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Dear friends! I am pleased to present this issue of RTI’s newsletter. These six months witnessed 4 extra trainings on IT side and 5 extra trainings training on non-IT side. This institute had 19 trainings on non-IT side and 15 trainings on IT side since Oct. 2014. On non-IT side, Courses such as New Companies Act 2013, Introduction to Accrual Accounting, GASAB and IPSAS, Audit of
Municipal Corporations, Audit Evidence, Seminar on IPSAS, Development of Management Skills, etc. were well received. On IT side, the Training Course on IDEA, Qlik View, Oracle, Hardware & Software, IT Audit, and e-Library were appreciated by the trainees. On 22-1-2015, RAC members met to finalise the training calendar for 2015-16. Members were also briefed about last year’s performance of this institute. The RAC members expressed their satisfaction about functioning of this institute. I would like to put on record my sincere thanks to the Chairman and RAC members for the guidance provided from time to time.
From P. D’s Desk
Issue Date - March 2015 Issue 5 Year 2015
Indian Audit & Accounts DepartmentIndian Audit & Accounts DepartmentIndian Audit & Accounts Department
Regional Training Institute, MumbaiRegional Training Institute, MumbaiRegional Training Institute, Mumbai
NewsletterNewsletterNewsletter
Our Mission :-
To organize and conduct training courses in strategic skills in general subjects relating to audit including Corporate Finance/G o v e r n a n c e , Audit of Municipal Corporations and General Purpose Financial Reporting (IPSAS). To impart requisite knowledge and skills in information technology to enable audit of information systems and to provide essential EDP skills. To act as a development centre for courses / courseware for delivery of these courses in in-house training units and training centres.
Inside this issue:-
Page No.
Courses Conducted-List 2
Photo Gallery 2
An Article-Role & Context of IPSAS 3-7
Crossword Puzzle - IT Audit 8
Contact Us :-
GN Block, Plot No. C-2, Bandra Kurla Complex, Behind Asian Heart Institute, Mumbai - 400051 Ph-022-26521902, Fax-022-26522627
“ There is no God higher than the truth”
Mahatma Gandhi
2
Courses we conducted from 1-10-2014 to 31-3-2015
General Courses :- 1. New Companies Act 2013 2. Audit of Fraud & Fraud Detection Techniques 3. All India Training Programme on Corporate Finance 4. Awareness of ISSAIs 5. All India Trng. Programme on Audit of Municipal Corporations 6. Performance Audit and Risk based Auditing 7. Audit Evidence 8. Audit of Works Expenditure 9. All India Trng. Programme on Development of Management Skills 10. Audit Reporting 11. Financial Rules & Financial Management 12. Preparation and Certification of Finance & Appropriation Accounts 13. Right to Information Act 14. All India Seminar on General Purpose Financial Reporting
(IPSAS) 15. Dieting and Nutrition - to commemorate Intl Women’s Day Additional / Special Trainings / Seminars 1. Introduction to Accrual Accounting, GASAB and IPSAS 2. Audit of Consolidated Financial Statements (Two Trainings) 3. Time Value of Money and Capital Budgeting for project appraisal 4. Training Programme under TGS for staff of DLFA, Maharashtra IT Trainings :- 1. Presentation & Graphics 2. IT Audit Level 2a 3. MS Access (Two Trainings) 4. Akshar Naveen/Saransh 5. Oracle Backend-SQL 6. MS Office 7. Hardware & Software 8. IT Audit Level 2b 9. Creation of e-Library 10. IT Audit Level 3-SAP and IDEA IT-Additional Trainings 1. QlikView (Two Trainings) 2. IDEA Training for MAB-I, Mumbai office 3. All India Training on IDEA 9.2 Case Studies 1. Corporate Revenue Management (Corporate Finance) 2. Collection of Property Tax by Kochi Corporation 3. Transactions involving interested parties in PSUs
(Corporate Governance) Developments in RTI Mumbai 1. Ms. Jayshree Chettiar, Sr.AO has joined RTI Mumbai as Core
Faculty – General Courses 2. Shri Prashant Solanki, MTS has been transferred to
PAG(A&E)-I, Mumbai 3. Shri B Shejal, MTS has passed the Accountant Examination held
in Feb 2015 RAC Meeting
Seminar-General Purpose Financing
Development of Management Skills
Corporate Finance Training
Training on IPSAS
3
Role and Context of IPSAS in IA & AD
Article by Shri Mahadevan P, Core Faculty, RTI, Mumbai
IPSAS - What and Why?
International Public Sector Ac-
counting Standards (IPSAS) are account-
ing standards intended for adoption by
public sector entities across the world.
They are to be used for preparation of
'general purpose financial statements'.
'General Purpose financial statements' is
a term denoting the full set of accounts in
applicable uniform formats. The accounts
need to comply with the laws and
accounting standards that govern their
maintenance and preparation. They
comprise the final accounts, such as
annual accounts- balance sheet, profit and
loss/ income and expenditure accounts,
finance and appropriation accounts, etc.
Organisations such as autonomous
bodies, statutory corporations and
companies, etc. in the public sector are
classified as Government Business
Enterprises – GBEs, by the IPSAS. The
accounting framework adopted by GBEs
is outside the purview of IPSAS. Thus,
in India, IPSAS, if adopted/ adapted,
would be suitable only for other Public
Sector Entities, including ministries,
departments and attached and subordinate
offices, local self governments,
international government organisations
and other programmes, organisations, etc.
which have a public sector character,
excluding GBEs.
IPSAS are a collection of
standards issued by the International Pub-
lic Sector Accounting Standards Board
(IPSASB) functioning under the
International Federation of Accountants
(IFAC). These are derived from the
International Financial Reporting
Standards (IFRS) developed by the
International Accounting Standards
Board (IASB) of the IFRS foundation
and have been given a public sector
focus. IFRS themselves have wide
acceptability in private sector and GBEs
across the world. IPSAS have been
framed primarily based on the accrual
basis of accounting in the context of
public sector, though they also contain
instructions on cash basis of accounting,
especially in 'Cash Basis IPSAS,
Financial Reporting under the Cash Basis
of Accounting'. IPSAS would by and
large harmonise accounting in public
sector entities with the accrual system of
accounting used in commercial
enterprises and businesses. Thus, both in
the private and public sectors across the
world, standards with some link with
IFRS framework would play a major
role.
The Indian Context
In India, government accounting
has been following the pattern and
procedures contained in rules such as the
General Financial Rules (GFR), the
(Continued on page 4)
4
Government Accounting Rules (GAR)
and the Receipts and Payments Rules
(RPR), as also numerous rules,
regulations, manuals and instructions for
operations in state and central treasuries,
offices of Accountants General and other
accounting authorities like the Controller
General of Accounts. The said
mechanism envisages cash basis of
accounting. Cash basis of accounting
records the actual cash inflow or outflow.
The outflow is authorised by and
compared to budgetary allotment by
competent legislature, being the
Parliament for the Union Government or
federal Legislature for States and Union
Territories with legislative assembly.
India has now embarked on the
transition to the accrual basis of account-
ing in government accounts. Accrual
accounting would present a more
meaningful comparison of the actual
position of the finances of the
government. Cash basis of accounting
may lead to distortions involving
expenditure of the current year being
carried forward to subsequent years,
merely because of lack of budgetary
support. Accrual accounting would
necessarily require booking of expendi-
ture to the year to which it relates,
irrespective of whether it is paid for
(settled in cash) or credit is availed for its
settlement in future year(s). An example
of a transaction booked in government
accounts in the present cash basis of
accounting and in the accrual basis of
accounting is given below.
Take the instance of a labourer
who is being paid Rs.10,000/- per month
out of the budget head 'Wages'. During
the year 2012-13, the budget allotment
under this head was Rs.1,10,000/- only.
Hence, wages for only 11 months (April
to February) could be paid. But, the ac-
counts of the government are duly closed,
matching budget of Rs.1,10,000/- with
cash payment of Rs.1,10,000/-. During
the year 2013-14, the office demands and
gets an allotment of Rs.1,30,000/-. In
April, the arrears for the month of March
(Rs.10,000/-) are first disbursed and
then, he is paid Rs.10,000/- per month
from April to March. The accounts of the
government are again duly closed,
matching budget of Rs.1,30,000/- with
cash payment of Rs.1,30,000/-. You
would appreciate that when the transac-
tion is the same, the wages are the same,
the value of services availed are the same
in both years, it would be logical to book
the same expenditure of Rs.1,20,000/- in
both years. A liability of Rs.10,000/-
could be recognised in the year 2012-13,
comprising the unpaid wage and it would
be settled in the year 2013-14. Thus, it
would be a balanced presentation of ex-
penditure in both years. This is the crux
of accrual basis of accounting.
(Continued on page 5)
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In India, new standards for gov-
ernment accounting are being framed by
an organisation called Government Ac-
counting Standards Advisory Board
(GASAB) under the aegis of office of the
Comptroller and Auditor General of In-
dia. GASAB has been set up with repre-
sentation of CAG, Ministries and profes-
sional standard setting bodies for formu-
lating standards for government accounts.
These standards comprise Indian Govern-
ment Accounting Standards (IGAS) on
cash basis of accounting and Indian Gov-
ernment Financial Reporting Standards
(IGFRS) on accrual basis of accounting.
IGFRS draw from best practise standards
of government accounting across the
world, including IPSAS. These are in re-
sponse to the IPSAS mechanism being
adopted or adapted by governments
across the world. This would lead to vast
changes in the operations in the Accounts
offices of the department as well as the
audit approach during financial audit by
Civil Audit offices. The accounting
adopted by autonomous bodies, statutory
corporations and companies in the public
sector in India is outside the purview of
such changes, as they are GBEs already
covered by the mechanism of accrual ac-
counting as per Accounting Standards
issued by the CA institute. But this sector
too is set to change in a different direc-
tion, as India has decided to converge
with IFRS. For this, a fresh set of stand-
ards called IndAS is being issued to adapt
(converge) IFRS to the Indian context.
Subsequent to this, a National Financial
Reporting Authority has been envisaged
by the Companies Act, 2013 to peer
review draft accounting standards
formulated by CA institute under the
IndAS regime.
Challenges in navigating the network
of standards
The relationship between various stand-
ards, agencies involved and their applica-
bility in various contexts are tabulated
below.
Evolution of Accounting Standards and their adaptation in Indian and Public Sector, mercantile and cash
Accounting Contexts
* Designated in IPSAS as Government Business Enterprises (GBE)
Notes:
2. IGFRS is probably the future of accounting standards in the Indian public sector
1. The dotted line from IPSAS denotes that it is only one of the many set of standards referred to for
drafting IGFRS. These are not adaptations but original standards. In case of IGAS, it is only that the
scope of IPSAS (Cash basis Accounting) and IGAS that is similar.
(Continued on page 6)
6
While it may appear to be a daunt-
ing task to juggle with so many standards,
many of the agencies drafting the stand-
ards are, in fact, working in close co-
ordination with each other. The standards
are not competitive, but are co-
operatively developed to apply, as rele-
vant, to various contexts. There is a com-
mon thread in all these standards issued
by various agencies, that being the under-
lying principle behind the standard.
In fact, we only need to realise that
accounting has existed in all countries in
private and public sectors across the
world since time immemorial. The 'art' of
accounting had been around even in early
Mesopotamia (4th millennium BC) and
practiced by shepherds for keeping ac-
counts of their sheep ! The 'science', ter-
minology and standardisation of account-
ing and all other professional practices
and principles came later. This scientific
'knowledge' was nothing but a compila-
tion of the age-old wisdom of the art of
accounting and auditing. It first evolved
as a systematic science under Luca
Pacioli (15th century AD, Italy). Each
country and each class of business organ-
isation (public and private sector, small
scale and large scale, corporate and non-
corporate, business and welfare, etc.)
adopted and adapted this knowledge ac-
cording to their requirements. Some trade
guilds, associations and 'professional
institutes' were formed with varying
degrees of regulatory support from gov-
ernments in each country (such as enact-
ment of laws giving statutory recognition
to such institutes and/ or to standards is-
sued by them) to regulate the transmis-
sion of this knowledge and its uniform
(Continued on page 7)
7
practice by its members in their respec-
tive jurisdictions. This led to the concept
of Generally Accepted Accounting
Principles (GAAPs). With globalisation,
a need was felt to adopt uniform
standards of accounting to enhance the
quality, consistency, and transparency of
accounting and public sector financial re-
porting world-wide. This led to develop-
ments like IFRS and IPSAS. Yet, due to
the typical situations in various nations,
each country could choose to opt for or
not to opt for or to modify the application
of such standards. Each set of standards
contain jargon and technical terms unique
to them. But, the principles and logic
guiding accounting are evergreen.
Role of IA & AD
One of the immediate areas of change of
the IA &AD's audit approach consequent
to the advent of IPSAS would be in the
area of foreign audits such as UN
organisations and programmes thereof,
whose audits have been assigned to CAG.
Personnel to be deputed for such postings
would now require an awareness of
IPSAS, as this would be the basis of
accounting that they would encounter in
such audits.
Knowledge dissemination to our
Civil Accounts and Audit offices on
features and concepts given in IPSAS and
related developments would give the first
mover advantage to personnel who can
easily grasp and implement the new
accounting standards and practices in
government, if and as and when they are
notified.
The process adopted by GASAB
and NFRA for evolving accounting
standards would definitely benefit from
knowledge of IFRS and IPSAS as it
would give an insight into international
best practices for public sector account-
ing. Hence, GASAB, in which IA & AD
also plays a major role, may have to
frame standards which may draw from
the principles and best practices
enshrined in various standards, of which
IPSAS is one. At the same time, the role
of the IA & AD is to maintain transparen-
cy and simplicity. Drafting of standards
with minimal jargon, including a glossary
of technical terms used, if any, etc. will
help in seeing through the jargon in
accounts and audit and to frame reports
directed at ease of understanding by
common citizens and for lawmakers, for
whom it is intended. Thus, the principles
and best practices, enshrined in
international standards, including IPSAS
and drafting by GASAB could mark the
future of government accounting
mechanism in India. This would culmi-
nate in the final adoption of IGFRS for
public sector accounting in India.
8
5. RISKAPPETITE, 7. SDLC 14. RISKMANAGEMENT 15. COBIT 17. RESIDUALRISK 18. INSURANCECOVER
1. COLDSITE 2. FEASIBILITYSTUDY 3. PIGGYBACKING 4. SENIORMANAGEMENT 6. BUILTRISKPROFILE 8. CIANONREPUDIATION 9. VULNERABILITY 10. ITPROJECTDIRECTION 11. STAKEHOLDERS12. MOTIVATION 13. UAT 16. NOISE
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