On January 31st, the Reserve Bank of India ordered Paytm Payments Banks, a restricted bank and subsidiary of Paytm to not take further deposits, carry out credit transactions, or top-up on any customer’s accounts. Paytm Payments bank is an entity that can take deposits, but not lend. 

RBI also prohibits the bank from using prepaid methods, wallets, and cards for paying tolls beyond February 29. The RBI has cited sections 35A of the Banking Regulation Act, 1949, and mentioned that the Nodal Accounts of One97 Communications and Paytm Payments Services Ltd. are to be terminated. 

This is what has happened so far. In the latter part of the article. Finsmart Accounting – the leading accounting and compliance services provider in India – will share everything about the Paytm compliance fiasco, and also share key takeaways on compliance for modern businesses. Let’s start!

What exactly led to the Paytm probe by RBI?

RBI had been frequently raising issues against the bank. According to the RBI, due to “persistent non-compliance and continued material supervisory concerns in the bank” the bank was compelled to take action. 

Here are a few important courses of action:

– There have been money laundering concerns and questionable dealings of hundreds of crores of rupees between Paytm and its banking arm.

– Paytm Bank has lakhs of non-KYC-compliant accounts and thousands of cases where single PANs were used to open multiple accounts.

– There have also been instances where the total value of the transactions ran into crores, much beyond the regulatory limits. 

RBI detected certain violations back in 2021. Although the bank was directed to address these issues, they continued to remain. The compliances submitted by Paytm were found incomplete and false, sources said. Here’s what followed:

– In March 2022, RBI imposed restrictions on Paytm Payments Bank to stop onboarding new customers and to appoint an external audit firm for a detailed audit.

– Many cases of frozen accounts and wallets have been found. These were the ones being used to commit digital fraud.

– In September 2022, the Enforcement Directorate (ED) conducted raids on the Paytm Payment Bank and One97 Communications premises.

– After several cases of debtors ending their lives came to light from different states, the ED initiated a probe under the Prevention of Money Laundering Act (PMLA).

Allegedly, illegal digital loan companies sourced the personal data of the borrower at the time of downloading these apps. 

Key Takeaways on Compliance for Modern Businesses:

The recent decision by the Reserve Bank of India not only aims to bring businesses’ focus on regulatory compliance but also serves as a learning for firms in India and globally on several other aspects. 

Here are the key takeaways from Paytm RBI issue:

– Prioritize regulatory compliance: It is non-negotiable in sectors like finance. It is not just the fintech industry, but any organization dealing with money and finance must adhere to all guidelines set by their regulatory bodies. To ensure this, regularly assessing and updating internal policies are a must. Firms must align with the regulations and make amends when something is being flagged. A dedicated compliance team to monitor and maintain adherence has to be brought in place.

– Proactively approach risk management: The recent fate of Paytm is also a reminder for organizations to identify and mitigate potential risks before they become unamendable. A comprehensive risk management that includes risk assessments and scenario planning should be adopted to address unforeseen challenges.

– Operational transparency: Transparency within the organization and with the regulatory bodies is key in building trust with all parties involved. Organizations dealing with financial data and finances must maintain clear communication about offerings, terms of use, and any changes. It helps manage regulatory environments effectively.

– Relations with investors: They closely monitor regulatory compliance and transparency in operations. When issues like the one with Paytm occur, it shakes the faith of the investors. It is essential to keep the investors informed about regulatory developments, compliance efforts, and risk mitigation strategies. 

Compliance is key not just in fintechs, but across industries that deal in finances and financial data. Besides staying compliant, the Paytm case also focuses on the importance of being ethical in the practices to not fall under the negative lens of the regulatory body. This is also true if you are outsourcing your practices like accounting. Beware of who you deal with and make sure to check if they have enough compliance in place.

If you are looking for a trustable partner in India, get in touch with our experts at sales@finsmartaccounting.com 

Also, don’t forget to check out the services we are most consulted for:

Accounts receivable outsourcing services

Outsourced payroll service providers

India entry consulting services

Outsourced financial controller services

The post Paytm Compliance Fiasco: RBI Notice, Financial Issues, and Tips for Businesses appeared first on Finsmart Accounting.

In this blog, Finsmart Accounting – the leading accounting outsourcing services provider of India – will share top checkpoints before the financial year end. Let’s start!

Financial Year-end Closing Checklist

Deduct TDS on year end provisions: This has been observed that the company generally fails to deduct TDS on year-end provisions of expenses like Audit Fees, Annual Filing Charges, etc. Company needs to make sure that proper TDS has been deducted & paid in these cases.

Verification of Closing Stocks as on 31.03.2024: In tax audit cases, also for closing of books, we need to have quantity-wise & item-wise value of closing stocks as of 31.03.2024. Hence, the company needs to document this detail as of 31.03.2024.

Collecting Loan & FD statements: Accountants are advised to collect all running loans & Fixed Deposits and record actual/accrued interests properly.

Collecting Bank Statements: Keep/download bank statements and maintain BRS as applicable.

Collaborative approaches for MNCs entering the Indian market. 

Taking balance confirmations of all running parties: Accountants are advised to collect balance confirmations and ledgers of all sundry creditors & sundry debtors and reconcile the balances. This needs to be reconciled with 26AS as well.

Double check the expenses where TDS hasn’t been deducted: In all cases where TDS hasn’t been deducted on expenses, please reconfirm the TDS applicability with your consultant & take corrective action, if needed. Also, check the applicability of the Equalisation Levy.

TDS on Advance Payments: Check whether TDS has been paid on Advance Payments made to suppliers, especially where balances appear in the books as of 31.03.2024.

Reconcile Inter-branch balances: Company should reconcile inter-branch balances and balances of subsidiary companies otherwise closing the company’s books at year-end would be challenging.

Record Foreign Exchange Fluctuations Properly: In case of Foreign Parties or Assets/Investments where balance is outstanding/pending ascertain Foreign Currency Value as of 31.03.2024., apply AS-11 and record fluctuation difference properly. Take the help of a consultant if required.

Learn about the cost of outsourcing accounting services in India!

Recording Depreciation on Fixed Assets: Accountants are advised to make sure that proper depreciation as per Schedule II of Companies Act, 2013 has been recorded on Fixed Assets appearing in companies’ books.

Loan to Directors or Interested Parties: Loan to directors or any other person in whom the director is interested is prohibited by the Companies Act, 2013 subject to certain exceptions. Accountant needs to make sure the company is not providing or would not provide any such loan or guarantee.

Actuarial Valuation for Gratuity Payable and Leave Encashment Payable – If the auditor suggests, company should get an Actuarial Valuation done for Gratuity and Leave Encashment liability as per Accounting Standards prevailing in India

Transfer Pricing: Please ensure that your books are aligned with the agreement executed between the Holding company or Subsidiary Company or Associated Enterprises.

Taking proofs from employees against their investment mentioned in their declaration and deduct balance TDS: Accountants have the tendency to deduct TDS as per the declaration filed by employees at the beginning of the financial year. But in many cases, it has been found that employees fail to invest as mentioned in their declarations, hence it is advisable to collect all proofs as mentioned in the declaration and re-compute tax liability & deduct balance TDS while making payment of salary for March month.

GST related Checklist Points 

Download all GSTR-2A/2Bs: Accountants are advised to download all GSTR-2A and GSTR-2B related to F Y 2023-24 and record GST Inputs if it hasn’t been recorded except ineligible ITC. If any input recorded in books does not appear in GSTR-2A, accountants are advised to highlight these cases with the concerned parties and ask those parties to take corrective action. If any transaction appears in the GSTR-2A and is not recorded in the books, please check whether that expense belongs to the company or not and record the same, if needed.

Reverse GST Inputs if payment pending or not made: In cases where the company has recorded GST Inputs and it has been more than 180 days and payment has not been made so far, company needs to reverse these Inputs and pay the corresponding tax liability along with interest.

Double check the income where GST not paid or paid at lower rate: In all cases, where GST has not been paid or paid at a lower rate, please reconfirm the same with your consultant. In case of exempt export supplies, please ensure that proper LUT is in place.

Match GST ledger balances: Reconcile GST ledger balances as on 31.03.2024 (Electronic Cash Ledger, Electronic Credit Ledger & Electronic Liability Ledger) with the balances showing in the books. 

We hope that the above blog helped you learn about the checkpoints before the financial year ends. Got any queries to ask? Send them to sales@finsmartaccounting.com and have them answered by our experts.

Also, don’t forget to check out:

Accounts receivable outsourcing services

Outsourced payroll service providers

India entry consulting services

Outsourced financial controller services

The post Financial Year-End Checklist to Close Books Right in 2024 appeared first on Finsmart Accounting.

*Enter the concept of hiring outsourced accounting firms* 

Much like using a GPS for unknown roads, these experts help MNCs navigate complexities, ensuring smooth financial operations. In India, however, many organizations remain in the dark about what to expect from these financial wizards. 

Some are even oblivious to things to keep in mind while outsourcing to one. Fear not! In this blog, Finsmart – a leading accounting outsourcing services provider in India – will unveil the mysteries surrounding hiring accounting firms for MNCs. We provide insights that empower you to make informed decisions. 

We bet that by the end, you’ll be equipped to determine whether embracing an accounting firm is the strategic move your MNC needs! 

What Can MNCs Expect from Hiring Accounting Firms in India?

Embarking on the journey of choosing an accounting firm in India holds the promise of transforming MNCs’ financial landscapes. Not only do these experts ease the burden of complex accounting but also bring forth a plethora of benefits. Here are some things you can expect when collaborating  with accounting firms:

1 Expertise and Specialization

Accounting firms in India employ experts with in-depth knowledge and specialized skills. They bring a wealth of experience in handling diverse financial scenarios. They make sure that MNCs benefit from their expertise in navigating intricate accounting challenges specific to both the global as well as Indian business landscape.

2 Regulatory Compliance

The complex regulatory environment in India demands meticulous attention to detail. Accounting firms play a pivotal role in ensuring MNCs adhere to the ever-evolving financial regulations. By staying abreast of changes, they mitigate the risk of non-compliance and help your organization maintain good financial health.

Moreover, accounting firms extend their expertise to navigate the nuances of global compliance. Meaning, your MNC won’t be having any trouble meeting international standards and regulatory requirements. You will be able to foster a seamless and compliant financial operation on a global scale.

3 Cost Efficiency

They say EFFICIENCY is doing things right and EFFECTIVENESS is doing the right things. Accounting firms are about both things! While we will explain to you about effectiveness in upcoming points, let us tell you that they optimize financial processes, enhancing cost efficiency for MNCs. 

Through streamlined operations and resource allocation, these experts will make certain that your financial resources are utilised judiciously. Result? This will contribute to overall cost-effectiveness and improved profitability.

4 Timely and Accurate Reporting

Carson Wentz once said, “Timing and accuracy is really what matters at the end of the day.” We 100% agree with this! Accurate and timely financial reporting is crucial for MNCs to make informed decisions. Accounting firms excel in delivering precise financial reports within stipulated timelines. 

Benefit? This provides organizations with reliable data to facilitate strategic planning and operational decisions.

5 Risk Mitigation

Let’s be honest! Financial landscapes come with inherent risks. Accounting firms are adept at proactively identifying and addressing potential threats. Whether these risks stem from compliance complexities, market fluctuations, or the intricacies of financial operations, they employ comprehensive risk mitigation strategies. 

By doing so, they not only safeguard MNCs from unforeseen challenges but also contribute to fostering long-term stability and resilience in the face of an ever-evolving business environment in India.

Collaborative approaches for MNCs entering the Indian market!

6 Strategic Financial Advice

Another important thing that you need to know about hiring accounting firms for your MNC! These MVPs go beyond routine tasks to offer strategic financial advice. Their insights might enable your organization to make informed decisions, plan for the long term, and navigate financial complexities strategically. 

This also ensures that your financial decisions align with broader business objectives.

7 Focus on Core Competencies

By outsourcing accounting functions to specialized companies, MNCs can concentrate on their core business competencies. This strategic delegation will not only liberate their valuable time and resources but will also empower them to channel their energies into areas where they excel. Put simply, global organizations in India can foster innovation, sustained growth, and heightened competitiveness. 

This approach can literally transform accounting from a potential distraction into a catalyst for organizational excellence.

Is There a Difference Between Hiring and Outsourcing? 

While both hiring an accounting firm and outsourcing accounting services involve seeking external expertise for financial tasks, there are subtle differences between the two methods. For instance, hiring a firm typically refers to engaging the services of a specialized firm that provides a range of accounting services. 

The firm may have a team of professionals with expertise in various financial areas, and they often offer a comprehensive suite of services including payroll management, tax preparation, financial analysis, and more. Talking about outsourcing, in a broader sense, it involves contracting out specific tasks or functions to external service providers. 

In the context of accounting, outsourcing refers to delegating accounting responsibilities to an external entity which could be a specialized accounting firm that focuses solely on handling accounting services for its clients.

Why Finsmart for Outsourced Accounting Services? 

In the intricate realm of accounting and compliance, MNCs often find themselves grappling with the demands of ever-changing tax laws and internal processes. Finsmart emerges as the beacon of efficiency! We have offered seamless offshore payroll services in India for 15+ years. Known for serving 100+ clients, our team of financial experts will alleviate the burden of your accounting and compliance processes. 

Our strategic outsourcing solution will enable you to redirect your manpower toward critical business areas and revenue-generating tasks, improving overall productivity and cost efficiency. 

Here are more reasons to choose us as your accounting and finance management partner:

– Expertise in Regulatory Changes: Our team stays ahead of the curve. It continually trains itself on the latest changes in laws and regulations. Benefit for your MNC? This ensures that your organization also remains in compliance with the dynamic financial landscape of India.

– Comprehensive Scope of Services: Finsmart offers end-to-end payroll and accounting outsourcing services tailored to the specific needs of Indian businesses. From meticulous accounting entries to reconciliations and monthly financial data closing, our services cover the entire financial spectrum.

– Efficient GST and TDS Compliance: Finsmart excels in navigating the complexities of Goods and Services Tax (GST) and Tax Deducted at Source (TDS) compliance. Our expertise in these areas guarantees accurate and timely submissions. We can mitigate the risk of penalties.

Learn about the cost of outsourcing accounting services in India!

– Detailed Management Reports: Beyond basic accounting functions, we also provide global organizations in India with insightful management reports. These offer a comprehensive view of cash flows and profitability, empowering decision-makers with the data needed for strategic planning.

– Resource Reallocation for Business Growth: By outsourcing to Finsmart, MNCs in India can strategically reallocate their employees to critical business areas. They can foster innovation and growth. 

Hiring Accounting firm for MNC in India: Final Words

There you go! 

We told you everything important about hiring an accounting firm for your MNC in 2024. As you navigate the complex landscape of financial management and compliance, Finsmart stands ready to streamline your processes, ensure regulatory compliance, and fuel your business growth. 

By having us on your side, you not only gain a trusted accounting ally but also unlock the potential for innovation, profitability, and sustained success! Got any queries to ask? Send them to sales@finsmartaccounting.com and have them answered by our experts. 

Also, don’t forget to check out:

Accounts receivable outsourcing services

Outsourced payroll service providers

India entry consulting services

Outsourced financial controller services

The post Accounting Firm for MNCs: What to Expect and More appeared first on Finsmart Accounting.

– What is FASB accounting? 

– What benefits does it offer?

– How does it differ from Ind AS and Indian GAAP?  

At Finsmart – trusted for India entry consulting, we understand these queries that MNCs are having. And guess what? We have decided to answer them for you! In this blog, we will unravel the intricacies of FASB accounting, addressing your concerns and empowering you with insights to make informed decisions for your MNC. 

Let’s understand its meaning first! 

What is FASB Accounting? 

FASB basically stands for the Financial Accounting Standards Board. It’s a private, non-profit organisation in the US that establishes and improves accounting standards for financial reporting by non-governmental entities. Established back in 1973, FASB operates independently and has set standards for private-sector organisations (including businesses and nonprofits). 

The primary goal of FASB is to provide transparent, relevant, and reliable financial information to investors and other stakeholders. 

What Are the Benefits of FASB Accounting? 

The adoption of FASB accounting principles offers numerous benefits to businesses, investors, and other stakeholders. Here we will some advantages of implementing FASB accounting standards:

1 Consistency and Comparability

FASB’s establishment of GAAP ensures a uniform set of accounting principles. They allow for consistency in financial reporting across different organizations. This standardization facilitates meaningful comparisons between companies, industries, and periods. 

Investors and analysts can rely on consistent financial information. FASB  accounting makes it easier to evaluate the financial health and performance of entities.

2 Enhanced Transparency

They say transparency increases credibility and accountability. Well, guess what? FASB accounting standards are all about this! They promote transparency by requiring organizations to disclose pertinent information in their financial statements. Detailed footnotes, disclosures, and supplementary information provide a comprehensive view of an entity’s financial position and performance. 

This transparency helps stakeholders make informed decisions, understand potential risks, and gain insights into the management’s judgement and estimation processes.

3 Credibility and Reliability

The adoption of FASB accounting standards enhances the credibility and reliability of financial statements. By following established accounting principles, MNCs can demonstrate a commitment to accurate and faithful representation of their financial activities. 

This, in turn, fosters trust among investors, creditors, and other stakeholders. Put simply, it will contribute to a more robust financial reporting environment.

4 Global Recognition

Another benefit of FASB accounting is that its principles are widely recognized and followed not only in the United States but also internationally. Yes, it’s true! Many MNCs adopt GAAP or reconcile their financial statements to comply with these standards. 

This global recognition facilitates cross-border investments as investors and businesses appreciate the consistency and comparability offered by FASB accounting principles on a worldwide scale.

5 Adaptability to Evolving Business Practices

FASB maintains an ongoing commitment to staying abreast of changes in the business environment. Your organization can regularly review and update GAAP to address emerging issues and evolving business practices. Benefit? Well, this adaptability guarantees that your FASB standards remain relevant and effective. It provides a framework that can accommodate innovations and changes in the economic landscape.

A comprehensive guide on FaaS accounting! 

How FASB Accounting Differs from Ind AS and Indian GAAP?

As MNCs navigate the complexities of operating in different global jurisdictions, understanding and adhering to local accounting standards become crucial. In the context of global organizations operating in India, it encounters variations between the FASB accounting principles, the Indian Accounting Standards (Ind AS), and the traditional Indian Generally Accepted Accounting Principles (Indian GAAP). 

So, how exactly do these terms differ from each other? Well, here are some key differences: 

1 Convergence with International Standards

FASB accounting standards are largely converged with international standards. They provide a level of consistency with practices adopted globally. Ind AS, On the other hand, represents India’s convergence with International Financial Reporting Standards (IFRS), ensuring alignment with international accounting norms. 

Indian GAAP, while transitioning, traditionally had more variations which could pose challenges for MNCs in achieving uniformity in financial reporting.

2 Treatment of Leases

Now FASB introduced ASC 842 to address lease accounting, requiring lessees to recognize operating and finance leases on the balance sheet. Ind AS also underwent a significant change with Ind AS 116. It aligns lease accounting with IFRS. However, the treatment of leases under Indian GAAP differs, potentially leading to disparities in reported financial positions, especially for MNCs with global lease portfolios.

3 Revenue Recognition Standards

For those who don’t know, FASB and Ind AS converged on the principles of recognizing revenue under ASC 606 and Ind AS 115 respectively. These standards emphasize a more principles-based approach to revenue recognition. And since Indian GAAP historically follows a rules-based approach, it has its own revenue recognition criteria. 

Meaning, MNCs operating in India may need to adjust their revenue reporting practices accordingly.

4 Financial Statement Presentation

FASB has a well-defined structure for financial statement presentation. This highlights the distinction between operating and financing activities. Ind AS also follows a structured format that aligns with IFRS. Indian GAAP, in contrast, has a different presentation style. 

5 Treatment of Goodwill and Intangible Assets

The accounting treatment of goodwill and intangible assets differs between FASB, Ind AS, and Indian GAAP. FASB follows ASC 350 for goodwill impairment testing while Ind AS has its standard (Ind AS 36). Similarly, Indian GAAP has variations in the recognition and measurement of goodwill. MNCs need to navigate these differences when assessing the value of acquired entities.

6 Fair Value Measurement

Both FASB and Ind AS place a significant emphasis on fair value measurement for financial instruments and other assets. The standards (ASC 820 for FASB and Ind AS 113 for Ind AS) are closely aligned. However, Indian GAAP has different criteria for fair value measurement, potentially requiring adjustments in the valuation practices for MNCs accustomed to FASB or Ind AS norms.

Learn about cross-border taxation challenges and how to overcome them! 

How Finsmart Can Help With FASB Accounting? 

With decades of expertise, Finsmart stands as a reliable partner for MNCs seeking assistance with FASB accounting. Specializing in outsourcing accounting services, we offer a seasoned team of accountants well-versed in FASB standards. Leveraging extensive experience, our professionals ensure meticulous adherence to FASB accounting principles, providing accurate and compliant financial reporting for multinational clients. 

Finsmart’s comprehensive outsourcing solutions cover various aspects of FASB compliance including lease accounting, revenue recognition, financial statement presentation, and more. We will not only help you navigate the complexities of FASB but also align financial reporting practices with global standards. We will offer MNCs a streamlined and efficient approach to meet their accounting requirements while enabling them to focus on core business operations.

FASB Accounting: Final Words 

There you go! 

We’ve addressed critical inquiries surrounding FASB accounting for MNCs. Remember, staying informed and navigating the intricacies of financial standards is vital for seamless global operations. As you explore FASB principles and their application in India, consider partnering with experts like Finsmart for comprehensive outsourcing solutions. 

With our dedicated team and decades of experience, we will ensure you accurate, compliant, and streamlined financial reporting, allowing your MNC in India to thrive. 

Got any queries to ask? Send them to  sales@finsmartaccounting.com and have them answered by our accounting experts. 

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