Monday, June 9, 2014

The Rules of Thoughts

We all know the rules of multiplication of mathematical signs ‘positive’ and ‘negative’. Still, we’ll have a look at those. These are as below.
‘positive’ x ‘positive’ = ‘positive’
‘positive’ x ‘negative’ = ‘negative’
‘negative’ x ‘positive’ = ‘negative’
‘negative’ x ‘negative’ = ‘positive’

One thing we can observe from above is that opposite signs give the negative results whereas same signs give the positive result. Similarly, there are some rules for thoughts also. But these rules are something different.

Before that, let us understand some points about thoughts. Thoughts are the things we feel in our mind. On an average, a human mind gets around 60,000 thoughts in one day. Most of the thoughts are unconscious also. The thought process is mostly out of control. However, we have the capability to control some of our thought, if not all.

Thoughts can be of two types – one which originate within us and one which originate with the input we get from others. Let us name these thoughts as internal thoughts and external thoughts respectively. External thoughts have, in most of the times, potential to influence the internal thoughts. In turn, internal thoughts also have potential to defend external thoughts.

These thoughts are further of two types – positive and negative. It means we have four types of thoughts in all – internal positive, external positive, internal negative, external negative. Internal thoughts are more in abundance than external thoughts. However, the chances of external thoughts influencing the internal thoughts are more.

As discussed above, thoughts also have rules. Let us discuss these rules.

Internal Positive x External Positive:

When internal thoughts are positive and external thoughts are also positive, the result, as like in mathematical signs, is positive.

Internal Negative x External Negative:

When internal thoughts are negative and external thoughts are also negative, the result is not positive. In case of thoughts, negative multiplied by negative is not positive.

Internal Negative x External Positive:

When internal thoughts are negative and external thoughts are positive, the result is still negative.

Internal Positive x External Negative

When internal thoughts are positive and external thoughts are negative, there is a magic and the result is positive.

Now what can we observe from the above? The answer is whenever the internal thoughts are positive, the result is always positive. On the other hand, when internal thoughts are negative, the result is always negative. So, bottom line is positive thoughts should originate from within.

I conclude by giving a thought – One positive thought from within can fight with millions of negative thoughts from outside.

(This write up is restricted to convey the rules with respect to thoughts. However, I shall try to elaborate more on thoughts in upcoming writings.)

CA. Amol G. Kabra
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Friday, June 6, 2014

Substance over Form

The concept of substance over form is very difficult to understand for the students in the initial stage. Owing to initial confusion many students either keep it in option or even if they study, don’t understand it fully. I have made a short attempt to explain this concept in a brief manner.

This phrase contains two words, ‘substance’ and ‘form’. The phrase ‘substance over form’ is a short version of its original meaning “In case of conflict between ‘substance’ and ‘form’ of a transaction, the ‘substance’ of transaction shall prevail over its ‘form’.”

Let us understand the meanings of ‘substance’ and ‘form’ separately.

Substance of a transaction means its actual nature. Whatever is the original nature of transaction is its substance. Form is the way the transaction is recorded or presented. So, basically substance relates to content of transaction whereas form relates to its presentation. It is not always necessary that the substance of a transaction shall differ from its form. In most of the cases, the substance of a transaction and its form are one and the same. However, in select cases, the substance can be different from the form of the transaction.

The concept of ‘substance over form’ may be relevant in three cases viz., accounting, audit, and regulatory assessments. But, it mainly comes under focus either during audit or during regulatory assessments.

Accounting requires that whenever a transaction is recorded or it’s presented in the financial statements of an enterprise, the substance of transaction should prevail over its form. However, in case of accounting, it is not independent of its management or ownership. So there can be bias in avoiding this requirement.

In case of audit, an auditor is under obligation to follow substance over form. So auditors require examining transactions (obviously considering the materiality concept also) so as to check whether the financial statements follow the concept of substance over form.

Also in the case of regulatory assessments, the assessing authorities always go by substance and not by its mere presentation so as to make sure the revenue of their department is not at loss.

Let us understand ‘substance over form’ by small example. X Limited has paid a commission of Rs.1,00,000. to its agent. However, while recording, the company recorded it as Rent. Now what can be the implication of this change in presentation? With respect to net result of the business there shall be no impact as both commission and rent shall be debited to profit and loss account and net profit or loss shall remain unchanged.

But with respect to audit and regulatory point of view, it can make a difference. In case of tax audit, the auditor is required to report on compliance with respect to TDS of the company. Take in the same example, the company has debited the amount to rent instead of commission. If we go by its form, on a rent of Rs.1,00,000 there is no requirement of tax to be deducted u/s 194I. However, if we go by the substance of transaction, i.e., its original nature being commission, tax is required to be deducted @ 10% u/s 194H.

Now, the duty of auditor or regulatory authority is to consider the actual nature of transaction and not merely the form in which it is presented. This consideration of substance of transaction over its form is called as ‘substance over form’.

CA. Amol Gopal Kabra, Latur
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Thursday, June 5, 2014

Road to Professionalism – 1: Be a Professional and Look like a Professional.

Having a professional qualification and being a professional is far different. Just qualifying a professional education course does not necessarily give you professionalism. Professionalism is to be learnt in addition to getting the professional degree.

When we understand this word ‘professional’, most of the people have a wrong perception about the word. Many people confuse ‘professional’ with ‘commercial’. Whereas commercial is merely concerned with money, professional is concerned with quality, service and well as monetary terms. So, at first, the perception needs to be cleared.

It is very obvious that we refer the word professional to a person who has got some professional qualification like CA, CS, MBA, Doctor, Engineer, Architect, etc. But the word professionalism means something different. The dictionary meaning of the word professionalism is ‘professional character, spirit or methods’ and another is ‘the standing, practice or methods of a professional, as distinguished from an amateur’. It is quite clear that professionalism involves character, methods, practice and also expertise.

To head towards professionalism from being an amateur, one needs to bear a professional character. Professional character does not mean just to show off like a professional, but a person should possess these qualities. It should be the part of its ‘substance’ and not just ‘form’. Behaving like professional without having it in character is like the wolf wearing the tiger skin. It gets uncovered someday definitely.

Professionalism involves methods to be followed. We may also term it as techniques of professionalism. These techniques may involve proper planning, formation of strategies, delegation of work, handling the people, executing the plans, etc. A professional definitely follows all these techniques to achieve professional success.

Professionalism is not a one day affair. That you behave like a professional for a day and it’s achieved. It requires continuous and consistent practice. It needs to be imparted within a person through practice, practice and practice. And over a period of time this practice gets converted into a professional character.

Professional is a person who is not an amateur, i.e. a beginner. It means that professionalism requires expertise. Expertise is definitely attained through some professional course. But it needs to be maintained. A professional needs to be updated on all aspects of his area of practice. Expertise can be achieved through continuous updation process.

Having these qualities is just a part of being a professional. However, only being a professional is not sufficient, you should also look like a professional. Looking like a professional can mean to include your dressing, grooming up, looks, behavior, etc. However, looking like professional includes much more than having professional attire. It’s not just about attire but it should be about a professional attitude.

So, I briefly conclude the article with the heading – be a professional and also look like a professional.

CA. Amol Gopal Kabra, Latur
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Wednesday, June 4, 2014

Marks – A real measure of performance or just a record?

Recently, the results of HSC i.e. 12th Grade have been declared. As usual, there were mixed feelings for the students. Passed students have scored marks as low as 35% to as high as over 98% also. However, if we can see a large number of students are not satisfied with the result. Be it a student scoring 50% or be it a student scoring 95%. The main issue with students is that the marks are below expectations.

Being in a teaching profession, I am closely associated with students. After the results, I got to know the feedback from the students about their results. The main feeling amongst most of the students was ‘disappointment’. The main reasons for disappointment were – 1. Scoring below expectations, 2. Should have prepared more, 3. Some other students more than me, etc. On analyzing these reasons I have something to convey to all the students who have passed out of HSC or shall be appearing next year.

Almost all students, and also their parents, are concerned with marks only. Everything in the career achievement process of a student is measured in terms of marks only. I have seen teachers discriminating the students on the basis of marks. But one question I need to ask that whether marks are the only criteria to judge a student’s worth? The answer is NO. It’s definitely not. But still students are being judged and graded on the basis of marks only.

No doubt, scoring good marks is an achievement while pursuing your academic goal. But what I mean to convey is that it is not the only criterion. I have seen students scoring top marks in exams but having less regards to common sense and vice versa. Scoring good marks need not always bring you wisdom. Then why to get disappointed about marks after the results?

I have experienced in life that all these marks and scores are a matter of a month after the result. If you get good marks, people will cherish for a month, if not the will blame for a month. They won’t pay heed after that. So what I mean exactly that your marks, whether good or bad, just remain as a record in the file of your academic accomplishments. So, if you want to score good marks, prepare and perform for it, but once the result is out there is no scope for ifs and buts.

Have a lot to say in this topic, but if I continue, this article may get lengthier. May be I’ll discuss other aspects in upcoming posts.

Heartiest congratulations to all the students for their success in HSC exams. Also, my advice is look forward and pursue your further education with full of confidence and determination.

All the best.

CA. Amol G. Kabra, Latur.

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Saturday, October 5, 2013


Today, we are in the world of technology. Technology is so much advanced today that communication is now at fingertips. Communication today is fastest in terms of time for delivery and cheapest in terms of cost of delivery. There are various modes of communicating such as SMS, e-Mail, Instant Messaging, Facebook, Twitter, Whatsapp, We Chat, etc. All this is result of advanced and ‘smart’ technology.

Now-a-days we have smart phones, smart computers, smart tablets, smart technology, etc. We can see everything is becoming smart and smarter. But do we ask ourselves, that in the age of technology becoming smarter, are we also becoming smarter? What comes to my mind always looking at the today’s scenario that – This is the age of smart technology and idiot people. Technology is getting smarter but people are getting idiots.

With the increase in the use of social networking, we have definitely reduced the gap between ourselves, but alongside it, there is an increasing amount of spam in the social media world. I wonder how people fall prey to such spam messages. It all started when I was still studying in CA Final and one fine day just before exams I got a message as below –

“This message has come from Sai Baba Shirdi. This is a good luck message. Pass this message to 15 people except me and you’ll get good luck for next 5 years. Don’t ignore or delete or you’ll face bad luck for next 7 years”

Without thinking for a single moment, I deleted the message and I am still wondering where is my bad luck. Do you really think the message is sent by any God or any Deity? Are we really so insane of dumb to believe such things immediately? This comes to my thinking of smart technology and idiot people. This links to my article – “Think before you like, share or forward”.

What I have given above is just one example. There are many such examples of fooling people through technology. The intention is just to keep people busy in irrelevant things. I want to share examples of such spamming through social networking with an appeal to people not to fall prey for such spams.

Following are some popular of spamming on various social networks including SMS, IM, Facebook, Twitter, Whatsapp, etc.

1.    Forward this message to get good luck or if ignored face bad luck for years. Do you really think that your good luck is depending on some type of forwarding of messages? Then I request you one more thing that forward ‘that’ message to 21 people as required and then don’t take any efforts in your life. Let’s see how and who gives you good luck. Even God will not help you if you don’t help yourselves.

2.    There is one popular spam on all types of social networks about ATM machines that if in case of emergency or some danger situation, if you enter your ATM PIN in reverse order, than the ATM machine will understand the danger and inform the nearest police station. I have seen when people get such messages they share or forward it immediately in a hope of sharing valuable information with someone else. But have you thought for a moment that this information might by fake or spam. Have you tried to check the authenticity of such message? For example, if my ATM PIN 1221 or say 4444 then I don’t have the right to inform the nearest police station in case of danger? The message clearly indicates itself that it’s fake information. Still people blindly share or forward it. This is one such example. There are many. You need to be careful before you share with someone.

3.    Pictures of religious places, Gods, of deities are posted on media and people are asked to like it or share it to get good luck. Do you think God is sitting there with facebook and observing people who like His photo and then to transfer good luck to that person. By liking or sharing religious photos you are not worshipping God but in turn you are insulting Him.

4.    Posting photos of health affected people or children and asking for likes and shares so that you can pray to God for saving the person in the image from such medical illness. For example 1 like = 1 prayer and 1 share = 100 prayers. I think you are not praying for the health of affected person but you are just making fun of such people.

5.    Apart from the above there are various types of spamming in form of creative manipulation of images so as to make people believe them to be true and think of it like a miracle, again demanding likes and shares on such information. I have seen people sharing or liking such images assuming it to be true.

I have covered a very limited aspect of spamming here. But whenever I use social networking, I find spamming to a very large extent. Even if it doesn’t cost you anything to like, share or forward something, still whenever you forward some information in the social media, you should at least check for its authenticity. We are generally advised to ‘Think before you speak’. But in this social media context I would like to change it to ‘Think before you like, share or forward.’

CA. Amol Gopal Kabra

Friday, May 25, 2012

Value of CA Services

Earlier, I have written various articles relating to students. This is my first article keeping in mind Chartered Accountants in Practice. This article also applies to any professional providing services in the form of practice. However, I am writing this article for Chartered Accountants only. This article is regarding the value of services given by CA’s in Practice.

Ours is not a business industry whereby we can estimate the cost of goods manufactured or cost of goods traded. If we consider the expenditure we incur on providing our services, it is very negligible. Being a professional we spend our time or rather we invest our time. So the value of services cannot be measured as easily as compared to products. So how should the services be valued?

There may be different perceptions about how to value the services and charge accordingly. But by any means or methods, the crucial factor on which the calculation should be done is time. We provide our time to clients. Time is the most important factor of our services. Here the question arises is how should we charge on timely basis. Calculating the value of time is not so easy task. There are certain criteria on which it is based. Two of these are estimated time of work expressed in terms of hours and remuneration expected from practice expressed in terms of money.

First we need to calculate how much time we are going to work effectively during a given period of time, say one year. This time should be expressed in terms of hours. Second, we need to calculate what our expected remuneration from practice is. This should also include the overheads we incur for maintaining our professional office. On the basis of these two criteria, we can estimate the expected earnings per hour. Here I am not giving any demonstrations for this. This thing is simple to understand. My purpose is to make the readers understand the need of calculating the expected remuneration per hour and charge accordingly.

However, in practical, this thing does not happen. Especially in non-metro cities, the members don’t charge or at least don’t calculate their expected remuneration per hour. This leads to under valuation of their services. In most of the cases, fees are not charged in proportion of the time devoted for the respective work. Our prime investment in services is time. So while charging the fees, due respect should be given to time also.

Apart from calculating the hour rates of partners / proprietor in the firm, similar calculations should also be made for the qualified and semi-qualified staff members, audit and articled assistants, support staff, etc. This calculation not only makes us realize the value of time, but also results in improved efficiency of partners and staff in the office.

There are certain tasks for which the time involved and fees charged cannot be exactly correlated, because of which such assignments cannot be charged on hour-rate basis. Examples are audits of small traders, tax advisory services, etc. However, in such cases we should estimate time involved for each of such service and derive the fees to be charged.

I would like to make it clear that time is not the only factor on which the fees should be decided. There are various other factors on which the charging of fees can depend. Some of them are the nature and volume of work, scope of work, the needs of the client, priority of the work, etc. These factors affect on the charging of fees from time to time and case to case.

This was regarding how to value our service. But now the prime reason why there should not be undervaluation of our services. I repeat again, we are not selling any product in the market, but we are providing services. But as like product, clients expect quality services from professionals. If we compare among products in the market, the better the quality the higher is the price and vice-versa. Similar is the case for services. But here fees are not based on quality, but quality is based on fees.

If we try to charge less to clients, initially we may attract some clients but we cannot assure quality services to them, because if the remuneration is less, the dedication is also less. On the contrary, if the remuneration is more, the dedication is also more. This results in providing of qualitative services which in turn results building the goodwill of the professional as well as the profession. If a person is charging less just to sustain in competition, he will sustain the price competition but he won’t sustain the competition of quality and enrichment of services.

The race of service industry cannot be won on the basis on reduced prices but on the basis of improved quality. And for providing improved quality services, the right price is also to be charged. So, all the members of the fraternity, please value you services properly, and the services will value you in return.

CA. Amol Gopal Kabra

Tuesday, May 22, 2012

Failure is not Falling Down

In this age of cut-throat competition, everybody is racing towards success. However, it is not possible for everyone to succeed at once. There is competition almost everywhere. In every phase of life, in every sector of life, there is competition. Everybody wants to succeed. Nobody wants to fail. Still it is not possible that everyone will succeed. But in this race, people fail to understand the real meaning of success and failure.

Those who succeed don’t think need to understand what the real meaning of success is. They are too much satisfied to care about. On the contrary those who don’t succeed are also not aware what the exact meaning of failure is. They are too much depressed to care about. In this article, I’ll just write about the latter part and not the former. I’ll write another article for it.

In common parlance, failure means not achieving something that is desired. Examples of failure are, failing in exams, making losses in business, failing in job interviews, failing in scientific inventions, failing in love, failing to win sports tournaments, etc. These are the ‘so called’ examples of failure.

However this is not the real meaning of failure. According to a popular maxim, “Failure is not falling down, but refusing to get up.” This maxim looks easy to read but again people fail to understand it properly. They don’t apply this in their own life when they fail to achieve something they desire. The point of failure is not that when you didn’t get success, i.e. you fell down. The point of failure is when you don’t get up again to achieve what you desire.

There is an example which all of us have experienced in our life. As an infant, nobody can walk. Babies just crawl and make their moves. But after a certain period of time, the same baby can walk fairly well. After some more period of time, the baby can walk perfectly. Does this change take place overnight? The answer is no. There are many instances when the baby in an attempt to stand on his own legs and walk, falls down. But he still manages to stand up again and again and after numerous attempts, he makes himself capable of walking.

This baby is none other than what we ourselves are. If suppose we didn’t get up after falling and didn’t try again and again, then I think, the scenario would have been like this – We all would have crawled instead of walking and running. This seems to be a very simple example, but this is the first success in everybody’s life.

We tend to forget that we didn’t have the attitude of quitting in our childhood. This results in many people quitting their own efforts that lead them towards the success. Failure is final when one decides to quit. In fact if it is your dream to achieve it, then you should not quit till your dream is fulfilled.

Swamy Vivekanand has also given the same message in one of his saying – Arise, Awake and Stop not till the Goal is achieved. This thought also means the same that don’t stop after you fail. Don’t quit till you achieve your goal.

The great scientist Thomas Edison failed for almost 10000 times before inventing the electric bulb. But finally he succeeded after these many attempts. After so many attempts, his attitude was I have found 10000 ways of not inventing an electric bulb. This attitude of not quitting after failed attempts has led him to the success of inventing the electric bulb.

If we look at most successful people in life, everyone had to face to different failures before achieving the successful position in their life. When we look at the successful people, we just say that it their luck. But I would like to tell that luck favours the one who is prepared to achieve in all respects. So don’t just look at the luck of successful people. There are lot of other things that led them to their success.

I’d like to conclude that whenever in file you come across any failure, don’t get disappointed, don’t feel down. Just get up and get going. Success is waiting for you.

CA. Amol Gopal Kabra