Mcdowell Krest Finance

The company has not followed the RBI-prescribed norms for drawing up its accounts, being legally advised that these were to be applied only for filing returns with the RBI. This resulted in overstatement of the profit by Rs 24.23 lakh, and understatement of the loss by Rs 2.69 crore.

In another novel way to show profits, the company has not made any provision for depreciation of its fixed assets, except for the assets sold during the year, on the plea that profits were inadequate. If such provisions had been made, Rs 67.64 lakh would have been debited to the P&L account. No provision has been made for depreciation amounting to Rs 43.91 lakh in the value of investments.

 

There are other qualifications to the accounts. Although revenue is recognised on percentage of completion method, unrecouped costs amounting to Rs 1.61 crore are being carried forward. Further, an amount of Rs 78.85 lakh in respect of a project which has been kept in abeyance has been included in