Regulatory updates

Recap on key updates

Updates from MCA

Back

Effective 1 April 2021

In February 2020, MCA issued the Companies (Auditor’s Report) Order, 2020 (CARO 2020), making it applicable for auditors of prescribed class of companies. It is effective for financial years commencing on or after 1 April 2021.

CARO 2020 has added several new clauses and revised certain existing clauses of CARO 2016. Reporting on CARO requires application of judgement, accordingly ICAI has released a guidance note for reporting under CARO.

Effective 1 April 2021

On 24 March 2021, MCA issued certain amendments to Schedule III of the Companies Act, 2013 in Divisions I, II and III. The amendments in Schedule III are largely driven by requirements relating to CARO 2020. ICAI has issued guidance notes for amendments in Division I , Division II and Division III .

Effective 1 April 2021

On 24 March 2021, MCA amended the Companies (Audit and Auditors) Rules, 2014, thereby requiring additional matters to be reported in audit report under ‘Other matter’ paragraph. The matters include:

  • Management representation on funds advanced, loaned to or invested in by an entity or received by an entity for further advancement, etc.; and such representation is not materially misstated
  • Dividend declared and paid during the year is in compliance with the Companies Act, 2013

Effective 1 April 2022

On 24 March 2021, MCA issued amendments to provisions of Companies (Accounts) Rules, 2014 and Companies (Audit and Auditors) Rules, 2014 under the Companies Act, 2013. As per the amendments:

  • Companies that use accounting software for maintaining books of account, should use such software which has feature of recording audit trail of each transaction, creates an edit log of each change made in books of account and ensures audit trail is not disabled
  • Auditor needs to report whether the company has used an accounting software having a feature of recording audit trail, the audit trail feature has been operated throughout the year for all transactions recorded, audit trail feature has not been tampered with, and audit trail has been preserved by the company as per statutory requirements.

The requirements for maintaining the software with audit trail feature and auditors responsibility to report thereon are effective for the financial year commencing on or after 1 April 2022.

Our Insights

Tools and Enablers
Resources
Events and Webinars
Sectoral Insights

Reach out to us

;