The Ministry of Corporate Affairs, Government of India, issued notifications dated 24th March 2021 to amend Companies (Accounts) Rules, 2014 to enhance the disclosures required to be made by the Company in Board Report;
These rules may be called the Companies (Accounts) Amendment Rules 2021.
Above mentioned amendment shall be applicable on Companies for financial year start on or after 01st April 2021.
Amendment in Rule 8 i.e. Matters to be included in Board’s Report. In rule 8, sub-rule 5 after clause x, two new clauses added.
(xi) The details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year.
(xii) The details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof.
Disclosure on above mentioned two clauses are required to give in the Director’s Report of Companies along with other disclosures.
Amendment in Rule 3 i.e. Manner of Books of Account to be Kept in Electronic Mode. in Rule 3, in sub-rule (1) the proviso shall be inserted:
New Proviso: Provided that for the financial year commencing on or after the 1st day of April, 2022, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of:
Audit Trail means, an audit trail is defined as a step-by-step sequential record which provides evidence of the documented history of financial transactions to its source. An auditor can trace every step of, the financial data of a particular transaction right from the general ledger to its source document with the help of the audit trail. Audit trails are crucial when it comes to validating and verifying the source of a particular transaction. In case an audit trail learns about missing documents during the process, it means that the company does not adhere to the established accounting procedures.
Factors to Consider
Amendment in Audit Report
The Ministry of Corporate Affairs, Government of India, issued notifications dated 24th March, 2021 to amend Companies (Audit and Auditors) Rules, 2014 to enhance the disclosures required to be made by the Company in its Audit Report
This amendment shall effect the Auditor Report as on 31st March 2022 i.e. (f.y. 2021-22).
Amendment in Rule 11 i.e. Other Matters to be Included in Auditors Report. In Rule 11.