17 April 2015
Greetings Ankit, sec 130 is when the order is raised by the court and the accounts are reopened, whereas in sec 131 it is done voluntarily by people managing the company. Here is the detailed idea :- Reopening of Accounts
3.1 New sections 130 and 131 provide for the manner in which a company can reopen or recast its books of account or financial statements. This is a new provision made in the company legislation for the first time. At present, the Government has taken the view that the accounts once adopted by the members of the company at the AGM cannot be reopened or recast.
3.2 New section 130 provides that if it is found that (i) the accounts for a particular year were prepared in a fraudulent manner or (ii) the affairs of the company were mismanaged during the relevant period casting a doubt on the reliability of financial statements, an application will have to be made by the Central Government, the Income tax Authorities, the SEBI, any other statutory regulatory body or authority or any concerned party to a competent Court or Tribunal. On receipt of the order of the Court/Tribunal the company will have to reopen its accounts or recast its financial statements in conformity with the order. The accounts so revised or recast shall be considered as final.
3.3 New section 131 provides for voluntary revision of financial statements or Director’s Report. Under this section, if it appears to the directors that (i) financial statement or (ii) report of the Board of Directors for a particular financial year does not comply with the provisions of the new sections 129 or 134, they can revise the financial statement or director’s report in respect of any of the three preceding financial years. For this purpose the directors have make an application to the Tribunal in the prescribed manner and obtain its order. Before giving such an order the Tribunal has to give notice of hearing to the Central Government and the Income tax Authorities. It is also provided that such revised financial statement or report of directors shall not be prepared more than once in any financial years. Further, detailed reasons for such revision will have to be disclosed by the directors in their report to the members in the relevant financial year in which revision is made.
3.4 The Central Government has been authorised to make Rules about the procedure for such voluntary revision of financial statements and director’s report. These Rules will also provide for reporting requirements applicable to the auditors of the company. Draft rules 9.5 to 9.8 provide for the procedure to be followed by the Company for this purpose.
CAclubindia
