30 May 2013

Guidelines for Appointment of Statutory Auditors in Public Sector Banks

Based on the recommendations of a Working Group (WG) to review the norms for empanelment of statutory auditors for public sector banks and other related issues and after seeking the approval of GoI, it has been decided to revise the guidelines on appointment of statutory auditors in public sector banks with effect from the year 2013-14. The revised eligibility norms for empanelment of SCAs as prescribed by RBI in consultation with the WG have been indicated in Annex 1. The categorization/eligibility norms for empanelment of branch auditors which have been kept unchanged are indicated in Annex 2.
The guidelines/instructions relating to the selection procedure to be followed for appointment of statutory auditors in PSBs and details thereof are furnished in Annex 3

Annex 1
Norms of Empanelment for Statutory Central Auditors
of Public Sector Banks applicable from the year 2013-14
As on 1 January of the relative year the firm should have
(i) minimum 7 full time chartered accountants, of which at least 5 should be full time partners exclusively associated* with the firm. These partners should have minimum continuous association with the firm i.e. one each should have continuous association with the firm at least for 15 years and 10 years , two with a minimum of 5 years each and one with a minimum of one year. The remaining 2 full-time chartered accountants or partners, as the case may be, should also have a continuous association with the firm for a period of one year*. Four of the partners should be FCAs. Also at least two of the partners should have minimum 15 and 10 years experience in practice. In case the paid Chartered Accountant available with the firm without any break was admitted as a partner of the said firm at a future date, his association with the firm as a partner will be counted from the date of his joining the firm as a paid Chartered Accountant.
*Note:
1. The definition of 'exclusive association' will be based on the following criteria:
(a) The full time partner should not be a partner in other firm/s.
(b) He should not be employed full time / part time elsewhere.
(c) He should not be practicing in his own name or engaged in practice otherwise or engaged in other activity which would be deemed to be in practice under Section 2(2) of the Chartered Accountants Act, 1949.
(d) The total compensation@ of the partner from the firm should not be below the following limit:
In case the Head office of the firms located in
(i) Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad
ACA partner
` 1.80 lakh in a year (` 15000/- per month)
FCA partner
` 3.00 lakh in a year (` 25000/- per month)
(ii) Other places:
ACA partner
` 1.20 lakh in a year (` 10000/- per month)
FCA partner
` 1.80 lakh in a year (` 15000/- per month)
(e) A partner whose total compensation@ from the firm is less than the following will not be treated as exclusively associated with the firm :
Firms having more than 14 partners
1%
Firms having 10 to 14 partners
3%
Firms having 5 to 9 partners
5%
Firms having less than 5 partners
8%
@Total compensation =Sum total of share of profit, remuneration and interest on capital.
2. Out of the 7 full-time chartered accountants, the remaining two chartered accountants/partners (besides the 5 exclusively associated partners) will be treated to be exclusively associated with the firm only if they are continuously associated with the firm for a period of one year as on January 1 of the relevant year. These norms will be made applicable from the financial year 2014-15 i.e. the chartered accountants/partners will have to comply with the norms as on January 1, 2014.
(ii) the number of professional staff (excluding typists, stenographers, computer operators, secretary/ies and sub-ordinate staff etc.), consisting of audit and articled clerks with the knowledge in book-keeping and accountancy and are engaged in outdoor audit should be 18.
(iii) the standing of the firm should be of at least 15 years which would be reckoned from the date of availability of one full time FCA continuously with the firm.
(iv) the firm should have minimum statutory central audit experience of 15 years of public sector banks (before or after nationalisation) and/or by way of statutory branch audit thereof or that of statutory audit experience of a private sector bank. In case any of the partner of an audit firm is nominated / elected for a period of at least 3 years or more on the Board of any public sector bank then his / her such experience for a maximum period of three years will be considered as bank audit experience, provided such experience has not been earned by him/her concurrently i.e. when his / her firm was assigned statutory audit of any PSB, select all India financial Institutions or RBI.
(v) the firm should have statutory audit experience of 5 years of the public sector undertakings (either Central or State Government undertaking). While calculating such experience, more than one assignment given to a firm during a particular year or more than one year's statutory audit (audits in arrears) assigned to the firm will be reckoned, as one year experience only, for the purpose of counting such experience.
(vi) at least two partners of the firm or its paid Chartered Accountants must possess DISA/CISA or any other equivalent qualification.

Annex 2
Norms for the empanelment of audit firms to be appointed as statutory branch auditors for public sector banks (2013-14)
Cate-gory
No. of CAs exclusively associated with the firm
(Full time)
No. of partners exclusively associated with the firm (full time) (Out of 2)
Profe-ssional
staff
Bank audit experience
Standing of the audit firm
(1)
(2)
(3)
(4)
(5)
(6)
I.
5
3
8
The firm or at least one of the partners should have a minimum of 8 years experience of branch audit of a nationalised bank and/ or of a private sector bank .
8 years
II.
3
2
6
The firm or at least one of the partners should have preferably conducted branch audit of a nationalised bank or of a private sector bank.
6 years
(for the firm or at least one partner)
III.
2
1
4
The firm or at least one of the CAs should have preferably conducted branch audit of a nationalised bank or of a private sector bank for at least 3 years
5 years
(for the firm or at least one partner)
IV.
2                        2
Even proprietorship concern without bank audit experience may be considered as hitherto. (The proprietary concerns of Chartered Accountants with 1 paid CA, 2 professional staff and not having any statutory branch audit experience of a nationalised bank or of a private sector bank will be treated at par with the partnership firm after deducting their 3 years seniority from the date of their establishment).
2
Not necessary
3 years



Annex 3
PROCEDURE FOR APPOINTMENT OF
STATUTORY AUDITORS IN PUBLIC SECTOR BANKS
A. Statutory Central Auditors (SCAs)
1. For the year 2013-14 and onwards, GoI have approved the revision in the norms on the number of SCAs to be appointed in PSB as under:
i) Category "A" Banks (Large Banks viz. Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, Central Bank of India and Union Bank of India) shall not have more than 6 SCAs. However, in case of SBI the number of SCAs shall not be more than 14.
ii) Category "B" Banks (Medium Banks viz. Allahabad Bank, Corporation Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Syndicate Bank and UCO Bank) shall not have more than 5 SCAs, and;
iii) Category "C" Banks (Small Banks viz. Andhra Bank, Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) shall not have more than 4 SCAs.
Actual numbers of SCAs to be appointed can be decided by respective boards subject to the above limit.
2. As per the existing practice, SCAs appointed will have a tenure of three years after which they will be rested for a period of two years. The appointment of SCAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time and also subject to their suitability.
3. From the financial year 2013-14, selection of SCAs will be done by the Selection Committee constituted by GoI and the procedure that will be followed by RBI for forwarding the list of eligible audit firms for selection of SCAs by the Selection Committee constituted by GoI is as under :
  • After receipt of the list of eligible auditors / audit firms, based on the eligibility norms for empanelment of auditors / audit firms prescribed by RBI from the Office of the Comptroller and Auditor General of India (C&AG), verification of eligibility of audit firms by RBI with respect to their bank audit experience available with RBI will be done by RBI.
  • List of eligible firms after excluding the firms which are to be continued, rested and denied audit during the relevant year will be prepared by RBI and forwarded to GoI for selection by the Selection Committee.
  • After selection, GoI will advise bank-wise names of the selected firms to the respective banks. As per the statutory requirement, banks, in turn, are required to forward the names of the selected SCAS to RBI for its prior approval before their actual appointment.
B. Statutory Branch Auditors (SBAs)
1. The norms for selection of branches of PSBs for statutory audit from the year 2012-13 and onwards will be based on the following :
  1. For the year 2012-13, statutory branch audit of PSBs may be carried out for all branches with advances of ` 20 crore & above and 1/5th of the remaining branches covering a representative cross section of rural/semi-urban/urban and metropolitan branches, predominantly including branches which are not subjected to concurrent audit, so as to cover 90% of advances of a bank. CPUs/LPUs/and other centralized hubs by whatever nomenclature called would be included in the one fifth of the remaining branches every year.
  2. In respect of branches below the cut-off point, which are subject to concurrent audit by chartered accountants, henceforth, LFARs and other certifications done earlier by SBAs will now be submitted by the concurrent auditors and such branches may not generally be subject to statutory audit.
  3. Going forward, in mutual discussions with GoI and SCAs, based, inter alia, on the operational efficiency and robustness of CBS, system driven identification of NPAs, and integrity of MIS, managements of individual PSBs may decide on the threshold level of advances for the purpose of selecting branches for statutory audit.
  4. Progressively, the threshold level of advances may be increased so that the number of branches to be taken up for statutory audit is phased down over a period of time.
2. The following procedure will be followed for appointment statutory branch auditors (SBAs) in public sector banks (PSBs):
(i) The list of eligible auditors/audit firms will be prepared by the Institute of Chartered Accountants of India (ICAI) as per the norms prescribed by RBI.
(ii) The above list will be subjected to scrutiny by RBI for identifying the continuing and rested firms and excluding audit firms against whom adverse remarks/disciplinary proceedings are pending or who have been denied audit.
(iii) RBI will, thereafter, forward the final list of all eligible auditors/audit firms to PSBs for selection.
(iv) The PSBs will select the required number of branch auditors/audit firms. Banks will be required to clearly advise the audit firms selected for consideration of appointment that each audit firm can take up audit assignment (branch audit) in one PSB only. The audit firm should give their consent in writing for consideration of appointment in the bank concerned for the particular year and the subsequent continuing years.
(v) The consent given by an audit firm will be treated as irrevocable and request, if any, from audit firms for changing the bank, after giving its consent to the bank concerned will not be entertained.
(vi) After the selection of branch auditors, PSBs will be required to recommend the names of both continuing and selected branch auditors to RBI for seeking its prior approval before their actual appointment, as per statutory requirement.
3. SBAs will have a maximum tenure of four years. The appointment of SBAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time and also subject to their suitability.
4. The number of eligible auditors / audit firms is more than the number of branches to be audited at the following 33 centres (viz. Mumbai, Kolhapur, Pune, Solapur, Thane, Kolkata, Chennai, Coimbatore, Delhi/ New Delhi, Ajmer, Bikaner, Jaipur, Kota, Udaipur, Ahmedabad, Vadodara, Surat, Hyderabad, Chandigarh, Raipur, Faridabad, Gurgaon, Panchkula, Panipat, Sonipat, Bangalore, Ernakulam, Indore, Nagpur, Ludhiana, Jodhpur, Bhilwara, and Ghaziabad). In such centres, the auditors/ audit firms will be put to a period of compulsory rest for two years after completion of four years of continuous branch audit. In other centres, where the number of eligible auditors / audit firms is less than the number of branches to be audited, the branch auditors on completion of four years of continuous branch audit will be subjected to the policy of rotation.
5. While allotting branches, banks are required to select auditors/audit firms which are in close proximity to their offices/branches. Banks are also required to have a suitable mix of various categories of auditors / audit firms while selecting the branch auditors keeping in view the size of the branches to be audited.
6. As regards statutory branch audit to be carried out by SCAs, banks will allot the top 20 branches(to be selected strictly in order of the level of outstanding advances) in such a manner as to cover a minimum of 15% of total gross advances of the bank by SCAs.
C. General Guidelines applicable to both SCAs and SBAs
(i) All PSBs are required to have a Board approved policy for appointment of statutory auditors and the same may be hosted on the bank's web-site. Banks are also required to ensure that the policy framed by the Board in the matter of selection of auditors/audit firms for appointment of auditors is strictly adhered to. Further, the list of firms selected for appointment as statutory branch auditors may be placed before the ACB/Board of bank before for its concurrence before it is forwarded to RBI for final approval.
(ii) The policy of one audit firm for one PSB will be continued. Accordingly an audit firm will be eligible to be appointed as a central/branch auditor of only one PSB during a particular year.
(iii) Further, an audit firm which takes up statutory central audit assignment in a PSB will not be eligible to be appointed as a statutory central auditor in a private sector/foreign bank during that particular year and vice versa. The policy has been made applicable from the year 2012-13 onwards.
(iv) In order to protect the independence of the auditors/audit firms, banks will have to make the appointments of SCA/branch auditors for a continuous period of three and four years respectively subject to the firms satisfying the eligibility norms each year. Banks cannot remove the audit firms during the above period without the prior approval of the Reserve Bank of India.

Guidelines for Appointment of Statutory Auditors in Public Sector Banks

Guidelines for Appointment of Statutory Auditors in Public Sector Banks
Based on the recommendations of a Working Group (WG) to review the norms for empanelment of statutory auditors for public sector banks and other related issues and after seeking the approval of GoI, it has been decided to revise the guidelines on appointment of statutory auditors in public sector banks with effect from the year 2013-14. The revised eligibility norms for empanelment of SCAs as prescribed by RBI in consultation with the WG have been indicated in Annex 1. The categorization/eligibility norms for empanelment of branch auditors which have been kept unchanged are indicated in Annex 2.

The guidelines/instructions relating to the selection procedure to be followed for appointment of statutory auditors in PSBs and details thereof are furnished in Annex 3


Annex 1

Norms of Empanelment for Statutory Central Auditors
of Public Sector Banks applicable from the year 2013-14

As on 1 January of the relative year the firm should have

(i) minimum 7 full time chartered accountants, of which at least 5 should be full time partners exclusively associated* with the firm. These partners should have minimum continuous association with the firm i.e. one each should have continuous association with the firm at least for 15 years and 10 years , two with a minimum of 5 years each and one with a minimum of one year. The remaining 2 full-time chartered accountants or partners, as the case may be, should also have a continuous association with the firm for a period of one year*. Four of the partners should be FCAs. Also at least two of the partners should have minimum 15 and 10 years experience in practice. In case the paid Chartered Accountant available with the firm without any break was admitted as a partner of the said firm at a future date, his association with the firm as a partner will be counted from the date of his joining the firm as a paid Chartered Accountant.

*Note:

1. The definition of 'exclusive association' will be based on the following criteria:

(a) The full time partner should not be a partner in other firm/s.

(b) He should not be employed full time / part time elsewhere.

(c) He should not be practicing in his own name or engaged in practice otherwise or engaged in other activity which would be deemed to be in practice under Section 2(2) of the Chartered Accountants Act, 1949.

(d) The total compensation@ of the partner from the firm should not be below the following limit:

In case the Head office of the firms located in

(i) Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad

ACA partner` 1.80 lakh in a year (` 15000/- per month)
FCA partner` 3.00 lakh in a year (` 25000/- per month)

(ii) Other places:

ACA partner ` 1.20 lakh in a year (` 10000/- per month)
FCA partner` 1.80 lakh in a year (` 15000/- per month)

(e) A partner whose total compensation@ from the firm is less than the following will not be treated as exclusively associated with the firm :

Firms having more than 14 partners1%
Firms having 10 to 14 partners3%
Firms having 5 to 9 partners5%
Firms having less than 5 partners 8%
@Total compensation =Sum total of share of profit, remuneration and interest on capital.

2. Out of the 7 full-time chartered accountants, the remaining two chartered accountants/partners (besides the 5 exclusively associated partners) will be treated to be exclusively associated with the firm only if they are continuously associated with the firm for a period of one year as on January 1 of the relevant year. These norms will be made applicable from the financial year 2014-15 i.e. the chartered accountants/partners will have to comply with the norms as on January 1, 2014.

(ii) the number of professional staff (excluding typists, stenographers, computer operators, secretary/ies and sub-ordinate staff etc.), consisting of audit and articled clerks with the knowledge in book-keeping and accountancy and are engaged in outdoor audit should be 18.

(iii) the standing of the firm should be of at least 15 years which would be reckoned from the date of availability of one full time FCA continuously with the firm.

(iv) the firm should have minimum statutory central audit experience of 15 years of public sector banks (before or after nationalisation) and/or by way of statutory branch audit thereof or that of statutory audit experience of a private sector bank. In case any of the partner of an audit firm is nominated / elected for a period of at least 3 years or more on the Board of any public sector bank then his / her such experience for a maximum period of three years will be considered as bank audit experience, provided such experience has not been earned by him/her concurrently i.e. when his / her firm was assigned statutory audit of any PSB, select all India financial Institutions or RBI.

(v) the firm should have statutory audit experience of 5 years of the public sector undertakings (either Central or State Government undertaking). While calculating such experience, more than one assignment given to a firm during a particular year or more than one year's statutory audit (audits in arrears) assigned to the firm will be reckoned, as one year experience only, for the purpose of counting such experience.

(vi) at least two partners of the firm or its paid Chartered Accountants must possess DISA/CISA or any other equivalent qualification.


Annex 2

Norms for the empanelment of audit firms to be appointed as statutory branch auditors for public sector banks (2013-14)

Cate-gory

No. of CAs exclusively associated with the firm
(Full time)

No. of partners exclusively associated with the firm (full time) (Out of 2)

Profe-ssional
staff

Bank audit experience

Standing of the audit firm

(1)

(2)

(3)

(4)

(5)

(6)

I.

5

3

8

The firm or at least one of the partners should have a minimum of 8 years experience of branch audit of a nationalised bank and/ or of a private sector bank .

8 years

II.

3

2

6

The firm or at least one of the partners should have preferably conducted branch audit of a nationalised bank or of a private sector bank.

6 years 
(for the firm or at least one partner)

III.

2

1

4

The firm or at least one of the CAs should have preferably conducted branch audit of a nationalised bank or of a private sector bank for at least 3 years

5 years 
(for the firm or at least one partner)

IV.

2                        2
Even proprietorship concern without bank audit experience may be considered as hitherto. (The proprietary concerns of Chartered Accountants with 1 paid CA, 2 professional staff and not having any statutory branch audit experience of a nationalised bank or of a private sector bank will be treated at par with the partnership firm after deducting their 3 years seniority from the date of their establishment).

2

Not necessary

3 years

 

 


Annex 3

PROCEDURE FOR APPOINTMENT OF
STATUTORY AUDITORS IN PUBLIC SECTOR BANKS

A. Statutory Central Auditors (SCAs)

1. For the year 2013-14 and onwards, GoI have approved the revision in the norms on the number of SCAs to be appointed in PSB as under:

i) Category "A" Banks (Large Banks viz. Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, Central Bank of India and Union Bank of India) shall not have more than 6 SCAs. However, in case of SBI the number of SCAs shall not be more than 14.

ii) Category "B" Banks (Medium Banks viz. Allahabad Bank, Corporation Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Syndicate Bank and UCO Bank) shall not have more than 5 SCAs, and;

iii) Category "C" Banks (Small Banks viz. Andhra Bank, Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) shall not have more than 4 SCAs.

Actual numbers of SCAs to be appointed can be decided by respective boards subject to the above limit.

2. As per the existing practice, SCAs appointed will have a tenure of three years after which they will be rested for a period of two years. The appointment of SCAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time and also subject to their suitability.

3. From the financial year 2013-14, selection of SCAs will be done by the Selection Committee constituted by GoI and the procedure that will be followed by RBI for forwarding the list of eligible audit firms for selection of SCAs by the Selection Committee constituted by GoI is as under :

  • After receipt of the list of eligible auditors / audit firms, based on the eligibility norms for empanelment of auditors / audit firms prescribed by RBI from the Office of the Comptroller and Auditor General of India (C&AG), verification of eligibility of audit firms by RBI with respect to their bank audit experience available with RBI will be done by RBI.

  • List of eligible firms after excluding the firms which are to be continued, rested and denied audit during the relevant year will be prepared by RBI and forwarded to GoI for selection by the Selection Committee.

  • After selection, GoI will advise bank-wise names of the selected firms to the respective banks. As per the statutory requirement, banks, in turn, are required to forward the names of the selected SCAS to RBI for its prior approval before their actual appointment.

B. Statutory Branch Auditors (SBAs)

1. The norms for selection of branches of PSBs for statutory audit from the year 2012-13 and onwards will be based on the following :

  1. For the year 2012-13, statutory branch audit of PSBs may be carried out for all branches with advances of ` 20 crore & above and 1/5th of the remaining branches covering a representative cross section of rural/semi-urban/urban and metropolitan branches, predominantly including branches which are not subjected to concurrent audit, so as to cover 90% of advances of a bank. CPUs/LPUs/and other centralized hubs by whatever nomenclature called would be included in the one fifth of the remaining branches every year.

  2. In respect of branches below the cut-off point, which are subject to concurrent audit by chartered accountants, henceforth, LFARs and other certifications done earlier by SBAs will now be submitted by the concurrent auditors and such branches may not generally be subject to statutory audit.

  3. Going forward, in mutual discussions with GoI and SCAs, based, inter alia, on the operational efficiency and robustness of CBS, system driven identification of NPAs, and integrity of MIS, managements of individual PSBs may decide on the threshold level of advances for the purpose of selecting branches for statutory audit.

  4. Progressively, the threshold level of advances may be increased so that the number of branches to be taken up for statutory audit is phased down over a period of time.

2. The following procedure will be followed for appointment statutory branch auditors (SBAs) in public sector banks (PSBs):

(i) The list of eligible auditors/audit firms will be prepared by the Institute of Chartered Accountants of India (ICAI) as per the norms prescribed by RBI.

(ii) The above list will be subjected to scrutiny by RBI for identifying the continuing and rested firms and excluding audit firms against whom adverse remarks/disciplinary proceedings are pending or who have been denied audit.

(iii) RBI will, thereafter, forward the final list of all eligible auditors/audit firms to PSBs for selection.

(iv) The PSBs will select the required number of branch auditors/audit firms. Banks will be required to clearly advise the audit firms selected for consideration of appointment that each audit firm can take up audit assignment (branch audit) in one PSB only. The audit firm should give their consent in writing for consideration of appointment in the bank concerned for the particular year and the subsequent continuing years.

(v) The consent given by an audit firm will be treated as irrevocable and request, if any, from audit firms for changing the bank, after giving its consent to the bank concerned will not be entertained.

(vi) After the selection of branch auditors, PSBs will be required to recommend the names of both continuing and selected branch auditors to RBI for seeking its prior approval before their actual appointment, as per statutory requirement.

3. SBAs will have a maximum tenure of four years. The appointment of SBAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time and also subject to their suitability.

4. The number of eligible auditors / audit firms is more than the number of branches to be audited at the following 33 centres (viz. Mumbai, Kolhapur, Pune, Solapur, Thane, Kolkata, Chennai, Coimbatore, Delhi/ New Delhi, Ajmer, Bikaner, Jaipur, Kota, Udaipur, Ahmedabad, Vadodara, Surat, Hyderabad, Chandigarh, Raipur, Faridabad, Gurgaon, Panchkula, Panipat, Sonipat, Bangalore, Ernakulam, Indore, Nagpur, Ludhiana, Jodhpur, Bhilwara, and Ghaziabad). In such centres, the auditors/ audit firms will be put to a period of compulsory rest for two years after completion of four years of continuous branch audit. In other centres, where the number of eligible auditors / audit firms is less than the number of branches to be audited, the branch auditors on completion of four years of continuous branch audit will be subjected to the policy of rotation.

5. While allotting branches, banks are required to select auditors/audit firms which are in close proximity to their offices/branches. Banks are also required to have a suitable mix of various categories of auditors / audit firms while selecting the branch auditors keeping in view the size of the branches to be audited.

6. As regards statutory branch audit to be carried out by SCAs, banks will allot the top 20 branches(to be selected strictly in order of the level of outstanding advances) in such a manner as to cover a minimum of 15% of total gross advances of the bank by SCAs.

C. General Guidelines applicable to both SCAs and SBAs

(i) All PSBs are required to have a Board approved policy for appointment of statutory auditors and the same may be hosted on the bank's web-site. Banks are also required to ensure that the policy framed by the Board in the matter of selection of auditors/audit firms for appointment of auditors is strictly adhered to. Further, the list of firms selected for appointment as statutory branch auditors may be placed before the ACB/Board of bank before for its concurrence before it is forwarded to RBI for final approval.

(ii) The policy of one audit firm for one PSB will be continued. Accordingly an audit firm will be eligible to be appointed as a central/branch auditor of only one PSB during a particular year.

(iii) Further, an audit firm which takes up statutory central audit assignment in a PSB will not be eligible to be appointed as a statutory central auditor in a private sector/foreign bank during that particular year and vice versa. The policy has been made applicable from the year 2012-13 onwards.

(iv) In order to protect the independence of the auditors/audit firms, banks will have to make the appointments of SCA/branch auditors for a continuous period of three and four years respectively subject to the firms satisfying the eligibility norms each year. Banks cannot remove the audit firms during the above period without the prior approval of the Reserve Bank of India.

Registration Certificates for export of cotton

W.e.f 01-07-2013,Online application for grant of Registration Certificates for export of cotton, cotton yarn, non-basmati rice, wheat and sugar mandatory. [Trade Notice 3/2013 of 28-05-2013].

29 May 2013

Section 40(a)(ia) applies to transaction made during the year

Section 40(a)(ia) applies to transaction made during the year under Income Tax Act, in the High Court of Gujarat at Ahmedabad Sikandarkhan N Tunvar.

FVU 3.71 mandatory w.e.f 26-05-2013 for quarterly TDS/TCS statements



FVU 3.71 mandatory w.e.f 26-05-2013 for quarterly TDS/TCS statements from financial year 2010-11. 80CCG added, 80CCF removed. No need for 85% PAN for TCS on bullion and jewellery.

28 May 2013

The refund of interest paid on delayed payment of service tax



The refund of interest paid on delayed payment of service tax, which is not liable to pay , shall not allowed if the liability of service tax has been admitted. Custom Excise Service Tax Appellate Tribunal, Mumbai in case of Skoda Auto India Private Limited versus Commissioner of Central Excise, Aurangabad (2012) 28 taxmann.com 58 (Mumbai-CESTAT) in Order No.-A/382/2012-WZB/C-I(CSTB), dated 05 June, 2012.

27 May 2013

The Central Board of Direct Taxes (CBDT) is spreading e-tax net



The Central Board of Direct Taxes (CBDT) is spreading e-tax net through [Notification no. 34/2013, dated 01.05.2013]. E-filing of IT returns is now mandatory for individuals, including salaried taxpayers earning more than Rs 5 lakh taxable income during the financial year ended 31-03-2013.

Exemption u/s. 10(23C)



Exemption u/s. 10(23C), (vi) can be claimed without applying for registration u/s 12A of Income Tax Act. [High Court of Allahabad Jeevan deep charitable trust].

25 May 2013

RRB Audit Fee revision

This is to bring to your notice that RRB audit fee revised by NABARD vide circular .No.-NB.IDD.RRCBD.BMBL/323-D/2013-14 date 22-05-2013. All RRB auditor's will get fee for 2012-13 as per revised rates.

Service Tax Amnesty acknowledgement

Service Tax Department to issue acknowledgement of discharge in Form VCES-3 in 7 days from furnishing of details of payment of tax and interest. Service Tax Amnesty Scheme.

Cheque return charges

Cheque return charges only where customer at fault. Cheque without any recourse to payee to be resent in the next clearing within 24 hours. RBI Circular of 07-05-2013.

Empanelment as financial experts

Applications are invited from practising Chartered Accountants/CA firms for empanelment as financial experts for Biotech Consortium India Limited (BCIL), New Delhi.

24 May 2013

Form 16A, 27D for Quarter four by 30-05-2013 and Form 16 by 31-05-2013


Issue Form 16A, 27D for Quarter four by 30-05-2013 and Form 16 by 31-05-2013. Mandatory for all to download Form 16(Part A) and Form 16A from www.tdscpc.gov.in.

Business responsibility report to be part of Annual report


Business responsibility report to be part of Annual report w.e.f financial year ending 31-12-2012.optional for other listed companies. SEBI Circular of 13-08-2012.

Protective additions in the hand of minors

Protective additions in the hand of minors not required if the same been made on substantive basis in the hand of father under Income Tax Act. [ITAT Delhi Bench master Akshay Bansal].

22 May 2013

Service Tax Returns, (ST- 3) for July -September, 2012

Service Tax Returns, (ST- 3) for July -September, 2012, e-filed in ACES can now be viewed under View Original ST3 and View ST-3 options under RET module of ACES.

Commission paid to related parties for services

Commission paid to related parties for services rendered by them is allowable expenditure under Income Tax Act. High Court of Gujarat at Ahmedabad, Naval Technoplast Industries Limited.

21 May 2013

Excise Duty in closing stock

If liability to pay excise duty is not incurred, excise duty is not to be included in closing stock.
High Court of Gujarat at Ahmedabad, Bell Granito Ceramica Limited.

Issue of equity shares under FDI

Issue of equity shares under FDI Scheme allowed under Government route against Pre-operative/Pre-incorporation expenses. RBI Circular 104 of 17-05-2013.

20 May 2013

Molasses produced during manufacturing of sugar not scrap

Molasses produced during manufacturing of sugar not scrap for the purpose of section 206C of Income Tax Act. ITAT Amritsar Bench Nawanshahar Co-op. Sugar Mills Ltd.

Dena Bank concurrent audit

Dena Bank invites applications for appointment of CA firms for conduct of Concurrent Audit of the Branches from July, 2013 to June, 2014.

18 May 2013

Date for filing the ST-3 return, for the period from October, 2012 to March, 2013

Date for filing the ST-3 return, for the period from October, 2012 to March, 2013 has been extended from 25th April, 2013 to 31st August, 2013. Order No. 03/2013-ST, [F.No.137/99/2011-Service Tax], dated 23-04-2013.

EPF Rate for 2012-13

Government notifies Employee Provident Fund rate for 2012-13 at 8.5%. Those who settled or transferred their accounts in last 14 months to approach Provident Fund department for balance 0.25%.

Reopening not valid

Reopening not valid if reasons silent on quantum of escaped tax under Income Tax Act. Allahabad High Court, Mahesh Kumar Gupta.

16 May 2013

CBEC clarifies certain issues on Service Tax Amnesty Scheme

CBEC clarifies certain issues on Service Tax Amnesty Scheme
SERVICE TAX VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME - CBEC CLARIFIES CERTAIN ISSUES – MERE PENDENCY OF LETTER SEEKING GENERAL INFORMATION NOT AN IMPEDIMENT TO PERSON SEEKING THIS SCHEME
CIRCULAR NO. 169/4/2013-ST [F.NO.B1/19/2013-TRU], DATED 13-5-2013
The Service Tax Voluntary Compliance Encouragement Scheme (VCES) has come into effect upon enactment of the Finance Bill, 2013 on the 10th May, 2013. The Service Tax Voluntary Compliance Encouragement Rules, 2013 has been issued to bring into effect the Scheme. Some references have been received seeking clarification as regards the scope and applicability of the Scheme.
2. The issues have been examined and clarifications thereto are as follows:
S. No.
Issues
Clarification
1
Whether a person who has not obtained service tax registration so far can make a declaration under VCES?
Any person who has tax dues to declare can make a declaration in terms of the provisions of VCES. If such person does not already have a service tax registration he will be required to take registration before making such declaration.
2
Whether a declarant shall get immunity from payment of late fee/penalty for having not taken registration earlier or not filed the return or for delay in filing of return.
Yes. It has been provided in VCES that, beside interest and penalty, immunity would also be available from any other proceeding under the Finance Act, 1994 and Rules made thereunder.
3
Whether an assessee to whom show-cause notice or order of determination has been issued can file declaration in respect of tax dues which are not covered by such SCN or order of determination?
In terms of section 106 (1) of the Finance Act, 2013 and second proviso thereto, the tax dues in respect of which any show cause notice or order of determination under section 72, section 73 or section 73A has been issued or which pertains to the same issue for the subsequent period are excluded from the ambit of the Scheme. Any other tax dues could be declared under the Scheme subject to the other provisions of the Scheme.
4
What is the scope of section 106(2)(a)(iii)?
Whether a communication from department seeking general information from the declarant would lead to invoking of section 106 (2) (a)(iii) for rejection of declaration under the said section?
Section 106(2)(a)(iii) of the Finance Act, 2013 provides for rejection of declaration if such declaration is made by a person against whom an inquiry or investigation in respect of service tax not levied or not paid or short-levied or short paid, has been initiated by way of requiring production of accounts, documents or other evidence under the chapter or the rules made thereunder, and such inquiry or investigation is pending as on the 1st day of March, 2013.
The relevant provisions, beside section 14 of the Central Excise Act as made applicable to service tax vide section 83 of the Finance Act, 1994, under which accounts, documents or other evidences can be requisitioned by the Central Excise Officer for the purposes of inquiry or investigation, are as follows,-
(i) Section 72 of the Act envisages requisition of documents and evidences by the Central Excise Officer if any person liable to pay service tax fails to furnish the return or having made a return fails to assess the tax in accordance with the provision of the Chapter or rules made thereunder.
(ii) Rule 5A of the Service Tax Rules, 1994 prescribes for requisition of specified documents by an officer authorised by the Commissioner for the purposes specified therein.
The provision of section 106(2)(a)(iii) shall be attracted only in such cases where accounts, documents or other evidences are requisitioned by the authorised officer from the declarant under the authority of any of the above stated statutory provisions and the inquiry so initiated against the declarant is pending as on the 1st day of March, 2013.
No other communication from the department would attract the provisions of section 106(2)(a)(iii) and thus would not lead to rejection of the declaration.
3. Trade Notice/Public Notice may be issued to the field formations and tax payers.


No penalty on gift of Resurgent India Bonds from Non Relative NRI under Income Tax Act.

No penalty on gift of Resurgent India Bonds from Non Relative NRI under Income Tax Act.
In the Income Tax Appellate Tribunal, Indore Bench, Indore, Smt.Sangeeta Rathi.

11 May 2013

President Assent to Finance Bill 2013

Finance Bill gets enacted as Act No.17 of 2013; President gives assent on 10th May,2013

Constitution Amendment Bill 2011

revised E-TDS Fee


Revised filing fee for E-TDS/TCS, Form 24G & AIR at TIN-FCs: 0100 records: Rs 35, 100- 1000 records: Rs 200 and more than 1000 records: Rs 650 (inclusive of ST).

Five Days Residential Programme on Advanced Leadership for Chartered Accountants at IIM Ahmedabad

ICAI: Registration for the 2nd Batch of *Five Days Residential Programme on Advanced Leadership for Chartered Accountants at IIM Ahmedabad *...