Rectification of accounts - satyam

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Dhruv Gaglani (Querist)
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04 January 2012 Madam / Dear Sir,

I have a query regarding the Satyam scam that took place. After the company was taken over, the accounts of the years in which the fraud had taken place were rectified with the Income Tax Department as well as with the MCA. I am aware how rectification / revision takes place with the Income Tax Department. But I am curious as to how this rectification of accounts can place with the MCA. Kindly enlighten me on the provisions of the Companies Act under which the said rectification took place.

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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04 January 2012 Dear Dhruv,

Earlier the position was that, if after filing of b/s to the ROC any changes in the B/s Arises. Companies used to file form 23AC and ACA again and ROC took note of the same.

However, the circular have been issued by the MCA and this practice has been revoked.

Now, for revision of accounts the Company has to adopt modified B/s again in duly held General Meeting.

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Dhruv Gaglani

Dhruv Gaglani (Querist)
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05 January 2012 Thank you Sir

However I wish to know that after the company has adopted revised financial statements in the general meeting, how does it file the same with ROC. As you mentioned that as per the MCA circular the company cannot cannot file Form 23AC and ACA again. So how does the company bring on record the rectified accounts and financials?

Also can you provide me with the MCA Circular you mentioned above.

CS Suraj Arora

CS Suraj Arora (Expert)
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05 January 2012 Dear Dhruv

I hope my Example Clarify your Doubts:

Suppose the Company has Made its accounts and get approved the same in the AGM.

Now if you read the provisions of section 211 Which Provides that Every balance Sheet of the Company shall give a True and fair veiw of State of Affairs of the Company.
Now If after approval in AGM ,,,the Baord has come to Know some erros they can rectify it and file the same to give effect to the provisiosn of section 211.

I conclude that yes "to give True and Fiar View of the state of affairs of the Company...The Accounts can be rectified and can be filed at ROC again and this is the thing which has been done in Satyam Case.

Regards

Dhruv Gaglani

Dhruv Gaglani (Querist)
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05 January 2012 Thank you so much Sir for your inputs.

For my understanding I would like to summarize as below. Kindly correct me if I am wrong.

The company has prepared its accounts, adopted them in the AGM and filed it with ROC.

But afterwards it has realised that there is fraud element in the same.

So the company gets it corrected and audited with a C.A. It agains calls for general meeting and adopts the rectified financials. Then the company files Form 23AC, ACA, Form 20B with ROC and the same replaces the old Forms filed. Also I assume that there is no time limit for the rectification of accounts with ROC, as it is with the I.T. dept (2 years).

CS Suraj Arora

CS Suraj Arora (Expert)
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05 January 2012 Yes Dhruv

You have got my Point.

Regards

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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06 January 2012 Yes Dhruv you are right.

Nice explanation by CS Suraj.

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