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Ministry of Corporate Affairs has released the Companies (Accounts) Amendment Rules, 2021, to further amend the Companies (Accounts) Rules, 2014 and various new changes have been inculcated including the requirement of a compulsory audit trail in Accounting software that is to be used by Companies from 1st April 2021 onwards. Read the official notification below:

 MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 24th March, 2021

G.S.R. 205(E).—In exercise of the powers conferred by section 134 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Accounts) Rules, 2014, namely:-

1. Short title and commencement.-

(1) These rules may be called the Companies (Accounts) Amendment Rules, 2021.
(2) They shall come into force with effect from the 1st day of April, 2021.

2. In the Companies (Accounts) Rules, 2014,-

(1) in rule 3, in sub-rule (1), the following proviso shall be inserted, namely:-

“Provided that for the financial year commencing on or after the 1st day of April, 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.”

 

(2) in rule 8, in sub-rule (5), after clause (x), the following clauses shall be inserted namely:-

"(xi) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year.

(xii) the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof."

The analysis of pre and post amendment of the same is as follows

SNo.

Rule

Pre-Amendment

Post Amendment

1

Rule 3(1) of Companies (Accounts) Rules, 2014:

Manner of books of accounts to be kept in electronic mode

The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.

The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference

Provided that for the financial year commencing on or after the 1st day of April, 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

2

Rule 8(5) of Companies (Accounts) Rules, 2014:

Matters to be included in Board's Report

In Rule 8(5) of the Companies (Accounts) Rules, 2014, ten matters/clauses were specified which the Board report shall contain in addition to the information and details specified in sub- rule (4).

Two additional clauses has been inserted in Rule 8(5) of the Companies (Accounts) Rules, 2014, w.e.f. 01.04.2021 which are as follows:

xi. The details of application made or any proceeding pending under the Insolvency and Bankruptcy

     

Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year.

xii. The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

Accordingly, w.e.f. 01.04.2021, Rule 3(1) of Companies (Accounts) Rules, 2014 for using accounting software having feature of audit trail is applicable to all companies irrespective of its capital or turnover.

Further, two more matters are specified in sub rule 5 of rule 8 which shall be contained in Board report in addition to the details required sub rule (5) and (4) of Rule 8.

[F. No. 1/19/2013-CL-V-Part III]
K.V.R. MURTY, Jt. Secy.

Note: The principal notification was published in the Gazette of India vide notification number G.S.R. 239(E), dated 31st March, 2014 and was last amended vide notification number G.S.R. 60 (E), dated the 30th January, 2020.

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