The MCA has amended Rule 11 of the Companies (Audit and Auditors) Rules, 2014 pertaining to disclosures to be made in the Auditor’s report. With effect from 1 April 2021, the Auditor’s report shall disclose:
Whether the management of the company has represented that, to the best of its belief and knowledge, no funds have been advanced or loaned to or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
Whether the management of the company has represented that, to the best of its belief and knowledge, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
Nothing has come to the management’s notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.
The dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013.
The company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software; the audit trail feature has not been tampered with; and the audit trail has been preserved by the company as per the statutory requirements for record retention.
To refer to the Companies (Audit and Auditors) Amendment Rules, 2021, dated 24 March 2021, click here
Companies (Accounts) Rules, 2014, amended
In line with the disclosure in (v) above, the Companies (Accounts) Rules, 2014 have been amended to insert a proviso in rule 3, sub-rule (1) that, for the financial year commencing on or after 1 April, 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made, and, ensuring that the audit trail cannot be disabled.
Further, Rule 8(5) is amended to prescribe that the following matters shall be included in the Board’s report :
the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year alongwith their status as at the end of the financial year;
the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions, along with the reasons thereof.
. To refer to the Companies (Accounts) Amendment Rules, 2021, dated 24 March 2021, click here.
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