The weekly messenger | Edition 24.20

Accounting News

ICAI issues Technical Guide on Accounting for Expenditure on CSR Activities and withdraws the GN on Accounting for Expenditure on CSR Activities – 6 July 2020

The Corporate Social Responsibility (CSR) Committee of the ICAI has issued the ‘Technical Guide on Accounting for Expenditure on Corporate Social Responsibility Activities’, thereby replacing the erstwhile ‘Guidance Note (GN) on Accounting for Expenditure on CSR Activities issued on 15 May 2015’. The purpose of issuing this guide is to provide detailed guidance on the accounting aspects of CSR spends and its presentation in the Financial Statement.
 
The new technical guide also covers the position after the amendments made to Section 135 by Companies (Amendment) Ordinance 2020, treatment for donations made in kind and treatment of excess expenditure than that specified under law.
 
For more information, click here. 

Auditing News

GN on CARO, 2020 – 1 July 2020

The Ministry of Corporate Affairs (MCA) vide its notification dated 25 February 2020, had issued the revised version of Companies (Auditor’s Report) Order (CARO) i.e. CARO 2020, which was initially applicable for statutory audits of financial statements for periods beginning on or after 1 April 2019. Subsequently, the applicability of CARO 2020 got deferred by one year and now the same would be applicable for statutory audits of financial statements for periods beginning on or after 1 April 2020.
 
Now, in order to enable the auditors to comply with the reporting requirements of CARO 2020, the ICAI has issued the GN on CARO 2020 which inter-alia includes:

• General Provisions Regarding Auditor’s Report;
• Applicability of the Order;
• Auditor's Report to Contain Matters Specified in Paragraphs 3 and 4 of the Order;
• Period of Compliance;
• Matters to be Included in the Auditor’s Report;
• Comments on Forms of Report;
• Clause by clause comparison of the reporting requirements of the Order and the erstwhile CARO 2016;
• Illustrative Checklist on CARO 2020.

For more information click here.

Compendium of Auditing Guidance issued by ICAI on Various Aspects amid COVID-19 – 1 July 2020

Recently, the ICAI had issued guidance on various aspects relating to auditing such as going concern, physical inventory verification, auditor’s reporting and subsequent events, in order to help its members in conducting audits amid COVID-19.

Now, in order to provide the members with a one stop source of reference of auditing guidance issued with respect to COVID-19, the ICAI has decided to publish the compendium of the same i.e. ‘Compendium of Auditing Guidance Issued by Auditing and Assurance Standards Board on Various Aspects amid COVID-19’.
 
For more information, click here.

Applicability of the revised edition of Code of Ethics – 1 July 2020

The ICAI has issued an announcement, stating that the Revised 12th edition of Code of Ethics shall come into effect w.e.f. 1 July 2020, except for the following provisions of Volume-I, which have been deferred till further notification:

• Responding to Non-Compliance of Laws and Regulations (NOCLAR)
  [Sections 260 and 360]
• Fees - Relative Size
  [Paragraphs 410.3 to R410.6]
• Taxation Services to Audit Clients
  [Subsection 604]

For more information, click here. 

Regulatory News

Valuation Professionals’ Insight – Series 4 – 2 July 2020

The Valuation Standards Board together with the ICAI Registered Valuers Organisation has brought out the fourth Series of the publication ‘Valuation: Professionals’ Insights’ covering the articles on the impact of global crisis and consideration for valuers and some practical insights on valuation. The publication is a compilation of diverse valuation topics authored by leaders in the profession. The objective of the publication is to make available the knowledge of the valuers of the professional practices followed by them in the field of valuation.

For more information, click here.

Publication - Judicial Pronouncements under Insolvency and Bankruptcy Code, 2016 (Series 3) – 4 July 2020

The Committee on Insolvency & Bankruptcy Code of the ICAI together with the Indian Institute of Insolvency Professionals of ICAI has issued the publication on ‘Judicial Pronouncements under Insolvency and Bankruptcy Code, 2016 (Series 3)’, in order to help professionals understand the application and intricacies of the provisions of the Code.
 
This series of the publication like the earlier two series covers important Case Analysis based on the decisions taken by Supreme Court, High Courts, NCLAT and NCLT on issues under the Code.
 
For more information, click here.
 
The Central Government has amended the Companies (Removal of Names of Companies from the Register of Companies) Rules 2016 with the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2020, wherein the following changes have been made:

• a proviso has been inserted after Rule 4(3)(i), which states that the application for removal of name of company to be made in Form STK 2, shall be accompanied by an indemnity bond duly notarized by every director in Form STK 3, which is as follows:
• "Provided that in case of a - (a) Government company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments; or (b) subsidiary of a Government company, referred to in clause (a), in which the entire paid up share capital is held by that Government company; a duly notarised indemnity bond in Form STK-3A shall be given by an authorised representative, not below the rank of Under Secretary or its equivalent, in the administrative Ministry or Department of the Government of India or the State Government, as the case may be, on behalf of the company".
• After form STK 3, the new form STK 3A has been inserted.

For more information click here.

Extension of timeline for finalization of audited accounts – 6 July 2020

As per para 18(2) of the ‘Master Direction on Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’ and ‘Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016’, every applicable Non-Banking Financial Company (NBFC) shall finalise its balance sheet within a period of 3 months from the date to which it pertains.

Considering the current situation, the Reserve Bank of India has decided that every applicable NBFC shall finalise its balance sheet within a period of 3 months from the date to which it pertains or any date as notified by the Securities and Exchange Board of India for submission of financial results by listed entities.
 
For more information, click here.