Section 194N Exemption for Foreign Representations: Key Highlights of the New Income-Tax Notification

-
  On 28th November 2024 , the Ministry of Finance issued Notification No. 123/2024 , bringing clarity to the applicability of Section 194N of the Income-tax Act, 1961. The notification exempts specified foreign representations from the provisions of this section, reinforcing India's commitment to international diplomatic norms and global cooperation. Effective from 1st December 2024 , this move comes after due consultation with the Reserve Bank of India (RBI) and aligns with international protocols such as the Vienna Convention and the United Nations Privileges and Immunities Act . Understanding Section 194N of the Income-tax Act Section 194N mandates tax deduction at source (TDS) on cash withdrawals exceeding ₹1 crore in a financial year . The provision applies to withdrawals from banks, co-operative banks, and post offices, aiming to curb cash usage and promote digital transactions. Fifth Proviso to Section 194N The fifth proviso grants the Central Government the authority ...
Post a Comment

NFRA Proposes Overhaul of Auditing Standards to Align with Global Quality Control Standards

-

 The National Financial Reporting Authority (NFRA) recently concluded its 18th meeting, held on November 11-12, 2024, resulting in several key recommendations to revise India’s auditing and quality control standards. These revisions are designed to align India's Standards on Quality Management (SQM) and Standards on Auditing (SA) with international benchmarks, specifically modeled after the International Standards on Quality Management (ISQM) and International Standards on Auditing (ISA). Here’s a detailed look at the NFRA’s recommendations and their potential implications for auditing practices in India.

Key Highlights of the NFRA’s Recommendations

1. Revision of Standards on Quality Control to Standards on Quality Management
NFRA has recommended that the Standard on Quality Control (SQC 1) be revised to Standards on Quality Management, aligning it with ISQM 1 and ISQM 2, which are globally accepted quality management standards. These revisions are intended to enhance the robustness and adaptability of audit quality controls across firms.

This shift emphasizes proactive quality management rather than traditional quality control, introducing a systematic, risk-based approach that enables audit firms to manage risks more effectively.

2. Alignment of Standard on Auditing (SA) 600 with Global Standard ISA 600
NFRA has recommended that SA 600, which addresses auditing procedures and considerations in group financial statements, be revised and aligned with the international ISA 600 standards. The revised SA 600 will now be specifically applicable to Public Interest Entities (PIEs), excluding Public Sector Banks, Public Sector Undertakings (PSUs), and public sector insurance companies.

This updated standard will likely refine audit consistency and quality in complex audit environments, especially for PIEs, where financial accountability and transparency are crucial.

3. Joint Auditors’ Liability Under SA 299
One notable recommendation involves revising SA 299, which governs the responsibilities of joint auditors. NFRA has proposed that the liability of joint auditors be changed to make them jointly and severally responsible, in line with international standards. This change aims to enhance audit accountability, ensuring that each auditor in a joint audit arrangement shares responsibility for the audit outcomes.

4. Updates to Special Purpose Auditing Standards (SA 800 Series)
NFRA also recommended updating three specialized Standards on Auditing (SA):

  • SA 800 (Revised): Special Considerations-Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks.
  • SA 805 (Revised): Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement.
  • SA 810 (Revised): Engagements to Report on Summary Financial Statements.

These revisions will enhance the clarity and effectiveness of audits conducted for special-purpose frameworks, single financial statements, and summary financial statements, ensuring these audits meet global expectations.

5. Rebranding of Indian Auditing Standards as "IndSAs"
Following practices seen in countries like the UK, Australia, and Singapore, NFRA recommended rebranding Indian Standards on Auditing as IndSAs to clearly distinguish them as Indian standards that align with international standards. This renaming will improve recognition of India’s adherence to global standards, boosting investor confidence in Indian audits.


Approval Status and Implementation Timeline

The recommendations received majority approval from NFRA members, including representatives from the Comptroller and Auditor General (CAG), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and independent experts from IIM Bangalore and ISB Hyderabad. However, representatives from the Institute of Chartered Accountants of India (ICAI) expressed reservations regarding the changes, which may point to potential challenges or areas for further discussion.

Pending the Central Government's approval, these revised standards are expected to become effective from April 1, 2026, giving audit firms sufficient time to adapt to the new quality management requirements and standards

Comments

Post a Comment

Popular posts from this blog

Classification of Accrued Interest on Short-Term Fixed and Flexi Deposits under Ind AS

-
  Introduction In the financial world, companies regularly seek to optimize cash management through short-term deposits that are highly liquid, known as "cash equivalents." However, under the Indian Accounting Standards (Ind AS) framework, the classification of accrued interest on such deposits can create debate, particularly during the audit process. This blog explores how accrued interest on short-term fixed and flexi deposits should be classified under Ind AS, with insights from recent Expert Advisory Committee (EAC) opinions and Ind AS 7, the Statement of Cash Flows. The Scenario Sonu Limited, a company specializing in infrastructure projects, classifies its investments in Flexi Deposits and Fixed Deposits with a maturity of three months or less as "cash and cash equivalents" under its current accounting policies. This classification includes any accrued interest on these deposits. However, during the audit, the auditors raised concerns, suggesting that this tre...
Read more

"The Fragrance of Love: A Love Story of Clearing the Air"

-
Image
"The Misunderstanding" T he next day, Aarav arrives at school, filled with anticipation to finally speak to Avni. To break the ice, he slips a note into her book that simply reads, "Hi, this is Aarav." When Avni reads the note, she looks up and catches Aarav's eye, but she quickly looks away, leaving Aarav feeling rejected. Disheartened, Aarav couldn't believe that he had mustered the courage to write to Avni, only to be ignored. Little did he know that Avni had been preoccupied with schoolwork and had not even noticed the note. "An Unforgettable Encounter in the School Corrido r" During their lunch break, Aarav waits for Avni in the corridor outside their classroom. As Avni walks back from the restroom, she spots Aarav standing in front of the door, waiting for her. Their eyes meet, and at that moment, they both feel a spark. Aarav, with tousled dark hair, was dressed in his best clothes. He wore a sharp navy blue suit with a crisp white shirt a...
Read more

"Spreading Cheer: A Secret Santa Celebration"?

-
Image
Celebrating the Holidays with a Secret Santa Game The holiday season is here, and everyone is excited to celebrate with their loved ones. Our group of friends came up with the idea of playing "Secret Santa" on our way back from our trip to Wayanad. We were all eager to continue the fun and laughter that we experienced during our trip. The Return Journey  Preparing for the Game Our friends Swetha and Keerthana organized the game and wrote down the names of all the people in our group, including Venkat, Pavan, Chetna, Vedvyas, Jay Ganesh, Lakshmi Priya, Swetha, Vignesh, Sushmita, Keerthana, and Varsha. We each picked a chit without revealing the name on it to anyone else. Unfortunately, Keerthana and Vignesh were not with us when we picked the chits, as they had to leave for Mangalore for their audit. However, Swetha made sure to safely hand over the chits to them later. Introducing Some Amazing Personalities - Get to Know Them! " Meet Venkat (myself), a friendly and spon...
Read more