Corporate Social Responsibilities and the challenges in accounting with specific reference to IPSAS

1. ACCOUNTING CHALLENGES DUE TO
IMPLEMENTATION OF “CSR” – UNDER
SECTION 135 OF COMPANIES ACT
TOGETHER WITH THE IMPACT OF IPSAS
Loyola College, - Dr. T. Joseph M.Com., M.Phil., MBA.,Phd.,
Chennai Associate Profession, Commerce Department
- Sundar A. Rodriguez M.Com.,FCA.,DISA.,CFSA(USA).,
Research Scholar, Commerce Department

2. CORPORATE SOCIAL RESPONSIBILITY
CSR is “the responsibility of enterprises for their impacts on society”.
To completely meet their social responsibility, enterprises “should have in place a
process to integrate social, environmental, ethical human rights and consumer
concerns into their business operations and core strategy in close collaboration with
their stakeholders” .
Ref: (http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/
index_ en.htm)

3. CSR – DEFINITION IN COMPANIES ACT 2013
SECTION 135
1) Every company having a net worth of rupees five hundred crore or more (100 million $
or more), or a turnover of rupees one thousand crore or more (200 million $ or
more) , or a net profit of rupees five crore or more (1 million $ or more) during any
financial year shall constitute a Corporate Social Responsibility Committee of the Board
consisting of three or more directors, out of which at least one director shall be an
independent director;

4. AMOUNT TO BE SPENT FOR CSR
Section 135 (5)
The Board of every company covered under CSR shall ensure for every financial
year that:
At least 2% of average net profits of the company made during 3 immediately
preceding financial years is spent on CSR.
This spending to be made in pursuance of its laid CSR Policy.

5. INCOMPATIBLE MARRIAGE
• The company has been used to account for its core activities – to carry on the
business.
• Now the company has to also enter into not for profit or social sector, as the
activities under CSR falls under it
• The accounting standards for each of these two incompatible marriage is different,
the jargons used are also different, and above all in some case the same concept
means differently.

6. CONVERGENCE – INDIAN SCENARIO
• The Ministry of Corporate Affairs had not come up with specific standards
exclusively for the accounting and reporting of the CSR activities.
• If the company is an Indian Company the standards mandated by MCA is to be
followed, which does not address the uniqueness of the CSR related accounting
process.
• As of now the companies are expected to follow the standards propounded by MCA
for reporting by the companies, hence the activities under CSR are also to be covered
by it, which is going to create lots of problem.

7. INTERNATIONAL SCENARIO
• For reporting of the business activities the international community has come up
with IFRS – International Financial Reporting Standards.
• For the reporting of the Public Sector Activities (under which the CSR falls) it has
the IPSAS – International Public Sector Accounting Standards.
• The countries which had approved and following the approved standards has to
adhere to the appropriate standards based on which criteria the activities or
transactions falls

8. THE COMPLICATIONS DUE TO THE MAZE

9. ANTICIPATED AMOUNT TO BE SPENT ON
CSR DURING 2014 - 2015
• The anticipated spending requirements for CSR for the FY 2014-2015
• The Major Banks alone – INR 1,628.10 Crores
• Top 100 Companies in India – INR 7,627.00 Crores

10. RECOMMENDATIONS
• The MCA has to come up with another set of standards which are converged with IPSAS
(as the ones which they had now issued converged with IFRS).
• The segmental accounting for the consolidation of the Indian operation with that of the
other countries operations, should take appropriate measures to incorporate the CSR
activities carried out in India by following the concepts of IPSAS, insofar as it relates to
it.
• The oversight mechanism should be given appropriate guidelines, based on the approved
and/or suggested standards and guidelines for the accounting and reporting of the CSR
activities to enable them to discharge their function more efficiently and effectively. If
this is not done then the very spirit of law which spurred the formulation of CSR would
be defeated

11. QUESTIONS
?

12. THANKS
• Loyola College, - Dr. T. Joseph M.Com., M.Phil., MBA.,Phd.,
• Chennai Associate Profession, Commerce Department
• - Sundar A. Rodriguez M.Com.,FCA.,DISA.,CFSA(USA).,
• Research Scholar, Commerce Department