ACCOUNTING INFORMATION SYSTEM An accounting information system as an organizational component, accumulates, classifies, processes, analyzes and communicates relevant finance-oriented, decision making information to a company's external parties (Reviews such as current and potential investors, federal and state tax agencies and creditors) and internal parties (principal management) Organizational cultures and subcultures are important determinants of how people use information and information systems. By grounding information systems in the context of the organization as a larger system, it is possible to realize that numerous factors are important and should be taken into account when ascertaining information requirements and designing and implementing information systems. An important factor in the development and implementation of information systems is identifying, understanding the meaning, norms and power within the organization. Implementation of information systems in the financial services sector needs strengthening organizational cultural values associated with customer orientation, flexibility, quality, and performance orientation. Getanjali Bhatia, B.A(Hons.) Business Economics Gargi College

Recently, one of my friends forwarded me a story titled “Can you sleep when the wind blows”. It’s a nice story which partly answers the above questions. The story goes like this - Years ago a farmer owned land along the Atlantic seacoast. He constantly advertised for hired hands, however, most people were reluctant to work on farms along the Atlantic. They dreaded the awful storms that raged across the Atlantic, wreaking havoc on the buildings and crops.As the farmer interviewed applicants for the job, he received a steady stream of refusals. Finally, a short, thin man, well past middle age, approached the farmer. 'Are you a good farm hand?' the farmer asked him.'Well, I can sleep when the wind blows,' answered the little man. Although puzzled by this answer, the farmer, desperate for help decided to hired him.The little man worked well around the farm, busy from dawn to dusk, and the farmer felt well satisfied with the his work. Then one night the wind howled in loudly from offshore. Jumping out of bed, the farmer grabbed a lantern and rushed next door to the hired hand's sleeping quarters. He shook the little man and yelled, 'Get up! A storm is coming! Tie things down before they blow away!'The little man rolled over in bed and said firmly, 'No sir, told you, I can sleep when the wind blows.'Enraged by the response, the farmer was tempted to fire him on the spot. Instead, he hurried outside to prepare for the storm. To his amazement, he discovered that all of thehaystacks had been covered with tarpaulins. The cows were in the barn, the chickens were in the coop and the doors were barred. The shutters were tightly secured. Everything was tied down. Nothing could blow away. The farmer then understood what his hired hand meant, so he returned to his bed to also sleep while the wind blew.(Source: http://www.agiftofinspiration.com.au/stories/attitude/When%20the%20wind%20blows.shtml) All of us face some degree of harsh winds in our lives. It jolts lives of people who are caught unaware & unprepared. Harsh winds could come in the form of

• A close relative’s serious illness or accident which requires urgent arrangement of loads of cash;
• Death of an earning member;
• Daughter / son’s wedding expenses going way above the savings or budget;
• Unplanned pregnancy
• Disability (Permanent or for even for couple of months)
• Loss of Job
• Property damage due to fire or accidents.
• Serious damage to any expensive asset/s requiring major repair or replacement.

And hundreds of other things which can go wrong and cause our life and financial health to tremble & be blown away in the wind. But if we are well prepared; then we can also sleep when the wind blows. We sadly cannot secure ourselves from all the blows that life is going to through our way. Most of us cannot prepare ourselves for emotional or psychological losses, because it requires lot of emotional strength & stability. But securing ourselves against financial turmoil is not as difficult. We can, to a great degree, plan and secure ourselves against events that can put a bad strain on our financial health. We can insure ourselves against almost all the risks that we face in our lives. We can plan, save and invest appropriately to provide for all the financial needs that are expected to, or unexpectedly may, arise in our lifetime. The good news is that options to secure our financial future are available online at a very low cost. If we have the required knowledge, we can bypass all intermediaries’ i.e. brokers / agents & buy these products online directly from the company websites. Online Term Insurance for 1Crore Rupees is available at meagre cost of 500-1500 rupees per month depending on the age & medical condition. This is cheaper than couple’s movie ticket on any weekend. Most mutual funds have their own simple online investment vehicles or can be accessed through through MF Utilities platform (  https://www.mfuindia.com/ & https://mfuonline.com/ ) or CAMS online (  http://www.camsonline.com/ ) or Karvy MFs platform ( https://www.karvymfs.com ) with zero additional costs. Now MF investments can be done through any smart phone using different user friendly phone applications. All insurance products can be bought sitting in the comfort of your homes using phone or a computer. But it is imperative that one seeks professional guidance on financial planning and investment planning if he/she does not have the necessary skills to create an optimal portfolio that seeks to achieve all their important financial goals. Services of a financial planner are also required to evaluate the insurance cover that would suffice the need to secure one’s human capital. INR 1 crore might seem like a big amount and a sufficient insurance cover today, but the value of INR 1 crore will have depleted in real terms to around INR 31 lacs in 20 years at 6% inflation. Simply put Rs. 1 Crore after 20 years ≈ Rs. 31 lakhs today. To chose between different advisers or to evaluate the quality of investment advice being provided, fundamental level education is required. Lot of options are available for one to get training on financial planning and investment planning. Professional courses are available which can help individuals master the art of financial planning and use the knowledge not just for managing their own investments, but for additional income by advising others. Financial planning will always remain a lucrative field if one chooses to make it a career path. So what we really need is to just fight the lethargy & learn a few things that can help us “Sleep when the wind blows”.  Kushal Bhateja, Program Head-Financial Analysis

On the 23rd of January, 2019, the students from the MBA - Financial Analysis batch 2018-20 visited the offices of Moody's Analytics Knowledge Services (MAKS), based at Gurgaon. Moody's Analytics Knowledge Services is the knowledge services unit of Moody’s Analytics. The objective of the visit was to provide the students with an opportunity to understand the actual working of the organization on the Equity and Fixed Income side.

The trade wars have been progressively escalating between the US and China for the past five months. Yet, the implication that trade war represents to the rest of the world economy has been toned down by the global investors. The weakening of the Turkish Lira after the implementation of US tariffs spread to the euro on August 10^th, is worrying market participants globally. The exposure of European banks to the Turkish economy surfaced the concern of contagion. In total, Europe is owed $194 billion from Turkey. And, while action from Turkish regulators and an investment assurance from Qatar have offered some hope of stability, the damage to investor satisfaction may already be done. The Battle of Higher Returns and Higher Risk Emerging markets, in part due to their higher interest rates, offer investors the prospect of high returns should they be willing to accept elevated risks. The opportunity for higher growth is quite an attractive prospect for many investors as well as banks, especially considering the stable economic conditions the world has experienced in recent years. The economic climate encouraged many European banks to confidently increase their exposure to emerging markets like Turkey and China. Contrary to the 'developing' world, many of the developed economies still maintain record low interest rates, attempting to maintain their current levels of economic growth. However, with a benchmark like the US moving to normalize its benchmark rates and other major leaders on the verge of following suit, emerging markets may steadily lose attractiveness as rate disparity decrease while the skew in risk grows. Emerging Markets Suffer Losses despite the Promise of High Return With a few minor exceptions, emerging market currencies have been pummelled during the last twelve months, with the most recent Lira developments aggravating losses. The South African Rand for example has seen considerable weakness on the back of the Turkish currency's drop, most likely due to the country's similar size and profile, since the two countries do not have significant exposure to each other. The longer time-frame also showcases when the Ruble's losses started to accumulate. Due to tariffs and sanctions, the Russian Ruble felt serious pressure in the past 3 to 6 month range - though it has not seen the same scale of loss as Lira or arguably the Rand. The resilience of the Ruble is likely due to its large volume of energy exports, consistently providing the nation with a steady stream of income despite geopolitical concerns. Yet the Ruble may fall under further pressure in the coming weeks after US Deputy Secretary of the Treasury Sigal Mandelker said the US "will not hesitate to bring economic pain to Russia if its conduct does not change." Should the US impose further restrictions on Russia, the Ruble would undoubtedly feel significant pressure, adding to the broader turmoil in emerging markets. The Chinese Yuan has similar slid in the past weeks as the United States presses on with import taxes targeting specifically China. Yet, like many emerging markets in Asia, the Yuan has suffered less than other geographical regions in just this past week due in part to markedly fewer contagion fears. Developed markets have also lost ground to the dollar during this time. The Japanese Yen and Swiss Franc have performed admirably, due to their stability and relative safe-haven status. The two havens received a boost after the recent emerging market contagion fears, offering a rebound from some of their losses earlier in the year. If volatility persists or global capital markets outright decline, the stability factor will matter far more than a modest yield advantage. In that scenario, the Dollar may very well rise, but emerging markets would almost certainly face further capital outflows as investors look to protect their funds. Sanchita BhatiaPGD-FA(2018-19)

Remember the feeling you have when you receive your salary and then you realize a chunk of it has been cut as tax and then you proceed to create other sources of income which at the end of the year you are rudely informed will be taxed too. We all know that our taxes go towards the development of the nation and it is our patriotic duty to pay our taxes and watch our nation grow. But don’t you sometimes have a nagging feeling that it would be nicer if you could just pay a little less of your salary as income tax. What we mean is that you earn a fixed salary every month and wouldn’t it be nicer if you could save a larger part of it. While saying this at no point do we recommend for you to evade taxes or not disclose income as that would land you a significantly large stay with the Indian Prison Board. So, the following are a few ways the government allows you to save on your taxes in a manner it does frown upon. Section 80C of the income tax act This section is the most commonly used and recommended by tax consultants. It is a relatively straightforward thing to do where you are allowed to invest up to ₹1,50,000 which will then be deducted from your total taxable income Section 80 CCD This section is for those who have a pension account of sorts and it allows up to 10% of the individuals salary or ₹1,50,000 whichever is less. Section 80 TTA A not commonly utilized section, it allows you to deduct up to ₹10,000 against your interest which you will earn from a savings bank account. Section 80D An amount of up to ₹25,000 can be deducted under this section as payment towards the payment of premium for medical insurance. Section 80 G One for the philanthropists out there. This section rewards you for contributing you to a social cause. Various slabs of deductions are available based on the cause you donate towards. It ranges from a total 100% to a more modest 10%. Home loan Firstly, congratulations on the purchase of your new home and now lets make that home loan work for you. Under section 24 of the income tax act you can claim benefits towards interest on the interest payment of the loan. Allowances Your salary is also something which can be utilized to cut down on your total taxable income. Sounds counterintuitive right? It is not so. Allowances like your House Rent Allowance (HRA), conveyance/travel allowance and your telephone bill reimbursement are some things which can be adjusted against your salary and will then allow you to reduce your total taxable income. So go ahead and use these smart techniques to save some of that hard earned money as we are sure that you wouldn’t want to let go of an opportunity like this.

In the first article on Health Insurance, we discussed the rationale for buying insurance. Now let us understand the types of Health Insurance / Medical Insurance policies offered in India and how to choose what’s best for you? Types of Health Insurance Plans

• Hospitalization Plans / Indemnity Plans:

These plans reimburse the insured or pay up the hospital directly (Cashless Policies @ Network Hospitals) for cost of hospitalization and medical costs of the insured subject to the sum insured or sub-limits for different treatments specified in the policy.

• Individual Health Plan – Entire sum insured is applicable for single individual

Who should buy? When to buy?

• Anyone who doesn’t have adequate health insurance cover.
• Right after first job till happily single.
• For individuals more prone to diseases (family history), accidents (bikers), they can buy or continue individual policy even after marriage and buy a family floater to cover family.

 

• Family Floater Policy - Sum insured is applicable for a family as a whole

Who should buy? When to buy?

• Earning member of any family that is not adequately covered.
• Right after first job if parents and siblings are not adequately covered.
• Right after marriage. Benefit* by converting existing Individual Health policy to Family floater.

Please Note: SUB-LIMITS may exist for various Non-Major procedures up to certain SI (Sum Insured) level. This means insurance company will pay only up to respective sub-limit amount in case of the specified medical procedures. These sub-limits are usually not applicable for Major medical illness & procedures like Cancer, major organ transplant, cardiac surgeries, stroke, paralysis, brain surgeries etc. (Read policy document for details) Eg. In case of ICICI Lombard complete health insurance, for Annual sum insured of Rs.3Lac, Rs.4Lacs and Rs.5Lacs – following Sublimit applies

Surgeries / Medical Procedure	Sub-Limit
Cataract per eye	20,000
Other Eye Surgeries	35,000
ENT	35,000
Surgeries for - Tumors/Cysts/Nodule/Polyp	60,000
Stone in Urinary System	40,000
Hernia Related	60,000
Appendisectomy	40,000
Knee Ligament Reconstruction Surgery	90,000
Hysterectomy	60,000
Fissures/Piles/Fistulas	35,000
Spine & Vertebrae related	90,000
Cellulites/Abscess	35,000
All Medical Expenses for any treatment not involving surgery/medical procedure	25,000

  For Annual sum insured of Rs.2Lac sub-limits are much lower. However for Annual Sum Insured of Rs.7Lac and Rs.10Lac no sub-limit exists. (Source – www.icicilombard.com)

• Hospitalisation Plus / Top Up Plans:

These plans are affordable options to supplement your Primary Health Insurance Plan with a Rs.5Lac, Rs.8Lac or Rs.10Lacs Top-up cover with applicable deductions^ of Rs.2lac, Rs.3lac or Rs.4lac respectively. ^Deduction means you need to pay the applicable deduction amount (i.e. 2lac, 3lac, 4lac) out of your other existing policy/company group policy and use your Top-Up insurance policy to pay the rest of the hospital bill. Higher the Deduction Amount → Lower the Policy Premium. Who should buy? When to buy?

• Individuals/Families with insufficient existing cover If Existing Policy/Co. Policy provides cover up to Rs.2lacs or 5Lacs, then one can buy:
  • 5Lac Top-Up policy for family of three with Rs.2Lacs deductible at annual premium of around Rs.11,000 (~ Rs.920/- per month) OR
  • 10Lac Top-Up policy for family of three with Rs.4Lacs deductible at annual premium of around Rs.5500 (~ Rs.460/- p.m.)
• Check your family’s total health insurance cover. Right time to buy is the time you realize you’re inadequately covered – Could be today.

• Critical Illness Plans

These plans are defined-benefit based policies which pay a lump-sum (fixed) payment on diagnosis of covered critical illness & medical procedures like heart attack, stroke, cancer, kidney failure etc. Life Insurance companies also offer critical illness plans as a bundled option with Online/Offline Term Life Insurance Plans. General Insurance companies also offer these plans as Add-On option. Who should buy? When to buy?

• Individuals with family history of critical illnesses covered in such plans.
• Individuals with highly stressful lives.
• Anyone who wants to cover themselves against life shattering & wealth eroding critical illnesses.

There are some other health insurance plan categories like Specific Conditions Coverage Plans (Eg. Cancer Care Plans) - These plans are special case of critical illness plans designed specifically to offer health insurance against cancer or diabetes.   In a nutshell:-

• It is imperative to have adequate health insurance protection covering all family members irrespective of your company’s group insurance policy cover. This may not apply for individuals/families covered under CGHS or Railways or Military hospital if they are satisfied with the offered medical care.
• You should contemplate buying an Individual Health Plan / Family floater as soon as you join the workforce depending on parent’s & sibling’s medical coverage situation.
• If your company covers you & your family for Rs.2lacs, 3lacs or 5lacs and you cannot afford paying high premium than you can buy a Top-Up Health plan. However if your organisation’s group plan doesn’t cover all your family members, buying a family floater makes more sense. You should increase the Sum-Insured amount and/or add a Top-Up plan when your salary increases.
• If you lead a very stressful life and/or have a family history of any critical illness, buying a critical illness cover makes lot of sense.
• Before buying any health insurance plan, you should thoroughly read the policy document and understand important Conditions (e.g. sub-limits) and Exclusions (both temporary and permanent).

  In the third and final article on Health Insurance we would shed some light on general health insurance policy exclusions, along with discussing Add-on rider options that one can take advantage of. By Kushal Bhateja Keep learning & sharing!

Cenvat, Sales tax, Excise duty, Octroi, Service tax, Entertainment tax, Vat, Security Transaction Tax, Purchase tax, Luxury tax, Lottery Tax are some of the prominent taxes that died after GST. The GST is a Value added Tax (VAT) is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and state governments. GST is set to become one of the biggest fiscal reforms that our country is going to witness. All businesses, small or large are going to get impacted because of this paradigm shift in the indirect tax regime. Policymakers have consistently resonated the benefit of a unified taxation system in a federal country like India. Benefits of GST:

• Estimated to increase GDP by 0.9% to 1.7%.
• Fewer Tax rates and exemptions.
• Broadening of tax base.
• Efficient use of resources.
• Creation of common national market.
• Improved compliance and revenue collections.
• Mitigation of cascading of taxes.
• Accounting will be simplified and consideration for input tax from raw materials will also become easy.

GST bill is an attempt to bring all these taxes under one act and simply taxation, which will facilitate ease of business in the country.

Wouldn’t you love to buy equities when markets are at a low and sell them when markets are at a high? Dynamic funds switch between different asset classes, depending on their attractiveness. Dynamic funds aim to switch aggressively between equity and debt and are more opportunistic. When an investor invests in dynamic asset allocation funds, s/he does not have to worry about rebalancing the equity and debt allocations. The fund managers of these funds do it automatically on their behalf. These funds invest in equities and debt. These funds are invested with the help of valuation metric to regulate whether the markets are affluent or low-priced. They hike their equity exposures, when the markets are low-priced and vice versa. Various metrics i.e. price-to-equity ratio (P/E) and price-to-book value (P/BV) used for determining equity exposure. If P/E goes down, the fund will be substantially invested in equities. It will progressively reduce its equity exposure as the market P/E moves up and then invests entirely into fixed- income products. These funds carry certain tax advantages. As a fund gets treated as an equity fund, hence gets advantageous tax treatment only if its average equity exposure during the year is above 65 per cent. These funds do the asset allocation on the investor’s behalf. They are all- weather funds and investors may invest in them irrespective of market conditions.

Following the theme of digitalization and cashless economy, PM has launched Aadhar based mobile payment application BHIM (Bharat Interface for money). BHIM Being UPI (unified Payment Interface) brings a lot more benefits in comparison to E-wallets applications like Paytm, Freecharge, Mobikwek etc. Unified Payment Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI regulated entity. UPI is built over the IMPS infrastructure and allows you to instantly transfer money between bank accounts. Following are the features provided by this application.

• You can transfer fund to any bank account.
• You don’t need to register payee beforehand.
• BHIM provides IMPS facility. This allows transfer of money anytime, even on holidays or night.
• Only payee ID is needed while transferring the amount.
• Internet access is not needed for using this application, this feature makes it more accessible.

BHIM Application is one of the top trending apps on Google play store with over 3 million downloads so far. But the ease of using BHIM has also certain limitations as :-

• You can add only one bank account at a time.

You can have only two Virtual payment address. The first would be default (containing your mobile number) while you can set the second VPA. Reference : http://upipayments.co.in/bhim-app-download-features-use/

Worthy convivial diplomatic relationships lead India to strengthen its ties with the rest of the world. One such affable dealing has been with the United Kingdom. Coming across afresh is the news of UK opening up to India with Mr. Alok Sharma (Minister-in-charge of Asia) asserting India of UK to be its “Destination of Choice” for financing purposes such as raising offshore finance. In a meeting with the UK India Business Council on “Future of the UK-India Relationship” in London, Mr. Kumar affirmed in regards with Mr. Modi’s Make In India initiative, that the UK wants to propose- “Make in India, Finance in the UK”. The Make In India initiative is expected to require about more than a couple of Trillion Dollars by the year 2040 for meeting its capital needs appropriated for addressing prospective future energy and investment commitments. The Theresa May led Govt. is proposing for India to have UK as its “Destination Of Choice” for raising the finance that it needs for carrying out the objectives of the aforesaid initiative, for corporates as well as quasi-sovereigns. Substantiating his point on the relationship building with India, he added that the visa requirements for Indian students are open enough to let them in comfortably. As much as eighty nine percent of the visa applications have been approved. In addition, the UK govt. wants to have India as the first country to be offered the “Registered Traveller Scheme” which is aimed at helping the people travelling for business experience easy clearances on the UK Border. Madam May’s visit to India has as well been the most significant indicator purported to signify the important value that UK places on its relationship with India.