Indore (Madhya Pradesh): Company secretary, DK Jain, a senior expert in company laws, has said that under the changes made in the Companies Rules 2014, timely compliance with company laws has become mandatory. In case there is non-compliance two or more times, the company will have to pay a higher penalty.
He said that there have been a lot of amendments to Schedule 3 of the Companies Act 2013, which is related to the preparation of financial statements, which has come into force from the financial year 2021-22, in which new disclosure norms have been made.
Jain said it while addressing a seminar here on Friday. It was organised by the Tax Practitioners Association (TPA) and CA Indore Branch of ICAI on the subject provisions of the Companies Act and audit reporting.
‘The company auditors are required to mention all the disclosure norms in their report. With these new disclosure norms, the company's investors, banks and financial institutions will get more information about the company with complete transparency. These new disclosures include benami transactions done by the company, willful default, loans given to related parties and promoters, etc. will also have to be disclosed’ said Jain.
Chartered accountant Vikram Gupte while talking about the Companies Auditor's Report Order (CARO) said that in the new CARO 2020 auditor will have to report almost all the areas of the company. Old CARO 2016 was based only on compliance; CARO 2020 also expects comments from the auditor on economic health, solvency, and corporate governance of a company.
CARO 2020 is also applicable to the group's consolidated financial statement, which was not previously reporting on the group's consolidated financial statement made under CARO 2016.
Compared to the past, the auditors need to adopt a new audit procedure to meet the new reporting requirements, he added. In CARO 2020, if there is any fraud in the company or any case of undeclared
income in any proceeding of the income tax department, then the auditor will have to comment on the company's internal financial control or inefficient business operation.
The seminar was conducted by Abhay Sharma, honorary secretary, TPA. Welcome address on behalf of TPA vice president J P Saraf and vice-chairman Atishay Khasgiwala from Indore CA branch.