Company (Account) Amendment Rules

The MCA amend the Companies Account Rules by Notification dated : 27.07.2016. This rules may be called Company (Account) Amendment Rules

Earlier Provision:

Earlier Provision: Provided further that nothing in this rule shall apply in respect of preparation of consolidated financial statement by an intermediate  wholly-owned subsidiary, other than a wholly-owned subsidiary whose immediate parent is a company incorporated outside India:

Amended Provision:

"Provided further that nothing in this rule shall apply in respect of preparation of consolidated financial statements by a company if it meets the following conditions:-

(1) it is a wholly-owned subsidiary, or is a partially-owned subsidiary of another company and all its other members, including those not otherwise entitled to vote, having been intimated in writing and for which the proof of delivery of such intimation is available with the company, do not object to the company not presenting consolidated financial statements;

(ii) it is a company whose securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India and

(iii) its ultimate or any intermediate holding company files consolidated financial statements with the Registrar which are in compliance with the applicable Accounting Standards

Effects:

A Company not required to prepare consolidated financial statement as per rules 6 if its fulfill the above mentioned all three conditions simultaneously. In brief as follow:
-       Its not Listed or in process of listed
-       Its ultimate or any intermediate holding is filing consolidated financial statement.
-       It is WOS or partly owned subsidiary if such non consolidation is informed to members and no objection received from them.




Rule No.
Earlier Provisions
Amended Rules
Effects of Amendment
Rule 8
8. Matters to be included in Board’s report.

(1) The Board’s Report shall be prepared based on the stand alone financial statements of the company and the report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented.
Rule 8 has been modified.

(1) The Board’s Report shall be prepared based on the stand alone financial statements of the companyand shall report on the highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the company during the period under report.
Now, in addition to the report on performance of subsidiaries, associates and joint venture companies the directors have to also provide the contribution of the performance of the said entities to the overall performance of the company.
Rule 13
13. Companies required to appoint internal auditor.-

(1) The following class of companies shall be required to appoint an internal auditor or a firm of internal auditors, namely:-


Explanation.- For the purposes of this rule –
(ii) the term “Chartered Accountant” shall mean a Chartered Accountant whether engaged in practice or not.


Rule 13 (1) has been modified:

(1) The following class of companies shall be required to appoint an internal auditor which may be either an individual or a partnership firm or a body corporate , namely:”

Explanation to Rule 13 (1) has been modified:
(ii) the term "Chartered Accountant" or "Cost Accountant' shall mean a "Chartered Accountant" or a "Cost Accountant", as the case may be, whether engaged in practice or not.



The Amendment clarifies that an internal auditor under Rule 13 would also include an individual, partnership firm or body corporate.

The Amendment  has also added a Cost Accountant for the purposes of Rule 13, in addition to a Chartered Accountant.


Comments

  1. What about associate companies. In case one unlisted company has 2-3 associate companies then will the parent company needs to consolidate the financial statements of associate companies or simplyng giving details of Rule 8 and Form AOC -1 will serve the purpose

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