MCA updates

24 March 2021

MCA updates

AUDIT

The MCA had notified amendments on 24 March 2021 which will impact the way Companies are required to maintain their books of accounts and present new disclosures in their financial statements. The amendments are applicable from FY 2021–22, i.e. starting from 01 April 2021.

We highlight the changes below:

1. Mandatory use of accounting software having Audit Trail for Companies

From FY commencing on 01 April 2021, every Company shall use an accounting software (ERP accounting systems) which have the following features:

record audit trail of each and every transaction
creating an edit log of each change made in the books of accounts along with date when such changes were made
ensuring that audit trail cannot be disabled

Link to the notification

2. Amendments in Schedule III

Additional disclosures in Schedule III, i.e. the schedule which prescribes the format of a Company’s financial statements, were also notified. It includes presentation of ageing schedule for receivables and payables, additional CSR disclosures and more interestingly, Details of Crypto Currency or Virtual Currency too!

The broad list is given below:

Disclosure of Shareholding of Promoters
Trade Payables ageing schedule with age 1 year, 1–2 year, 2–3 year & More than 3 years
Reconciliation of the gross and net carrying amounts of each class of assets
Trade Receivables ageing schedule with age 1 year, 1–2 year, 2–3 year & More than 3 years
Detailed disclosure regarding title deeds of Immovable Property not held in name of the Company.
Disclosure regarding revaluation & CWIP ageing.
Loans or Advances granted to promoters, directors, KMPs and the related parties
Details of Benami Property held
Reconciliation and reasons of material discrepancies, in quarterly statements submitted to bank and books of accounts.
Disclosure where a company is a declared wilful defaulter by any bank or financial Institution
Relationship with Struck off Companies
Pending registration of charges or satisfaction with Registrar of Companies
Compliance with number of layers of companies
Disclosure of 11 Ratios
Compliance with approved Scheme(s) of Arrangements
Utilisation of Borrowed funds and share premium
Details of transaction not recorded in the books that has been surrendered or disclosed as income in the tax assessments
Disclosure regarding Corporate Social Responsibility
Details of Crypto Currency or Virtual Currency

Link to the notification

3. Other matters to be included in the Audit Report

Once again, in an attempt to increase responsibility of the statutory auditors, the following additional matters are to be included in the audit report

Reporting regarding advances, loans & Investment other than disclosed in notes to accounts.
Receiving of funds for further lending or investing other than disclosed in notes to accounts.
Dividend declared or paid is in compliance of section 123 of CA, 2013.
Comment of use of Accounting Software having Audit Trail & other rules therein.

Link to the notification