Wrong Provision Of Gratuity - Accounting Problem - XLS Download

Dear Sir,

We would like to inquire if there would be any issues if an employee has been working for the past 5 years and 3 months until 31.03.2014 and is still continuing to work. This information has not been included in the provision for gratuity. Therefore, could you please advise if there might be any problems? The company's balance sheet has been prepared and submitted for income tax purposes.

Thank you.

Hi,

Section 4 of the Act mentions the obligation on an employer of an establishment to consider the case of each employee in the matter of payment of gratuity to him. The employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable to the person to whom the gratuity is payable. If the amount of gratuity payable under the section is not paid by the employer within the period specified, from the date on which the gratuity becomes payable, he will have to pay simple interest on it at a rate not exceeding the rate notified by the Central Government from time to time. This will consider a delay in payment if it has crossed 30 days from the date of the application made by the employee and provision made by the employer.

Dear Sir,

I know that, but the question is when we did not make a provision for gratuity in the last year for one person, but we will make it in the current year. So, what is the obligation?

As per "Accounting Standard (AS-15) Employees Benefits" issued by the ICAI, every employer/assessee has to make a provision (mandatory) in their Annual Accounts towards gratuity for their employees using the "Actuarial" valuation method for those who have become eligible for gratuity under the Gratuity Act or any other applicable scheme. This provision is claimed as a deduction for expenses for the respective year for computing the employer's income tax. Failure to do so will result in disallowance in the future. However, in your case, your firm has omitted one employee's provision for making a provision in the accounts, possibly due to oversight. You have not mentioned for which year this provision pertains to. Presumably, it should be for an incremental liability for the Financial year 2013-14, for which your firm might have recently filed the income tax return. I don't think this is a significant mistake to worry much about. If you are very concerned, discuss with your auditors. You might also consider filing a revised return since I am sure the assessment of the income tax return for 2013-14 is not yet completed. Even if the assessment is over, don't worry; ensure it is covered for the next year by making a fresh provision either under "Prior Period Expense" or under the Major Head Employees Benefits as the case may be.

Respected sir,

My name is Murali, and I have recently secured a job in Dubai at a real estate company as an accountant. However, I have come to learn that the company has been without an accountant since 2001. This situation has left me feeling quite worried. I would greatly appreciate your guidance on this matter.

Could you please advise me on the various registers that need to be maintained and any other crucial information that I should be aware of?

I kindly request you to highlight the key points that you believe are important for me to focus on.

Regards,
Murali

Hi Murali,

Congratulations on bagging the job. You have not mentioned more details about your company, such as the type of accounting system they follow and your responsibilities. Of course, it's going to be a Herculean job for you since they have not maintained any accounts since 2001. Are you well-versed in the TALLY accounting package? What are your qualifications and experience in accounting?

In circumstances where your job is only to maintain a simple cash book, it could be manageable. However, if they expect you to maintain all ledgers, accounts, Profit & Loss accounts, and Balance Sheet, you have to think about it carefully. For now, start by maintaining columnar cash and bank books, customer ledgers, and partners' accounts. What about site accounts, inventory, labor management, taxation, bank transactions, etc.? Who cares? Is it an Indian-based company? (Regret the few spelling mistakes in my posts.)

Respected Mr. Kumar S.,

Thank you very much, sir, for giving me your guidance. It is purely an Arabic company. I want to keep the confidentiality, that's why I am not disclosing my company name. The company has 3 sister concerns, and I have to maintain these companies' accounts also, so I want to implement an accounting system. Additionally, the company is presently planning to set up a branch in Qatar. I am fluent in Tally ERP 9.

You kindly guide me as I have the following doubts:
1) How to Set Up an Accounting Filing System
2) What registers to be maintained, etc.
3) How to maintain an asset list and calculation of its depreciation
4) Voucher register

Kindly forward the samples of profit and loss account, asset register, etc. to my email id: pvmmadhavan@gmail.com.

Regards,
Murali

Hi Murali,

1) If you are conversant with TALLY ERP 9, then it should help you in setting up an Accounting Filing System for a company. You can maintain accounts of all three companies simultaneously in the same Tally account. Open Co.A, Co.B, & Co.C, and so on. Start creating required ledger heads and entering the transactions. It's unnecessary to elaborate step by step entries in Tally to someone literate like you.

2) If the Tally account is in operation, there is no need to maintain separate registers; everything can be managed within it.

3) If you are unable to create a separate Assets register in Tally, calculating depreciation is also easy if you create masters like asset description, the rate of depreciation applicable as per laws/acts, etc. Depreciation rates vary depending on the type of assets, usage, expected life of use, etc. The Companies Act/IT Act in India differs from what is applicable in Dubai, so obtain all guidelines and consult competent authorities in Dubai or a CFA if available in practice there.

4) If you use Tally Software, no separate voucher number would be necessary as the software assigns voucher numbers automatically. In Tally, the Profit & Loss Account, Balance Sheet, all linked ledgers, cash book, etc., are also automatically updated as and when you make an entry for every entry. You can access all the books, ledgers, PL, BS together at any time for every entry/date.

If you are struggling to start, consider hands-on training on Tally from a licensed trainer or purchase a Tally guide to help you. Online portals are available for training. There are numerous P&L Accounts and Balance Sheets of various companies on their websites; explore and see for yourself. If you still need the formats, I can provide them. All the best.

Respected Mr. Kumar,

Thank you for taking the time to clarify my doubts. I sincerely appreciate the time you spent recommending accounting tips for me. Your advice is truly invaluable and helpful to me. Dear sir, do you have any idea about Argus Enterprise 10 software for property budgeting? Kindly forward the samples of audited profit and loss account, balance sheet, asset register, etc., to my email address: pvmmadhavan@gmail.com.

Regards,
Murali

Dear Murali,

Browse these links to learn more about the PL & BS of an MNC company.

[Sample Balance Sheet from The Coca-Cola Company](http://beginnersinvest.about.com/od/analyzingabalancesheet/a/assets-liabilities-shareholder-equity.htm)

[Understanding Balance Sheet | Finance & Accounts | India Point](http://indiapoint.net/finance/2005/11/14/understanding-balance-sheet/)

Thank you.

Respected Mr. Kumar S.,

Here, I am attaching the payroll Excel file, which is suitable for the Indian system only. I tried my very best to make it suitable for the Middle East salary system, but I couldn't. Dear Sir, please help me solve this problem. I need the below-mentioned items in my salary slip:

Payments:
- Basic Pay
- HRA
- Overtime
- Telephone Allowance
- Temporary Assignment
- Arrears (in increment)
- Special Allowance

Deductions:
- Company Loan
- Passage Loan
- Cash Advance
- Others

Regards,
Murali

Attribution: [CiteHR](http://citehr.com#ixzz3EmBqyUIY)

Dear Murali,

Regarding the format of a payroll, the items such as emoluments should be broken down into various categories on your Excel sheet. I assume you have already finalized the structure with your employees; if so, categorize them under the appropriate headings. Similarly, list the deductions to determine the net amount payable to the respective bank accounts. I do not encounter any difficulties in formatting the Excel sheet for payroll. However, if you have not yet determined the salary breakdown, I cannot provide an answer as you will need to do that. In the meantime, I believe the information available in the following links may offer additional insights on the subject. Please review them:

Payroll Software Dubai - HR Management - WPS - HRMS - Document Management System (http://dubaipayroll.com/)

Dubai Salary Details and Negotiation Tips (http://dubaiemploymenttips.com/salary/negotiation/)

Salary Slip Format (http://www.svtuition.org/2011/10/salary-slip-format.html)

Regards,