Related Topics: Banking Frauds, Y.H. Malegam Committee
Reserve Bank of India (RBI) has revised the guidelines on concurrent audit system following the recommendations by an expert committee under Y.H. Malegam.
What is Concurrent Audit?
- It is a systematic and timely examination of financial transactions on a regular basis to ensure accuracy, authenticity, compliance with procedures and guidelines.
- The emphasis under concurrent audit is not on test checking but on substantial checking of transactions.
- It is an ongoing appraisal of the financial health of an entity to determine whether the financial management arrangements (including internal control mechanisms) are effectively working and identify areas of improvement to enhance efficiency.
- This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilant internal audit to preclude the incidence of serious errors and fraudulent manipulations.
- According to the revised guidelines, concurrent auditors will be appointed for a period of not more than three years. Further, the age limit for retired staff engaged as concurrent auditors may be capped at 70 years.
- Earlier the tenure of external concurrent auditors was fixed at five years on a continuous basis.
- The option to consider whether concurrent audit should be done by bank’s own staff or external auditors (which may include retired staff of its own bank) continues to be left to the discretion of individual banks.
- In case the bank has engaged its own officials as concurrent auditors, they should be experienced, well trained and sufficiently senior.
- The staff engaged in concurrent audit must be independent of the branch/business unit, where concurrent audit is conducted.
- Under the new guidelines, the scope of work for concurrent auditors is left to the discretion of the head of internal audit of banks, with the due prior approval of the Audit Committee of the Board of Directors (ACB)/Local Management Committee ((LMC) in case of foreign banks) of the bank.
- Earlier, the audit covered at least 50% of the advances and 50% of deposits of a bank.
- Banks should ensure that the concurrent audit covers risk sensitive areas identified by them as per their specific business models.
- The broad areas of coverage under concurrent audit shall be based on the identified risk of the unit and must include random transaction testing of sufficiently large sample of such transactions wherever required.
- Banks’ Internal Audit Department should develop a reporting system for concurrent auditors with the approval of ACB/LMC.
- The findings of the concurrent auditors may be received in a structured format prescribed by the bank.
- Minor irregularities pointed out by the concurrent auditors shall be rectified on the spot.
- The major deficiencies/aberrations should be immediately brought to the notice of Head Office/Controlling Office of the concerned branch/business unit of the bank.
The guidelines require the ACB/LMC of the bank to review the effectiveness of the Concurrent Audit system as well as the performance of the concurrent auditors on an annual basis and take necessary measures to suitably strengthen the system.
[Source: Livemint, The Hindu]
Related Topics: Fisheries Sector, Reports & Indices
Union Minister of Fisheries, Animal Husbandry & Dairying has released the “Handbook on Fisheries Statistics – 2018”, published by the Department of Fisheries of Ministry of Fisheries, Animal Husbandry & Dairying, Government of India.
The Handbook on Fisheries Statistics – 2018
- It is the 13th edition of the Handbook, which presents useful statistical information for various aspects of Fisheries sector.
- The last (12th) edition of Handbook was published in 2014.
- The latest edition provides information on year wise fish production (Marine & Inland) from 1990-91 to 2017-18, trend of fisheries exports, fisheries resources, fishing craft, pattern of per capita fish consumption in different States/UTs, Grass Value Addition (GVA) from fisheries sector and its contribution to total GVA of the Country, fisheries institutes, fishermen population and various schemes implemented for sustained and responsible development of fisheries sector.
Fish Production in India
- The total fish production of 125.9 lakh tonnes was registered during 2017-18 with a contribution of 89.02 lakh tonnes from inland sector.
- The total fish production in 2017-18 was 10.14 per cent more than 11.43 mt produced in 2016-17.
- Inland fisheries, which grew at 14.05 per cent accounted for much of the growth.
- Marine fisheries production, on the other hand, went up by only 1.73 per cent in 2017-18.
- India is currently world’s second largest producer of fish after China.
- India is also world number two in aquaculture production as well as in inland capture fisheries.
- Andhra Pradesh, which captured 34.5 lakh tonnes of fish, topped the Indian States, followed by West Bengal which accounted for 17.4 lakh tonnes.
- Andhra Pradesh has recorded the highest production of inland fish (28.45 lakh tonnes) where as Gujarat is the leading state in Marine fish (7.01 Lakh tonnes) in the country.
- During 2017-18, the volume of fish and fish products exported was 13,77,243.70 tonnes worth Rs 45,106.90 crore.
- The export of Marine Fish products has registered growth of 21.35% (Quantity) and 19.11 % (Value) during the year 2017-18.
- Government had drawn up plans to increase marine exports to ₹1 lakh crore over the next five years.
- Towards this, the Centre will invest ₹ 25,000 crore in the fisheries sector.
Significance of Fisheries Sector
- It is a major source of livelihood for over 1.60 Crore people along with double the number in down and upstream.
- Development of fisheries can ensure nutritional security, food security of India and also provide employment in these regions that are predominately inhabited by rural populace
- It will play a crucial role in the doubling of farmers’ income.
Related Topics: Indian Economy, Government Policies & Initiatives
- Finance Minister Nirmala Sitharaman has announced big cuts in corporate tax rate, giving a ₹1.45 lakh crore stimulus aimed at reviving private investment and lifting growth from a six-year low.
- The government has promulgated an ordinance – the Taxation Laws (Amendment) Ordinance 2019 to make amendments in the Income-tax Act and Finance Act 2019.
Existing Domestic Companies
- All domestic companies will be allowed to pay corporate tax at the rate of 22% (effective rate 25.7% including cess and surcharge) from 30%.
- This would be subject to the condition that these companies do not avail of any tax incentives or exemptions.
- Moreover, no Minimum Alternative Tax (MAT) would be imposed on these companies.
Domestic Companies incorporated on or after 1st October 2019
- To boost manufacturing and the ‘Make-in-India’ initiative, the government has slashed corporate tax rate to 15% (effective rate 17.01%), from 25%, for domestic companies incorporated on or after 1st October 2019 making fresh investment in manufacturing.
- No MAT will be imposed on these companies either.
- This will be subject to the condition that the company does not avail of any tax incentives or exemptions and commences production by 31 March, 2023.
Minimum Alternate Tax (MAT)
To provide relief to companies that continue to avail of exemptions and incentives, the rate of MAT has been reduced from 18.5% to 15%.
- Enhanced surcharge introduced by the Finance Act 2019 shall not apply to capital gains arising on sale of equity share in a company/unit of equity-oriented fund or unit of business trust liable for securities transaction tax.
- Enhanced surcharge shall not apply to capital gains on sale of any securities, including derivatives, in the hands of Foreign Portfolio Investors (FPIs).
Companies availing Tax Exemption
- A company which does not opt for the concessional tax regime and avails the tax exemption/incentive can continue to pay tax at the pre-amended rate.
- After expiry of their tax holiday/exemption period, these companies can opt for the new concessional tax regime.
To provide relief to listed companies that had announced share buyback before 5th July 2019, the government exempted such companies from buyback tax announced in the Budget.
Why the government is cutting taxes?
- The corporate tax cut is part of a series of steps taken by the government to tackle the slowdown in economic growth, which has dropped to 5% in the June quarter.
- Many investors have expressed concerns over the additional taxes that were announced by the government during the budget in July 2019 and began pulling money out of the country.
- The government hopes that the new, lower tax rates will attract more investments into the country and help revive the domestic manufacturing sector which has seen lackluster growth.
Impact of Tax Rate Cut
- The corporate tax rate is a major determinant of how investors allocate capital across various economies.
- Tax cuts can offer people more incentive to produce and contribute to the economy, by putting more money in the hands of the private sector.
- The present cut in taxes can make India more competitive on the global stage by making Indian corporate tax rates comparable to that of rates in East Asia.
- However, the tax cut is expected to cause a yearly revenue loss of ₹1.45 lakh crore to the government which is struggling to meet its fiscal deficit target.
- At the same time, if the tax rate cut manages to sufficiently revive the economy, it can help boost tax collections and compensate for the loss of revenue.
- Some economists believe that the current economic slowdown is due to the problem of insufficient demand which cannot be addressed just through tax cuts and instead advocate greater government spending to boost the economy.
- Others, however, argue that lackluster demand faced by sectors like automobiles is merely a symptom of supply-side shocks such as the goods and services tax that have affected various businesses and caused job losses. In that scenario, tax cuts and other supply-side reforms can indeed help the economy recover from its slump.
- The Government should try to simultaneously enact other structural reforms that reduce entry barriers in the economy along with these tax cuts and make the marketplace more competitive.
FACTS OF THE DAY
GLOBAL GOALKEEPERS GOALS AWARD 2019
PM Narendra Modi will be honoured with the ‘Global Goalkeeper Award 2019’ by the Bill and Melinda Gates Foundation for his leadership and commitment to the Swachch Bharat Abhiyaan. The Foundation will host the fourth annual Goalkeepers ‘Global Goals Awards’ on September 24, 2019. The annual awards, in five categories, are presented to leaders and individuals for their efforts in achieving the Sustainable Development Goals (SDGs).The Swachh Bharat Mission was launched by the central government launched on October 2, 2014. It aims to accelerate the efforts to achieve universal sanitation coverage in the country by 2019 as a tribute to Mahatma Gandhi on his 150th birth anniversary.
CONTROLLED HUMAN INFECTION MODEL (CHIM)
The Department of Biotechnology (DBT) is close to finalising three projects worth ₹135 crore, involving Indian and European scientists, to develop new influenza vaccines. These projects involve a Controlled Human Infection Model (CHIM). Under CHIM, volunteers who take part in trials will be infected, under expert supervision, with infectious viruses or bacteria. A CHIM approach will speed up the process whereby scientists can quantify whether potential vaccine candidates can be effective in people and identify the factors that determine why some vaccinated people fall sick and others do not. The risk in such trials is that intentionally infecting healthy people with an active virus and causing them to be sick is against medical ethics. It also involves putting human lives in danger.
AUDIT BUREAU OF CIRCULATIONS (ABC)
Madhukar Kamath, chairman emeritus of DDB Mudra group and mentor of Interbrand India, has been elected chairman of the Audit Bureau of Circulations (ABC) for 2019-20. It is a not for profit circulation-auditing organisation, founded in 1948. It is responsible for certifying and auditing the circulations of major publications, primarily of newspapers and magazines in India.
INTERNATIONAL DAY OF PEACE
International Day of Peace is observed every year on 21 September. The United Nations (UN) General Assembly has declared this as a day devoted to strengthening the ideals of peace, both within and among all nations and peoples. The theme of International Day of Peace 2019 is ‘Climate Action for Peace’.