SICASA CHAIRMAN'S MESSAGE TO STUDENTS. My Dear Beloved Students (future CAs),

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2 SICASA CHAIRMAN'S MESSAGE TO STUDENTS My Dear Beloved Students (future CAs), I wholeheartedly thank all the people who extended their support to serve the CA students of the Branch, through conducting a few programmes for the benefit of the students. We have started to march in the month of March, with all the stakeholders support and help, towards the students development, in the form of conducting the following programmes. Seminar on Significant Changes in GST held on , attended by 85 students Seminar on Bank Statutory Audit held on , attended by 105 students Seminar on How to face CA Exam held on , attended by 27 students There are many roads to pass by, to do real good things for the benefit of the students. So, we have plans in our minds for the students and therefore, the following are planned in the month of April 2018: Revision Classes for students appearing in May 2018 Exam Mock Tests for students appearing in May 2018 Exam Regular Classes for students to appear in Nov 2018 Exam As April 2018 is a month for Bank Audit, in which all the CAs are busy in auditing the Bank Branches, the CA students, working as Articled Assistants, will be major helping hands for the Auditor- Employers. Students are expected to be of more helpful to their Auditors in discharging the Auditors attesting functions. We believe that the seminar conducted in the Branch on Bank Audit will be very much helpful for the students. They will come to know all the practical nuances of Bank Audit. As a student, he/she can handle the following aspects in a bank audit under the supervision of appropriate senior staffs in the Audit Team. KYC Verification Documentation of Loans Collection of information for reporting under LFAR and Tax Audit Report Classification of Advances & Provisioning Working Papers accumulation and other documentation Understanding the application of various applicable Standards on Auditing (SAs) There is nothing to doubt that once a student gets more knowledge in his/her Articles Period, he/she would become a most successful CA, in his/her professional life. Hence, learn sincerely. Some students may be on study leave for the ensuing examinations. Those students are advised not to waste their precious time. Sketching out a good plan for study is must. Try to devote 12 to 14 hours of effective study, daily. If you are able to study your subjects in an effective and dedicated manner, success will be yours, the three hours of exam will be easy going and will be felt as delighted time of your life. At the same time, at the cost of studying, you should not leave your mental and physical health unattended. Take care of your health also. I wish to hereby conclude this letter by once again thanking all the good hearts, which will help us do great things in the coming month. Best wishes, CA T SIVAGURUNATHAN SICASA Chairman Kanchipuram District Branch of SIRC of ICAI 2 P a g e

3 SICASA Team CA.Sivagurunathan - Chairman-SICASA CA.Narasimma Raghavan - Chairman Students Committee CA.Jayasankar.D - Co-ordinator Students Committee CA.P.Aanand Member - Students Committee G.Uma Maheswari Vice Chairman-SICASA R.Bharath SICASA Secretary R.Parasuraman - SICASA Treasurer P.Prasanna Kumar - SICASA Joint Secretary V.Sindhuja SICASA Member S.Laxmi Narayani SICASA Co-opted Member K.Vishnupriya SICASA Co-opted Member Editorial Board EDITOR - CA.Sivagurunathan.T MEMBERS - CA.Geetha.G CA.Narasimma Raghavan.R CA.Jayasankar.D Note: The views expressed in the articles published are their own views and SICASA-Kanchipuram District Branch does not endorse or take responsibility for the views expressed in the articles ARTICLES INVITED FROM STUDENTS: Note: Articles are invited from the students for publishing in this newsletter. The articles shall be either on the specific subject or a general article. Students can mail their articles with Name, SRO Number, Mobile Number, Res.Address, Office Address & Photo to our mail id mentioned below. The students, whose articles are selected for publishing in this newsletter, will be honoured in the upcoming student s seminar. Contact Us For Knowing about all the events conducted by the SICASA-Kanchipuram District Branch Reach us Via...Phone / Mail Id - kpmsicasa@gmail.com Face Book - Like our SICASA KANCHIPURAM DISTRICT BRANCH OF SIRC Page / Website - kanchiicai.org Our Branch - at East Tambaram At a Glance Contents of News Letter Important Events to be held during April 2018 Asset Classification, Provisioning and Income Recognition of Advances of Banks B6 Sigma for Beginners Events held during Mar'18 Toppers Speak.., [Toppers of Chartered Accountants] Know Your Due Dates & Gallery 3 P a g e

4 IMPORTANT EVENTS TO BE HELD DURING APRIL Revision Classes on Goods & Services Tax [GST] to IPCC / IPC Students to be held on 2 & 3rd Apr'18 2. Revision Classes on "Auditing & Accounting Standards" to IPCC / IPC Students to be held on 7 & 8th Apr'18 3. Revision Classes on Direct Taxes" to IPCC/IPC Students to be held on 10th & 11th April CA Intermediate Regular Classes [Duration - 5 months] to be started from 15th April Mock Test for Final Students is going on [ to ] Asset Classification, provisioning and Income Recognition of Advances of BANKS S.Dinesh Kumar SRO finadinesh@gmail.com Asset Classification & Provisioning, Income Recognition, and Restructuring of advances of BANKS Asset Classification & Provisioning as on Classification of Advances i) Standard Assets ii) Sub- Standard Assets iii) Doubtful Assets iv) Loss Assets On Standard assets - The provisioning requirements for all types of standard assets stand as below. Banks should make general provision for standard assets at the following rates for the funded outstanding on global loan portfolio basis: (a) Farm Credit to agricultural activities and Small and Micro Enterprises (SMEs) sectors at 0.25% (for medium enterprises 0.40%) (b) Advances to Commercial Real Estate (CRE) Sector at 1.00 % 4 P a g e

5 (c) Advances to Commercial Real Estate Residential Housing Sector (CRE - RH) at 0.75% (d) Restructured Standard Assets 5.00% (e) All other loans and advances not included in (a) (b) and (c) above at 0.40 per cent. On Sub-Standard Assets In General 15% and on unsecured portion (if any) then additional provision of 10% On Doubtful Assets On Unsecured portion 100% and on secured portion as follows:- Period for which the advance has remained in Provision requirement (%). doubtful category. Up to one year 25 One to three years 40 More than three years 100 On Loss Assets 100% Non-performing assets: An asset, including a leased asset, becomes non-performing when it ceases to generate income for the Bank. Hence, non-performing asset is required to be classified correctly at the right time so that unrealized Income on such assets is not recognized in the books of the Bank. A Non-performing Asset (NPA) is a loan or an advance where; i) Interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a Term Loan, ii) The account remains Out of order (as indicated at Paragraph 2 below) in respect of an Overdraft/Cash Credit (OD/CC), iii) The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, iv) The instalment of principal or interest thereon, remains overdue for two crop seasons for short duration crops, v) The instalment of principal or interest thereon remains overdue for one crop season for long duration crops, vi) The amount due to the Bank under any credit facility is overdue for a period of more than 90 days, vii) The account where the regular/ad-hoc credit limits have not been reviewed/renewed within 180 days from the due date/date of adhoc sanction. 5 P a g e

6 viii) The drawings allowed against Stock/Book Debts statements older than 180 days.(i.e. if the outstanding in the account based on drawing power calculated from stock statements older than 3 months would be deemed as irregular and if such irregular drawings are permitted in the account for a continuous period of 90 days even though the unit may be working or the borrower s financial position is satisfactory, the borrower account will become NPA), ix) The amount of liquidity facility remains outstanding for more than 90 days in respect of a securitization transaction undertaken in terms of guidelines on securitization dt.1st February 2006, x) in respect of derivative transactions, the overdue receivables representing positive mark to market value of a derivative contract, if these remains unpaid for a period of 90 days from the specified due date for payment. Income Recognition I. Income Recognition Policy a) The policy of income recognition has to be objective and based on the record of recovery. Internationally income from non-performing assets (NPA) is not recognized on accrual basis but is booked as income only when it is actually received. Therefore, branches should not charge and take to income account interest on any NPA. On account turning NPA, branches should reverse the interest already charged and not collected by debiting Profit and Loss Account and stop further application of interest. However, branches should ensure that same is recorded in accrued interest in Dummy Ledger. b) However, interest on advances against term deposits, NSCs, IVPs, KVPs and Life Policies may be taken to income account on the due date, provided adequate margin is available in the accounts. c) If Government guaranteed advances become NPA, the interest on such advances should not be taken to Income Account unless the interest has been realized. d) However, the credit facilities backed by guarantee of the Central Government though overdue may be treated as NPA only when the government repudiates its guarantee when invoked. e) This exemption from classification of Central Government guaranteed advances as NPA is not for the purpose of recognition of income. f) Fees and Commission earned by the banks as a result of renegotiations or rescheduling of outstanding debts should be recognized on an accrual basis over the period of time covered by the renegotiated or rescheduled extension of credit. 6 P a g e

7 II. Reversal of Income a) If any advance, including bills purchased and discounted, becomes NPA, the entire interest accrued and credited to income account in the past periods, should be reversed if the same is not realized. This will apply to Government Guaranteed Accounts also. b) In respect of NPAs, fees, commission and similar income that have accrued should cease to accrue in the current period and should be reversed with respect to past periods, if uncollected. c) On an account turning NPA, banks should reverse the interest already charged and not collected by debiting to Income A/C Interest on Advances and stop further application of interest. However, banks are required to continue to record such accrued interest in respect of NPA accounts in a Memorandum account in their books (Dummy Ledger). III. Appropriation of Recovery A.] Interest realized on NPAs may be taken to income account provided the credits in the accounts towards interest are not out of fresh/ additional credit facilities sanctioned to the borrower concerned. B.] In the absence of a clear agreement between the bank and the borrower for the purpose of appropriation of recoveries in NPAs (i.e. towards principal or interest due), RBI guidelines requires banks to adopt an accounting principle and exercise the right of appropriation of recoveries in a uniform and consistent manner. Branches to follow the following accounting principles in this regard: There are two rules of appropriation: [1] General Rule of Appropriation [2] Particular Rule of Appropriation. 1- General Rule of Appropriation: When there is no agreement between the debtor and creditor as to how monies paid by the debtor are required to be appropriated by the creditor, the order of appropriation is as under: Firstly towards running ledger i.e. principal amount. Secondly towards dummy ledger interest. Thirdly towards expenses and costs. 2- Particular Rule of Appropriation: This refers to the method of appropriation received from the borrower strictly as per the agreement with the borrower. In other words, when borrower enters into a loan agreement, he may stipulate Rule of Appropriation differently and if such a different rule of appropriation is accepted by the Bank, then Bank cannot apply the General Rule as stated above. C.] Accounting of unrecovered interest: Unrecovered interest should be treated as part of dummy ledger interest and to be accounted for reversal (taken to Income Account) after accounting for running ledger (principal demand raised).. 7 P a g e

8 B6 Sigma for beginners Uma Maheshwari.G SRO Six Sigma is a disciplined methodology for improving organization s processes, based on rigorous data gathering and analysis. The approach focuses on helping organizations produce products and services better, faster and cheaper by improving the capability of processes to meet requirements. Six Sigma identifies and eliminate costs, which add no value to customers. Unlike simple cost cutting programs, however, six sigma delivers cost cuts whilst retaining or improving value to the customer. Six Sigma is a smarter way to manage a business or a department. Six Sigma puts the customer first and uses facts and data to drive better solutions. Six Sigma efforts target three main areas: Improving customer satisfaction Reducing cycle time Reducing defects Six Sigma is a total management commitment and philosophy of excellence customer focus, process improvement and the rule of measurement rather than gut feel. Six Sigma is about making every area of the organization better able to meet the changing needs of customers, markets and technologies - with benefits for employees, customers and shareholders. 8 P a g e

9 Six Themes of Six Sigma: Genuine Focus on the Customer: In Six Sigma, customer focus becomes the top priority. For example the measures of Six Sigma performance begin with the customer. Six Sigma improvements are defined by their impact on customer satisfaction and value. Data and Fact Driven Management: Six Sigma discipline begins by clarifying what measures are key to gauging business performance and then gathers data and analyzes key variables. Then problem can be much more effectively defined, analyzed and resolved permanently. Processes are where the Action is: Whether focused on designing products and services, measuring performance, improving efficiency and customer satisfaction or even running the business, Six Sigma positions the process as the key vehicle of success. Proactive Management : In real world though proactive management means making habits out of what we are, too often, neglected business practices; defining ambitious goals and reviewing them frequently, setting clear priorities, focus on problem prevention rather than firefighting and questioning why we do things instead of blindly defending them. Boundary less Collaboration: Boundlessness is one of Jack Welch's mantras for business success. Years before launching Six Sigma, GE's chairman was working to break down barriers and to improve teamwork up, down and across organizational lines. The opportunities available through improved collaboration within companies and with vendors and customers are huge. Billions of dollars are lost every day because of disconnects and outright competition between groups that should be working for a common cause: providing value to customers. Drive for perfection: Tolerate Failure: No company will get close to Six Sigma without launching new ideas and approaches - which also involves some risk.the techniques for improving performance include a significant dose of risk management so the downside of setbacks or failures is limited. The bottom line though is that any company that makes Six Sigma its goal will have to keep pushing to be ever more perfect while being willing to accept and manage - occasional setback. IMPORTANT EVENTS HELD DURING MARCH Seminar on Significant Changes in GST held on 3 rd March 2018 Chief Guest : CA.M.P.Vijayakumar [CCM ICAI] Speaker : CA.L.Durairaj 2. Seminar on Bank Statutory Audit held on 17 th March 2018 Chief Guest : CA.Dungar Chand U Jain [RCM ICAI] Speaker : CA.P.Anand, CA.A.P.Kumar & CA.R.Rajaram 3. Seminar on How to Face CA Exam by CA.Shanmuganathan on 27th March 2018 Speaker : CA.K.Shanmuganathan 4. Mock Test for IPCC Students held during the month of March P a g e

10 Toppers Speak.., Toppers of Chartered Accountants Q. What strategy/study plan did you follow while preparing for the exam? Mohit Gupta, First Rank CA Final [November 2017] First of all, I tried to complete my syllabus in the first two years of the articleship in which I succeeded. We have 8 subjects to study and everybody can complete one subject in 3 months by studying 3-4 hours on daily basis. Firstly, I completed all the practical subjects like Financial Reporting, Advanced Management Accounting and Strategic Financial Management. Then I finished the Direct Taxes and Indirect Taxes as there used to be amendments in these subjects and finally the theory subjects. During exam leaves, I prepared my time table in such a way that I could complete 3 revisions for practical subjects and around 5 revisions for theory subjects. Revising each theory subject for 2 hours daily can easily increase the confidence of any student. Along with theory subjects, I took two subjects in a day (One Tax and one other practical). In this way, I planned and executed my preparations. Prashant, Second Rank- CA Final [November 2017] I had a comprehensive plan in place for the last 4 months. Within the broad plan I had subject wise targets and within those I also had topic wise targets. I used to strictly adhere to my plans. I would suggest all the students to follow an organised approach. Aditya Mittal, Third Rank- CA Final [November 2017] The strategy was simple. Start early preparation for the exams and make a plan and ensure that I am able to execute them efficiently and effectively. The plan was to finish all my classes well before the exams date. I got four months of leaves for preparation from PwC where I am doing my articleship. I planned my classes in a manner that they were over before June 17. Then during those four months I planned each subject as to how many days are to be devoted to each of them so that I am able to do sufficient number of revisions as to the level of my satisfaction. I managed to achieve the targets set by me for each month, each day and even for each hour during the day. I did one subject each day always and picked up another one after completing the previous one. 10 P a g e

11 KNOW YOUR DUE DATES APRIL 2018 Compliance under Income tax Act SI No Due Date Compliance Required Due date for deposit of Tax deducted by an office of the government for the month of March, Due date for deposit of tax deducted/collected at source for the month of March 2018 Due date for furnishing of Form 24G by an office of the Government where TDS for the month of March, 2018 has been paid without the production of a challan Due date for uploading declarations received from recipients in Form 15G/15H during quarter ending March Compliance under GST SI No Due Date Compliance Required E Way Bill For Inter-State movement of goods Due date for filing GSTR -1 for the month of Feb 2018 Applicable for taxpayers with Annual Aggregate turnover More than 1.50/- Crore (Rs. One Crore Fifty Lacs only) Due date of GSTR-4 (for Composition Dealer) for the months of Jan to March GSTR-3B for the m/o March. Also Pay due Tax till this date Due date of GSTR-5 (for Non-resident Taxable person) for the month of Feb Compliance under ESI, PF Acts SI No Due Date Compliance Required PF Monthly Payment for March ESIC Monthly payment for the month of March 2018 Compliance under Companies Act SI No Due Date Compliance Required Condonation of Delay Scheme 2018 [CODS-2018] allows Defaulting Companies to file its overdue documents which were due for filing 11 P a g e

12 Gallery Students Seminar on "SIGINIFICANT CHANGES IN GST" at Tambaram held on 3 rd March 2018 Students Seminar on "BANK STATUTORY AUDIT" at Tambaram held on 17 TH March 2018 Students Seminar on "HOW TO FACE CA EXAM" at Tambaram held on 27 TH March 2018 News in The Hindu DOWNTOWN about CA Classes in Kanchipuram Branch on 30 th March P a g e