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SIGNIFICANT ACCOUNTING POLICIES

In document Annual Report-2013-2014 (Page 112-116)

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED 31 MARCH 2014

SCHDULE 22 SIGNIFICANT ACCOUNTING POLICIES

1. ACCOUNTING CONVENTION

The financial statements are prepared on the basis of historical cost convention, unless otherwise stated, following going concern concept and on accrual method of accounting .Accrual method of accounting has been followed as far as possible and the deviations are as stated below .Since the format of presentation has been altered for the current year as per the MHRD guidelines, regrouping has been made for previous year figures wherever applicable and incorporated.

2. REVENUE RECOGNITION AND CHANGE IN THE ACCOUNTING POLICY

2.1 From the year 2005-06 the Institute is covered under the ‘Block Grant Scheme’ of the Govt. of India. Under ‘Block Grant Scheme ’Non plan grant is released on the basis of pre-fixed amount on revenue account. Accordingly from the year 2005-06 the institute has been recognizing Non plan Grant as income.

2.2 Interest on Investment and Mobilization Advances is recognized on accrual basis whereas interest on Saving Bank Account is taken on actual receipt basis as and when credited by banks.

2.3 Placement Fee is recognized on realization basis, though all invoices raised have been accounted.

2.4 Consultancy income is recognized on completion of the consultancy projects.

2.5 ePGP income has been considered for the total fee collected during the year as well as for fee collected during 2012-13 and shared during the year.

2.6 Since on the above stated items the income is not fully as per Accounting Standard 9. The quantum of deviation will be approximately 2.33 crores for ePGP and 6.42 lakhs for MDP. Quantification of other items are not possible due to lack of adequate data.

For and on behalf of the Board of Governors of the Institute

Sd/-

Place: Kozhikode Prof. K.K. Ramesh

Date : 27-08-2014 FA & CAO (Officiating)

INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE 113 ANNUAL REPORT 2013-2014 3.1 Expenses are accounted on the basis of accrual method of accounting except the following.

3.2 We have prior period expenses of Rs.1.93 crores in 2014-15 which was not recognized in 2013-14 4. INVESTMENTS

4.1 Investments classified as “Long Term Investments” are carried at cost. Provision for decline, other than temporary decline, is made in carrying cost of such investments.

4.2 Investments classified as “current” are carried at cost. Provision for shortfall on the value of such investments is made for each investment considered individually and not on a global basis.

4.3 Fixed deposits with Bank for less than 12 months have been shown as short term investments in the current year as it is investment of surplus funds of the Institute for a short term.

5. FIXED ASSETS

5.1 Fixed Assets of the Institute are acquired out of grants from the Government of India and the Government of Kerala. Funds utilized for acquisition of assets are shown under Capital Fund (Fixed Assets) in the corresponding schedule 4 to the Balance sheet.

5.2 Fixed Assets Acquired out of Earmarked/Sponsored Project account are booked as expenditure in concerned project account. These assets are included in Fixed Assets by corresponding credit to Capital Fund ( Fixed Asset - Project ) in Schedule 4 to the balance sheet.

5.3 Fixed Assets are stated at cost of acquisition inclusive of inward Freight, duties and taxes and incidental and direct expenses related to acquisition of assets.

5.4 In respect of projects under construction, all direct expenses connected with the construction are capitalized under different sub-heads and apportionment of this expenditure to the specific assets are done on completion of the project on pro-rata basis. Fixed Assets received by way of non-monetary grants (other than towards the Corpus Fund) are capitalized at values stated on receipt and corresponding credit to Capital Fund.

For and on behalf of the Board of Governors of the Institute

Sd/-

Place: Kozhikode Prof. K.K. Ramesh

Date : 27-08-2014 FA & CAO (Officiating)

INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE 114 ANNUAL REPORT 2013-2014

Indian Institute of Management Kozhikode

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED 31 MARCH 2014

6. DEPRECIATION

6.1 Depreciation is provided on written down value method as per rates specified in the Income- tax Act, 1961 except depreciation on cost adjustments arising on account of conversion of foreign currency liabilities for acquisition of fixed assets, which is amortized over the residual life of the respective assets.

6.2 In respect of additions to / deductions from fixed assets during the year, depreciation for the full year is charged for the assets acquired and put to use for 180 days and above and 50% of the depreciation is charged for the assets acquired and put to use for less than 180 days.

6.3 Though depreciation is taken to Income & Expenditure account to ascertain the total Recurring Expenditure, corresponding amount is reduced from the Capital Fund (Fixed Assets) and Capital Fund (Fixed Assets-Projects) so that the surplus of Income over expenditure is excluding the provision for depreciation.

6.4 Cost of Fixtures constructed on leased asset is amortised over the lease perion. This has been done from current year in order to ensure that its treatment is in line with Accounting Standard 17

7. GOVERNMENT GRANTS / SUBSIDIES

7.1 The Institute is financed by the Government of India and Government of Kerala for setting up the infrastructure of the Institute. The Government of Kerala has committed to provide the land free of cost to the Institute initial years.

7.2 The Plan Grants received is accounted as Capital Fund (Grant-in-aid) from where the share of Capital expenditure is transferred to Capital Fund (Fixed Assets) and the balance, if any, carried forward for the utilization/adjustment during the next year.

7.3 Government grants utilized towards capital cost of setting up Institute are treated as capital Fund (Fixed Assets). Grants in respect of specific fixed assets acquired are shown as a Deduction from the cost of related assets.

7.4 Govt. grant is accounted on accrual basis subject to the condition that the sanction orders for grant is received on or before balance sheet date.

For and on behalf of the Board of Governors of the Institute

Sd/-

Place: Kozhikode Prof. K.K. Ramesh

Date : 27-08-2014 FA & CAO (Officiating)

INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE 115 ANNUAL REPORT 2013-2014

Sd/- Sd/- Sd/-

Place: Kozhikode Prof. K.K. Ramesh Lt. Col M. Julius George (Retd) Prof. Debashis Chatterjee

Date : 27-08-2014 FA & CAO (Officiating) CAO DIRECTOR

8.1 Institute is covered under the block grant scheme of Govt. of India from the year 2005-06 onwards and accordingly the entire Surplus/Deficit in the income & expenditure account is transferred to Corpus Fund.

8.2 Interest accrued on Corpus Fund Investment and Loans and Advances granted out of Corpus Fund are directly credited to the Corpus Fund Account without taking to Income & Expenditure Account. This change is done in compliance with requirement of ‘Block Grant Scheme’

9. DEPRECIATION FUND

9.1 Depreciation Fund created by transferring the amount of depreciation charged every year to ensure availability of sufficient funds as and when the old assets has to be replaced. The amount transferred for last year was the depreciation for the year less the interest received from the depreciation investment. In the current year, the entire amount of depreciation has been apportioned to the fund account so that there is no understatement of the fund balance.

10. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are accounted at the exchange rate prevailing on the date of the transaction.

11. LEASE

Lease rentals are expensed with reference to lease terms.

12. RETIREMENT BENEFITS

12.1 Provision for accumulated leave encashment benefit to the employees is computed on the assumption that employees are entitled to receive the benefits as at each year end.

12.2 In respect of employees covered under the pension Scheme the amount received from their previous employers towards discharge of their pension liability is taken to the Pension Fund account and invested suitably.

12.3 Provision for payment of pension in respect of the service rendered in the Institute has been made as per Govt. of India pension / commutation rules.

12.4 Pension payment made during the year is charged off to the revenue.

For and on behalf of the Board of Governors of the Institute

INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE 116 ANNUAL REPORT 2013-2014

Indian Institute of Management Kozhikode

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED 31 MARCH 2014

SCHEDULE 23 - CONTINGENT LIABILITIES AND NOTES ON ACCOUNTS

In document Annual Report-2013-2014 (Page 112-116)