The company was looking for an implementation partner to address key issues such as revenue recognition and treatment of commissions, conceptualize an accounting system for Panchayats, examine clauses of a tripartite agreement and examine if any tax benefits can be availed.
In addition to the predefined scope, Nexdigm developed an innovative and critical revenue model addressing the complexity of the arrangement between the three parties. The CWS systems bought by the Panchayats were financed by a bank and the company collected the service charge in a fiduciary capacity for the Panchayats. Nexdigm helped the client in formulating the accounting policy of revenue on sale of the CWS and apportionment of the service charge among the three parties based on the tripartite agreement.
We addressed the client's requirements and provided the following integrated support services:
- We designed the revenue model for the tripartite agreement ensuring it is compliant with the Accounting Standards and the erstwhile Schedule VI of the Companies Act, 1956.
- We reviewed the draft tripartite agreement and suggested the clauses for sharing of revenue and expenses among the company, NGO and Panchayats.
- We developed the internal control system for its operations and also helped the entity design the accounting system to capture information in line with the company's agreements. The accounting system designed was robust and generated the Profit and Loss account for each CWS project (Panchayat).
Nexdigm's overall project support addressed all the required concerns and provided the company with a detailed assessment of the complex business, tax and regulatory landscape in India. Our analysis helped the client plan its entry strategy and set up the manufacturing facility in record time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
