The weekly messenger | Edition 44.20

AUDITING NEWS

Guidance Note on ICSI Auditing Standards (CSAS-1 to CSAS-4) – 21 December 2020

The Institute of Company Secretaries of India (ICSI) has issued the ‘Guidance Note on Auditing Standards (CSAS-1 to CSAS-4)’, which provides explanations, procedures and other practical aspects w.r.t. various provisions contained in ICSI Auditing Standards (CSAS-1 to CSAS-4) in order to facilitate compliance thereof by the stakeholders.
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REGULATORY NEWS

Advisory to follow the ICAI Valuation Standards 2018 while conducting any type of Valuation Engagement to ensure uniformity and transparency – 21 December 2020

The Institute of Chartered Accountants of India (ICAI) has issued an advisory, wherein it has advised its members to follow the ICAI Valuation Standards, 2018, while conducting any type of Valuation Engagement to ensure uniformity and transparency.
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Further extension of applicability of CARO 2020 – 17 December 2020

The Ministry of Corporate Affairs (MCA) vide its notification dated 17 December 2020, has further deferred the applicability of Companies (Auditor’s Report) Order, 2020 (CARO 2020) by one year, which means that now CARO 2020 would be applicable for the financial years commencing on or after the 1 April 2021.
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Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020 – 18 December 2020

The MCA has issued the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020, wherein the following changes have been made in sub-rule (4) of Rule 6 ‘Compliances required by a person eligible and willing to be appointed as an independent director’:

• The time period within which an individual whose name is so included in the data bank, has to pass an online proficiency self-assessment test has been increased from 1 year to 2 years;
• Individual shall not be required to pass the online proficiency self-assessment test if he has served for a total period of not less than three years:

1. as director or key managerial personnel in certain class of companies as on the date of inclusion of his name in the databank;
2. in the pay scale of Director or above in the MCA or the Ministry of Finance or Ministry of Commerce and Industry or the Ministry of Heavy Industries and Public Enterprises and having experience in handling the matters relating to corporate laws or securities laws or economic laws
3. in the pay scale of Chief General Manager or above in the Securities and Exchange Board or the Reserve Bank of India or the Insurance Regulatory and Development Authority of India or the Pension Fund Regulatory and Development Authority and having experience in handling the matters relating to corporate laws or securities laws or economic laws.

These Rules shall come into force w.e.f. 18 December 2020.
 
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Companies (Compromises, Arrangement and Amalgamation) Second Amendment Rules, 2020 – 18 December 2020

The MCA has also issued the Companies (Compromises, Arrangement and Amalgamation) Second Amendment Rules 2020, wherein the following changes have been made:

• a new definition of ‘corporate action’ has been inserted, which means any action taken by the company relating to transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares and right issue to the acquirer;
• After Rule 26, a new Rule 26A ‘Purchase of minority shareholding held in demat form’ has been inserted.

These Rules shall come into force w.e.f. 18 December 2020.

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Mandatory validation of UDIN in all Income tax forms – 26 November 2020

The Central Board of Direct Taxes has issued a press release, wherein it has notified that Income-tax e-filing portal has completed its integration with the ICAI portal for validation of Unique Document Identification Number (UDIN) generated from ICAI portal by the Chartered Accountants for documents certified/attested by them. With this system level integration, UDIN provided for the audit reports/certificates submitted by the Chartered Accountants in the e-filing portal shall be validated online with the ICAI.

However, if for any reason a Chartered Accountant is not able to generate UDIN before submission of audit report/certificate, the Income-tax e-filing portal permits such submission, subject to the Chartered Accountant updating the UDIN generated for the form within 15 calendar days from the date of form submission in the Income- tax e-filing portal, else the audit report/certificate uploaded shall be treated as invalid.
For more information, click here.