The Ministry of Corporate Affairs (MCA) vide Notification No. G.S.R. 205(E), dated 24th March, 2021 has issued ‘Companies (Accounts) Amendment Rules, 2021’ to further amend the Companies (Accounts) Rules, 2014. The amendments are effective from 1st April,2021.
The amendments are given below for ready reference of our readers:
Mandatory use of Accounting Software having Audit Trail:
Proviso has been inserted in Rule 3(1) of the Companies (Accounts) Rules, 2014 , which mandates that every company shall use only such accounting software which has a feature of recording audit trail of each and every transaction and ensure that the audit trail cannot be disabled. This will come as hit for SMEs as above feature will ensure that accounting is made on daily basis and no back dating entries are passed or rectified later. Any error will be required to be rectified only by passing rectification / reverse entry.
Rule 3(1) of the Companies (Accounts) Rules, 2014 now reads as under:
“3. Manner of books of account to be kept in electronic mode.-
(1) The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.
Provided that for the financial year commencing on or after the 1st day of 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.”
New Disclosures in Board’s report:
New Clause (xi) and (xii) have been inserted in Rule 8(5) of the Companies (Accounts) Rules, 2014 stating that the Company‘s Board Report shall also contain the details of application / proceeding pending under the Insolvency and Bankruptcy Code, 2016 and 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.
The amended Rule 8(5)(xi) and (xii) of the Companies (Accounts) Rules, 2014 now reads as under:
“8. Matters to be included in Board’s report.-
(5) In addition to the information and details specified in sub-rule (4), the report of the Board shall also contain –
(xi) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year.
(xii) 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.”
As stated earlier the above amendment will come into force with effect from April 1, 2021
Notification can be accessed at: http://mca.gov.in/Ministry/pdf/AccountsAmendmentRules_24032021.pdf
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