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 following are the amendments as per both the aforesaid Rules:
Mandatory use of accounting software having recording audit trail:
(As per notification, in rule 3, sub-rule (1), the following proviso shall be inserted)
For the Financial Year commencing from 1st April, 2022, every Company which uses accounting software for maintaining its Books of Accounts, 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 Accounts along with the date of such change and ensuring that audit trail cannot be disabled.
The amendments was earlier made effective from 1st April,2021. However, MCA had on 1st April,2021, further issued ‘Companies (Accounts) Second Amendment Rules, 2021’, deferring the effective date for Mandatory use of accounting software having recording audit trail [as mentioned in proviso of rule 3, sub-rule (1)], from 1st April,2021 to 1st April,2022.
The amended 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, 2022, 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.”
Additional points to be mentioned in the 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 following details:
- 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.”
MCA notification can be accessed at: http://mca.gov.in/Ministry/pdf/AccountsAmendmentRules_24032021.pdf
AccountsAmendmentRules_01042021.pdf (mca.gov.in)
Published on: March 27, 2021