The departmental heads who were earlier sceptical of the role of internal audit were appreciative of the internal audit reviews carried out and also started making number of requests for internal auditing of all new processes including new computer applications. They also requested internal auditors for continuous assurance work including reviews of all processes from time to time. This led the Chief Internal Auditor to prioritise internal audit work based on availability of resources and also on the criticality of process.
In a large engineering company operating in Western India having global operation, a new Chief Audit Executive (CAE) was appointed. The CAE had joined this organisation based on the public positioning of the group but felt disappointed within a few months of joining. The organisation had grown organically and was largely family-owned with the senior management being hands on with the operations of the company. The Internal Audit culture had not yet matured and was largely focussed on ‘compliance’. The budget was not sufficient as the management had very low level of expectations from the internal audit function which was mainly compliance-driven.
A leading consumer goods industry in India, with a turnover of more than Rs.250 crores with activities spread across the country covering both the urban and rural markets, has been facing a downward trend in its sales along with rising marketing costs. Top management has been grappling with a changing consumer preference trend guided by the entry of a strong MNC competitor. Some major promoters and key marketing personnel have changed loyalties and have shifted to competition. The Board has been concerned about this disturbing trend and has been reviewing the strategies being adopted by the company to adapt to these changes and retain the earlier good performance. Audit Committee meeting held along with this Board Meeting focussed on this important business issue.
Background :In the IT Industry, the key asset is the human resource. Payroll for an information technology company therefore forms the single largest component of expense. The success of an IT based organisation depends on the size and quality of its human resource. The activity is performed by these resources at the client’s site which often is spread over the world and in the development centres within the country. This results in movement of resources between clients and development centres.
An engineering company, with a turnover of Rs.350 crores, is into manufacturing and giving services for cooling appliances like air-conditioners — window, split, cascade, etc., refrigerators, water coolers. Its main Stores is at its three factories located at Mumbai, Vapi and Hyderabad. Mumbai factory is the largest factory located at Thane with other two units at Vapi and Hyderabad. Inventory in Stores other than raw materials and capital items is around Rs.3.0 crores at Mumbai and Rs.1.3 crores and Rs.1.2 crores at Vapi and Hyderabad respectively.
The management wants the internal auditors to now assess the procurement activity in terms of process improvements with optimal controls, compliance with laid down systems and procedures and cost rationalisation. The engineering company, whose turnover is 350 crores, is into manufacturing and giving services for cooling appliances like air-conditioners — window, split, cascade etc., refrigerators, water coolers.
Audit Committee Chairperson has indicated to the partner-in-charge of the outsourced firm carrying out internal audit that the coverage of personnel audit would be desirable every six months. Chief Executive Officer and Chief Financial Officer agree with the importance given by Audit Committee Chairperson to Personnel area. They have indicated the importance of this area to the partner-in-charge and also cautioned him that this being a sensitive area, needs to be handled with care. This exercise should be done by experienced persons.
FBT is not payable by a trust, fund or institution if its income is exempt under section 10(23C) or it is registered under section 12AA of the Income-tax Act. Therefore, a company registered under section 25 of the Companies Act will also not be liable to FBT if its income is exempt under section 10(23C) or such company is registered under section 12AA of the Income-tax Act.
IT all started with search and seizure operation conducted at the premises of Friends Portfolio. In the course of the search, statements of Shri Manoj Agarwal and other persons were recorded and thereafter assessment was completed in their cases. It was found that all the transactions undertaken by Shri Manoj Agarwal through Friends Portfolio and his other concerns were bogus transactions, in the nature of merely providing entries without any real physical transactions relatable to those entries. Such entries were taken by a number of persons, namely, S/Shri C.P. Khanna, Puneet Khanna, Rajiv Aggarwal, Dhanraj Singh, Harjoot Singh, M/s Ramco Steel (P) Ltd. etc. The last named company filed petition to the Settlement Commission for settlement of its case in respect of entries taken from Shri Manoj Agarwal. In the statement Shri Manoj Agarwal admitted that all the entries given by him through Friends Portfolio and his other companies were in the nature of accommodation entries, which could be grouped into six categories as under:-
As no notice issued by the Assessing Officer u/s 143(2) in the present case as admitted by the AO himself in the remand report submitted to the learned CIT(A) as clearly mentioned by the learned CIT(A) in paragraph No. 17 on page 12 of his impugned order, the assessment order passed by him u/s 158BC suffered from a jurisdictional error and the same, therefore, was not valid in the eye of law.
