FromGeneral Manager (Finance)H.O., Thrissur.

ToAll Branehes

, Our Ref: 7809 Your Ref.Date:21.03.2018

TIIE KERALA STA"[ I'INANCIAL ENTORPRISES LBIITEDCorporate OIfiee, "Bhadrarka", Museum Road, Ihrissur - 680 020

Statutory .Arldit fsr FY 2017-18 is scheduled to commence ftom l5lp{/291S &branches have',been directed to prepare CTB with underlying scheduleVstatoments as

iY 2017-18 is attaehed forDetailed instructions with regard to closing of accounts for lyour ready reference & compliance.

You are once again instructed to ensure that time frame as stipulated in the aforesaid

Circular fi.e S7!o4/2S1& is strictly adhered to.

(,*'*General Mfager (F inance)

,:ii

INSTRUCTIONS FOR CLOSING OF ACCOUNTS FOR FY 2017-18

(A) Trial Balance:

1. Check the total of Consolidated Trial Balance (CTB):

i) Total side of Income & Expenditure (Profit and Loss) tallies

ii) Total side of Assets & Liabilities (Balance sheet) tallies.

iii) Figure of profit/loss (Account code1000) should tally with figure of Account

code1001

2. Ensure all relevant Statements/ Schedules/ AS etc are prepared and tallies with underlying

figures of CTB.

3. It must be ensured that all relevant details to be mentioned in Form 3CD are strictly

prepared in accordance with the prescribed formats made available in downloads.

4. Check whether closing balance (Balance sheet items) of previous year has been correctly

carried forwarded to current year.

5. The previous year profit/loss should be transferred to HOC (General) account.

6. Corrections /rectifications instructed by pre-auditors / Statutory auditors should be carried

out and corrected CTB to be extracted.

7. Three sets of corrected CTB (extracted after incorporating corrections as stated in point 6

above) along with underlying statements/ schedules/ AS etc duly signed by Accounts

Assistant, Assistant Manager (Accounts) and Branch Manager should be made available

to statutory auditors.

(B) General:

1. It must be ensured that all bugs / mistakes related to branch duly reported to IT

department or otherwise, are rectified before handing over CTB as on 31/03/2018 to the

pre-auditors.

2. AM (Accounts) and Branch Manager must conduct a preliminary verification of annual

accounts before handing over to the pre-auditors.

3. Branches should comply with HO circulars issued from time to time with regard to

provisions of Prevention of Money Laundering Act, 2002 and ‘Know Your Customer’

(KYC) Guidelines formulated by Reserve Bank of India.

4. All cases ripe for initiating RR action, as per HO directions issued must be transferred to

RR. It must be ensured that statement of RR Debtors (AS 47) must tally with balance in

Head Office Current Account (RR).

5. Check payroll and ensure that following items viz. staff Welfare / LWF has not been

wrongly accounted under the account head - Salaries & Allowances.

6. The following allowances/ charges should be accounted under account head- Salaries and

Allowances:

(a) Gold Loan Risk Allowance ,

(b) Cashier Allowance

(c) Data entry charge

(C) Reconciliation:

1. Fund Pooling accounts like Federal bank – RO (collection) account (Account code 1414),

Federal bank – RO (Disbursement) account (Account code 1415), Dhanalaxmi – RO

(collection) account (Account code 1418) and Dhanalaxmi – RO (disbursment) account

(Account code 1419) must have NIL balance as on 31/03/2018. These accounts must be

properly reconciled and transferred to New ROC account.

2. It must be ensured that no new accounts must be created by branches/ regions for parking

unadjusted/ un-reconciled entries.

3. The Door collection suspense accounts should be made nil by transferring the balance

amount (if any) to the personal ledger accounts concerned as on 31st March 2018, itself.

4. Reconciliation of Revised Bhadratha Social Security Scheme / Lucky VAT scheme at

branch level/ RO-Tvm must be carried out and reconciliation statement as on 31/03/2018

must be readily available for audit.

5. All transfer/ movement of fixed assets from / to branches must be properly reconciled and

no un-reconciled/ unadjusted movement should be there on 31/03/2018.

6. It must be ensured that all movement of funds between branches and RO should be

properly reconciled as on 31/03/2018.

7. It must be ensured that all movement of funds between RO and HO should be properly

reconciled as on 31/03/2018.

8. Fund movement through treasury (between HO and branches) must be properly accounted

based on the debit notes issued and properly reconciled as on 31/03/2018.

9. It must be ensured that reconciliation statement of various ROC / HOC accounts viz. HOC

(General), HOC (WUMT), HOC (GST), HOC (TDS), HOC (e-collection), HOC (RR) for

FY 2017-18 must be complete, without fail.

(D) Statutory deductions/ Payment:

1. Statutory payments like Service tax payable, sales tax payable, TDS payable, GST payable

etc must be correctly calculated & deducted at applicable rates at the time of accounting/

paying.

2. Detailed statement (showing relevant details and workings) for each of the aforesaid items

mentioned in point 1 above must be made available for audit.

3. For GST related accounting/ details to be maintained at branch level as per HO directions

available in downloads. (Additional directions will be available in downloads by

24/03/2018)

4. Directions issued vide Circular No. 36/2012(BD) dated 07.07.2012 regarding RSC

payments under CFA 1982 must be complied with.

5. Necessary steps should be taken to settle amounts in RSC/APSTC payable accounts after

properly identifying the parties & obtaining proper acknowledgement.

(E) Accounts:

1. All closing journal / rectification entries etc must be duly incorporated as at the end of the

financial year concerned.

2. Accounts showing wrong balance in CTB viz. Income head showing Debit balance,

Expense head showing credit balance, similarly wrong balances in assets, liabilities etc

must be properly scrutinized and rectified.

3. It must be ensured that all Payroll deductions (PRD) till 31/03/2018 are accounted in the

accounts of FY 2017-18, without fail.

4. All Debit /Credit notes pertaining to 2017-18 should be accounted in FY 2017-18, without

fail.

(F) Fixed Assets:

1. Fixed Assets and Depreciation- checking and cross tallying of all columns and tallying

with book figures.

2. Verify and confirm amount in AS26 tallies with figures in CTB. (Ref. Circular

No.60/2014(Accounts) dated 31.12.2014.

3. Transfer-in and transfer-out of Fixed Assets between branches, branches to HO/RO are to

be accounted at both ends. This is to be confirmed by pre-auditors telephonically from the

camp. If it is not accounted by the transferee unit in the same year, this must be reported

to HO/RO immediately from the camp and it must also be included in the pre audit report

submitted to the HO and RO.

4. It must be ensured that updated fixed asset register as on 31/03/2018 is made available for

audit. Fixed assets register must clearly disclose (i) particulars of the assets, (ii)

Depreciation details and (iii) its location.

5. Physical verification of Fixed Assets and stamps/ stationary must be mandatorily done and

it should tally with the Fixed Asset Register/Stock Register and a physical verification

certificate as on 31/03/2018 should be available for audit.

(G) Prior period expenses:

1. As prior period expenses are generally disallowed by the Income tax department, it must be

ensured that no expense pertaining to earlier years should be booked under prior period

expenses account, to the extent possible.

2. The same could be accounted under appropriate head of account of the current year (e.g.:-

Agency commission recouped should be accounted in Agency commission itself and rent

arrears paid should be accounted as per the manual of accounting/HO circular in force.

3. After execution of revised rent agreement of branch /RO premises, rent liability of the

previous years should be accounted as expense of current year itself instead of prior period

expenses.

(H) TDS:

1. As per Central Government Notification No 3489 dt 22.10.1970 (Order copy available in

downloads), no Tax need be deducted at source on interest accruing on Treasury deposits/

Flexi deposits made by KSFE. In case, any TDS has been incorrectly deducted from

interest income of the Company by Treasury/Bank etc, then it must be ensured that the

amount of TDS should be debited to HOC (General) account by giving credit for gross

interest amount to “interest income account”.

2. TDS certificate (Form 16A) – as downloaded from TRACES site of deductor (Treasury /

Bank) should be forwarded to HO along with Debit note to HO (Central accounts).

3. All units are directed to request the Treasury/Sub Treasury Officers, not to deduct tax at

source on Chitty Security Deposits in the name of Assistant Registrar’s as we cannot

claim tax deduction based on the TDS issued in the name of Assistant Registrar.

4. It must be ensured that TDS statement of the branch/ RO is to be tallied with HOC (TDS)

Account.

5. It must also be ascertained that amount in HOC (TDS) account is equal to amount of TDS

credit notes submitted by branches to HO (branches may verify TDS credit notes and

reports from Tax KSFE application).

6. Amount refundable to eligible depositors/ agents/ appraisers as on 31/03/2017 and

incorrectly appearing in HOC (TDS) account/ TDS payable/ any other account must be

settled on or before 31/03/2018.

7. It must be ensured that the closing balance in HOC (TDS) must comprise only the genuine

TDS payable as on 31/03/2018. There should not be any debit entry in HOC (TDS)

account other than amount refunded to eligible depositors/ agents/ appraisers.

8. Closing balance in HOC (TDS) as on 31/03/2018 should not be transferred to any other

account and must be carried forward to next year.

(I) Cash & Bank balances:

1. All branches should ensure that balance of imprest cash account as on 31/03/2018 is nil.

2. It must be ensured that cash on hand as on 31/03/2018 is physically verified and a

certificate (with denomination) must be made available for audit.

3. Cash holding should be within the permissible limits as stipulated in HO circular issued in

this regard.

4. The balance in current and savings accounts with the banks /treasury respectively should be

minimum to the extent possible, as on 31/03/2018.

5. Bank balances as per cash book should not show credit balances (OD) except in case of

OD facility actually availed against flexi deposit.

6. Balance confirmation should be obtained for all Bank /Treasury accounts including Flexy

Fixed Deposits and Chitty Security Deposits and made available for audit. Request letter

forwarded to them should be available in our records.

7. Fund Management should given due importance and excess funds should not be kept at

branches and surplus fund as at the end of the month, in excess of the limit prescribed by

the HO/RO should be transferred to RO.

(J) Accrued Interest:

1. Interest on matured treasury deposit savings bank rate @4.50% should be provided.

2. The interest receivable on FD with Treasury in the name of Asst. Registrar of Chits should

be claimed as per Circular no. 59/2017(FA) dated 08.09.2017. It must be ensured that the

same has been received in full, without fail.

(K) Bank Reconciliation Statement:

1. Branches should transfer all cheques issued but not cleared up to three months to the

account head un-presented cheques and appropriate accounting entries based on the bank

reconciliation statement should be made immediately.

2. There should not be any un-identified debits/credits in the account statement

/reconciliation statement and if there is any un-identified debit/credit are noticed in the

account statement during FY 2017-18 or there are any carry forward entries, the same

should be identified and appropriate accounting entries should be passed in FY 2017-18

itself.

3. Any operating/ other charges (viz. cash handling charges, POS charges etc) debited by the

bank in our account, should be got compulsorily reversed by 31/03/2018.

4. Ensure reconciliation statements for all bank/ treasury accounts as on 31/03/2018 are

made available for audit.

(L) General Suspense:

1. It has to be ensured that no new entries (either debit or credit) are posted under General

Suspense account during FY 2017-18. However, if any entries have been passed during

FY 2017-18, the same should be transferred to correct account head without any further

delay. In other words, outstanding balance, if any, in General Suspense account as on

31.03.2018 should not be more than the outstanding amount under this head as on

31.03.2017.

(M) Chitty:

1. It must be ensured that chitty installment missing Suspense A/c (8530) is appropriately

adjusted /recovered vide HO Circular No.45/2015(IT) dated 10/09/2015.

2. Branches should ensure that all due prize money and unclaimed prize money is settled/

paid/ adjusted on or before 31/03/2018.

(N) Forfeited veethapalisa under CFA 1982:

1. Before extracting AS – 78 & 78A, it must be ensured that all PBNP Cases should be

settled at branch level vide Circular No. 39/2016 dated 15/07/2016 & 14/20l7 dated

06/03/2017 respectively. Only after settling/closing of PBNP cases, the entry to be passed

as per circular l7/20l5(FA) dated 23.03.2015. Based on the prepared schedules (AS- 78 &

78A), accounting entries are to be passed for transferring the income considering the

prized default and revenue recovery.

Income booked under account head (code 312), forfeited veethapalisa is the income after

adjusting/considering the default and revenue recovery. If defaulted amount exceeds

forfeited veethapalisa, then “nil” forfeited veethapalisa is taken as income and the carried

forward forfeited dividend will be taken as income as and when the default is cleared.

(O) Registers:

1. Various registers viz. suit /case filed register, Gold security register; Gold stock register,

cheque dishonor register, key register, imprest cash register, despatch register etc should

be filled in completely and made up to date as on 31/03/2018.

(P) Old inoperative accounts:

1. At many branches, despite repeated instructions it has been noticed that the following

suspense accounts were maintained which include un-adjusted old entries :

Manual a/c. code Account Head

1037 Initial Hire HP

1038 Initial Hire EOHP

1039 Option Money HP

1040 Option Money EOHP

1041 Hirers Suspense HP

1042 Hirers Suspense EOHP

1043 Hirers Suspense Trade Loan

1045 NFDL Suspense

1062 Retention Fund HP

1063 Retention Fund EOHP

Branches are required to verify their books of accounts and confirm the accuracy of these

outstanding balances. Accordingly, in case of loan accounts which has already been

transferred to RR accounts and suspense amount is still outstanding in the account head

concerned, may be transferred to General suspense account and then immediately to

concerned RR account as on 31st March 2018. All other balances outstanding in the

aforesaid account heads must mandatorily be transferred to miscellaneous expenses/

income as on 31.03.2018 and balance outstanding in these account heads should be NIL

as on 31.03.2018, without fail.

(Q) Terminated Chitty:

1. Branches should ensure that there are no Treasury Deposits outstanding to be released in

terminated chitties as on 31.03.2018. If gazette notification is pending in any of the

terminated chitties, the matter should be immediately taken up with Liaison Officer, RO

Thiruvananthapuram with a copy marked to AGM (Region) and HO (Central Accounts).

Government site, www.egazette.kerala.gov.in must be closely watched for gazette

notification.

2. It must be ensured that chitty balance sheet and minutes for all chitties are filed on time.

3. Cases where matured Chitty Security Deposits are not released despite getting gazette

notification must be looked into immediately and it must be ensured that there are no such

cases as on 31/03/2018.

(R) Investor Education & Protection Fund:

1. Fixed deposits matured but not claimed for >7 years should be transferred to H.O. through

credit note along with relevant details in the prescribed format, as the same needs to be

transferred to Investor Protection & Education Fund.

2. Before transferring matured fixed deposits remaining unclaimed for >7 years to HO,

maximum effort should be taken to locate the depositor/nominee/legal heirs for settling

the claim at branch itself by sending ordinary letter in the available postal address.

3. Once the amount is transferred to the Registrar of Companies to the credit of “Investors

Protection and Education Fund’, request for refund will not be entertained by the fund”

(S) Advance recoverable:

1. Amount recoverable from Staff – names of the employees with employee code and

amount due from them should be accounted individually and a statement should be

prepared (AS- 55). Recovery action should be initiated at branch level.

2. All unsettled TA advances/salary advances etc. outstanding for > 3 months should be

rectified by passing correct entries/ deducting the same from the staff concerned, as the

case may be.

3. It must be ensured that Salary advance (account code 1425)/ undisbursed salary (account

code 1033) must be correctly transferred to respective account, to the extent possible.

(T) Outstanding Expenses:

1. Necessary provisions should be made in the accounts for all outstanding expenses as at

31/03/2018.

2. Tax should be deducted at applicable rate at the time of making the provision for expenses

that are subject to tax deduction at source e.g. Rent, Agency Commission, Contract

Payments, Appraiser fee etc. TDS Credit notes for the same should be forwarded to HO

i.e. on 31/03/2018 itself.

(U) Major Items in head of accounts –expenses

Listing below certain Heads of Account stating in brief, nature of expenses to be debited

therein:

a) Office Refreshments/ Canteen expense to staff (A/c code 283)

Expenses/Cost incurred for tea, Coffee, snacks, etc. served in the office premises (staff

meeting, Reimbursement of tea Expenses to the staff etc.)

b) Hospitality Expense –(A /c code no 284)

a. Tea / coffee/ snacks/ food etc. served exclusive at public function (other than

staff meeting) such as inauguration, other social functions, meeting involving

public, conference convened exclusively for canvassing Agents/ Dealers/

Business Association etc.

b. Meeting/get together of Employees and their family meeting on annual day

c. Approved lunch or dinner or accommodation provided to External Auditors

(AG and other Government)/Office Guests/VIP’s etc.

c) Meeting / staff Training (Code no.237) Tea / coffee/ snacks / etc served to employees during the course of all kinds of office

meetings (full time) including Regional Conference.

d) Conference Expenses Account (A/c Code 280)

Conference fee/ Charges paid to External agencies and cost of conducting meeting/

seminar need be accounted under the above head.

e) Books and periodical (A/c Code 227) Reimbursement of cost of News Papers/ Periodicals to officers should be accounted

under this head.

f) Office Maintenance A/c (A/c Code 288)

1. Uniform Allowance /cost of uniforms purchased

2. Stitching Charge reimbursement

3. Washing Allowance/Change reimbursed

4. Spectacle Allowance/cost of spectacle reimbursed

5. Chappal Allowance reimbursed

6. Franking/Stenciling /dispatch Allowance

7. Expense incurred in connection with Independence Day, Republic Day, Gandhi

Jayanthi etc.

8. Authorized Expense incurred on retirement of employees superannuation.

g) Staff Welfare (A/c Code 204)

a. Reimbursement of medical expense/Hospital charge

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b. Medical Allowancec. Expense on death of Employees in service

d. Award and prizes to employees/ Units

h) Festival celebration Expense (A/.c Code 287)' with Ortam' Xmas,Id'Divali' Vishu

etc (does not inciude Independence/ Republic day celebration etc)

i) Scholarship (A/c Code 288)ouse of the Employee should be accounted under this

head.

j) Sales Promotion and publicitv A/c (289)

1. Chitty Canvassing expenses reimbursed to staff

Z. promotional expinses, High tea and others such expenses reimbursed to staff

3, Calendar, Dairy, Printing charges and others complement items etc (To be

accounted at HO)4. Expense/Gift given to customers as part of chitty campaign.