.
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
SALARY EXPECTATIONS:
1. How much do you expect?
VOL. VI l JULY 2012 4 “Creativity Is Like Electricity.”
If you have done your homework, you would know how
much other people in similar jobs are paid. Quote the
range upfront.
2. How much do you think you are worth?
Work out how much you should be paid, given the market
value of the job and your skills. If you can bring some
extra skills to the table, do not hesitate to ask for more
than the market value.
3. What kind of a culture are you comfortable with?
It is better to be frank about your preferences. Your
interviewer will get a clear idea about your expectations.
4. Which is more important to you-salary, perks or growth
opportunities?
This one will reveal the real you. So be sure what you are
going to say. Above all, be true to yourself. If you think this
is a negotiation move, then say clearly that you will never
sell yourself short.
5. What do you know about our company?
Do not give your opinions about the company. Stick to
reported facts that you have gathered from newspapers
and so on. Talk about the product portfolio, size, income,
and market perceptions of the company. Also it is better
to refer details about each company before going for the
interview from Freshersworld.com or
PlacementWeek.com
6. Why should we choose you over someone else?
Talk clearly about problems that you have solved in your
College/Project Team and highlight the quality required.
7. Your qualifications are excellent, but you may be
overqualified for the position we have to offer?
Point out that more experience can never be a drawback.
If you are multi-skilled, then highlight the fact that a
company on the fast-track needs multi-skilled people. It
needs people within different departments to work
together. Also emphasize that the company's future
growth will be an exponential function of your
experience.
QUESTIONS YOU SHOULD ASK:
Interviewers usually round off by giving you an opportunity to
ask questions. Treat it like a welcome opportunity.
You could ask questions like.
� Tell me about your company.
� Now that I have outlined my career goals, do you think
you can offer me the opportunities I need?
� What kind of training and learning can I expect in your
company?
�
Describe the work culture and the management style of

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
�
your company?
What is the long-term vision of your company?
� As a fresher, current position and status can impact the
way you are interviewed. Fresh Out of College
� The basis on which you will be judged is your academic
background, family background, and interests.
� If looking for your first job, ensure that your previous
experience, even if it is part-time, is noticed.
� Mention projects or responsibilities you may have
undertaken. This will indicate your area of aptitude.
� You should be willing to put in regular hours, in line with
the company's policies. The interviewer needs to know
whether you can be punctual and put in full-time work.
� In case you have applied for the post of management
trainee, you should display an ability to adapt, and
indicate all-round interests. Moreover, you should have
good interpersonal skills.
� You should be enthusiastic to learn, and show
commitment towards the organization, as the company
will be spending a lot on your training.
Bring with you :
a) Copies of your resumes.
b) References and letters of recommendations.
First Impressions :
There is a common saying that minds are made up within
the first 5 minutes of an interview. So keep in mind these
important first impression indicators. Walk in the door as
if you already work there carry yourself as though you
feel perfectly comfortable with the situation. Arrive on
time or a little early. In the waiting area, politely tell the
receptionist who you are meeting and in a friendly way,
ask where you should sit. Take slow, deep breaths to help
you remain calm and focused. When introduced to the
interviewer, have a firm, but not painful, handshake.
Smile. Have good posture when sitting or standing.
Introduce yourself in a relaxed, confident manner. Have a
well-groomed, professional appearance. Project a
feeling of confidence. Bring extra copies of your resume,
some thing to write on and something to write with.
VENTURE CAPITAL-THE CONCEPT
Contributed by : Abhishek Shah, CA Final Student
Mr. A, is having a new idea of irrigation system but no one is
ready to finance his project. The reason behind that is:
The System is very new and it is having a dark picture that
whether traditional farmers will accept the system or
not?
Uncertainty about revenue generation.
Financing the project means in this case financing the
research for new system development?
Traditional financiers are not ready to finance him due to the
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
above mentioned reasons. Now what should Mr. A do?
Should he quit his new idea? No, here the concept of
venture capital comes in the picture.
Meaning:
Dictionary meaning of venture is risky undertaking. Venture
capital is a risky capital and having great amount of
uncertainty regarding recovery of principle. The capital is
invested in equity or debt securities of young companies
promoted by technocrats and entrepreneur who attempt to
break new path. It is a financial source for new, high risk, high
profit potential products as the projects belong to unknown
and new segments or technologies.
The venture capital industry understood globally as
“independently managed, dedicated pools of capital that
focus on equity or equity-linked investments in privately held,
high-growth companies” (“The Venture Capital Cycle”,
Gompers and Lerner, 1999).
With capital financing, the venture capitalist acquires an
agreed proportion of the equity of the company in return for
the funding. Equity finance offers the significant advantage of
having no interest charges. As it is owner’s capital financing
that seeks a return through long-term capital investment
rather regular interest payments.
Venture capitalist invests in owner’s capital, and that capital is
highly risky. Venture capitalist assumes higher risk by
financing equity capital. That is why venture capitalists must
have analytical and selection of that projects which truly
compensate the exposed risk taken by them. Therefore, by
investing in a business they typically require a seat on the
company's board of directors, and usually do not take day-today
control. Rather, the professional venture capitalists act as
mentors.
Venture Capital Concept in India
India is the developing country having yearly growth rate
approx. at the rate of 8.5% to 9%.Every emerging country
need technological development to expand its growth rate
and having independency in technology. Such country also
needs entrepreneur to create new market, to have modern
technocrat ancillary industry, and have successful
industrialist.
In light of this to promote innovation, enterprise and
conversion of scientific technology and knowledge based
ideas into commercial production, it is very important to
promote venture capital activity in India. Our country has
tremendous potential for growth of knowledge-based
industries. Entrepreneur with innovative ideas is also needed
for sustainable growth of India.
Such Entrepreneurs have to face hardship for getting finance
from traditional sources. Venture Capitalist is the persons
who fill gape by financing such projects.
VOL. VI l JULY 2012 5 “Happiness depends upon ourselves”

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
In 1973, a committee on Development of Small and Medium Enterprises highlighted the need to foster venture capital as a
source of funding new entrepreneurs and technology. Thereafter some public sector funds were set-up but the activity of
venture capital did not gather momentum as the thrust was on high-technology projects funded on a purely financial rather
than a holistic basis.
Later, a study was undertaken by the World Bank to examine the possibility of developing venture capital in the private sector,
based on which the Government of India took a policy initiative and announced guidelines for venture capital funds (VCFs) in
India in 1988. However, these guidelines restricted setting up of VCFs by the banks or the financial institutions only.
Internationally, the trend favored venture capital being supplied by smaller-scale, entrepreneurial venture financiers willing to
take high risk in the expectation of high returns, a trend that has continued in this decade. The Government of India issued
guidelines in September 1995 for overseas venture capital investment in India and as a part of its mandate to regulate and to
develop the Indian capital markets, Securities and Exchange Board of India (SEBI) framed SEBI (Venture Capital Funds)
Regulations, 1996.
SEBI (Venture Capital Funds) Regulation, 1996
MEANING
Any company or trust or a body corporate proposing to carry on any activity as a venture capital fund shall make an application
to the Board for grant of a certificate.
REGISTRATION
An application for grant of certificate shall be made to the Board in Form A.
Application fess is of Rs. 1,00,000 and non-refundable fees is of Rs.10,00,000
The fees specified above shall be payable by bank draft in favors of “The Securities and Exchange Board of India” at
Mumbai.
ELIGIBILITY CRITERIA
Criteria A company A Trust
Its main objective, the carrying on of the activity of a venture capital fund Memorandum of Trust Deed
in
It is prohibited by its memorandum and articles of association from
Association
making an invitation to the public to subscribe to its securities
�
Its director or principal officer or employee is not involved in any litigation
connected with the securities market which may have an adverse bearing
on the business of the applicant
� �
Its director, principal officer or employee or trustee in case of trust has
not at any time been convicted of any offence involving moral turpitude or
any economic offence
� �
And is a fit and proper person
� �
The Board may require the applicant to furnish such further information as it may consider necessary
CONDITION OF CERTIFICATE
The certificate granted under regulation subject to the following conditions, namely:--
The venture capital fund shall abide by the provisions of the Act and these regulations;
The venture capital fund shall carry on only the activity of venture capital fund;
The venture capital fund shall forthwith inform the Board in writing if any information or particulars previously submitted
to the Board are found to be false or misleading in any material particular or if there is any change in the information
already submitted.
INVESTMENT CONDITIONS AND RESTRICTION
A venture capital fund may raise monies from any investor whether
Indian,
Foreign or
non-resident Indian and
VOL. VI l JULY 2012 6 “Nothing recedes like success.”

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
by way of issue of units
No venture capital fund shall accept any investment from
any investor, which is less than Rs. 5, 00,000.
The above minimum investment amount condition shall
not apply to investors who are
Employees or the principal officer or directors of the
venture capital fund, or directors of the trustee company
or trustees where the venture capital fund has been
established as a trust;
The employees of the fund manager or asset
Management Company.
Way to understand Accounting in Practice
Contributed by : Jatin Pal, CA Final Student, Ludhiana
At one end introduction of Corporate Governance,
mandatory application of well-conceived and stringent
Accounting Standards one after another and growing
regulatory role of SEBI in India and at the other end the
colossal accounting fraud, auditor-auditee collusion and
window dressing of accounts under camouflaged wording of
audit report have put the accounting profession on the cross
road of creative accounting.
Each scheme launched or fund set up by a venture capital
fund shall have firm commitment from the investors for
contribution of an amount of at least Rs. 5 crores before
the start of operations by the venture capital fund.
Venture Capital fund may invest in Securities of foreign
companies subject to guidelines given by RBI and SEBI.
Venture capital fund should not invest in the equity
shares of any company or institution providing financial
services
What is creative accounting? It is a novel nomenclature used
for the concept of maintaining accounts to give all possible
illegal and dubious benefits to the entirety.
This sort of accounting is the need of corporate. Company
management may adopt various methods to dress up
financial statements to show improved performance. In
respect of profit & loss account, the accounting risk is
usually the overstatement of income or understatement
of expenses. For the balance sheet, it may exist in three
Restrictions on investment in other venture capital fund: areas, the correct valuation of company’s assets, accounting
Investment restriction made in other venture capital for all liabilities and over of understatement for net worth.
fund :
The effect of creative accounting may defeat the purpose
Venture
Proposed(to)/ Unlisted
of presentation of “true and Fair” financial statements.
Capital Fund Listed
Do you want to accept creative accounting? You may at best
Minimum Not Specifically 66.67%
investment given
Maximum 33.33% Not Specifically
investment given
Not more than 25% should invest in one Venture Capital Fund
Investment in proposed security can be made by way of
subscribing
get a quicker promotion in your job or a couple of millions
increase in the fees as an auditor! Not at all …..Never. Above
all reality can be deferred, but it can never be denied. If we
introspect minutely, we would agree and appreciate that the
accounting profession is growing and glorifying in passage of
time by perceptible improvement of accounting standards
and related regulations, consciousness and alertness among
the intellectuals and investors fraternity. And this is the
Shares
reason why the recent scams have come to lime light so soon,
Debt or debt instrument of such fund in which fund has even if, maneuvered so shrewdly by so called top notch world
already made investment by way of equity, preferential class companies and audit firms.
allotment, subject to lock-in period of 1 Year.
No theory of accounting standards or related regulatory
Prohibition on Listing
mechanism can ensure true and fair accounts unless the
Venture Capital Fund shall be entitled to get its units listed on
any recognized stock exchange only after the expiry of three
years from the date of the issuance of units by the venture
capital fund.
GENERAL OBLIGATION AND RESPONSIBILITY
A venture capital fund can receive money for investment in
the venture capital fund only through private placement of its
units. Venture capital fund cannot issue any advertisement or
offer document to public for inviting money.
MAINTENANCE OF BOOKS AND RECORDS
Every venture capital fund is required to maintain records
for a period of 8 years.
accountants and the management at the helm of affairs of the
company are committed and sincere on the issue. Further, the
management of the company of which accounts are true, fair
and transparent is in a better position to take suitable
managerial decision for remedy of past errors as well as
future growth.
Few areas of accounts - which all associated with accounts of
a company either directly or indirectly - accountants,
management, investors, banks, financial institutions, stock
exchanges, SEBI etc. should closely monitor. These are very
simple to understand but can offer a reasonable level of
confidence about the fidelity and fairness of accounts and
efficiency of operation. By this you can satisfy the wants to
society.
VOL. VI l JULY 2012 7 “Be Curious, not judge mental.”

GROWTH OF SALES VS. EARNINGS:
Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
There should be some parity in growth rate between sales
and earnings otherwise it should be thoroughly analyzed. It
is prudent to compare the topline growth of an enterprise
with that of the industry in which the enterprise operates.
This would indicate whether the enterprise is
outperforming its competitors or lagging behind. All interdivisional
sales including sales to associate, parent or
subsidiary companies should be excluded while evaluating
the performance.
SALES VS. DEBTORS: A perpetual monitoring is necessary
between sales and debtors to find out whether there is any
efforts to push the sales while remaining slack on collection
or allowing more liberal credit terms than warranted. One
should find out the 'Debtors Days' or 'Collection Period'
which represents the average number of days’ credit
customers takes before paying off their accounts. The
formula for calculation is : Debtors / Sales *365 .
CAPITALIZATION OF EXPENSES:
All major capital expenditures need to be analyzed to find
out whether they really refer to acquisition of assets having
utility over a period of time or just an effort to capitalize
revenue expenditure.
MATCHING CONCEPT :
Both revenue and related expenditure should be booked in
the same period. For example, income from annual
maintenance contract and expenses for maintaining such
service should relate to same period.
DEBTORS AND INVENTORY:
These two items should always be analyzed with age-wise
break-up to indicate their realizable value. Debtors
outstanding for more than 6 months needs microscopic
view since generally speaking the longest credit period
allowed in industry is 6 months. Inventory level should be
reviewed with respect to lead time for procurement and
manufacturing cycle. In case of industry like electronics ,
telecom etc. where the rate of obsolescence is very high due
to rapid technical change, value of inventory should be
closely evaluated.
RETURN ON CAPITAL EMPLOYED:
ROCE is expressed as the profit before interest and tax
(PBIT) as percentage of total capital Employed (CE) which
includes all long term funds i.e. shareholders' funds plus
long term borrowings. This ratio offers a first hand clue
whether the company is able to generate adequate return
to service its debts and offer suitable return to its
shareholders. To have better understanding, ROCE for last
few years of the company as well as that of other companies
in the same industry should be analyzed.
CASH FLOW STATEMENT
“Cash is King" - is the cliché in the modern finance world.
VOL. VI l JULY 2012 8 “Aim for the highest.”
e-NewsLetter
“Leveraging Strength, Catalyzing Tomorrow”
The interesting fact is that how much manipulation or
fabrication one may do in accounts, he cannot hide position
of cash - which is the ultimate source of survival and
growth of any organization. Cash Flow Statement is now a
mandatory statement in all Annual Reports. Of this report,
the segment called cash flow from operating activity is the
most important one. Cash flow is calculated by adding back
net profits of the company non-cash expenditure like
depreciation and amortization of intangible and deferred
revenue expenditure and followed by adjustment for
movement of working capital i.e. increase or decrease in
debtors, inventory and debtors. Any mismatch in cash
generation vis-à-vis sales increase or negative cash
generation should be the first and foremost area to be
scrutinized to see whether the business is on the right track. It
is the cash management which can make a company survive
or bankrupt.
IMPACT OF CONTINGENT LIABILITY:
Contingent liabilities which do not figure in the Balance Sheet
are expressed in form of a note to the accounts. These are
based more on perception of the management. Auditors
should thoroughly analyze these cases and express their frank
and candid opinions as far as possible. Similarly, investors and
other external agencies should go through the same to have a
feeling of extreme scenario in case of worst eventualities.
Lastly, where as an accountant should pledge to per-form
without fear and favor, the corporate management should
ensure sound and impartial internal control system, periodic
affirmation of corporate code of con-duct and increased
vigilance by audit committee. Last but not least, an auditor
should not hesitate to qualify the accounts, if the company is
unable or unwilling to prepare financial statements, which
give a true and fair view.
What do the numbers on the bottom of the
Cheque represent?
Contributed by: Vaibhav Thakkar (CA. Final Student)
I. Cheque Number:
The first set of numbers represents the Cheque number. It
is a six digit number.
ii. MICR Code:
It stands for Magnetic Ink Character Recognition.
This number helps a bank to recognize the bank and
branch that issued the Cheque.
The Cheque are sorted through a Cheque reading machine
which uses this number to identify the bank and branch a
Cheque belongs to. This makes the process faster.
The MICR number is a nine digit number, which consists of
three parts-

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
a) City Code: The first three digits represent the city code and
are same as the first three digit of the PIN code of that city.
e.g., a bank in Vadodara will have first three digits of MICR
code as 390 (since PIN code for Vadodara starts with 390)
b) Bank Code: The next three digits represent the bank code.
Every bank has a unique code assigned to it. For e.g., ICICI
bank’s code is 229, for HDFC it is 240 and so on.
c) Branch Code: The last three digits represent the branch
code.
iii. Bank account Number:
The third set of six digit numbers represents your account
number maintained by the Reserve Bank of India (RBI).
The number helps in Cheque processing when it goes to
RBI for clearance.
iv. Transaction ID:
The last two digits tell whether a Cheque is a local Cheque
our payable at par Cheque.
29, 30 31 represents payable at par Cheque, while 09, 10
and 11 represents local Cheque.
One More Interesting Thing…
These numbers are written in a different font style with a
special ink usually iron oxide that contains magnetic material
so that it can be recognized by Magnetic Character Ink Reader
and also if it is stamped.
Currency Carrying limits in FEMA
Contributed by: Jatin Pal (CA. Final Student)
PRELUDE -The draconian law enshrined in Foreign Exchange
Regulation Act, 1973 comes to an end through Foreign Exchange
Management Act, 1999 (Commonly Known as FEMA) which was
made effective from 1st June , 2000. It’s the Central Government
who made rules and regulations to make FEMA operationalized,
Notifications, Directions, Circulars etc. issued by Reserve Bank of
India. FEMA Act extends to the whole of India and apply to all
branches, offices and agencies outside India owned or controlled
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“Leveraging Strength, Catalyzing Tomorrow”
VOL. VI l JULY 2012 9 “Talent works, genius creates.”
by a person resident in India. It is also applicable to any
contravention committed outside India by any person to whom
this act is applicable. Offices of FEMA
Which means Delhi have 7 Sub- Zonal Offices and 5 Fields
Units, Similarly Bombay have their own 7 Sub- Zonal Offices
and 5 Fields Units.
In every country 2 types of foreign exchange transactions are
there
� One is Trade &
� Second is Non-trade, the thrust of FEMA is more on arranging
and managing these transactions rather than imposing
restrictions and regulating them the way a watchdog does. In
the era of liberalization as we are on the global platform,
Rules and Regulations framed under FEMA are being relaxed
from time to time to incorporate greater freedom so far as
the conduct of foreign exchange transactions both by
residents and non- residents is concerned. Authorised
Dealers, the conduit between the Reserve bank and the
public in general, are vested with increased delegatory
powers so that cross-border trade, investments, remittances
etc. are conducted more cordially and smoothly.
Transactions involving foreign exchange have been–
Classified either as capital or current account transactions.
When you enter in to a foreign transaction and your
Assets/Liabilities including contingent liabilities, does not alter,
then it is a current account transaction. Section 5 of FEMA allows
a person resident in India to buy or sell foreign exchange for any
current account transaction except for those transactions for
which withdrawal of foreign exchange has been prohibited by
Central Government.
Reserve Bank authorized dealers under Section 10(1) of FEMA,
1999, to do transactions. They are –
-Authorised Dealer (AD) Category-I bank
-AD Category-II. Full-Fledged Money Changers (FFMCs) are also
permitted to release exchange for business and private visits.
(For list of Ads is available on www.rbi.org.in).
FEMA Head-office in New Delhi (Headed By a Director)
5 Zonal Offices (Headed By Deputy Directors)
Delhi Bombay Calcutta Madras Jalandhar
Each Zone further divided in to 7 Sub-Zonal Offices
( Headed by the Assistant Directors)
&
5 Fields units (Headed by the Chief Enforcement Officers)

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
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Reason for going Abroad- Maximum Amount Allowed
1. For tourism (Other Than Nepal and/or Bhutan) - Aggregrate amount of USD 10,000 for any one financial
year, on self-declaration basis, irrespective of the
number of visits undertaken during the year.*
*You can avail this facility, even you are availing facility while visiting foreign for employment or immigration or studies.
2. For Tourism to Nepal and/or Bhutan A resident Indian is allowed to take INR of denomination
of Rs.100 or lesser denomination to Nepal and Bhutan
without limit.
3. For Business Trip (other than to Nepal and/or Bhutan) USD 25,000 per visit**
**Business Visits means visits in connection with attending of an international conference, seminar, specialised training, study
tour, apprentice training, etc.
If you want release of foreign exchange exceeding USD 25,000 for business travel abroad (other than to Nepal and Bhutan),
irrespective of the period of stay, requires prior permission from the Reserve Bank.
4. For Business Trip (To Nepal and/or Bhutan) No release of foreign exchange is admissible
5. For Medical Treatment USD 100,000 or its equivalent***
*** AD Category-I banks and AD Category-II, may release foreign exchange up to USD 100,000 or its equivalent to resident
Indians for medical treatment abroad on self-declaration basis, without insisting on any estimate from a hospital/doctor in
India/abroad. A person visiting abroad for medical treatment can obtain foreign exchange exceeding the above limit, provided
the request is supported by an estimate from a hospital/doctor in India/abroad.
An amount up to USD 25,000 is allowed for maintenance expenses of a patient going abroad for medical treatment or check-up
abroad, or to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up.
The amount of USD 25,000 allowed to the patient going abroad is in addition to the limit of USD 100,000 mentioned above.
6. For Studies
Student can avail this from AD Category-I bank and AD Category-II.
USD100000 or the estimate received from the
institution abroad, per academic year, whichever is
higher.
7. For Employment USD 100,000 on the basis of self-declaration
Withdrawal Period : You can withdraw Permissible foreign exchange 60 days in advance. In case it is not possible to use the foreign
exchange within the period of 60 days, it should be immediately surrendered to an authorized person. However, residents are free to
retain foreign exchange up to USD 2,000, in the specified manner.
Payment Mode : The value of foreign currency which we want to carry if, it is upto Rs. 50000 , then you can pay that in Cash. If, the
value of foreign currrency is more than Rs. 50000, entire payment should be made by way of a crossed cheque/banker’s cheque/pay
order/demand draft/debit card/credit card/prepaid card only.
Surrender of foreign currency : When you return from a foreign trip, travellers are required to surrender unspent foreign exchange
held in the form of currency notes and travellers cheques within 180 days of return. However, they are free to retain foreign exchange
up to USD 2,000, in the specified manner. You can hold foreign coins without any limit.
Usage of Cards : Holder of International Credit Cards (ICCs)/ATMs/Debit Cards can use it for travel abroad in connection with various
purposes and for making personal payments like subscription to foreign journals, internet subscription, etc. If the person has a foreign
currency account in India or with a bank overseas, he/she can even obtain ICCs of overseas banks and reputed agencies.
Carrying Indian currency : In India, Residents are free to take outside India (other than to Nepal and Bhutan) currency notes of
Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 7,500 per person. They may take or send
outside India (other than to Nepal and Bhutan) commemorative coins not exceeding two coins each.
A resident of India, who has gone out of India on a temporary visit, may bring into India at the time of his return from any place outside
India (other than Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not
exceeding Rs. 7,500.
Foreign currency to India : A person coming into India from abroad can bring with him foreign exchange without any limit. However, if
the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD
10,000 or its equivalent and/or the value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to the
Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.
Export of gifts : A person resident in India is free to send (export) any gift article of value not eaxceeding Rs. 5, 00,000 provided export
VOL. VI l JULY 2012 10 “Wisdom begins in wonder.”

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
of that item is not prohibited under the extant Foreign Trade
Policy and the exporter submits a declaration that goods of gift
are not more than Rs. 5, 00,000 in value. Export of goods or
services up to Rs. 5, 00,000 may be made without furnishing the
declaration in Form GR/SDF/PP/SOFTEX, as the case may be.
Revised Schedule VI
EXPLANATION OF
CURRENT ASSETS/LIABILITIES
Contributed by: Mohd. Atiq Qureshi (CA. Final Student)
The above bifurcation of assets and liabilities between current
and non-current would require major reclassification in Balance
Sheets of all companies and would have impact on the current
ratio. Some of such instances of reclassifications are as under:-
1) Presently even the current maturities to long term debt are
shown as part of long term debt and only disclosure of
amount due to be repaid within one year is made. However,
as per Revised Schedule VI current maturities to long term
debt would be depicted as “Other Current Liabilities”.
2) As per old schedule VI interest accrued and due on long term
loans were shown as part of long term loans but in Revised
Schedule VI the same is shown as Current Liabilities.
3) Currently all loans and advances (except capital advances)
are shown under Current Assets & Loans and Advances but
now onwards the same need to be bifurcated between
current and non-current, accordingly the sub heading of long
term loans and advances has been introduced in Revised
Schedule VI.
4) The provisions also need to be bifurcated among long term
and short term, the latter one being classified as current, and
former being classified as non-current e.g. employee related
provisions ; accordingly sub heading of long term provisions
has been introduced. Under old Schedule VI all provisions
were being shown under Current Liabilities and Provisions.
5) Under old Schedule VI the trade receivables (Debtors) / trade
payables (creditors) were always shown as Current, but in
revised Schedule VI, these can also be shown as Non-Current.
It appears that where the credit is offered on deferred credit
basis or the payment is not expected to be received from
debtors within normal operating cycle/ 12 months from
reporting period, the same need to be disclosed as Non-
Current.
EXAMPLES OF CURRENT ASSETS/LIABILITIES
For understanding the above definitions let us apply the same in
following cases
Question 1 : As on 31st March, 2011, a property developer has
inventories of residential units which it expects to sell in three
years. Historically similar residential units have been sold in
three years. As of 31st March, 2012, should the inventories of
residential units be classified as current or non-current assets?
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Solution: Assets shall be classified as current when it satisfies
any of the four criteria. Since the inventories of residential units
in the given case, satisfy the given requirement i.e. it is expected
to be realized in, or is intended for sell or consumption in, the
entity’s normal operating cycle, the residential units should be
classified as Current Assets.
Question 2 : A primary school require a deposit to be paid upon
enrolment in the school, should the student leave the school,
this deposit is refundable within three months, However based
on historical evidence the majority of students enrolling to
primary school continue with school and receive the deposit
back at the end of six year period. How should the deposits be
classified?
Solution: The deposit shall be classified as current liabilities.
Despite the historical evidence that indicates that the majority of
deposits are only repaid at the end of six years period, the
deposits are payable on three month notice. Revised Schedule VI
states that a liability should be classified as current when the
entity does not have an unconditional right to defer settlement
of the liability for at least twelve months after the reporting date.
Therefore, the deposits should be classified as Current Liabilities.
Open issues for SEBI
1) The Balance Sheet format prescribed under Clause 41 of the
Listing Agreement, which is on the lines of existing Schedule
VI, will now be inconsistent with the Revised Schedule VI
Balance Sheet format.
Based on the above guidance, we are of the following views
on the issues raised:
(a) Half yearly results:
�
�
�
Clause 41(V)(h) prescribes a format for presentation of
Balance Sheet items at the end of half year.
Though the clause specifically acknowledges that the
format drawn from Schedule VI it does not allow automatic
amendment in case of any change/revision in Schedule VI.
Until new format is prescribed by SEBI, companies will have
to continue to present Half-yearly Balance Sheet in old
format.
(b) Annual audited yearly results:
�
�
Clause 41(V)(h) does not refer to any format for annual
audited balance sheet.
Two views seem possible until clause 41 is amended:
a) View 1: Company can use the format used in its annual
financial statements, i.e., as per the revised Schedule VI.
b) View 2: Company should use the same format of balance
sheet items in its half-yearly and annual audited results.
As per the exposure draft of guidance note on Revised
Schedule VI, this should be in the format of Revised
Schedule VI. SEBI should take immediate steps to align the
formats with New Schedule VI.
VOL. VI l JULY 2012 11 “Powerful Dreams Inspire Powerful Action”

Baroda Branch of WICASA
of The Institute of
Chartered Accountants of India
Glimpse June 2012
Meeting with MOC for 25th All India
CA Students' Conference (02.06.2012)
WICASA Committee Meeting with
CA Jaydeep Shah (ICAI President)
Study Circle Meeting (Udit Patadiya)
(23.06.2012)
CA. Jaydeep Shah at ICAI Bhawan Baroda
(08.06.2012)
CA. Jaydeep Shah (ICAI President)
CA Shruti Shah (Chairperson WICASA, WIRC)
CA Ashish Parikh (Chairman WICASA, Baroda )
(08.06.2012)
CA. Ashish Parikh (Chairman WICASA Baroda)
at ICAI Bhawan Ahmedabad (17.06.2012)
WICASA Committee Meeting with
CA. Madhukar Hireganga -
BOS Vice- Chairman (30.06.2012)
VOL. VI l JULY 2012 12 “Knowledge speaks, but wisdom listens”
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“Leveraging Strength, Catalyzing Tomorrow”
CA. Jaydeep Shah
(Students Interaction with ICAI President)
(08.06.2012)
Chairman WICASA Baroda Met with
WICASA Ahmedabad (17.06.2012)
CA. Ashish Parikh (WICASA Chairman)
CA. Pradeep Agrawal (Branch Chairman)
with CA. Madhukar Hireganga -
BOS Vice- Chairman (30.06.2012)