Budget 2014 Highlights

Finance Minister P. Chidambaram today presented the Interim Budget for 2014-15 in Lok Sabha. Here are the Budget 2014 highlights:

* Fiscal deficit for current fiscal to be 4.6%

* Revenue deficit estimated at 3% for current fiscal

* 140m people lifted out of poverty in last 10 years

* Excise duty on SUVs cut from 30 to 24%, in large and mid-segment cars from 27-24% to 24-20%

* Excise duty on small cars, motorcycles and commercial vehicles cut from 12% to 8%; appropriate cut to be done on chassis, trailers

* A Rs 100 crore scheme formulated to promote community radio stations: Chidambaram

* RBI must strike a balance between growth and moderating inflation, Chidambaram says

* We must focus on manufacturing, specially manufacturing for exports: Chidambaram

* I am disappointed that we could not introduce GST: Chidambaram

* No changes in tax laws in interim budget

* Govt has obtained information in 67 cases of illegal offshore accounts of Indians: Chidambaram

* Excise duty cut from 12 to 10 per cent in capital goods sector to stimulate growth

* Excise duty on mobile handset to be 6% on CENVAT credit to encourage domestic production

* Excise duty on small cars, motorcycles and SUVs reduced

* Service tax relief storage for warehousing for rice

* Blood banks to be exempt from service tax
* Rs 500 crore estimated requirement for implementing one-rank-one-pay scheme for armed forces in 2014-15

* Rs 6000 crore to rural housing fund, Rs 2000 crore for urban housing fund

* Minority bank accounts have swelled to 43,53,000 by 2013-14 from 14,15,000 bank accounts 10 years ago

* Rs 3711 crore for minority affairs; housing and urban poverty alleviation gets Rs 6000 crore

* Social justice ministry gets Rs 6730 crore; panchayati raj ministry Rs 7000 crore

* Moratorium on interest on student loans taken before March 31, 2009; to benefit 9 lakh borrowers

* Public Debt Management Bill ready

* Fiscal deficit target of 3% to be achieved by 2017

* Fiscal deficit to be contained at 4.6% of GDP in 2013-14.

* CAD will be $45 billion in 2013-14

* Foreign exchange reserves up by $15 billion

* Foodgrain production estimated at 263 million tons in 2013-14

* Agriculture credit will cross $45 billion against $41 billion in 2012-13

* 296 projects worth Rs 6,60,000 crore cleared by Cabinet Committee on Investment by end January 2014

* Merchandise export to grow by 6.8% to $326 billion

* 3 more industrial corridors — Chennai-Bangalore, Bangalore-Mumbai, Amritsar-Kolkata — under various stages of implementation

* GDP growth rate in Q3 and Q4 of 2013-14 will be at least 5.2%

* Declining fiscal deficit, moderation of CAD, stable exchange rate and increase in project implementation result of hardwork

* Power capacity rises to 234,600 MW in 10 years

* Expenditure on education has risen from Rs 10,145 crore 10 years ago to Rs 79,251 crore this year

* Sugar decontrol, gradual correction of diesel prices, application for new bank licenses, sick electricity distribution companies restructured

* Average growth under UPA's ten year rule was 6.2 per cent against 5.9 during NDA period of 1999-2004

* Average growth under UPA-I was 8.4 per cent and UPA-II 6.6 per cent

* PSUs to achieve record capex of Rs 2,57,645 crore in 2013-14

* 500 MW fast breeder nuclear reaction in Kalpakkam to be ready shortly; 7 nuclear power reactors under construction

* National Solar Mission to undertake 4 ultra mega solar power projects in 2014-15

* Rs 1,200 crore additional assistance to N-E states to be released before end of the year

* Rs 1,000 crore grant for Nirbhaya Fund will be non-lapsable; another Rs 1,000 crore to be given next fiscal

* Rs 3,370 crore to transferred to 2.1 crore LPG users

* Govt committed to Aadhaar-based LPG transfer but scheme on hold temporarily

* Aadhaar is tool for empowerment

* Non-plan expenditure to exceed by a small amount in 2013-14

* 500 MW fast breeder test reactor in Kalpakkam to be ready shortly; 7 nuclear power reactors under construction

* Plan expenditure will be Rs 5,55,322 crore in 2014-15, unchanged from last fiscal

* Budgetary support to railways increased from Rs 26,000 crore to Rs 29,000 crore 2014-15

* Rs 2,46,397 crore allocated for food, fertilizer and fuel subsidy

* Food subsidy will be Rs 1,15,000 crore for implementation of National Food Security Act

* Defence allocation increased by 10 per cent to Rs 2.24 lakh crore (TOI)

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Final Course Study Material (January 2013 Edition)

• Paper – 1 : Financial Reporting
  
• Paper – 2 : Strategic Financial Management
  
• Paper – 3 : Advanced Auditing and Professional Ethics
  
• Paper – 4 : Corporate and Allied Laws

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Clarification with regard to Section 185 of Companies Act General Circular no. 03/2014

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CBDT circular on Application of Sec 14A & Rule 8D Circular 5/2014 dated 11-02-2014

CBDT issues circular, clarifies that Sec 14A expense disallowance applicable even where taxpayer has not earned exempt income in that particular year; Circular cites use of the term "includible" in heading to Sec 14A & Rule 8D and use of words "income under the Act" u/s 14A instead of "income of the year"; Legislative intent is to allow only that expenditure which is relatable to earning of income. (To view Circular 5/2014 dated 11-02-2014 Click Here )

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Non-Filing of ITR-V in returns with refund claims-relaxation of time- limit for filing ITR-V

Subject: - Non-Filing of ITR-V in returns with refund claims-relaxation of time-limit for filing

ITR-V and processing of such returns -regarding.

Several instances of grievances have come to the notice of the Board stating that a large number of returns-of-income for Assessment Year ('AY') 2009-2010, which were electronically filed without a digital signature in accordance with procedure laid down under the Income-tax Act, 061 ('Act'), were not processed as such returns became non-est in law in view of Circular No. 3 of 2009 of CBDT dated 21.05.09. Paragraphs 9 and 10 of the said Circular laid down that 1TR-V had to be furnished to the Centralised Processing Centre ('CPC'), Bengaluru by post within 30 days from the date of transmitting the data electronically and in case, 1TR-V was furnished after the stipulated period or not furnished, it was deemed that such a return was never furnished. It was claimed by some of the taxpayers that despite sending ITR-V through post to CPC within prescribed time-frame, the same probably could not reach CPC and thus such 4eturns became non-est. Since ITR-V was required to be sent through (ordinary) post at a 'post box' address, there were no despatch receipts with the concerned senders in support of their claim of having furnished 1TR-V to CPC within prescribed time limit.

2. Subsequently CBDT extended the time-limit for filing ITR-V (re1ati4 to Income-tax returns filed electronically without digital signature for AY 2009-2010) upto 31.12.2010 for 120 days from the date of filing, whichever was later. It also permitted sending of ITR-V either by ordin4ry or speed post to the CPC. However, for the AY 2009-10, some cases were still reported where return was declared non-est due to non-receipt of ITR-V by CPC even within such extended time-frame and conseq4ently the refunds so arising continue to remain held up.

3. Likewise, for AY's 2010-11 and 2011-12, though relaxation of time for furnishing ITR-V was granted by Director General of Income Tax (Systems), it has been noticed that a large number of such electronically filed returns still remain pending with Income-tax Department for want of receipt of valid ITR-V Certificate at CPC.

4. The matter has been examined. In order to mitigate the grievances of the taxpayers pertaining to non receipt of tax refunds, Central Board of Direct Taxes, in exercise of powers under section 119(2)(a) of the Act, hereby further relaxes and extends the date for filing ITR-V Form for Assessment Years 2009-10, 2010-11 and 2011-12 till 31.03.2014 for returns e-Filed with refund claims within th4 time allowed under section 139 of the Act The taxpayer concerned may send a duly signed copy of 1TR-V to the CPC by this date by speed post. In such cases, Central Board of Direct Taxes also relaxes the time-frame of issuing the intimation as provided in second proviso to sub section (1) of Section 143 of the Act and directs that such returns shall be processed within a period of six months from end of the month in which ITR-V is received and the intimation of processing of such returns shall be sent to the assessee concerned as per laid down procedure. 

5. Provision of sub-section (2) of section 244A of the Act would apply while determining the interest on such refunds. 

6. The taxpayer concerned may ascertain whether ITR-V has been received in the CPC, Bengaluru or not by logging on the website of Income-tax Department - http:/incometaxefiling.gov.in/e-Filing/Services/lTR-V Receipt Status.html by entering PAN No. and Assessment Year or e-Filing Acknowledgement Number. Alternatively, status of ITR-V could also be ascertained at the above Website under 'Click to view Returns/Forms' after logging in with registered e-Filing account. In case ITR-V has not been received within the prescribed time, status will not be displayed and further steps would be required to be taken as mentioned above. 

7. Hindi version to follow. 

(Rohit Garg) 

Deputy Secretary to the Government of India 

Circular No, 04/2014

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

North Block, New Delhi Dated the 10th of February, 2014

To Download Official Notification Click Here

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Tax Audit Limit Increased From 45 to 60 for audits conducted during the financial year 2014-15 and onwards. - (11-02-2014)

In view of the enhancement of professional competence of members to perform quality services in an IT-enabled environment, the Council of the Institute at its 331st meeting held from 10th to 12th February, 2014 has decided to increase the "specified number of tax audit assignments" for practicing Chartered Accountants, as an individual or as a partner in a firm , from 45 to 60. The said limit will be effective for the audits conducted during the financial year 2014-15 and onwards. Accordingly, the Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008 stands amended from 1.4.2014 as under:-

In the Council General Guidelines, 2008, the Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008, in Chapter VI "Tax Audit assignments under Section 44AB of the Income-tax Act, 1961 ", in Explanation given in Para 6.1, in sub-para(a) and sub-para(b), the figure "45" be substituted with the figure "60". 

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No Service Tax required to be paid on Services provided by an Authorised Person or Sub-Brokers to Member of Commodity Exchange up to 30th June, 2012

No Service Tax required to be paid on Services provided by an Authorised Person or Sub-Brokers to Member of Commodity Exchange up to 30^th June, 2012

The Central Government vide Notification 03/2014-ST dated February 3, 2014 has provided that no Service Tax is required to be paid on services provided by an authorised person or sub-brokers to the member of a Commodity Exchange, in relation to a forward contract, on which Service Tax was not being levied during the period commencing from the 10^th day of September 2004 and ending with the 30^th day of June, 2012 in accordance with the prevalent practice.

In exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944), read with section 83 of the Finance Act, 1994 (“the Finance Act”) the Central Government has directed that the service tax payable on the services provided by an authorised person or sub-broker to the member of a recognised association or a registered association, in relation to a forward contract, shall not be required to be paid in respect of such taxable service on which the service tax was not being levied during the period commencing from the 10^th day of September 2004 and ending with the 30^th day of June 2012 in accordance with the prevalent practice.

The Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), under section 66 of the Finance Act, on services provided by an authorised person or sub-broker to the member of a recognised association or a registered association, in relation to a forward contract, and that such services were liable to service tax under the Finance Act, which was not being levied according to the said practice during the period commencing from the 10^th day of September 2004 and ending with the 30^th day of June 2012.

Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)

F-30/31/32, Pankaj Grand Plaza

1st Floor, Mayur Vihar, Phase–I,

Delhi – 110091 India

Desktel: +91-11-22757595;

Mobile:+91 9810604563

Email: bimaljain@hotmail.com

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

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Service Tax - Reverse Charge liability paid by Service Provider, should not be demanded again from Service Recipient

Service Tax - Reverse Charge liability paid by Service Provider, should not be demanded again from Service Recipient

We are sharing with you an important judgement of the Hon’ble Mumbai CESTAT, in the case of Umasons Auto Compo Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Aurangabad [2014 - T           IOL – 126 – CESTAT - MUM] on following issue:

Issue:

Whether Service Tax can be demanded again from the Service Recipient under reverse charge, where the same has been paid by the Service Provider and accepted by the Department?

Facts & Background:

M/s Umasons Auto Compo Pvt. Ltd. (“the Appellant” or “the assessee”) was receiving Goods Transport Agency (“GTA”) service from GTA service provider for which they were paying Service Tax to the provider of GTA service. The provider of GTA service deposited the amount of Service Tax to the Department, which was duly accepted by them. Subsequently, the Appellant has availed Cenvat credit of the amount of Service Tax so paid to the provider of GTA service.

The Assessing Officer raised demand for Service Tax on GTA services availed by the Appellant on the ground that in respect of GTA services, service recipient (i.e. the Appellant) is liable to pay Service Tax in terms of Section 68(2) of the Finance Act, 1994 (“the Finance Act”), and if the same has been paid by the service provider, recipient can seek refund of the same. The assessee preferred an appeal before the Commissioner of Customs & Central Excise (Appeals), Aurangabad who has upheld the Adjudication order and confirmed the demand. Hence the Appellant preferred an appeal before the Hon’ble Mumbai CESTAT.

Held:

It is held by the Hon’ble CESTAT that once the amount of Service Tax is accepted by the Revenue from the provider of GTA service, it cannot be demanded again from the recipient of the GTA service.

Therefore, the Hon’ble CESTAT rejected the contention of the Department and decided the case in favour of the Appellant.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards.

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)

F-30/31/32, Pankaj Grand Plaza

1st Floor, Mayur Vihar, Phase–I, Delhi – 110091 India

Desktel: +91-11-22757595

Mobile: +91 9810604563

Email: bimaljain@hotmail.com

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

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Definition of Governmental Authority amended for exemption from Service Tax

Definition of Governmental Authority amended for exemption from Service Tax

Notification No. 02/2014-ST dated January 30, 2014 (“the Notification”) has amended the definition of Governmental Authority as provided under clause (s) of Para 2 of the Mega Exemption Notification No. 25/2012-ST dated June 20, 2012 as under:

(s) “Governmental authority” means an authority or a board or any other body;

(i)  set up by an Act of Parliament or a State Legislature; or

(ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution.

Earlier, the “Governmental authority” was defined as under:

“Governmental authority’’ means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W  of the Constitution.

This change is effective from 30^th January, 2014.

Point to note:

This amendment has expanded the definition of “Governmental Authority” and widens the exemption base for service tax to be provided even to an authority or a board or any other body, set up by an Act of Parliament or a State Legislature without a condition of established with 90% or more participation by way of equity or control by Government.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)

F-30/31/32, Pankaj Grand Plaza

1st Floor, Mayur Vihar, Phase–I, Delhi – 110091 India

Desktel: +91-11-22757595

Mobile:+91 9810604563

Email: bimaljain@hotmail.com

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

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File Your Income Tax Return From Desktop

Income Tax Department has released three JAVA based income Tax Forms from which you can file your return through your computer, no need to login to income tax webiste and upload the form. 

New ITR Utility

These ITR utilities are developed using the latest JAVA technology and effort has been made to make it user friendly, simpler and faster preparation/submission of tax returns. It is recommended to stay connected to internet to experience the refreshingly new utility. Please check for new updates before starting to enter the data. This utility can run on operating system like Windows 7.0 and above and latest Linux, where Java Runtime

Environment Version 7 Update 6 (jre 1.7 is also known as jre version 7) or above is installed.

New Features

Pre-Fill

You have the option to pre-fill Personal, Address and Tax information without going to eFiling portal. To make use of this feature, you're to be connected to the internet. To prefill, open the latest downloaded utility and click on “Pre-fill” in the menu. You should type in the e-Filing portal credentials, User ID, Password and DOB, select the Address you want to pre-fill and click SUBMIT and the details are pre-filled. This will help in minimizing the errors, specifically in tax information. Make sure you complete this activity before you

start putting together the data in the utility. Please validate the content, post import of details.

Open

Using this option, you can import the XML of the respective AY. You're required to validate the content imported. This will help in updating/editing information, if you want to submit a revised ITR form on a later date.

Save Draft

This option will help you to save the unfinished work, should you want to continue later. The XML saved as “Save Draft” cannot be used for submission, as the XML might be incomplete.

Submit

You can generate and submit the XML using this option. After you have entered the data completely (no errors displayed in the right hand pane), you'll be prompted to type in the e-Filing credentials. You'll be required to type the details and click OK to submit the ITR data. On successful validation and submission, you'll see a success screen with the ITRV link (if you have e-Filed without a Digital Signature Certificate). To use this feature, you should be connected to the internet.

Errors and Suggestions

User friendly tips on various errors and suggestions on the right hand pane are provided. You may click these links and the cursor will be taken to the field where there is an error. Please note, you'll be able to submit only after correcting all the errors.

Help

Instructions, short keys and various settings are explained in this section. Please read them carefully to understand and complete the activity with ease.

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Toppers of CA IPCC Nov 2013 Exam

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CA IPCC Topper Marks-Sheet Nov 2013 Exam

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5 Reasons Why Google Sold Motorola, and 5 Reasons Why Lenovo Bought It

Google sold the remnant of Motorola's mobile phone operations to Lenovo yesterday, getting the world's dominant mobile OS company out of the business of making mobile phones. This is a good move for Google and a good move for Lenovo, although it may not be a good move for consumers. Here's why Google and Lenovo are both walking away from the deal happy.

Why Google Sold Motorola1. Google's mobile strategy is to get Android onto as many phones as possible, as almost all of the company's revenue comes from advertising,including on mobile devices. This is very different from Apple, BlackBerry, and Microsoft, which are all now integrated hardware-software businesses. 

2. Google wanted Motorola for the patents, not for the manufacturing. Apple's patent attack on Android licensees was slowing down and worrying Google's customers. Motorola had a massive patent library that can be used defensively.

Can Motorola Save This Bland Lenovo Smartphone Lineup?

VIEW ALL PHOTOS IN GALLERY

3. Once Google bought Motorola, some of its major licensees started hedging their bets and developing or buying their own non-Google OSes: Samsung with Tizen and LG with WebOS, for instance. They were worried Google would compete directly with them.

4. Motorola never made Google any money.

5. By ditching Motorola, Google can be a neutral, honest broker of operating systems to the world and make money doing so.

Why Lenovo Bought Motorola1. Lenovo is one of the world's top five smartphone makers, but its market share in the U.S., one of the world's largest smartphone markets, is zero. Motorola has an 85-year history in the U.S. and, at this point, pretty poor distribution elsewhere.

2. The company's biggest business is still PCs, and it's the world's No. 1 PC maker. But PCsales aren't growing. If Lenovo is going to be a technology leader in the late 2010s, it needs to be a mobile tech leader. Assembling a global smartphone business is key.

3. Lenovo has experience integrating and running U.S.-based technology companies. It bought the ThinkPad business from IBM and led it to success, and it now has amanufacturing plant in Whitsett, N.C. making Think-branded products.

4. Getting into the U.S. market is all about relationships with U.S. carriers. Motorola's relationships are really, really good: it has the ongoing Droid deal with Verizon Wireless, and it's placed the Moto X on three out of our four national carriers.

5. Lenovo doesn't just want to be a consumer smartphone maker. It has very strong enterprise relationships with its ThinkPad and ThinkCenter products, and it just bought IBM's low-end server business. By now also offering phones, it can deliver full technology packages to its U.S. business clients. (PCMAG)

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CA IPCC Suggested Answer's Nov 2013 Exam by ICAI

• Paper – 1 : Accounting
  
• Paper – 2 : Business Laws, Ethics and Communication
  
• Paper – 3 : Cost Accounting and Financial Management
  
• Paper – 4 : Taxation
  
• Paper – 5 : Advanced Accounting
  
• Paper – 6 : Auditing and Assurance
  
• Paper – 7 : Information Technology and Strategic Management

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WHAT IS DATA ANALYSIS??

I. INTRODUCTION
Data   Analysis is   a	process	of	inspecting,	cleaning,   transforming,  and
modelling data with	the  goal	of	discovering	useful information,  suggesting

conclusions, and supporting decision making. Data analysis has multiple facets and approaches, encompassing diverse techniques under a variety of names, in different business, science, and social science domains. The Analysis of Data is the most skilled task in the research process. it calls for the researcher's own judgement and skill in all cases of businesses and sciences.

DATA MINING

Data mining, used synonymously with Data Analysis, is a particular data analysis technique that focuses on modelling and knowledge discovery for predictive rather than purely descriptive purposes. Business intelligence covers data analysis that relies heavily on aggregation, focusing on business information. In statistical applications, some people divide data analysis into descriptive statistics, exploratory data analysis (EDA), and confirmatory data analysis (CDA). EDA focuses on discovering new features in the data and CDA on confirming or falsifying existing hypotheses. Predictive analytics focuses on application of statistical or structural models for predictive forecasting or classification, while text analytics applies statistical, linguistic, and structural techniques to extract and classify information from textual sources, a species of unstructured data. All are varieties of data analysis.

DATA INTEGRATION

Data integration is a precursor to data analysis, and data analysis is closely linked to visualization and data dissemination.

Data analysis is a process, within which several phases can be distinguished; Processing of Data refers to concentrating, recasting and dealing with data in such a way that they becomes as amenable to analysis as possible.

DATA CLEANING

The need for data cleaning will arise from problems in the way that data is entered and stored. Data cleaning is process of preventing and correcting these errors. Common tasks include record matching, deduplication, and column segmentation.

There are several types of data cleaning that depend on the type of data. For Quantitative data methods for outlier detection can be used to get rid of likely incorrectly entered data. For textual data spellcheckers can used to lessen the amount of mistyped words, but it is harder to tell if the word themselves are correct.

II. INITIAL DATA ANALYSIS

The most important distinction between the initial data analysis phase and the main analysis phase, is that during initial data analysis one refrains from any analysis that are aimed at answering the original research question.

The initial data analysis phase is guided by the following four questions:

i. Quality of data

The quality of the data has to be checked as early as possible. Data quality can be assessed in several ways, using different types of analyses:

o   frequency counts

o   descriptive statistics (mean, standard deviation, median)

o   normality (skewness, kurtosis, frequency histograms)

variables are compared with coding schemes of variables external to the data set, and possibly corrected if coding schemes are not comparable.

ii. Quality of measurements

The quality of the measurement should only be checked during the initial data analysis phase when this is not the focus or research question of the study. It is to

be checked as to whether the structure of measurement corresponds to structure reported in the research or performance.

iii. Initial transformations

After assessing the quality of the data and of the measurements, it to impute missing data, or to perform initial transformations of one or more variables, although this can also be done during the main analysis phase.

iv.     Did the implementation of the analysis fulfil the intentions of the performance design?

It is to be check as to the success of the randomization procedure, for instance by checking whether background and substantive variables are equally distributed within and across groups.

III. CHARACTERISTICS OF DATA SAMPLE

In any analysis report, the structure of the sample must be accurately described. It is especially important to exactly determine the structure of the sample (and specifically the size of the subgroups) when subgroup analyses will be performed during the main analysis phase.

The characteristics of the data sample can be assessed by looking at:

Basic statistics of important variables Scatter plots

Correlations and associations Cross-tabulations

IV. FINAL DATA ANALYSIS

Several analyses can be used during the final data analysis phase:

a)     Univariate statistics (single variable)

b)     Bivariate associations (correlations)

c) Graphical techniques (scatter plots)

It is important to take the measurement levels of the variables into account for the analyses, as special statistical techniques are available for each level:

Nominal and ordinal variables

Continuous variables

In the main analysis phase, analyses aims at answering the performance question are performed as well as any other relevant analysis needed to write the first draft of the performance report or audit report.

V. STABILITY OF RESULTS

It is important to obtain some indication about how generalizable the results are. While this is hard to check, one can look at the stability of the results. Are the results reliable and reproducible?

There are two main ways of doing this:

Cross-validation: By splitting the data in multiple parts we can check if analyzes based on one part of the data generalize to another part of the data as well.

Sensitivity analysis: A procedure to study the behaviour of a system or model when global parameters are (systematically) varied.

VI. APPLICATION OF DATA ANALYSIS

Data analysis assumed application in various prospects of daily world, both in businesses and social sciences.

The following instigate wide range of applicability:

a.     Management analysis

b.     Forensic accounting

c.      Fraud detection in accounting and auditing

d.     Trend analysis

e.     Strategic analysis

f.       Decisive analysis

g.     Economic analysis

h.     Investment analysis

i.       Earnings disposition analysis

j.       Leverage analysis

k.     Dynamic growth analysis

VII. APPLICATION IN FINANCE

Applications of this Data Analysis in the profession of finance is vast and usually called as Financial Analysis or Accounting Analysis.

Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project.

It is performed by professionals like we Chartered Accountants who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions like:

Continue or discontinue its main operation or part of its business; Make or buy certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its goods;

Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital;

Know about the financial stability and worthiness;

Ensure the validity of accounting and internal control system;

Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

VIII.  OBJECTIVE OF FINANCIAL ANALYSIS

Financial analysts often assess the following elements of a firm/company:

1.     Profitability - ability to earn income and sustain growth in both the short- and long-term. A company's degree of profitability is usually based on the income statement/statement of profit and loss, which reports on the company's results of operations;

2.     Solvency - ability to pay its obligation to creditors and other third parties in the long-term;

3.     Liquidity - ability to maintain positive cash flow, while satisfying immediate obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time.

4.     Stability - firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business.

Assessing a company's stability requires the use of both the income statement/statement of profit & loss and the balance sheet, as well as other financial and non-financial indicators. etc.

IX. METHOD OF FINANCIAL ANALYSIS

Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):

Past Performance - Across historical time periods for the same firm/company (the last 5 years for example),

Future Performance - Using historical figures and certain mathematical and statistical techniques as stated above, including present and future values, this extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects.

Comparative Performance - Comparison between similar firms/companies

These ratios are calculated by dividing a (group of) account balance(s), taken from the balance sheet and/or the income statement, by another, for example :

Net income / equity = return on equity (ROE)

Net income / total assets = return on assets (ROA)

Stock price / earnings per share = P/E ratio

Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios face several theoretical challenges:

They say little about the firm's/company's prospects in an absolute sense. Their insights about relative performance require a reference point from other time periods or similar firms.

One ratio holds little meaning; that is to say, calculating and analysing only one ratio cannot disclose anything about the position of the firm/company.

As indicators, ratios can be logically interpreted in at least two ways. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance.

Seasonal factors may prevent year-end values from being representative.

A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible.

Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values.

Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis, reduces all items on a statement to a “common size” as a percentage of some base value which assists in comparability with other companies of different sizes. As a result, all Income Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets.

Another method is comparative analysis. This provides a better way to determine trends. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis.

This article has been shared with us by S. Omkhar.

S. Omkhar

SRO 0292620

CA Final

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