Category: Confirmation

Balance Confirmation

Benefits Of Balance Confirmation in Finance: Peace of Mind Guaranteed

Unlock Financial Peace With Balance Confirmation In Finance

It is an irrefutable fact that accuracy and reliability are paramount in the finance and accounting domain. Businesses employ various auditing procedures to ensure the veracity of financial statements and strengthen the trust of stakeholders. One such crucial process is balance confirmation, which plays a vital role in validating the accuracy and completeness of recorded balances. Companies can obtain essential feedback on their financial transactions by exchanging information with external parties, such as customers, suppliers, or financial institutions.

This article shall act as a comprehensive guide that sheds light on the benefits and importance of balance confirmation in financial transactions. We will explore how this process enhances the integrity of financial statements, helps detect errors or discrepancies, and promotes transparency and accountability. Furthermore, we will understand the role of automating the balance confirmation process of your company to improve your overall accounting efficiency.

What do you mean by balance confirmation?

Balance confirmation denotes a process used in accounting to check the precision and completeness of the balances recorded in a company’s financial statements. It typically involves exchanging information between a company and its external stakeholders, such as customers, suppliers, or financial institutions.

During the balance confirmation process, a company will send out balance confirmation requests to its stakeholders, requesting them to confirm the balances they hold or owe to the company. These requests are typically sent in writing through a balance confirmation letter, email, or online platform. The balance confirmation process is commonly used across various industries, including manufacturing, retail, banking, and services. It is particularly essential in industries with significant accounts receivable or accounts payable balances, where confirmation helps validate the accuracy of these balances.

Benefits & Importance

Balance confirmation holds significant importance in finance for several reasons:

  • Upholding Accuracy: Account Confirmation helps verify the accuracy of financial records by reconciling them with the records of external parties. It allows businesses to validate the balances they hold or are owed and identify any discrepancies or errors that must be addressed. This process enhances the overall reliability and credibility of financial statements.
  • Detecting Errors and Fraud: Account Confirmation plays a crucial role in detecting errors, omissions, or even fraudulent activities. Companies can identify discrepancies by comparing their records with those of external stakeholders, such as incorrect postings, unauthorized transactions, or missing balances. This helps in promptly investigating and rectifying any anomalies.
  • Strengthening Auditing Procedures: Auditors heavily rely on balance confirmation as an essential tool during the auditing process. By obtaining confirmations from external parties, auditors gain independent verification of the balances, transactions, and obligations recorded in the financial statements. This enhances the accuracy and thoroughness of the audit, assuring stakeholders.
  • Enhancing Transparency and Accountability: Account Confirmation promotes transparency and accountability in financial transactions. It demonstrates a company’s commitment to open communication and fosters stakeholder trust. By obtaining confirmations, businesses can demonstrate that their financial information is accurate and reliable, enhancing the confidence of investors, lenders, and other stakeholders.
  • Resolving Discrepancies: Account Confirmation allows companies to address any discrepancies or disagreements with external parties promptly. If a stakeholder provides a different balance or raises a concern, it will enable both parties to investigate and resolve the issue on time. This helps maintain healthy business relationships and avoids potential disputes in the future.
  • Compliance with Regulations and Standards: Many regulatory bodies and accounting standards require using balance confirmation as a standard practice. By adhering to these requirements, companies ensure compliance with legal and regulatory frameworks, thereby avoiding penalties and maintaining their reputation.

In this digitized age, automation for balance confirmation tasks is necessary. By leveraging automated systems, businesses can streamline their confirmation procedures, reduce manual efforts, enhance data security, and improve their financial operations’ efficiency and effectiveness.

Firmway offers a one-of-its-kind balance confirmation solution. It is a user-friendly tool that constantly monitors your customers and vendors, protecting you from unforeseen surprises. With its intuitive interface, the software significantly increases third-party response rates without manual intervention. Experience the ease and effectiveness of Firmway’s balance confirmation solution now!

Balance & Audit Confirmation

Balance & Audit Confirmations: What You Need to Know About

All About Digitized Balance & Audit Confirmation

A balance & audit confirmation letter is a crucial request sent to third parties in order to gather specific information regarding items that significantly impact the financial statement. Consequently, this process plays a pivotal role, as it aids in substantiating various assertions made in the financial statement, ultimately contributing to the formation of a well-informed opinion about its accuracy.

Importance of External Confirmation in Auditing

In the field of auditing, external confirmation, especially for financial elements like banks, loans, payables, receivables, and more, is a widely practiced method. To secure compliance and standardize the confirmation process, the Auditing and Assurance Standards Board (AASB) empowered by the Institute of Chartered Accountants of India (ICAI) issued SA 505: External confirmations. Further, to assist the professional accountants in implementing the confirmation process, ICAI issued the guidance notes that provide for obtaining confirmations for receivables, cash and bank balance, and liabilities.

Automating the Balance & Audit Confirmation Process

Conventionally, auditors use letters, posts, or emails to obtain confirmations from external parties. Click here for manual balance confirmation samples – negative or positive. However, it is not a sustainable solution for a high volume of accounts of large-scale businesses. Thus, there is a need for digital transformation. In this article, we will delve into the concept of digital balance confirmation letters. Additionally, digital transformation plays a crucial role in assisting auditors in automating tedious parts of audits. Furthermore, in the context of external confirmation, automation will not only lower clerical errors but also significantly enhance the efficacy of the audit evidence.

Streamlining Confirmation with Firmway

An affordable way to automate the external confirmation process involves the adoption of software such as Firmway. Furthermore, Firmway stands as India’s premier online software for balance confirmations. Leveraging cutting-edge technology, it streamlines and standardizes the process of obtaining external confirmations.

Effortless Responses

It allows auditors to efficiently process bulk requests and provides a comprehensive synopsis of reconciled and unreconciled balances. It allows debtors/creditors/banks to respond easily in the following ways:

1: Click on the unique link to respond & will be directed towards response sheet

2: Click on “amount is correct / incorrect” as per your deal (Only valid for positive & negative confirmation)

3: Incase of blank confirmation ask responding party to add the amount as per their books

4: Responses confirmed with auto-generated OTP verification shared on third party email id

5: Live Tracking of responses on dashboard for audit trail purpose

 

Balance & Audit Confirmation

Balance & Audit Confirmation

Balance & Audit Confirmation

Leveraging Audit Automation Tools

In this way, audit automation tools make confirmation easier for third parties and resolve the issue of manual follow-ups, fewer responses, tracking the data, collecting & accumulating the data. All leading accounting and auditing firms are automating the labor-intensive part of the audit to focus on analytical work. Thus, it is high time to leverage technology to smoothen the audit process.

Automating MSME Vendor Identification in Chemical Industry

Identifying MSME Vendors – How a Chemical Giant Automated the Process?

Ensuring Timely Payments and MSME Vendor Identification

The government has established explicit provisions to protect and reduce the credit risk of MSME vendors, including the crucial aspect of MSME Vendor Identification. To ensure that payments to MSMEs are not delayed beyond a specified period, the government mandates that companies disclose details when payments remain outstanding for over 45 days to MSME vendors. This provision necessitates accurate MSME Vendor Identification by companies.

What is an MSME?

Micro, Small and Medium Enterprises, also known as MSMEs, are defined under the Micro, Small and Medium Enterprise Development Act, 2006. The organizations that fulfill the following criteria are classified as MSME organizations:

Type of Enterprise Investment in plant & machinery or equipment should not be more than Turnover should not be more than
Micro Enterprise Rs. 1 crore Rs. 5 crores
Small Enterprise Rs. 10 crores Rs. 50 crores
Medium Enterprise Rs. 50 crores Rs. 250 crores

Thus, vendors who fulfill the above criteria will be classified as MSME vendors and consequently, the companies are required to ensure that their payments are completed within 45 days beyond which penal interest will be levied for micro and small companies. This necessitates them to verify which of their vendors are MSME vendors.

This becomes a tedious task especially when the company is dealing with thousands of vendors. Further, the MSME status keeps on changing each year. It is not necessary that a vendor who is an MSME vendor today will be an MSME vendor next year as well. Companies faced huge difficulties in verifying the MSME status of their vendors each year and automating this task was the need of the hour.

How A Ltd Automated MSME Confirmations?

A Ltd. is one of the giants in the chemical industry. Being one of the largest chemical companies, it dealt with 3 lakh vendors out of which 30,000 were active vendors. Its total annual purchases were Rs. 18,626.25 crores out of which it identified that only Rs. 110 crores were outstanding to the MSME vendors in the year end. Consequently, the huge gap in the figures raised concerns over the accuracy of the database. Clearly, automation was the need of the hour for getting MSME confirmations from such a huge number of vendors.

Earlier at A Ltd., the process for obtaining MSME confirmations was not systemised. A Ltd. obtained MSME confirmations 3 years before and the same confirmations were used each year to determine whether a particular vendor is an MSME or not. This led to inaccuracies in MSME identification and there were no updates as to whether an enterprise is still an MSME enterprise or not.

An automated solution was the need of the hour. That’s when they implemented Firmway’s MSME confirmation solution. Being a statutory compliance, it was important to ensure the accuracy of data. Due to non-accurate and untimely compliance led to penal interest @ 3 times of the bank rate notified by the RBI compounded with monthly rests. Consequently, this led to huge outflows in terms of penal interest which was a direct loss for the business.

How Firmway Helped A Ltd. Automate MSME Confirmations?

Firmway’s MSME confirmation tool allowed A Ltd. to automate its MSME confirmations. Following were the results that they witnessed after implementing Firmway’s MSME confirmation solution:

  • 30,000 MSME confirmations sent in a single click
  • 35% of the confirmations received in the first confirmation request itself
  • Overall, 80% response rate achieved. Earlier, it was just 15%-20%.
  • Nil error in detecting the MSME vendors.
  • 90% OCR verification success rate
  • 15,000 man-hours saved

Streamlining MSME Vendor Identification and Compliance

Earlier, they used to invest 100+ man-hours behind this confirmation exercise which eventually dropped to Zero after implementing the solution. Further, vendor education played an important role here. Firmway helped vendors understand the importance of MSME confirmations and why they were asked for their MSME status. Consequently, this led to a significant increase in their response rate.

Efficiently Managing MSME Vendor Data

Further, the solution auto-rejected old vendors from the system who claimed themselves as MSMEs earlier but were not MSMEs now. In fact, it identified that 40% of vendors were no more MSMEs. Further, the company had 3,000 new MSME vendors in the database and Firmway’s solution was able to identify MSME vendors with a 0% error rate.

Successful Implementation of Technology for MSME Compliance

A Ltd. was able to avoid penal interest rates as well as future ROC and CARO non-compliances. Identifying MSME vendors is posing significant difficulties for many such companies. However, by implementing technology, it is possible to automate the confirmations and ensure timely and accurate compliance. 

Section 43B

Understanding the practical applicability of Section 43B MSME payments amendment

Introduction to Section 43B Amendment

The recent Union Budget 2023 stirred discussions, especially regarding the unprecedented inclusion of payments to MSE vendors. This falls within the ambit of Section 43B of the Income Tax Act 1961. Section 43B contains provisions pertaining to “Income from Business and Profession.” It lists all the expenses a given business entity can seek as deductions from their business income only in the financial year when they make the actual payment, disregarding the year when the entity incurred such expenses. Thus, it advocates deduction of spending on an actual payment basis.

Section 43B: An Overview

 The inclusion of payments to MSE vendors in the above regulatory framework strives to address the key issues MSEs counter as a result of prolonged payments. MSEs make up a fundamental segment of the Indian business ecosystem. According to quantitative analysis estimates by the Economic Times, delayed payments to MSMEs in India have resulted in approximately Rs 10.7 lakh crore being held up, which represents around 6% of India’s Gross Value Added (GVA) for the financial year 2020-21. 

MSE Inclusion in Section 43B

The addition of the MSE payments clause (h) in Section 43B can prove as a cornerstone amendment to streamline the payment receipt process for MSE ventures. Business organizations dealing with MSE suppliers, need to duly comprehend the applicability of the amended Section 43B on your payments. You also need to pay attention to the requirements of Section 15 of the Micro, Small, and Medium Enterprises Development Act (MSMED), 2006. The latest Finance Bill 2023 permits the deduction of expense paid to MSEs in line with Section 43B only when it abides by the time limit specified in Section 15 of the MSMED Act 2006. Thus, one can claim deduction on payment to MSE vendors if they are paid within 15 days in cases where there is no agreement. Or 45 days or as per the time period in a pre-defined written agreement, whichever comes first.

Practical Insights and Illustrations

We provide practical insights on the treatment of payments to MSE vendors in various scenarios, assuming a predefined written agreement. Let’s explore specific situations to determine eligibility for deductions on MSE vendor payments based on the new clause addition.

Illustration 1:

A made a payment to a MSE after the time limit set by section 15 of the MSMED Act, 2006, but within the same financial year in which the expense was incurred. 

In this situation, A settled the payment after the specified time limit of Section 15 of MSMED Act, 2006. This activates the revised provisions of Section 43B. However, as the payment was made within the same financial year that the expense was accrued, deduction shall be permitted in that financial year as outlined by the regulations of the Income Tax Act, 1961.

Illustration 2:

Within the specified time limit under Section 15 of the MSME Act, 2006, B completes payment to an MSE and accrues the expense in the same financial year.

The provisions of section 43B of the Act would not apply to the payment that B made to the MSE. In the financial year in which the expense accrued, he will be permitted to take a deduction.

Illustration 3:

C dealt with an MSE where he had expenses that accrued in March 2024. However, he paid the vendor during the subsequent financial year in April 2024, within the deadline specified under Section 15 of the MSMED Act, 2006.

In this situation, C made the payment as per the time limit specified under section 15 of the MSMED Act, 2006. In the financial year 2023-2024, C will be able to calculate the payment in its tax on an accrual basis.

Illustration 4: 

D incurred an expense in the financial year 2023-2024 that was payable to an MSE. However, he settled it in the subsequent financial year, 2024-25. After the expiration of the time limit specified in Section 15 of the MSMED Act, 2006.

In this situation, because D made the payment beyond the time limit specified in Section 15 of the MSMED Act, 2006, and in the subsequent year, 2024-25, D will not be eligible to claim a deduction for that payment in the financial year 2023-2024 when the expenses initially accrued.

Illustration 5:

On March 16, 2024, E received an invoice from the MSE (Micro and Small Enterprise) for the supply of goods. E dealt with the MSE. The delivery person delivered the goods on the same day. On March 18, 2024, E communicated concerns about the quality of the supplied goods to the MSE vendor. Both parties resolved the dispute on April 30, 2024, and E made the payment on May 31, 2024.

Regulatory Compliance

It’s important to note that the disputing party raised the invoice dispute within 15 days of the delivery date. Therefore, the time limit defined in section 15 of the MSMED Act 2006 starts from the resolution of the dispute. E can claim a deduction for the payment in the financial year 2023-24. If E makes the payment within 45 days from the resolution of the dispute when the expenses accrued.

In summary, to ensure timely deductions and optimize your tax liability. It’s crucial to adhere to the regulatory requirements outlined in both the Income Tax Act 1961. The MSMED Act 2006. Failure to confirm your vendor’s MSME registration status could result in disallowed payment deductions and late payment penalties.

Firmway’s MSME Status Confirmation Tool

Collaborate with Firmway to gain an avante-garde solution in the form of an MSME status confirmation software. By using Firmway’s MSME Status confirmation tool, you can seek MSME status from your vendors and verify the same through MSME government databases and OCR technology. It simplifies the process of getting your vendor’s MSME status validation by leaps and bounds. 

Reach out to know more about this software.

Firmway is a SaaS based startup that has successfully automated Balance Confirmation and Ledger Reconciliation, for well-known companies such as Sodexo, Asian Paints, IPCA, Bluestar, Gati Logistics, and 500 more.

Audit a dying profession

Is Audit a dying profession?

Is Audit a dying profession?

The audit industry is at a crossroads: as market expectations are shifting, technology is empowering auditors and improving quality, the case for audit’s evolution is growing, and more and more businesses are realizing the importance of the audit and assurance industry. In fact, many businesses that previously did not conduct audits now see the value in doing so.

People feel auditing is a dying industry, but it is not. As per research by Deloitte, the audit industry will grow rapidly in the coming 10 years. Times are challenging and auditing is evolving with the help of AI, which helps auditors to automate time-consuming manual activities and focus on higher-value activities. They are realizing the importance of returning to basic management principles in order to identify and correct problematic management practices; auditing plays an important role in this regard because only a genuine and effective audit can drive effective fraud detection and risk management procedures within a company.

AI helps auditors optimize their time by allowing them to perform better and smarter, allowing them to use their human judgment to assess a broader and deeper range of data and documents. The incorporation of modern technologies such as machine learning (ML), cloud computing, and artificial intelligence (AI) with audit software will drive market expansion. These products are used to improve organizations’ risk management skills.

As new standards enable Artificial Intelligence to create new chances for evidence generation, there is also an opportunity to rethink the skills that auditors can gain on the job. As data-driven methodologies grow more common in today’s audits, auditors may now claim to be learning key business skills as well as AI skills. The knowledge that auditors gain through these automation tools equips them to do their job better and deliver better quality reports and results to their clients.

Some people assume that when a part of a profession becomes automated, the human element of the same is devalued. I see the opposite happening with audit automation. As auditors are freed from the more tedious and manual aspects of auditing that are spreadsheet-driven and tick-and-tie tasks — there is more room for strategic insights and critical thinking. This only expands the significance of the work auditors carry out, the influence they have, and their relevance to the capital markets and the global economy.

 

About the Author:

Prashant Gupta is a Chartered Accountant by qualification but an Entrepreneur by passion. He comes with 5 years of experience as a Statutory Auditor before starting his own company Firmway Services, with a vision to Automate Audit Confirmation & Reconciliation for Auditors & Corporates.

A tech enabled approach for auditors to safeguard themselves from increased surveillance risk

A tech enabled approach for auditors to safeguard themselves from increased surveillance risk

A tech enabled approach for auditors to safeguard themselves from increased surveillance risk

Background

In the recent past, the audit profession has been the subject matter of public commentary and scrutiny thanks to the searing probe it is facing.

The increased weightage placed on statutory duties of auditors has exceptionally increased the risks associated with the audit profession. It is safe to say that scrutiny on auditors has substantially increased due to the constitution of the National Financial Reporting Authority under Section 132 of the Companies Act 2013. Now, auditors are looking at possible penalization for failure to detect fraud or non-compliance with statutory provisions. The penalization includes the power to debar the auditor or audit firm from undertaking an audit for up to 10 years. Even Big4s are not spared.

The shift in the spotlight can be clearly noticed in some recent case laws. For instance, in ICAI v. Mukesh Gang, the Hyderabad High Court held the auditors guilty of gross negligence and violation of auditing standards. The level of strictness with which auditors are penalized for such wrongs- is in contrast with decisions in cases such as Union of India v. M.N. Basu where the Calcutta High Court had stated that non-reporting of extending loan without passing a resolution under Section 370 of the Companies Act, 1956, was not due to gross negligence but due to an erroneous interpretation of the law.

The proposition of an auditor being a ‘watchdog and not a bloodhound’ in Re Kingston Cotton Mills is now seeming outdated. In the past, auditors have failed to pay too much heed to nuanced expectations like receiving independent external confirmations. However, with the paradigm shift in the way the profession is being viewed, auditors agree that the risk – rewards relationship is heavily skewed and while the risks of audit have disproportionately increased, the revenue is subpar.

This is driving auditors to become more innovative within the audit practice and use forward-looking and proactive tech enabled audit tools. Technology has started to make inroads in most audit firms, and this directly and positively impacts the quality of each audit. The use of sophisticated technology solutions like practice management, audit confirmation, sampling, and data analytics is fast becoming standard operating practice as firms are embracing the digital-first approach to engagements. Not only are these tools enabling auditors to improve accuracy and analyze anomalies, trends, and areas of risk, but they are also proving to be much more cost effective for auditors.

One such tool that is helping auditors optimize the quality of processes and mitigate potential risks related to audit confirmation is Firmway. Firmway provides web-based SaaS platform that digitize the entire audit confirmation process. In cases like the Satyam fraud case, it was found that auditors’ failure to properly execute third-party confirmation procedures resulted in the fraud going undetected. It was held that the auditor relinquished control of cash confirmations entirely to their client and failed to question the integrity of the confirmation responses they received from the client by following up with the banks.

The entire fraud would have been nipped in the bud if there had been a platform where auditors could independently confirm all balances from third-parties. In Arrangement with The ICAI, Firmway is one such platform that helps auditors automize the independent audit confirmation process in compliance with SA 505. Firmway intends to show a clear picture of the company’s financials and curtail any potential fraud and misinformation. It thus provides auditors and authorities a higher level of assurance and smoothens the overall audit process.

To know more about the Audit Confirmation tool – Click here

Balance Confirmation Letter

Balance Confirmation Letter

Illustrative of Balance Confirmation Letter to be sent to Debtors – Positive Form

[Letterhead of Entity]

[Date]

[Name and address of debtor]

Dear Sir,

For audit purposes, kindly confirm directly to our auditors (name and address of  the auditors) that  the balance of  Rs xx due by you as on ________ , as shown by our books, is correct. The details of the balance are as under: Note: In case the list of invoices forming the balance is too large, these details may not be given

Invoice No Date Order Reference / Acceptance / Tender No. etc. Amount
Total
Less : Advanced Received
Net Amount due by you		 xxxx
(xxx)
xxxx

A stamped envelope addressed to our auditors is enclosed for your convenience.

If the amount shown is in agreement with your books, kindly strike-out the paragraph marked (B) below. If the amount shown is not in agreement with your books, kindly furnish the details in the proforma given in the paragraph marked (B) below and strike-out paragraph (A).

In either case, kindly sign at the place provided below and return this entire letter directly to our auditors in the enclosed envelope.

Your prompt compliance with this request will be appreciated.

Kindly return this form in its entirety.

Yours Faithfully,

 

(Signature of responsible official of the entity)

(Name and Address of entity)

(A) We confirm that the above stated amount is correct as at ______

OR

(B) We state that the above-stated amount is not correct as per our records. The details of the balance as at _________ as per our records are as below:

Invoice Number Date Order Reference Amount
xxxxxxxxxxx xxxx Total xxxxxx
xxxxxxxxxxx xxxx Less : Advanced paid (xxxxx)
xxxxxxxxxxx xxxx Net Amount due from us(Rs) xxxxxx

Yours faithfully,

(Signature of debtor/responsible official)

Illustrative Balance Confirmation Letter to be Sent to Debtors Negative Form

[Letterhead of Entity]

[Date]

[Name and address of debtor]

Dear Sir,

For audit purposes, kindly write directly to our auditors (name and address of the auditors) if the balance of Rs. due by you as on _______ as shown by our books, is not correct, giving details of the differences. The details of the balance are as under:

Note: In case the list of invoices forming the balance is too large, these details may not be given

Invoice No Date Order Reference /Acceptance/ Tender No. etc Amount
Total
Less : Advanced Received
Net Amount due by you		 xxxx
(xxx)
xxxx

If you do not notify our auditors of any difference within ten days of the date of this letter, it will be presumed that the balance stated above is correct.

A stamped envelope addressed to our auditors is enclosed for your convenience.

Yours faithfully,

(Signature of responsible official of the entity)

Source: Guidance Note on Audit of Debtors, Loans and Advances published in June, 1994 issue of ‘The Chartered Accountant’.

Use Firmway.in for obtaining balance confirmation in compliance with the Guidance Note.

MSME Form 1

MSME Form 1 – All that you need to know

MSME Form 1 – All that you need to know

 

What is the fuss around MSME Form 1?

MCA came with an order dated 22nd Jan 2019 that:

 

Every Company which has received goods or services from Micro & Small Enterprise

AND

Payment is due/ not paid to such enterprise for 46 days from date of acceptance

Shall file in MSME Form 1

Note:

  • Only Micro and Small Enterprise Suppliers are considered. Medium Enterprise suppliers are not considered as per the notification.
  • The 45 days calculation starts from the date of acceptance/deemed acceptance and not from the date the balance becomes due

 

Who is MSME?

MSME is classified into two categories:

  1. Manufacturing enterprise; and
  2. Service enterprise.

They are defined in term of investment in Plant and Machinery/ Equipment  as below

MICRO SMALL MEDIUM
Manufacturing Enterprises < Rs 25 Lacs < Rs 5 Crs < Rs 10 Crs
Service Enterprises < Rs. 10 Lacs < Rs 2 Crs < Rs 5 Crs

 

Note: Only registered enterprises having valid MSME certificate shall be considered. Udyog Aadhar is also considered as MSME registration.

 

What is MSME Form 1?

A Half yearly return to the Ministry of Corporate Affairs stating the following:

  • Name of Supplier,
  • PAN of Supplier
  • Amount Due*
  • Date from which such amount is due
  • Reasons for Delay (Generic) (eg – Credit period>45 days, Goods in Transit, Material rejected/returned, etc)

Note:

  • Here the details like amount and date are with respect to the due date and not the date of acceptance.
  • For example, an MSME vendor delivered you goods on 1/12/18. The credit period is 60 days. Hence you have to report this vendor in MSME form 1 since it is more than 45 days as on 22/1/19. However, the amount due would be Nil and date from which such amount is due – 30/01/2019.

 

What is the due date?

Filing Period Due date of Filing
Initial Return (Payable for more than

45 days as on 22nd Jan 2019)

 30th May 2019
From April to September 31st October
From October to March 30th April

 

Note: Only the first return is an “as on 22nd Jan 2019” return. For regular returns post that, you have to report all the MSME vendors to whom the payment was not made within 45 days from the date of acceptance in the said period.

 

How do we do it?

Step 1: Go through your list of vendors to whom Payment is due/ not paid for 46 days from date of acceptance

Step 2: Identify the list of vendors you think can be MSME

Step 3: Send them MSME confirmation asking whether they are MSME as on the said date. And if yes, ask them to attach their registration certificate as on the said date

Step 4: Once you receive the certificate, furnish their details in Form MSME -1

 

Is it Mandatory to file MSME Form 1?

Yes.

Is there any Penalty?

Yes

  • On Nonfilling or
  • On Knowingly furnishes incorrect/ Incomplete Information.

 

Particulars Penalty
On defaulting company Extended Up to  Rs. 25,000/-
Every Officer who is in default

(Directors, CFO and CS)

 Minimum Fine Rs. 25,000/- which may extend to Rs. 3,00,000/-

Or

Imprisonment which may extend to 6 Months

Or

Both

 

What if I missed the due date?

Don’t Worry! MCA is currently allowing (as on 6/6/2019) filling of MSME Form 1 – Without Penalty.

 

What if I missed filling some vendors in the return?

Don’t worry! You can file another return for the same period with the vendors you missed in your earlier return

 

Is there any software which can easily get MSME confirmation from all Vendors?
The Firmway tool can allow the companies to manage their entire MSME confirmations for one time and recurring return. Just upload a simple excel file with Vendor Name, Email Id and mobile number. The software will automatically trigger email and SMS to every vendor, do a rigorous follow-up and provide a real-time dashboard.

Know more about it – firmway.in

Links:
MCA Notification – http://www.mca.gov.in/Ministry/pdf/MSMESpecifiedCompanies_22012019.pdf

MCA Form Download – http://www.mca.gov.in/MCA21/dca/downloadeforms/eformTemplates/NCA/Form_MSME_help.zip

 

Disclaimer:

All Readers are advised to refer relevant provision of law before applying or accepting any of the point mentioned above or not. The author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write-up.

Audit Confirmation Software

Audit Confirmation Software

Audit Confirmation Software

Firmway helps to enhance the credibility of financials, detect and prevent frauds to uphold the interests of the various stakeholders.

Confirmations being an important source of authentication for the various stakeholders, the various flaws associated with the manual process had to be mitigated. To ensure a flawless and effortless process of obtaining confirmations, an effective and proficient platform was obligatory – this led to the birth of FIRMWAY. The unique verification process makes it the best way of obtaining confirmations.

Types of confirmations taken:

  • Debtor
  • Creditor
  • Loan
  • Stock
  • Bank Balance

Firmway sends the Confirmation, Verifies the Confirmer, carries out regular follow-ups with the Confirmer and Summarises Responses.

To Register please click here: https://app.firmway.in/register

Confirmations made easy

Balance Confirmations – Never ending Nightmare for Finance department

Balance Confirmations – A Never ending Nightmare  for Finance department

Financial year closure ensures that the accounts team is occupied with winding up their chef d’oeuvre “Financials”, but the idea itself of obtaining manual #confirmations from debtors, creditors, banks proves out to be one of the culprits for undesirable hitches. The reason being Firmway has come up with a process which has made the Confirmations process easy.

The finance team often finds confirmation tasks daunting, involving hundreds of confirmations, thousands of follow-ups, and countless minutes spent on calls. Although, the ever amounting #audit pressure is capable enough of driving an individual insane.

And if the individual survives the above-stated stages along with the unrealistic excuses like person is not on place, attending meeting, on leave, system issues, tight schedule etc., he is then exposed to the challenges of pursuing and closing the unreconciled differences by re-contacting those parties, asking ledgers, tallying line items, finding differences, communicating it, discussing it, negotiating it and finally closing it.

The story doesn’t conclude at closure unless one has completed that one thing the whole world approves of – #‘Documentation’.

In spite of thosse hundreds of days of hard work, the manual process leaves rooms for errors, #frauds, etc.

And by the time the whole cycle is about to complete; confirmations for the next quarter already in awaiting actions.

 

Are you facing similar problems?

Not to worry anymore, a young team of Chartered Accountants in support with senior professionals of the fraternity have come up with a unique software to streamline the entire process – “FIRMWAY” – Confirmations made easy.

Firmway seamlessly integrates with your accounting software, handling confirmations, timely follow-ups, balance reconciliation assistance, and providing real-time dashboard monitoring.

Technology enhances confirmation legality: verified parties, authorized responses, IP tracking, at an affordable cost.

– Prashant Gupta

Co founder | CEO

FIRMWAY

Visit www.firmway.in or email at [email protected] for a quick web demo or a physical demo.

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