New Economic Problems

New Economic Problems

-Dr. Lalit Kumar

Economic Situation of India after Covid-19:

It is worth to mention that India allocated Rs. 2 Trillion during the last 5 years for increasing the production in various sections like Autos, Textiles, Food Processing, Solar Energy Equipment, Telecom etc. The Foreign Direct Investment (FDI) is being attracted to finance the needs of the sectors, however, efforts are being made for “Atam Nirbhar Bharat” as well. Today, India is leading whole world in Software, Autos, and Pharma Sectors. The incentives on productions and imposition of custom duties are making the environment friendly to the domestic production units. In last few years, the Indian Economy has been affected adversely from the bankrupt companies and the unemployment also has been increased.

India is not performing well due to lack of Research and Development and also not implementing the best practices or innovative ideas based upon already done research. It is required to inculcate the culture of Research and Development (R&D). There are lack of incentives for doing R&D to the Academicians and Scholars, Scientists, and Professionals. The agitation of farmers to Contract Farming, has changed the scenario as well and the industrialists are feeling stressed from it. The land prices are increasing due to new land acquisition law and labour cost is also increasing due to impact of Covid-19. The use of Apps for remote education and training, also changed the whole scenario. 

New Economic Problems:

Both the developed and developing nations are suffering from some new economic problems which are required to be identified by the Governments. The unemployment and corruption are old economic problems which are still getting attention of the Government and the Good Governance initiatives and Entrepreneurship Programmes are particularly to target these two big problems of the countries. The world bank is also funding the initiatives of the nations to make them empower to fight with such economic issues. There are a few new economic problems affecting the countries which are required to be focused to improve the financial performance and economic status of the economies:

1.   Improper planning in making policies:

Most of the policies are made by sitting far from the people affected with the problems and the policies are impractical due to ignorance of ground realities. Many countries are dreaming to demonetize the currencies which the people have not been provided access to the technological means in the countries. India is a latest example where demonetization not showed the desired outcome. The economists found that the decision of demonetization was taken in hurry and there was lack of planning while formulating the policies relating to demonetization in India.

2.   Unequal utilization and excess exploitation of economic resources:

The non-performing assets in banking sectors of the nations including United States of America (USA) are increasing due to unequal utilization of the economic resources. The development of metro cities, smart cities, and use of information technology are not equally distributed around the world and this has also contributed in rise in unemployment, the traditionally well-known economic problem of the countries.

3.   Terrorism with support of unemployed youth:

The terrorists have become successful in targeting the intellectual people to work with them. The unemployed youth not getting access to economic resources to meet their requirements to stand with other equally qualified persons, preferring to use their qualifications in harming others after getting financial support from the terrorists. The attacks in United States, India, Pakistan, and other nations clearly show the use of technology and it is possible only after the success of terrorists in getting support from the well-qualified unemployed youth.

4.   Depreciating currencies:

The countries’ currencies are not depreciating not in terms of comparative assessment but in terms of amount of resources i.e. purchasing power. The financial resources are being costlier. The concept of keeping gold as reserves for issue of currency and the concept of keeping foreign currencies to represent the same gold reserves; are now no more being followed. Due to unnecessary interference in increasing the demand of currencies, the economies are suffering from the depreciating value of their currencies.

5. Inefficient Management of Growing Waste:

I attended a session on “Waste Management” today and realized that everyone of us, is a waste generator. We know it and as a part of society it is our duty to reduce the waste. For one person which is not a waste, for other person, it may be waste. The resource person rightly gave an example that a person taking pics of a lake, may think that the pics are not waste but for others, it can be waste. Therefore, every one of us is a waste generator. Dr. Sanjeev Chaddha concluded that the best way to reduce and eliminate waste is to send it back to the place from where it is generated. For example, Wet waste comes from soil and fields, it can be used as compost for the same fields to increase the agricultural produce of the soil. The plastic waste comes from the polymers which comes from the petroleum industry, therefore best way to dispose it is to convert it into petrol or use it for power generation. The e-waste is very harmful which is generated from gadgets of information technology, the waste should be recycle and reused for the same industry.

With the growth in population, the cities are growing and also contributing to increase in the waste. The per capita waste is 100 grams in a city after growth, it becomes 500 grams per capita. The huge waste becomes difficult to be managed by the Government as there are limited places to recycle and reuse the solid waste. In future, the situation can be more critical as people are not much sensitive to reduce the waste and be less waste generators. 

*Copyright © 2020 Dr. Lalit Kumar. All rights reserved. 

You might also be interested in the following:

1. Functions of Officers of PWD

2. Untold story of IL&FS

3. How to save money from being covered under taxes (Tax Saving Options)?

4. Parents in nurturing Children

5. Viruses and Infections

6. Let’s kill the pain without using painkillers

7. Don’t be afraid of Higher Uric Acid Level indeed adopt these remedies

8. Types of Tenders in Government

National Pension System

Retirement Benefits and National Pension System (NPS)

-Dr. Lalit Kumar

The Haryana Civil Service Pension Rules, 2016 are applicable to the employees joined on or before 31^st December 2005. The National Pension System (NPS) is applicable on the employees joined on or after 1^st January, 2006 in Haryana. In case of retirement or superannuation including Voluntary Retirement Scheme (VRS) and Death of an employee, these rules become applicable to provide pension and family pension as a reward for working long term with commitment in the interests of Government.

Pensionary Benefits under Haryana Civil Service Pension Rules, 2016:

The rules, notifications, instructions issued prior to enforcement of Haryana Civil Service Pension Rules, 2016; have been repealed and everything is comprised into these rules. Every Government employee has right to get the pension commuted i.e. to realize a lump sum amount up to a prescribed fraction of pension at the time of retirement. He is entitled for Death Cum Retirement Gratuity (DCRG) also becomes admissible on retirement if an employee completed 5 years qualifying service. Even in case of death, such condition is not applicable and DCRG is admissible.

Family pension is also entitled to the family members of the employee after the death of an employee or pensioner.

Qualifying Service:

An employee working for the jobs assigned to him even with taking admissible leaves except extraordinary leaves which are sanctioned without medical sanction; the period covered in qualifying service.

If an employee completes more than nine years and nine months of qualifying services, he became entitled for the Pension. However, if he completes more than 20 years then he is entitled for full pension.

Control on Employees after Retirement:

Even after retirement, the employees are supposed to behave properly for the interests of Government. A retired employee cannot disclose any information of his office if it is affecting the economic interests of the state or whose disclosure may be considered as an offence. Even an undertaking is taken from the employee in this regard. In case, during the service, he or she has been provided any excess payment, that can be recovered after retirement also. If his or her functions caused any loss to government and it is detected after retirement; then also the same can be recovered by the competent authorities. However, in most of the cases it is required to take the consent of pensioner. In case, the pensioner denied to give consent, the Government can file legal suit against the pensioner and recover the amount with the orders of the court.

Benefit of Past Service for Pensionary Benefits:

At the time of retirement, the benefit of past service is provided to the employee provided the employee within one year from his joining submitted an application and the office has taken a certificate from the previous competent authority of the employee.

However, if an employee not joined the service through proper channel then the benefit of the past qualifying service cannot be claimed and not admissible to the employee.

Effect of Misconduct on entitlement of Pension:

In case, an employee remains wilfully absent from his duty and it led to interruption in the qualifying service, then that period is not counted as qualifying service. Even if an employee resigns from his service, then his entitlement of pension is affected adversely and it is forfeited by the authorities. If due to misconduct, fraud, embezzlement, economic offences, the employee becomes victim and dismissed or removed from the service then also the period of past service is forfeited for pensionary benefits as per the rules provided in Haryana Civil Service (Punishment and Appeal) Rules, 2016.

Calculators to compute Retirement Benefits:

The Department of Personnel and Training (DoPT), Government of India on its website, provided various calculators to compute the amount of retirement benefits. The following computations are required at the level of Head of Office i.e. Basic Pension, Family Pension, Commuted Pension, Gratuity, Computing Dearness Relief as per the orders of Government etc.

Basic pension computation requires Date of Birth, Date of Retirement, Total Qualifying Service, and Last Pay Drawn. The calculators are available on the webpage i.e. pensionersportal.gov.in/pensioncalculators/calculator.asp can be retrieved with copy and paste in the URL.

National Pension System (NPS):

For Haryana Government employees joined on or after 01.01.2006, the National Pension System (NPS) is applicable. The NPS is based upon the contributions to Pension Fund during the service of an employee. Haryana Government contributes 10% of the salary of employee in the NPS. The NPS Trust ensures that the contributions are pooled into a fund regulated by fund managers. Proper planning is done for making investments in securities including Government Bonds, Corporate Debentures, Equity Shares etc. The returns are earned on such investments on which basis the pension is computed at the time of retirement of an employee.

Permanent Retirement Account Number (PRAN):

PRAN is a unique number allotted to each subscriber of National Pension System. There are two types of contributions i.e. Tier – 1 and Tier – 2 contributions. The tier-1 contributions cannot be withdrawn before retirement which tier-2 contributions can be withdrawn as and when required by the subscriber.

At the time of retirement 60% (or less than 60%) of such wealth created can be taken by the subscriber however, if such wealth is less than Rs. 2 Lacs then entire accumulated pension wealth can be withdrawn by the subscriber. The remaining portion (40% or more) of the accumulated wealth is used to purchase annuity on which basis, the amount of pension is determined.

However, in case of death of an employee, it is required to invest 80% or more than 80% in purchasing annuity therefore 20% or less than 20% can be taken by the legal heirs of the subscriber. But in this case also if the amount of accumulated wealth is less than Rs. 2 Lacs then the entire accumulated pension wealth can be withdrawn.

What is annuity and how it works?

Annuity is considered as long-term investment of an amount which generates regular payment to the investor after making the investment. The amount of accumulated wealth fund of NPS is invested in an annuity as per the plan selected either by the fund managers or subscriber for which options are available.

During the period of service, the investments are done in the name of subscriber by investing and accumulating cash in PRAN. After retirement, the subscriber start getting the benefits of annuity plan in the form of pension.

What happened with the amount after death of Subscriber?

At present, in National Pension System; the annuity is kept in the name of subscriber after retirement. After the death of subscriber, the annuity is re-issued to the family members firstly to living dependent mother, dependent father, then to the surviving children, or to the legal heirs of the subscriber.

However, the subscriber is provided opportunity to change this current scheme: (a) He or She can opt to get monthly pension till he or she is alive and payment of purchase price at the end to the nominee, (b) He or She can opt for guaranteed annuity for 5 or 10 or 15 or 20 years and in such case, the pension is received for the same definite period either to subscriber or his / her nominees in case of death thereafter the amount of purchase price is not returned.

Apart from (a) and (b) other variety of plans can also be opted which are detailed by the PFRDA on its website. http://www.npstrust.org.in/

Course on Retirement Benefits and National Pension System:

The following inputs will be covered in the course:

1. An overview to Retirement Benefits

2. An overview to National Pension System

3. e-NPS: How to contribute and what are its benefits, How to get maximum out of NPS investments.

4. Duties of Drawing and Disbursing Officers in computing and making payments of Retirement Benefits, including practical illustrations.

5. Advances from Government Provident Fund (GPF).

6. Tier I and Tier II contributions of NPS Account and their features, benefits and tax treatment

7. Loans and Advances, how to sanction, amount to sanction, role of Punjab National Bank, number of instalments for recovery and computing interest on various types of loans

8. Assignments and their scoring. Feedback and Evaluation. References for further learning.

More about National Pension System:

Everybody desires to live a healthy life after the age of 60, known as retirement age or old age. Up to the age of 60, most of the people can easily survive on the basis of their earnings from business or job but thereafter their capacity to earn money reduced significantly and they require financial assistance to spend their old age with meeting mounting medical expenses. The National Pension System (NPS) provides an opportunity to contribute an amount on annual basis and then receive pension after the age of 60.

"National Pension System (NPS) is a voluntary defined contribution pension system and is limited EEE (Exempt-Exempt-Exempt) instrument (because partial amount received on maturity is still taxable) for saving income tax if it is used with proper planning". 

Conditions to join National Pension System:

There is no hard condition to join NPS, anybody between the age of 18 to 65 can join NPS and made contribution in NPS account. The Government of India opened Points of Preference (PoP) at various locations to help people join NPS. In order to locate the authenticated PoP Service Provider, it is required to visit the webpage https://www.npscra.nsdl.co.in/pop-sp.php and select the desired location. The service provided at PoP provides a registration form to be filled for opening NPS account. The form along with ID proof, Address proof, and Age proof is required to be deposited at PoP. The PoP will give the acknowledgement number.

In the age of information technology, it is not necessary to locate PoP and then reach there. The NPS account can also be opened through online submission of details. For this purpose, it is required to visit https://enps.nsdl.com/eNPS/NationalPensionSystem.html and click upon Registration button; however for online direct registration it is must that the individual should have an active bank account with ATM or Net-Banking facility. The NPS is regulated by PFRDA i.e. Pension Fund Regulatory and Development Authority. However the returns of NPS are linked with the performance of Equity, Debt, and Government Securities but in order to make it totally risk free, the Government of India is working upon upgrading its features. A new option will soon be provided under the title "Fund" for providing assured returns upon the NPS invested amount. The PFRDA is working upon Minimum Assured Returns Scheme for the NPS Subscribers.

Tax Benefits of investment in NPS:

In case, the NPS start offering guaranteed returns it will become a more lucrative option of investment for the tax payers because the section 80 CCD (1B) offers a deduction of Rs. 50000 for investment in NPS. Even in new tax regime, the deduction of 80CCD (1B) is available for the taxpayers.

The Indian citizens in the age group of 18 to 65 can invest in NPS Tier I account which is basic account for NPS. An employee if invests through employer, can claim and get tax deduction up to 20 percent of his salary contribution in his NPS including 10 percent on part of employee's contribution (in 80 CCD 1B or in 80C) and 10 percent on part of employer's contribution (in 80 CCD 2).  

The returns on NPS are also not taxable however the returns are not fixed as in the case of provident fund. The returns are realised after its maturity either at the time of retirement (for employees) or at the age of 60 years whichever is earlier. The 60 percent of the corpus is maximum allowed to get as lump sum payment on maturity and remaining portion is transferred on the selected annuity plan of any investment entity including SBI, HDFC, ICICI etc. It depends upon the performance of fund managers and asset mix, selected at the time of opening account in NPS, that how much returns you realised. 

Scope of National Pension System:

The NPS was introduced from 1^st Jan 2004 and first of all, the employees of central government covered in NPS by contributing a portion of their salary along with matching contribution from the employers i.e. Central Government Organizations. Thereafter, the Government asked state governments to adopt and implement NPS. Most of the states adopted and implement NPS and made it mandatory for the employees to contribute a portion of their salary with matching contribution from the employers i.e. State Government Organizations.

The NPS is also available for corporate and citizens. The contribution in NPS provides deduction in taxable income of an individual and organization. The interest rates of Small Savings Schemes are attractive than the rates of Fixed Deposits.

*Copyright © 2020 Dr. Lalit Kumar. All rights reserved.

You might also be interested in learning from the following:

1. How Money Grows in NPS   

2. Tax Deduction at Source for Deductors  

3. Tier I and II Accounts of NPS 

Tax Deduction at Source

Tax Deduction at Source

The income tax is paid by the assessee either in form of Advance Tax or Self-Assessment Tax as per the expected or actual incomes earned during the financial year. This is the moral duty of assessee to pay the income tax. The income tax department also ensures the deduction of taxes on various payments and in such case the person or organization making payments, deduct the taxes and then make the payments. Such deduction of tax is known as Tax Deduction at Source (TDS). The person or organization who deducted tax before making specified payment, pays the deducted tax on behalf of payee to the income tax department. The TDS is deducted on payments of salaries, interest, commission, brokerage, professional fees, royalties, contract payments.

Rate of TDS deducted on particular payments:

Salaries are paid to the employees, interest and commission are paid to the customers, interest and brokerage are paid to the investors, professional fees and royalties are paid to professionals and contract payments are made to the contractors. Before deducting tax at source, it is required to know the PAN number of the recipient to whom the payment is being made. In such case, he is known as deductee. The person or organization who deducts the tax at source is known as deductor.

(a)          In case of payment of salaries:

The TDS is deducted as per the income category of the employee. In such case, the annual expected taxable income is calculated and as per the estimated tax liability, the TDS is deducted from the amount of salaries. From Financial Year 2018-19, the slab rates of income tax have been revised. For example, an employee is being paid salary @Rs. 50000 (Fifty Thousands) per month then the expected annual income will be Rs. 6 Lacs minus standard deduction of Rs. 50000 (from FY 2019-20) i.e. the tax payable on Rs. 5.5 Lacs will be computed including surcharge (if any) and education cess. The surcharge is applicable @10% in case the taxable income is above Rs. 50 Lacs but up to 1 Crore while it is @15% in case of taxable income exceeds 1 Crore. The tax payable will be computed and thereafter the TDS is deducted on the basis of tax payable. In case of monthly payments of salaries, the TDS will be deducted equal to the amount of (total annual tax payable divided by 12). The section 192 states that the TDS will be computed on the basis of Tax Liability i.e. (income tax plus surcharge) plus education cess @4% on (income tax plus surcharge).

(b)          In case of payments other than salaries:

10% TDS is deducted on interest on Fixed Deposits, interest of securities, and other types of interest payments. In case of unexpected income from winning of lottery or games or quiz contests or horse race etc. 30% TDS is deducted by the deductors. In payments of contractors, if the contractor is individual or HUF then 1% TDS is deducted otherwise 2% TDS is deducted. In payments of commission, 5% TDS is deducted. In payments of remuneration or royalties or professional fees etc.; 10% TDS is deducted. The provisions for TDS on various types of payments are described in section 192, 192A, 194, 195 and 196.

In case of purchase of immovable property (other than rural agricultural land), the buyer makes payment to the seller. If the sale proceeds are less than Rs. 50 Lacs then no TDS will be deducted but if it is more than Rs. 50 Lacs then TDS is deducted @1% on amount of sale proceeds.

Threshold Limits for not deducted TDS:

 In case, the payments are not so much or subject to a particular limit; then no TDS is deducted by the deductors. For example, in case of salaries if the deductee’s taxable income is not chargeable to tax i.e. up to basic exemption limit (BEL) then no TDS will be deducted from the salaries. The BEL for persons up to age 60 is Rs. 2,50,000; age 60 to 80 (senior citizens) is Rs. 3,00,000; age more than 80 (super senior citizens) is Rs. 5,00,000. Section 192A states that the premature withdrawal from accumulated balance of provident fund up to Rs. 50,000 is not subject to TDS. The annual payment of interest up to Rs. 10000 are not subject to TDS however in case of interest on debentures the threshold limit is Rs. 5000. Similarly if the amount of winnings from lottery is less than 10,000 then TDS is not deducted. In case of payment of rent, if the amount is less than Rs. 50,000 per month then there will be no TDS deducted by the deductor but if it exceeds Rs. 50000 per month, then 5% TDS is required to be deducted.

Provision of submitting Form 15G or 15H:

In case, the deductee’s estimated total income is not taxable then he can submit an undertaking in prescribed format i.e. 15G (for individuals with age up to 60) and 15H (for senior citizens).

Duties of Deductors for TDS:

It is the moral duty of a deductor to deposit the TDS to income tax department on behalf of deductee. For this purpose, first of all, the deductor obtain Tax Deduction Account Number (TAN) and file the TDS statements known as TDS return by due dates as specified by the income tax department. Further, it is also required to issue the TDS certificate to the deductee so that he can claim the benefit of TDS deducted in his ITR. In case, the deductor fails to remit the TDS amount to income tax department by due date, he is required to pay interest on late payment of TDS and also required to pay penalty and in few cases, also subject to imprisonment up to seven years.

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.

You would also like to learn from the following:
1. Corruption and Governance - Tools in the hands of Ruler   

2. Advance Tax and How to Avoid Interest on Advance Tax  3. Implications on Income Tax on Formation and Dissolution of Hindu Undivided Family   4. Payment and Status of Income Tax   

5. Income Tax Return   

6. Tax Deduction at Source  

7. Tax Planning to Have More Take-Home Salary   

8. Tax Deduction at Source for Deductors  

9. How to save money from being covered under taxes (Tax Saving Options)?   

10.  Duties of DDOs in Taxation Matters (Income Tax and Goods and Services Tax)  

Income Tax Return

Income Tax Return

Income Tax Return (ITR) is submitted annually, every year up to 31^st July. There are prescribed forms to file the income tax return available on the web portal of the income tax department. In order to carry forward losses or to claim a refund of excess deducted TDS; it is must submit the income tax return within the desired stipulated time i.e. up to 31^st July in the case of the individual.

A Course on e-filing Income Tax Returns (ITR) for Salaried Persons is organized in online mode for specific training for accurately e-filing Income Tax Return specifically ITR-1.

Forms to submit Income Tax Return (ITR):

The most popular ITR form is SAHAJ which is also known as ITR-1; it is used by individuals having income from salary, house property, and other sources. The ITR-2 form is submitted by individuals or HUF with income from sources except for Business or Profession. The ITR-3 form is submitted by individuals or HUF with income from Business or Profession. The ITR-4 form is known as SUGAM and it is used by individuals or HUF or Firm with presumptive income from business or profession. The ITR-5 form is submitted by firms or companies or other organizations except those who claim an exemption under section 11 or who file returns under section 139 (4A… to … 4F). The organizations who require to claim an exemption under section 11, use the ITR-6 form and the organizations who file returns under section 139 (4A… to … 4F) use ITR-7 to submit their return.

During the submission of returns (ITR-1 to ITR-7); there is no need to attach any document or paper with the return. The documentary proof or evidence of the figures stated in the submitted ITR are required to be maintained by the assessee and the same can be demanded at any time by the income tax department. It is required to maintain such evidence for at least six years, in case any legal proceeding is initiated by Income Tax Department during this period; then maintain it till such legal proceeding is not closed.

In case of any query relating to filing of ITR, there is a toll-free number of the income tax department i.e. 18001801961.

Penalty in case of non-filing of Income Tax Return:

In case, the income of an assessee is taxable and the ITR is not filed within the stipulated time frame then the penalty is imposed by the income tax department. In case of individuals, the due date of submitting ITR is 31^st July and in case, it is not submitted then the following late filing fees is applicable under section 234F:

(i)  Rs. 1000 (One Thousand) for individuals having income less than Rs. 5 lac

(ii)  Rs. 5000 (Five Thousand) or Rs. 10000 (Ten Thousand) for returns submitted up to 31^st December or after 31^st December of the Assessment year respectively.

What to do if inaccurate information is submitted in ITR:

In case of any mistake or omission, an assessee is required to resubmit the ITR known as the revised ITR before the end of the Assessment Year. It can be submitted by both means i.e. on paper or online as per the mode of the original ITR submitted earlier.

What happened if someone files ITR after the stipulated time frame:

There are a number of losses to an assessee if the ITR is not submitted on or before the due date. The ITR submitted after the due date is known as a belated return and in such case, the following things affect negatively:

1.   The Assessee is required to pay interest on the due amount of income tax under section 234A.

2.   The losses which can be carried forward usually, cannot be forwarded if ITR is not submitted on or before the due date except for the loss from House Property.

3.   Late fees on default is charged under section 234F amounting to Rs. 1000 or Rs. 5000 or Rs. 10000.

4.   Exemptions under sections 10A and 10B cannot be claimed.

5.   A few deductions are also not be claimed like 80-IA to IE.

Keep in touch with the latest updates. It is well said, "Self-education will make us think outside of the box. It transforms us into a new person through reading, observing, and experimenting on our own with a self-crafted syllabus, curriculum, and timetable. When we start self-educating ourselves, our brains will get out of the narrow mindset. And it will start to expand our mindset". 

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.

You would also like to learn from the following:
1. Corruption and Governance - Tools in the hands of Ruler   

2. Advance Tax and How to Avoid Interest on Advance Tax  

3. Implications on Income Tax on Formation and Dissolution of Hindu Undivided Family  

4. Payment and Status of Income Tax   

5. Income Tax Return   

6. Tax Deduction at Source  

7. Tax Planning to Have More Take-Home Salary   

8. Tax Deduction at Source for Deductors  

9. How to save money from being covered under taxes (Tax Saving Options)?   

10.  Duties of DDOs in Taxation Matters (Income Tax and Goods and Services Tax)  

Auditing Exposes Irregularities

Auditing Exposes Irregularities 

Auditing

The major goal of an Audit is to add value and improve the organization’s operations and provide reasonable assurance that the risks are identified and managed and the information in administrative and financial records is accurate and reliable as per proper compliance of policies, procedures, applicable laws and regulations. Every year, the organizations are either audited at their internal level or a team of auditors comes from outside or both internally as well as externally. An organization is always works to establish its priorities and the audit is particularly to evaluate for further deciding the action plans to achieve the organizational goals. The auditors perform independent evaluations and audited records are more trusted for the stakeholders with assurance of auditors that the records including financial statements present a true and fair view of the organization’s financial performance and position.

Internal Audit

The internal audit is decided by the Head of Departments / Chief Executive Officers to ensure financial controls in the organizational processes with the help of proper accounting and reframing of Standard Operating Procedures (SoPs). An internal audit is a self-assessment to determine the financial and administrative control in order to avoid irregularities.

Process of Auditing

At the time of audit, the following points are kept in mind:

a.  Findings of the prior audits

First of all, the files of prior audits are reviewed with the findings of each prior audit in an organization. It is possible only through meeting and building a rapport with the managerial people of the organization. The auditors observe the prime concerns and expectations of the managerial people from an audit, in case, request comes to audit a few organizational processes more sincerely, the same may be considered by the team of auditors.

b. Organizational processes to achieve its aim, objectives

Secondly, the auditors if required, may discuss and interact with the employees of the organization regarding their assigned duties and how they perform their duties as per the organizational functions. Thereafter, the financial records and departmental documents are tested whether adequate records are being maintained or not.

c. Budget documents of the organization

1. Grants from State Government
2. Grants from Central Government

d. Utilization of Budget, Approvals, Sanctions etc.

e. Revenue generated by the organization

1. Contracts of services

f. Process of incurring expenses in organization:

1. Cost of operations – Material, Labour, and Expenses

2. Ledger Accounts including Cash Book

3. Accounting Procedures either Manual or Computerized

4. Inventory Management System

5. Various functions of organization including Procurement of Goods / Services / Works, Salaries and Remuneration to Human Resources, Financial Statements, Taxation including Income Tax and GST, Organizational Codes and Policies etc.

g. Evaluation of internal control systems

1. Compliance of Laws, Acts, Rules, Policies, Instructions

In between and at the end of the audit, it is must to meet the managerial people informally and discuss on the findings of the audit. In case, the findings are misinterpreted then the same may be reframed after getting the clarity from the managerial people. However, the auditors are independent to write the audit objections if they disagree from the perspective of the managerial people.

2. Identifying Irregularities and corrective course of actions

3. Improving Efficiencies and Effectiveness of organizational processes

4. Safeguarding Assets from Wastes and Frauds

5. Promoting Accuracy and Reliability of Financial Records

The Audit report not only identifies the financial and administrative irregularities but also recommend the corrective course of actions to promote accuracy and reliability of the records.

h. Comments and Concerns of Administrators and Managerial people

Concern of Audit at Prime Minister Level in India:

The administrators looking after the efficient and effective use of public resources should be stricter than other employees working under them. The ministers elected to make decisions for their concerned ministries, should further restrict the administrators and themselves in using the public money with utmost prudence. In 2016, the Prime Minister of India, Sh. Narendra Modi worried and commented against the system in which Member of Parliament have right to decide or increase their own salary. He commented that the lawmakers (i.e. MPs) themselves should not decide their pay package*.

The member of parliament elected by the public in India, receives various benefits apart from the salaries i.e. housing and telephone facilities, travelling and daily allowances, medical facilities, allowances for foreign trips, constituency allowances, purchase of conveyance and office expenses. They are also eligible to get free accommodation, air tickets, free power and even pension after the term of five years.

The auditors only check the irregularities and the benefits passed in the parliament or assembly by the public representatives; cannot be questioned in audit.

Concern of Audit of Chit Fund Companies:

The chit fund companies are playing with the interests of investors and exposed when most of the investors have been affected adversely. The window-dressing of financial statements by the Multi-National Companies (MNCs) also affect the investors. In order to show higher net worth of company, the accounting is misused by the Chief Financial Officers (CFOs) of the company. In October 2018, Supreme Court of India, appointed Forensic Auditors to audit the accounts of Amrapli group of companies. The audit of account comprises the checking the errors in accounts as per the Accounting Standards framed by Institute of Chartered Accountants of India (ICAI).

Amrapali Group Diverted Money of Investors:

The Amrapali Group consist of 46 companies and the forensic auditors found that the directors of the Amrapali Group have been provided money in form of professional charges. It is also found that a few investors are refunded more amount due to non-allotment of flats. The forensic audit also detects the diversion of money within the bank accounts. As per provisions of Real Estate Regulation Act (RERA), it is must to utilize at least 70% of the amount received from investors in the concern real estate project and for this purpose, it is must to operate and maintain a separate escrow account for each real estate project. The developers if require to divert the money to other functions, then they require to take money out of the escrow account which can easily be audited.

Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 
References:
*This information has been retrieved from Economic Times of 3rd May 2016 reported by Rakesh Mohan Chaturvedi & Ravish Tiwari; 'PM Narendra Modi against MPs deciding their own salary'. 

Reforming Higher Education System in India

Reforming Higher Education System in India 

                     Source of pic: Courtesy of Pyramid College

In the words of Queen Latifah, "There is no profession more essential than that of an educator and it's time for all of us to embrace and celebrate their importance and contribution to America's children"

The role of a teacher in building nation with sacrifice and humble contributions in various forms cannot be neglected. A teacher shows the right path and forms future officers to lead a nation further on higher side. A good teacher not only be an ideal in the minds of his students but also inculcate good habits in them like manners, etiquettes, grooming of personality etc. and these things are priceless.

The Government of India is taking initiatives to improve the economic and financial position of the nation. In last article, we studied how "Energy Deficit to Energy Surplus" initiatives bringing positive changes in the economic position of nation.

National Education Policy:

Instead of implementation of National Education Policy in India, the access to Free Education is still a dream for millions. Why education should be free in cost? Do you think it is costly to be literate? 

The cost of any service or goods depends upon demand and supply, the market determines the price as per the Economics Theory of Marshall.

If anybody is skilled enough then it is the result of his or her hard work, further if he has skills and abilities to teach and train others to achieve their goals, utilizing their capacities and capabilities then the person deserves to be paid. No doubt, for implementation of National Education Policy, there is requirement of skilled humans who can assemble the resources and introduce valuable products for Educating and Training others. It's must to develop software, design curriculum, doing research, put new ideas with innovation and all these are available in less quantity than required. That's why price is there. 

The generation of skilled youth has become a challenge and the countries like India are suffering due to less skilled youth. The old software, old teaching methods, old training practices made the country hampered with huge unemployment which further increased the level of poverty. The desktops with C, C++, Cobol, Pascal, Fortran languages and with old software can easily be found in the colleges and institutes of higher education. It is must to improve the infrastructure to develop new skills in the students of higher education. The new era of technology including new app development languages like Phylon and Ruby; required to be made available for adopting new-age technology to compete the Multinational companies.

Required change in Higher Education:

In India, the University Grants Commission (UGC) and Ministry of Human Resource Development (MoHRD) are constantly bringing change in the Higher Education System to make it as per the needs of the industries. The emphasis is upon revising the curriculum of courses by making it learning outcome based. How higher education differ from the school education? At present, there is not much difference because at both places, the students are reading and learning the prescribed syllabus and then giving examinations to qualify. It is required to innovate the work of students reading and learning after the school classes i.e. 12^th known as senior secondary.

Why placements are not more and how to produce talent?:

It is required to bring digital learning platforms in the higher education system which is possible by using information technology. The YouTube and other channels of interactive video lectures are already in use and the students are watching videos to learn and develop their skills. The industries are also waiting for their prospective officers to run their organizations with better skills and the universities are being inspired to produce more talented students who can easily be grabbed by the human resource managers working in companies. The placement of students is a prime concern for all universities, business schools, and polytechnic institutions; and the placement can only be possible if the students are equipped with the required skills as identified by the industrialists. They know their requirement and the universities should know the curriculum to be taught for meeting the requirements of the industries, companies who are the prospective employers.

Creating industry-friendly environment at institutions:

Just making change in syllabus will not work smoothly, it is required to bring the environment of industries and companies inside the universities to train the students after completing the courses or degrees.

The students should take Education as a zeal for making life successful. Whatever work is being done either small or big; the success of the work depends upon the desire toward that work and devotion for learning. Nobody is perfect and doing work is a step towards perfection by attaining knowledge and skills. If a person doesn't stubborn and he is ready to learn from the failures, then success can be guaranteed provided efforts are put even after the happening of failures.

Digital Transformation in Higher Education:

It’s time to promote digital learning and there are institutions which are really embracing digital learning, a holistic approach to digital transformation. It is not only online teaching rather prefect module to ensure learning among the students. It is required to implement the online teaching with activities and personalization to inculcate the skills to perform better. To improve employability of the students, it is must to create online job portals by the Higher Education Institutions and also provide career counselling to the pass-out students, it will improve the chances of employability and the students’ admission will also increase in the institutions. The digitally mature Schools, Colleges, Universities, and Institutions can change the entire picture of India and other developing economies. 

Introduce the following in the Higher Education Institutions: 

(i) Digitally integrated Marketing, (ii) Recruitment Strategy with agreements with the Manufacturing, Industrial, and Service Sector Companies, (iii) Use of Customer Relationship Management (CRM) units, (iv) Records Management of Students scoring high and teachers producing talent, (v) Digital Social Marketing Strategies for promotion of the activities. 

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

Copyright © 2021 Dr. Lalit Kumar. A few rights reserved. Use this information in the public interest.

This content is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 16th December 2018 and last updated on 2nd December 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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