Analysis of MCA Amendment for Disclosure of Specified Bank Notes in Final Accounts & Auditors Report

With a view of curbing Black Money in the economy the Ministry of Finance by its notification dated 08.11.2016 had discontinued the then Rs. 500 & Rs. 1000. Still various corporate were found to be involved in transactions which were illegal in nature. In the same line MCA vide its notification dated 30.03.2017 has now amended the SCHEDULE III of the Companies Act, 2013 as well as the Matters to be included in the Statutory Auditors Report. EVERY COMPANY IS NOW REQUIRED TO DISCLOSE DETAILS W.R.T BANK NOTES WHICH CEASED TO BE A LEGAL TENDER W.E.F 08.11.2016.

This article is an analysis of the Latest Amendment made by the MCA w.r.t Disclosures to be made by the Companies in their Notes of Accounts as well as the Report to be provided by the Statutory Auditors for the year ended 31^st March, 2017.

Amendment No. 1

Ministry of corporate Affairs by Notification No. G.S.R. 308(E) Dated: 30^th March, 2017 has amended the Schedule III of the Companies Act, 2013.

In Division I, Part 1 under the heading “General Instructions for Preparation of Balance Sheet” the following clause shall be inserted in paragraph 6 after clause W:

Clause X : EVERY COMPANY SHALL DISCLOSE IN NOTES OF ACCOUNTS, details with regards to Specified Bank Notes (SBNs) held and transacted during the period from 8^th November, 2016 to 30^th December, 2016 as provided in the table below:-

In Division II, Part 1 under the heading “General Instructions for Preparation of Balance Sheet” the following clause shall be inserted in paragraph 6 after clause J:

Amendment No. 2

MCA has further Amended the Companies (Audit and Auditors) Rules, 2014 with Companies (Audit and Auditors) Amendment Rules, 2017 by Notification No. G.S.R. 307(E) dated 30^th March, 2017.

The Statutory Auditor’s Report for the year ended 31.03.2017 SHALL NOW ALSO INCLUDE:

> “Whether the company had provided requisite disclosure in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^thNovember, 2016 to 30^th December, 2016 and if so, whether these are in accordance with the books of accounts maintained by the company.”

Note: Specified Bank Notes: Means, Notes of Rs. 500 & Rs. 1000 denominations which ceased to be a legal tender w.e.f 08.11.2016

It shall now be a responsibility of the Statutory Auditors as well of the company to make a true and fair disclosure of all the CASH Transactions made during the Demonetization Period. This amendment by MCA should be regarded as a marvelous step towards Swachh Finance Abhiyan !

(Author: CS Rahul Harsh, is a company secretary in Employment and can be contacted at: csrahulharsh@gmail.com)