Companies Mandates To Use Software With Audit Trail of Each Transaction

*MCA New Updates* –

Reference: Accounting, Audit, Schedule III and Section applicability

  1. Mandatory use of Accounting Software having Audit Trail: 
  • Companies (Accounts) Amendment Rules, 2021
  • Shall come into force with effect from 1st day of April 2021.

From FY commencing on 01.04.2021, 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.

  1. Other Matters to be Included in Auditors Report* – 
  • Companies (Audit and Auditors) Amendment Rules, 2021
  • Shall come into force with effect from 1st day of April 2021.
  1. Reporting regarding advances, loans & Investment other than disclosed in notes to accounts.
  2. Receiving of funds for further lending or investing other than disclosed in notes to accounts.
  3. Dividend declared or paid is in compliance of section 123 of CA, 2013.
  4. Comment of use of Accounting Software having Audit Trail & other rules therein.
  1. Amendments in Schedule III from 1st day of April, 2021 

As per the amendments many new disclosure has been mandatory as detailed below:

  1. Disclosure of Shareholding of Promoters
  2. Trade Payables ageing schedule with age 1 year, 1-2 year, 2-3 year & More than 3 years
  3. Reconciliation of the gross and net carrying amounts of each class of assets
  4. Trade Receivables ageing schedule with age 1 year, 1-2 year, 2-3 year & More than 3 years
  5. Detailed disclosure regarding title deeds of Immovable Property not held in name of the Company.
  6. Disclosure regarding revaluation & CWIP ageing.
  7. Loans or Advances granted to promoters, directors, KMPs and the related parties
  8. Details of Benami Property held
  9. Reconciliation and reasons of material discrepancies, in quarterly statements submitted to bank and   books of accounts.
  10. Disclosure where a company is a declared wilful defaulter by any bank or financial Institution
  11. Relationship with Struck off Companies
  12. Pending registration of charges or satisfaction with Registrar of Companies
  13. Compliance with number of layers of companies
  14. Disclosure of 11 Ratios
  15. Compliance with approved Scheme(s) of Arrangements
  16. Utilisation of Borrowed funds and share premium
  17. Details of transaction not recorded in the books that has been surrendered or disclosed as income in   the tax assessments
  18. Disclosure regarding Corporate Social Responsibility
  19. Details of Crypto Currency or Virtual Currency
  1.  Applicability of Section 23 and 45 of Companies Amendment Act, 2020. 

Section 23 : Amendment of section 124 –  In section 124 of the principal Act, for sub-section (7), the following sub-section shall be substituted, namely:—

“(7) If a company fails to comply with any of the requirements of this section, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of ten lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.” 

Section 45 : Amendment of section 247 –  In section 247 of the principal Act, in sub-section (3), for the words “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees”, the words “liable to a penalty of fifty thousand rupees” shall be substituted.

Attached herewith all notifications for ready reference and reading.