Noticed food prices lately? Or perhaps the price of gas at the pump has caught your attention. You probably didn't know that raw cotton is up 180 percent since a year ago. Guess where that will take clothing prices. Think deflation is our problem, think again. Inflation is here.
US monetary policy and US debt policy hinge on the assumption of deflation. So much for those policies. Be prepared for major increases in treasury rates which means a dramatic and unanticipated increased in annual federal fiscal deficits. Things are going to get a lot worse quickly.
Bernanke and Obama are going to reap the results that their policies have sowed. A return to the Carter days -- stagflation is back. The stock and bond markets will struggle from here.
Friday, 25 February 2011
Wednesday, 23 February 2011
What Happened to Robin Hood?
In Madison, thousands of high income folks are busy demonstrating in the hopes that lower and middle income taxpayers will pay higher taxes to keep these rich folks riding high. The average teacher in Wisconsin makes between two and three times the all-in compensation of the average Wisconsin taxpayer, so, by all means, lets raise taxes and make the gap even higher. To show their concern for their students, the Wisconsin teachers have taken to calling in sick while they are demonstrating in the state capital for even more money.
Meanwhile, the state faces an immediate $ 3.6 billion shortfall and will be forced to begin laying off teachers next week. Why don't the demonstrating teachers care about the pending layoffs? Because the ones demonstrating will not be the ones laid off. The ones laid off will be the most recently hired teachers with the least seniority and these teachers aren't paid as well or have as much seniority as the ones wreaking havoc in Madison. The rich teachers are protected by seniority rules.
Just imagine a couple both of whom have been school teachers in Wisconsin for twenty years and have a combined compensation exceeding $ 250,000 annually. These are the people demonstrating. These are the people that are not showing up in the classroom even though paid (handsomely) to do so.
Where is Robin Hood? He needs to ride in and support the taxpayer against these rich folks who are robbing the public treasury and not showing up for work.
Student demonstrators, as usual, are supporting the relatively affluent against the interests of the average citizen. No change there.
Meanwhile, the state faces an immediate $ 3.6 billion shortfall and will be forced to begin laying off teachers next week. Why don't the demonstrating teachers care about the pending layoffs? Because the ones demonstrating will not be the ones laid off. The ones laid off will be the most recently hired teachers with the least seniority and these teachers aren't paid as well or have as much seniority as the ones wreaking havoc in Madison. The rich teachers are protected by seniority rules.
Just imagine a couple both of whom have been school teachers in Wisconsin for twenty years and have a combined compensation exceeding $ 250,000 annually. These are the people demonstrating. These are the people that are not showing up in the classroom even though paid (handsomely) to do so.
Where is Robin Hood? He needs to ride in and support the taxpayer against these rich folks who are robbing the public treasury and not showing up for work.
Student demonstrators, as usual, are supporting the relatively affluent against the interests of the average citizen. No change there.
Wednesday, 16 February 2011
Bernanke is a Political Hack
Ben Bernanke is likely the worst Fed Chairman in US history and that's saying something. We have had some really bad ones, but none like this guy. He has now purchased nearly $ 400 billion of his $ 900 billion QE2 buying spree. If he doesn't buy, who will? That's a question that is getting asked a lot lately.
Now Ben has opined on the Dodd-Frank bill, probably the second worst piece of legislation in American history (Obamacare is the winner of the gold). Ben likes the Dodd-Frank bill, otherwise known as FinReg. FinReg is one of the key contributors to our high unemployment rates. So, I guess it is having an impact. It is certainly not irrelevant. The mountain of new rules, regulations and prohibitions have done their job. They have stifled credit creation and muzzled the financial system.
Ben and Obama have a lot in common. Their policies are both significant contributors to our current stagnation and high unemployment.
Now Ben has opined on the Dodd-Frank bill, probably the second worst piece of legislation in American history (Obamacare is the winner of the gold). Ben likes the Dodd-Frank bill, otherwise known as FinReg. FinReg is one of the key contributors to our high unemployment rates. So, I guess it is having an impact. It is certainly not irrelevant. The mountain of new rules, regulations and prohibitions have done their job. They have stifled credit creation and muzzled the financial system.
Ben and Obama have a lot in common. Their policies are both significant contributors to our current stagnation and high unemployment.
The Real Tragedy of State and Local Employees
State and local government employees face signficant layoffs and dramatic reductions in their benefit packages. Why? The unions claim that the reason is the stingy taxpayer, who, in most states, makes less average compensation than the employees that the taxpayer is funding. The real problem is excessive promises by the union leadership, encoded into law by governors, state legislatures and local governments. There has never been any realistic chance that these benefits could be paid for...never. This grand plan only worked as a ponzi scheme, providing benefits to the early recipients until the cold hard facts of demographics revealed the fraudulent nature of the promises.
The great tragedy is that all of this fooled the employees. They assumed that they would be provided abundant retirement income and medical benefits. Thus, there was no need to save. They could spend with abandon and they did. Now, the day of reckoning has arrived and there is no money to pay the promises of the past and no savings to make up for it. That is the real tragedy. People believed these false promises of government and thus did not save and prepare for the future. That is the main reason that the US has the lowest savings rate in the developed world. They think they will be bailed out. Now they are learning that there are no resources available to deal with this problem.
False promises abound in the entitlement arena. President Obama's refusal to address this problem in his recent budget demonstrates the cynicism of the modern American political leadership.
The great tragedy is that all of this fooled the employees. They assumed that they would be provided abundant retirement income and medical benefits. Thus, there was no need to save. They could spend with abandon and they did. Now, the day of reckoning has arrived and there is no money to pay the promises of the past and no savings to make up for it. That is the real tragedy. People believed these false promises of government and thus did not save and prepare for the future. That is the main reason that the US has the lowest savings rate in the developed world. They think they will be bailed out. Now they are learning that there are no resources available to deal with this problem.
False promises abound in the entitlement arena. President Obama's refusal to address this problem in his recent budget demonstrates the cynicism of the modern American political leadership.
The Obama Budget
Apparently the Obama Administration has forgotten the results of the November election. The new Obama budget proposal unveiled this week brings back all of the same, tired, big government plans that the President has been pushing since the day he took office. It no longer matters to the President that the recovery is producing no jobs. He has grown used to that fact, apparently. Now, the President plans new spending initiatives to expand on policies that have few supporters even in his own party. The President is becoming more and more irrelevant. Perhaps that is the plan.
Meanwhile major budget cuts are being pushed by the President's opponents in the House of Representatives and even entitlement cuts are under consideration. While there may be zero presidential leadership, there are some good signs that the House of Representatives is not asleep and may supply the leadership that the White House seems incapable of providing.
The President seems bent on using today's fiscal crisis as an opportunity to force Republicans to make unpopular budget decisions. Then, I suppose, he will defend all of this spending and coast to a second term come next year. So much for Obama's view of "winning the future." His budget proposal is a sham.
Meanwhile major budget cuts are being pushed by the President's opponents in the House of Representatives and even entitlement cuts are under consideration. While there may be zero presidential leadership, there are some good signs that the House of Representatives is not asleep and may supply the leadership that the White House seems incapable of providing.
The President seems bent on using today's fiscal crisis as an opportunity to force Republicans to make unpopular budget decisions. Then, I suppose, he will defend all of this spending and coast to a second term come next year. So much for Obama's view of "winning the future." His budget proposal is a sham.
Saturday, 12 February 2011
Egypt -- Politics and Economics
Now that Mubarak has left, the media is trumpeting that Egypt is now "free." That's not a likely result. The military, who has ousted Mubarek and assumed control, owns a huge share of Egyptian business and industry -- estimates range from one-third to to one-half of the entire Egyptian economy is directly owned by the group that now has power in Egypt. Will they give up that power? Not likely.
What this means is that economic freedom will remain in short supply in Egypt. New politicians will appear and there will be elections, but the things that can make a difference to the lives of ordinary Egyptians will not be on the ballot. Egyptians need economic development. They need the freedom to start new businesses, educate their children and live in an economy that produces jobs.
The fundamental need in Arab countries is economic freedom, not the right to vote themselves into an Iranian-like theocracy or a Venezuelan-like monocracy. This does not mean that Mubarak is better than democracy. Democracy is definitely better than Mubarak. Democracy, without economic freedom does not produce economic growth (even though economic freedom without democracy can produce economic growth -- check out Singapore and parts of modern day China).
The Arab lands need economic freedom for their citizenry. The curse of oil has robbed the Arab countries of a middle class and made every Arab country the land of the rich and poor. Education, economic freedom and economic opportunity are the ticket, not the right to choose between various opportunists looking to cash in on Egypt's new found freedom.
As long as the military is Egypt's savior, the Egyptian people cannot be saved.
What this means is that economic freedom will remain in short supply in Egypt. New politicians will appear and there will be elections, but the things that can make a difference to the lives of ordinary Egyptians will not be on the ballot. Egyptians need economic development. They need the freedom to start new businesses, educate their children and live in an economy that produces jobs.
The fundamental need in Arab countries is economic freedom, not the right to vote themselves into an Iranian-like theocracy or a Venezuelan-like monocracy. This does not mean that Mubarak is better than democracy. Democracy is definitely better than Mubarak. Democracy, without economic freedom does not produce economic growth (even though economic freedom without democracy can produce economic growth -- check out Singapore and parts of modern day China).
The Arab lands need economic freedom for their citizenry. The curse of oil has robbed the Arab countries of a middle class and made every Arab country the land of the rich and poor. Education, economic freedom and economic opportunity are the ticket, not the right to choose between various opportunists looking to cash in on Egypt's new found freedom.
As long as the military is Egypt's savior, the Egyptian people cannot be saved.
Wednesday, 9 February 2011
Things to know about New Pension Scheme (NPS)
1. Where can you open your NPS account?
You can open a NPS account at any of the designated banks, post offices or brokerage houses.
2. Is there an initial fees?
A one time fee of Rs 40 is charged
3. What are the documentation requirements?
Carry your PAN card, Address proof, bank details and 3 photographs
4. What happens after opening an account number?
You will be alloted a Permanent Retirement Account Number (PRAN). This is a unique identification number given to your NPS Account. You have to pay a one time registration fee of Rs 50 followed by Annual Maintenance Fees of Rs 350.
5. What are the types of Accounts?
There are 2 types of Accounts Tier I and Tier II.
6. Tier I Account
Tier I account is a pension account and you cannot withdraw money from this account before you turn 60. After 60, you have to stop contributing and start withdrawing from it.
7. How do you withdraw the money from your Tier I Account?
You can withdraw 60% of the corpus as a lump sum or in a phased manner over the next 10 years till you turn 70. At least 40% needs to remain in an annuity for pension. At 70, the entire balance is withdrawn.
8. How do you deposit money in your Tier I Account?
You need to deposit at least Rs 6000 a year in Tier I account with minimum of 4 deposits in a year. It is not advisable to deposit too many small contributions as there is a transaction fee involved.
9. What about Tier II account?
A tier II account is more like a miutual fund and you can withdraw any amount ay time you want. However, you can only open a Tier II account if you have a Tier I Account. Tier II accounts require a minimum balance of Rs 2000. The management fee rate is 0.0009% (far too low than mutual funds). However, see exposure limitations in next point.
10 How about the investment and returns?
The returns on NPS varies and are not widely known. The funds may invest in Equities (E), Corporate bonds (C) or Gilts (G). The investor needs to decide how should be the allocation of the funds. If there is no declaration, there is a concept of automatic allocation of Investment.
E.g. Till the age of 35, 50% of the corpur will invest in Equities, the exposure to stocks will reduce progressively to 40% at the age of 40. by the age of 55, the exposure in equities will only be 10%. However, if the fund invests only 50% of corpus in equities, the exposure will reduce proportionately. i.e. 25% at the age of 35, 20% till 40 and 5% till 55.
Source: The Economic Times Wealth (7-feb-2011), Kolkata, India
You can open a NPS account at any of the designated banks, post offices or brokerage houses.
2. Is there an initial fees?
A one time fee of Rs 40 is charged
3. What are the documentation requirements?
Carry your PAN card, Address proof, bank details and 3 photographs
4. What happens after opening an account number?
You will be alloted a Permanent Retirement Account Number (PRAN). This is a unique identification number given to your NPS Account. You have to pay a one time registration fee of Rs 50 followed by Annual Maintenance Fees of Rs 350.
5. What are the types of Accounts?
There are 2 types of Accounts Tier I and Tier II.
6. Tier I Account
Tier I account is a pension account and you cannot withdraw money from this account before you turn 60. After 60, you have to stop contributing and start withdrawing from it.
7. How do you withdraw the money from your Tier I Account?
You can withdraw 60% of the corpus as a lump sum or in a phased manner over the next 10 years till you turn 70. At least 40% needs to remain in an annuity for pension. At 70, the entire balance is withdrawn.
8. How do you deposit money in your Tier I Account?
You need to deposit at least Rs 6000 a year in Tier I account with minimum of 4 deposits in a year. It is not advisable to deposit too many small contributions as there is a transaction fee involved.
9. What about Tier II account?
A tier II account is more like a miutual fund and you can withdraw any amount ay time you want. However, you can only open a Tier II account if you have a Tier I Account. Tier II accounts require a minimum balance of Rs 2000. The management fee rate is 0.0009% (far too low than mutual funds). However, see exposure limitations in next point.
10 How about the investment and returns?
The returns on NPS varies and are not widely known. The funds may invest in Equities (E), Corporate bonds (C) or Gilts (G). The investor needs to decide how should be the allocation of the funds. If there is no declaration, there is a concept of automatic allocation of Investment.
E.g. Till the age of 35, 50% of the corpur will invest in Equities, the exposure to stocks will reduce progressively to 40% at the age of 40. by the age of 55, the exposure in equities will only be 10%. However, if the fund invests only 50% of corpus in equities, the exposure will reduce proportionately. i.e. 25% at the age of 35, 20% till 40 and 5% till 55.
Source: The Economic Times Wealth (7-feb-2011), Kolkata, India
Monday, 7 February 2011
Obama and the Middle Class
In his speech today before the US Chamber of Commerce, Obama lectured his audience that gains must be shared with the middle class. He points to the eroding take-home income of middle class Americans.
But, there is nothing business can do about the plight of the middle class. That is pretty much determined by Congressionally imposed mandates on businesses. Imagine that you pay an employee $ 40,000 per year and that productivity improves enough to pay that employee $ 50,000 per year. Why wouldn't you do it? Because, in the meantime, Congress has passed a law permitting that employee to sue you for millions of dollars if another employee makes an off-color comment to another employee at the water fountain (or for that matter, off company premises and after hours....it doesn't matter under the law). Now the employee isn't worth $ 50,000 to you. Business has to factor in the potential cost of litigation (and, of course, they do). In fact, the litigation threat may be so costly to your business that you may simply terminate the employee, even though, absent the litigation benefits enacted by Congress, you would have been more than happy to pay the employee $ 50,000 (and hire more of them to boot).
Congress has punished the middle class with employer mandates. Congress has made much of the middle class economically toxic to American business. Obama need look no further than into the mirror to see the group that is responsible for damaging the prospects of the American middle class.
But, there is nothing business can do about the plight of the middle class. That is pretty much determined by Congressionally imposed mandates on businesses. Imagine that you pay an employee $ 40,000 per year and that productivity improves enough to pay that employee $ 50,000 per year. Why wouldn't you do it? Because, in the meantime, Congress has passed a law permitting that employee to sue you for millions of dollars if another employee makes an off-color comment to another employee at the water fountain (or for that matter, off company premises and after hours....it doesn't matter under the law). Now the employee isn't worth $ 50,000 to you. Business has to factor in the potential cost of litigation (and, of course, they do). In fact, the litigation threat may be so costly to your business that you may simply terminate the employee, even though, absent the litigation benefits enacted by Congress, you would have been more than happy to pay the employee $ 50,000 (and hire more of them to boot).
Congress has punished the middle class with employer mandates. Congress has made much of the middle class economically toxic to American business. Obama need look no further than into the mirror to see the group that is responsible for damaging the prospects of the American middle class.
Knocking Down Barriers
President Obama, speaking before the US Chamber of Commerce today, said that he would "knock down" barriers that hamper economic growth.
Well, for starters, how about repealing all of the enacted legislation from the 2009-2010 Congress. That would be a good beginning. In the process, away would go FinReg, Credit Card Reform, and Obamacare among other things.
If the president is serious, then the road is clear. All he needs to do is a complete about face. Anything else is just politics as usual.
Well, for starters, how about repealing all of the enacted legislation from the 2009-2010 Congress. That would be a good beginning. In the process, away would go FinReg, Credit Card Reform, and Obamacare among other things.
If the president is serious, then the road is clear. All he needs to do is a complete about face. Anything else is just politics as usual.
Sunday, 6 February 2011
Companies (Auditor's Report) Order - CARO 2003
Companies (Auditors Report) Order, 2003 [CARO 2003]
‘CARO’ is applicable to every company including a foreign company as defined in section 591 of the Companies Act, 1956 (‘the Act’), except to:
- a banking company,
- an insurance company,
- a company licensed to operate under section 25 of the Act and
- to private company meeting all of the following conditions:
-- paid up capital and reserves not more than Rs.50 lacs
-- has not accepted any public deposit
-- does not have a loan outstanding from any bank or financial institution of Rs.10 lacs or more
-- does not have a turnover > Rs.5 crores
The Order deals with the matters to be contained in the Auditor’s report under Sec 227 of the Companies Act, 1957.
Fixed Assets
Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets
Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account
If a substantial part of fixed assets have been disposed off during the year, whether it has affected the going concern
Inventory
Whether physical verification of inventory has been conducted at reasonable intervals by the management
Are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported
Whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account
Loans
Has the company either granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and amount involved in the transactions;
Whether the rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company;
Whether payment of the principal amount and interest are also regular
If overdue amount is more than one lakh, whether reasonable steps have been taken by the company for recovery/payment of the principal and interest
Internal control
Is there an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. Whether there is a continuing failure to correct major weaknesses in internal control
Transactions u/s 301
Whether transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered
Whether each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time
Public Deposits
In case the company has accepted deposits from the public, whether the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. If not, the nature contraventions should be stated; If an order has been passed by Company Law Board whether the same has been complied with or not
Internal Audit System
In the case of listed companies and/or other companies having a paid-up capital and reserves exceeding Rs.50 lakhs as at the commencement of the financial year concerned, or having an average annual turnover exceeding five crore rupees for a period of three consecutive financial years immediately preceding the financial year concerned, whether the company has an internal audit system commensurate with its size and nature of its business;
Accounts and Records
Where maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, whether such accounts and records have been made and maintained
Depositing dues with Statutory authorities
Is the company regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor in case dues of sales tax/income tax/custom tax/wealth tax/excise duty/cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending may please be mentioned; (A mere representation to the Department shall not constitute the dispute).
Accumulated Losses
Whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the financial year immediately preceding such financial year also;
Repayment of dues to Banks / FIs
Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported
Granted Loans and Advances
Whether adequate documents and records are maintained in cases where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities; If not, the deficiencies to be pointed out
Special statutes
Whether the provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ societies have been duly complied with?
Trading in securities
If the company is dealing or trading in shares, securities, debentures and other investments, whether proper records have been maintained of the transactions and contracts and whether timely entries have been made therein; also whether the shares, securities, debentures and other securities have been held by the company, in its own name except to the extent of the exemption, if any, granted under section 49 of the Act;
Guarantee for loans taken
Whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company
Whether term loans were applied for the purpose for which the loans were obtained
Funds raised on Short term basis
Whether the funds raised on short-term basis have been used for long term investment and vice versa; If yes, the nature and amount is to be indicated
Preferential allotment of shares
Whether the company has made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act and if so whether the price at which shares have been issued is prejudicial to the interest of the company
Debenture issues
Whether securities have been created in respect of debentures issued.
Use of money raised by public issues
Whether the management has disclosed on the end use of money raised by public issues and the same has been verified
Fraud
Whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated
‘CARO’ is applicable to every company including a foreign company as defined in section 591 of the Companies Act, 1956 (‘the Act’), except to:
- a banking company,
- an insurance company,
- a company licensed to operate under section 25 of the Act and
- to private company meeting all of the following conditions:
-- paid up capital and reserves not more than Rs.50 lacs
-- has not accepted any public deposit
-- does not have a loan outstanding from any bank or financial institution of Rs.10 lacs or more
-- does not have a turnover > Rs.5 crores
The Order deals with the matters to be contained in the Auditor’s report under Sec 227 of the Companies Act, 1957.
Fixed Assets
Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets
Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account
If a substantial part of fixed assets have been disposed off during the year, whether it has affected the going concern
Inventory
Whether physical verification of inventory has been conducted at reasonable intervals by the management
Are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported
Whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account
Loans
Has the company either granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and amount involved in the transactions;
Whether the rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company;
Whether payment of the principal amount and interest are also regular
If overdue amount is more than one lakh, whether reasonable steps have been taken by the company for recovery/payment of the principal and interest
Internal control
Is there an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. Whether there is a continuing failure to correct major weaknesses in internal control
Transactions u/s 301
Whether transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered
Whether each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time
Public Deposits
In case the company has accepted deposits from the public, whether the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. If not, the nature contraventions should be stated; If an order has been passed by Company Law Board whether the same has been complied with or not
Internal Audit System
In the case of listed companies and/or other companies having a paid-up capital and reserves exceeding Rs.50 lakhs as at the commencement of the financial year concerned, or having an average annual turnover exceeding five crore rupees for a period of three consecutive financial years immediately preceding the financial year concerned, whether the company has an internal audit system commensurate with its size and nature of its business;
Accounts and Records
Where maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, whether such accounts and records have been made and maintained
Depositing dues with Statutory authorities
Is the company regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor in case dues of sales tax/income tax/custom tax/wealth tax/excise duty/cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending may please be mentioned; (A mere representation to the Department shall not constitute the dispute).
Accumulated Losses
Whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the financial year immediately preceding such financial year also;
Repayment of dues to Banks / FIs
Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported
Granted Loans and Advances
Whether adequate documents and records are maintained in cases where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities; If not, the deficiencies to be pointed out
Special statutes
Whether the provisions of any special statute applicable to chit fund/nidhi/mutual benefit fund/ societies have been duly complied with?
Trading in securities
If the company is dealing or trading in shares, securities, debentures and other investments, whether proper records have been maintained of the transactions and contracts and whether timely entries have been made therein; also whether the shares, securities, debentures and other securities have been held by the company, in its own name except to the extent of the exemption, if any, granted under section 49 of the Act;
Guarantee for loans taken
Whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company
Whether term loans were applied for the purpose for which the loans were obtained
Funds raised on Short term basis
Whether the funds raised on short-term basis have been used for long term investment and vice versa; If yes, the nature and amount is to be indicated
Preferential allotment of shares
Whether the company has made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act and if so whether the price at which shares have been issued is prejudicial to the interest of the company
Debenture issues
Whether securities have been created in respect of debentures issued.
Use of money raised by public issues
Whether the management has disclosed on the end use of money raised by public issues and the same has been verified
Fraud
Whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated
Saturday, 5 February 2011
Unintended Consequences
The economic recovery in the US is stillborn. All the various "initiatives" enacted by the Congress since September of 2008 have virtually guaranteed that the economy cannot have a robust recovery, the kind of recovery that, from previous recessions brought the economy back to full strength. Instead, the new credit rules, the new financial regulations, the new health care mandates, the new tax gimmicks, and the business-demonizing atmosphere of the Obama Administration all serve to slow down economic recovery and to create long term stagnation in employment and economic growth.
The Administration seems truly puzzled by all of this. The lame duck session, extending the Bush tax cuts for two years, simply avoided disaster. The tax cut extension, since it is a temporary two year extension, cannot possibly stimulate the economy in any meaningful way. Changing the rhetoric in the White House is certainly an improvement but is totally inadequate given the enactment of legislation in 2009 and 2010 that shackles businesses and makes adding employees prohibitively expensive.
Businesses can be seen as growth engines and employment generators or they can be seen as purveyors of social causes. They can't do both. More and more,American business is expected to avoid profit maximizing behavior and be good citizens, promoting various social causes. Being good social citizens and promoting social causes inevitably means growing slower, hiring fewer employees and being less dynamic. That's where we are. The "green jobs" rhetoric is nothing more than rhetoric.
It is time to set aside "feel good" rhetoric and create a business environment favorable to jobs creation. So far, the President doesn't seem to get it. He seems genuinely surprised that American business, reeling from the blows of his policies and rhetoric, isn't racing to create jobs and rescue his presidency.
If your main economic banner is "no tax cuts for the rich," then economic stagnation is probably your future. What is needed is the elimination of the numerous barriers to economic prosperity that the Obama Administration and a compliant (and long gone) Congress put in place. What is needed is no less than a complete dismantling of the legislation passed in the last two years by the Congress. Then and only then can a truly vibrant economy take over.
The Administration seems truly puzzled by all of this. The lame duck session, extending the Bush tax cuts for two years, simply avoided disaster. The tax cut extension, since it is a temporary two year extension, cannot possibly stimulate the economy in any meaningful way. Changing the rhetoric in the White House is certainly an improvement but is totally inadequate given the enactment of legislation in 2009 and 2010 that shackles businesses and makes adding employees prohibitively expensive.
Businesses can be seen as growth engines and employment generators or they can be seen as purveyors of social causes. They can't do both. More and more,American business is expected to avoid profit maximizing behavior and be good citizens, promoting various social causes. Being good social citizens and promoting social causes inevitably means growing slower, hiring fewer employees and being less dynamic. That's where we are. The "green jobs" rhetoric is nothing more than rhetoric.
It is time to set aside "feel good" rhetoric and create a business environment favorable to jobs creation. So far, the President doesn't seem to get it. He seems genuinely surprised that American business, reeling from the blows of his policies and rhetoric, isn't racing to create jobs and rescue his presidency.
If your main economic banner is "no tax cuts for the rich," then economic stagnation is probably your future. What is needed is the elimination of the numerous barriers to economic prosperity that the Obama Administration and a compliant (and long gone) Congress put in place. What is needed is no less than a complete dismantling of the legislation passed in the last two years by the Congress. Then and only then can a truly vibrant economy take over.
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