Analysis of companies (accounts) Amendment rules, 2016
MCA thru Notification dated 27/07/2016 Amended the companies (bills) regulations, 2014 which now be referred to as as groups (money owed) amendment regulations, 2016.
Following beneath stated are the Provisions both in advance as well as amended at the side of the effect of amended provisions:
1. In Rule 6 for the second Proviso of agencies (money owed) rules, 2014 following proviso has been substituted-
earlier Provision:
provided further that nothing in the above said rule shall apply in admire of preparation of consolidated financial declaration by an intermediate utterly-owned subsidiary, apart from a wholly-owned subsidiary whose instant figure is a agency integrated out of doors India.
What actually Rule 6 says??
Rule 6 of the organizations (debts) policies, 2014 describes the way of consolidation of accounts because it says that consolidation of financial statements will be made according with the provisions of agenda III of the businesses Act, 2013 and relevant accounting requirements.
Amended Provision:
furnished similarly that nothing on this rule shall apply in recognize of guidance of consolidated financial statements by a business enterprise if it meets the subsequent situations:-
i) it is a completely-owned subsidiary, or is a partially-owned subsidiary of any other organization and all its other individuals, which include those not otherwise entitled to vote, having been intimated in writing and for which the evidence of transport of such intimation is available with the organization, do not object to the organization now not imparting consolidated economic statements;
ii) it’s miles a employer whose securities are not listed or are not in the process of list on any stock change, whether or not in India or out of doors India and
iii) its final or any intermediate holding enterprise documents consolidated financial statements with the Registrar which are in compliance with the relevant Accounting standards
impact of the Amended Provision :
A enterprise isn’t always required to put together consolidated monetary announcement as per the provisions of time table III of the organizations Act, 2013 and applicable accounting standards, if it fulfills the above cited all three conditions.
2. In Rule 8 sub rule 1 of businesses (debts) rules, 2014 following substitution has been made:
in advance Provision:
The Board’s document shall be prepared based on the stand by myself economic statements of the company and the document shall include a separate section in which a document on the performance and financial position of every of the subsidiaries, associates and joint undertaking agencies covered within the consolidated monetary assertion is offered.
What truly Rule 8 says??
Rule eight of the agencies (bills) guidelines, 2014 talk about the topics to be protected in the Board report.
Amended Provision:
The Board’s report shall be prepared based totally at the stand by myself financial statements of the organization and shall report on the highlights of overall performance of subsidiaries, buddies and joint project groups and their contribution to the overall performance of the corporation at some stage in the length underneath report.
effect of the Amended Provision:
Now, it’s far required to document on performance of subsidiaries, friends and joint venture corporations and their contribution to the overall performance of the business enterprise all through the length beneath Board’s file.
three. In Rule 13 sub rule 1 of organizations (accounts) regulations, 2014 following substitution has been made:
earlier Provision:
the subsequent magnificence of businesses shall be required to appoint an inner auditor or a firm of inner auditors, specifically:-
a) each indexed company;
b) each unlisted public organisation having:
i. paid up proportion capital of fifty crore rupees or extra in the course of the preceding monetary year; or
ii. turnover of hundred crore rupees or extra for the duration of the preceding monetary year; or
iii. incredible loans or borrowings from banks or public economic establishments exceeding a hundred crore rupees or greater at any factor of time in the course of the preceding monetary yr; or
iv. extraordinary deposits of twenty five crore rupees or more at any point of time at some point of the previous financial 12 months; and
c) each personal enterprise having-
(i) Turnover of two hundred crore rupees or extra in the course of the previous financial 12 months; or
(ii) first-rate loans or borrowings from banks or public economic institutions exceeding a hundred crore rupees or extra at any factor of time at some point of the previous economic 12 months:
supplied that an existing corporation included underneath any of the above standards shall comply with the necessities of section 138.
be aware: As in step with segment 138 of the corporations, Act, 2013, such elegance of businesses are required to hire internal auditor as described within the abovementioned Rule 13 organizations (accounts) regulations, 2014 who will be Chartered Accountant or price Accountant or different professional as decided by using board.
explanation: For the cause of this rule –
the time period “Chartered Accountant” shall suggest a Chartered Accountant whether engaged in exercise or now not.
Amended Provision:
the following magnificence of agencies will be required to hire an internal auditor which can be both an person or partnership firm or a frame corporate , namely:-
a) each listed business enterprise;
b) every unlisted public business enterprise having:
v. paid up proportion capital of fifty crore rupees or more during the previous financial 12 months; or
vi. turnover of two hundred crore rupees or greater in the course of the preceding monetary 12 months; or
vii. brilliant loans or borrowings from banks or public monetary establishments exceeding 100 crore rupees or extra at any point of time all through the preceding monetary year; or
viii. outstanding deposits of twenty 5 crore rupees or more at any point of time for the duration of the preceding monetary 12 months; and
c) every personal enterprise having-
(i) Turnover of hundred crore rupees or more at some stage in the previous economic yr; or
(ii) splendid loans or borrowings from banks or public monetary institutions exceeding 100 crore rupees or extra at any factor of time for the duration of the previous monetary yr:
provided that an current company blanketed beneath any of the above criteria shall follow the requirements of section 138.
be aware: As according to section 138 of the agencies, Act, 2013, such class of groups is needed to rent internal auditor as defined within the abovementioned Rule 13, of theCompanies (bills) rules, 2014 who shall be Chartered Accountant or fee Accountant or other professional as decided with the aid of board.
rationalization: For the reason of this rule, rationalization ii has now been changed as cited underneath:
the term “Chartered Accountant” or “value Accountant’ shall suggest a “Chartered Accountant” or a “cost Accountant”, because the case can be, whether engaged in practice or no longer.”
impact of the Amended Provision:
i) internal auditor under Rule thirteen of the companies (accounts) rules, 2014, could additionally include an man or woman, partnership company or body company.
ii) In clarification to the rule of thumb 13 of the organizations (money owed) regulations, 2014, now price Accountant is also added similarly to a Chartered Accountant.
