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Recent Changes in: - The Companies Act, 2013 - Audit Reporting

Recent Changes in: - The Companies Act, 2013 - Audit Reporting. Baroda Branch of WIRC of ICAI 9 February 2019. Assent from President of India on 3 rd January 2018 – notified on same day Commencement of the Amendment Act. The Companies (Amendment) Act, 2017. Company Incorporation.

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Recent Changes in: - The Companies Act, 2013 - Audit Reporting

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  1. Recent Changes in:- The Companies Act, 2013- Audit Reporting Baroda Branch of WIRC of ICAI 9 February 2019

  2. Assent from President of India on 3rd January 2018 – notified on same day Commencement of the Amendment Act The Companies (Amendment) Act, 2017

  3. Company Incorporation Companies (Authorized to Register) 2nd Amendment Rules, 2018 effective from 15 Aug 2018

  4. Company Incorporation … Companies (Incorporation) 3rd Amendment Rules, 2018

  5. Company Incorporation … Companies (Incorporation) 4th Amendment Rules, 2018.

  6. Total Share Capital

  7. Issue of Shares and Securities

  8. Issue of Shares and Securities …

  9. Appointment of Directors

  10. Appointment of Directors … These Rules are applicable from 10th July 2018.

  11. Meetings of Board of Directors

  12. Significant Beneficial Ownership • Companies (Significant Beneficial Owners) Rules, 2018 (13th June 2018)

  13. Significant Beneficial Ownership … Companies (Significant Beneficial Owners) Amendment Rules, 2019 Effective from 8th Feb 2019

  14. Significant Beneficial Ownership … • Companies (Significant Beneficial Owners) Amendment Rules, 2019 8th Feb 2019

  15. Audit and Auditors

  16. Appointment of an ‘auditor;’ is for a period of 5 years Several cases of auditor resignations before end of term – In many cases, resignations were given after year end and towards conclusion of the audit MCA has issued notices in several such cases to audit firms ICAI has in Dec 2018 issued “Implementation Guide on resignation or withdrawal from an engagement to perform audit of FS” In case of resignation, specific reasons to be communicated Auditor Resignation

  17. Valuations under Companies Act

  18. Valuations under Companies Act …

  19. Indian Valuation standards (Ind VS)

  20. Indian Valuation Standards (Ind VS)

  21. Overview of Ind VS 102Valuation bases

  22. Overview of Ind VS 103 Valuation Approaches and Methods

  23. Valuations of businesses and business ownership interests may be performed for a wide variety of purposes such as: For Acquisition, mergers, leveraged buyouts, initial public offer For Dispute resolution, pending litigations, etc. For Compliance oriented engagements (Financial reporting, under Income tax act) For internal use by owners Under Insolvency and Bankruptcy code Overview of Ind VS 301Business Valuation

  24. Intangible assets are required to be valued in the following situations: Purchase price allocation for accounting and financial reporting under Ind AS 103 Impairment testing under Ind AS 36, Impairment of Assets Transfer pricing where Intagibles are involved Taxation by way of a purchase price allocation for during slump sale Bankruptcy/restructuring, e. Overview of Ind VS 302Intangible Assets

  25. Overview of Ind VS 302- Methods of Valuation

  26. Factors to be considered while determining the valuation method include: The valuation base and terms and conditions of the instrument being valued The purpose of valuation The control framework (environment) Input data sets, and Other considerations. Overview of Ind VS 303Financial instruments

  27. Accounting Standards • Companies (Accounting Standards) Amendment Rules, 2018.

  28. Registration of Charges

  29. Companies Deposits (Acceptance) Rules Companies (Acceptance of Deposits) Amendment Rules, 2018 Effective from 15th August 2018.

  30. Companies Deposits (Acceptance) Rules …

  31. Companies Deposits (Acceptance) Rules … Companies (Acceptance of Deposits) Amendment Rules, 2019.

  32. Filing for ‘ACTIVE COMPANIES’ Companies (Incorporation) Amendment Rules, 2019 Effective 25th February 2019

  33. Report of Board of Directors Companies (Accounts) Amendment Rules, 2018

  34. Corporate Social Responsibility Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018 Clarification under Section 135 (5) of the Companies Act, 2013. Circular No. 06/2018 dated 28th May 2018

  35. National Financial Reporting Authority Rules (NFRA), 2018 • The MCA notified the NFRA Rules, 2018 on 13th November 2018 determining the jurisdiction, function and duties of the NFRA, as also its powers. • Applicability • Companies whose securities are listed on any stock exchange in India or outside • Unlisted public companies having paid-up capital of not less than Rs. 500 crs or having annual turnover of not less than Rs. 1,000 crs or having, in aggregate, outstanding loans, debentures and deposits of not less than Rs. 500 crs as on the 31st March of immediately preceding financial year. • Insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act for the time being in force or bodies corporate incorporated by an Act in accordance with sec 1(4)(b), (c), (d), (e) and (f) of the Act. • A body corporate incorporated or registered outside India, which is a subsidiary or associate company of any company or body corporate incorporated or registered in India as referred above, if the income or net worth of such subsidiary or associate company exceeds 20% of the consolidated income or consolidated net worth of such company or the body corporate as referred above

  36. National Financial Reporting Authority Rules (NFRA), 2018 … • Every auditor should file a return with the NFRA within 30 days from the date of deployment of this e-form on the website of the MCA • Among other matter, key aspects specified by the rules are as below: • Function and duties of the authority • Annual return to be filed by auditor • Recommending accounting standards and auditing standards • Monitoring and enforcing compliance with accounting standards and auditing standards • Power to investigate and disciplinary proceedings • Disciplinary proceeding and manner of enforcement of order passed • Punishment for non-compliance

  37. The CG has appointed the dates on which the following provisions of Section 132 of the Companies Act 2013 will come into force. NFRA is required to make recommendations to the CG, monitor and enforce the accounting standards and auditing standards. NFRA should look into the quality of services of the professionals associated with complying the above standards. NFRA will have the power to investigate into the matters of professional and other misconduct committed by any member or a firm of Chartered Accountants. Also, where such misconduct is proved, the NFRA will imposing penalty and debar the member/ firm from engaging to practice as a member of ICAI for such period as may be prescribed. National Financial Reporting Authority Rules (NFRA), 2018 …

  38. KYC of all Directors

  39. Managerial Remuneration Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2018

  40. Managerial Remuneration …

  41. Managerial Remuneration …

  42. Format for FS (incl for NBFCs)

  43. Additional disclosure for amounts due to MSMEs ‘Trade Receivables’ and ‘Loans & Advances’ to be classified as” Trade Receivables / Loans and Advances: Considered Good – secured Considered Good – Unsecured With significant increase in credit risk Which are credit impaired Equity Description of the Purposes of each reserve included within ‘Other Equity” to be disclosed in the Notes to Statement of PL Amendment in Schedule III (for companies under Ind AS and AS)

  44. Compliance for payments to MSMEs

  45. Amendments to Ind ASeffective 1st April 2018(applicable for FY 2018-19)

  46. Accounting Standards in India (applicable for FY 2018-19)

  47. How many Ind AS are issued?(for FY 2018-19) • Notification dated 16 February 2015: • Companies (Indian Accounting Standards) Rules, 2015 • 39 Ind AS notified effective from 1st April, 2015 • Rule 4 states: ‘ The Companies and their auditors shall comply with the Indian Accounting Standards (Ind AS)…’ • Notification dates 30th March 2016: • Companies (Indian Accounting Standards)(Amendment) Rules, 2016 • Ind AS 115 omitted – Ind AS 11 and Ind AS 18 notified • Total Ind AS now applicable: 40 • Notification dates 28th March 2018: • Companies (Indian Accounting Standards)(Amendment) Rules, 2018 • Ind AS 115 inserted • Ind AS 11 and Ind AS 18 omitted • Total Ind AS now applicable: 39 (from 2018-19)

  48. Formats for FS • For Non Ind AS Companies • Division I of Schedule III • Format for Ind AS FS • Division II of Schedule III of Companies Act 2013 • Amendment • Format for Ind AS NBFCs • Division III of Schedule III of Companies Act 2013

  49. Additional Ind AS material • Ind AS – An overview (2018 edition) • ICAI GN specific for IndAS • GN on Accounting for Real Estate Transactions (withdrawn from FY 2018-19 on IndAS 115 becoming effective) • GN on Accounting for Oil and Gas • GN on Division II of Schedule III • Ind AS Transition Facilitation Group (IFTG) – 18 IFTG issued so far • Ind AS Educational Material • Ind AS Disclosure Checklist • Ind AS – Impact Analysis and Industry Experience • Compendium of Ind AS (Vol I / II) (issued Feb 2019)

  50. Ind AS 40: Investment Property • The amendment lays down the principle regarding when a company should transfer asset to, or from, investment property • The amendment clarifies that a transfer is made when and only when: • There is an actual change of use i.e. an asset meets or ceases to meet the definition of investment property • There is evidence of the change in use

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