The weekly messenger | Edition 41.19

Accounting News

ITFG Clarification Bulletin 22 and 23 – 14 October 2019 and 26 October 2019

The Ind AS Technical Facilitation Group (ITFG) of Ind AS (IFRS) Implementation Committee has been constituted to provide clarification on various issues related to applicability and/or implementation of Ind AS under the Companies (Ind AS) Rules, 2015, raised by preparers, users and other stakeholders. Recently, ITFG has issued the twenty second and twenty third set of clarifications. These bulletins contain clarifications on following significant matters:

• Whether the exemption for short term leases as per Ind AS 116 can be claimed in different scenarios;
• Accounting Treatment of lease rental income in the hands of lessor;
• Accounting Treatment of rights for extraction of limestone by cement manufacturer;
• Whether the distribution of gifts by pharmaceutical company to doctors would be covered by Ind AS 115, ‘Revenue from Contracts with Customers’;
• Accounting Treatment of Interest on loan which has been waived by the director during the current year without amending the loan agreement;
• Whether the lower tax rate specified in Taxation Laws (Amendment) Ordinance, 2019 would be applicable for presenting interim financial statements as of 30 September 2019;
• Accounting treatment of difference in amount of deferred tax assets and liabilities on account of adoption of lower tax rate as per Taxation Laws (Amendment) Ordinance, 2019.

For ITFG Clarification Bulletin 22, click here.

For ITFG Clarification Bulletin 23, click here.

Regulatory News

Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Amendment Rules, 2019 – 15 October 2019

The Central Government (CG) has amended the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015 with the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Amendment Rules, 2019, wherein the CG has substituted the erstwhile Annexure III i.e. the XBRL Taxonomy for the purpose of furnishing cost audit report and other documents by the company with a new Annexure III.

These Rules shall come into force w.e.f. 15 October 2019.

For more information, click here.

Companies (Cost Records and Audit) Amendment Rules, 2019 – 15 October 2019

The CG has amended the Companies (Cost Records and Audit) Rules, 2014 with the Companies (Cost Records and Audit) Amendment Rules, 2019, wherein the CG has made the following changes:

• It has been clarified that the companies who have already filed their Cost Audit Report in form CRA-4 for the F.Y. 2018 -19 before the publication of the notification i.e. 15 October 2019 are not required to file their Cost Audit Report again for the said financial year;
• Certain administrative changes have been made in the following forms: 

1. Form CRA-1 ‘Particulars relating to the Items of Costs to be included in the Books of Accounts’;
2. Form CRA -3, ‘Form of the Cost Audit Report’.

These Rules shall come into force w.e.f. 1 April 2018.

For more information, click here.

Companies (Incorporation) Eighth Amendment Rules, 2019 – 18 October 2019

The CG has amended the Companies (Incorporation) Rules, 2014 with the Companies (Incorporation) Eighth Amendment Rules, 2019, wherein the CG has made certain administrative changes in the following rules:

• Rule 8A, ‘Undesirable Names’;
• Rule 25A, ‘Active Company Tagging Identities and Verification (ACTIVE)’;
• Rule 28, ‘Shifting of Registered Office Within the Same State’.

These Rules shall come into force w.e.f. 16 October 2019.

For more information, click here.

Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 – 22 October 2019

The CG has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 with the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, wherein it has substituted the erstwhile Rule 6 ‘Creation and Maintenance of Databank of Persons Offering to Become Independent Directors’ with the new Rule 6 ‘Compliances required by a person eligible and willing to be appointed as an independent director’, which includes the following provisions:

• Every individual who has been appointed or who intends to get appointed as an independent director in a company shall apply online to the institute for inclusion of his/her name in the databank for a period of one year or five years or for his life time within specified time limits;
• Every individual whose name has been included in the data bank, shall file an application for further renewal within thirty days from the date of expiry of the specified period;
• Every individual whose name is so included in the data bank shall pass an online proficiency self – assessment test conducted by the institute within a period of one year from the date of inclusion of his name in the data bank etc.

These rules shall come into force with effect from 1 December 2019.

For more information, click here.

Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 – 22 October 2019

The CG has issued the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 which inter – alia includes:

• Rule 1, ‘Short Title and Commencement’;
• Rule 2, ‘Definitions’;
• Rule 3, ‘Creation and Maintenance of data bank’;
• Rule 4, ‘Duties of the institute’;
• Rule 5, ‘Panel’.

These rules shall come into force with effect from 1 December 2019 except for Rule 2 and Rule 5.

For more information, click here.

Constitution of the Indian Institute of Corporate Affairs – 22 October 2019

The CG has notified the Indian Institute of Corporate Affairs (IICA) at Manesar (Haryana), as an institute to create and maintain a data bank containing names , addresses and qualifications of persons who are eligible and willing to act as independent directors, for the use of the company making the appointment of such directors, pursuant to Section 150 ‘Manner of Selection of Independent Directors and Maintenance of Databank of Independent Directors’ of the Companies Act, 2013.

The aforesaid notification shall come into force w.e.f. 1 December 2019.

For more information, click here.

Companies (Accounts) Amendment Rules, 2019 – 22 October 2019

The CG has amended the Companies (Accounts) Rules, 2014 with the Companies (Accounts) Amendment Rules, 2019, wherein a new clause (iiia) has been inserted in sub-rule (5) of Rule 8 ‘Matters to be included in Board’s Report’ which states that a Board Report shall also include “a statement regarding opinion of the Board with regard to integrity , expertise and experience (including the proficiency) of the independent directors appointed during the year.”

These rules shall come into force with effect from 1 December 2019.

For more information, click here.

Relaxation of additional fees and extension of last date of filing of CRA – 4 (cost audit report) for FY 2018-19 under the Companies Act 2013 – 25 October 2019

The Ministry of Corporate Affairs (MCA), pursuant to the pending deployment of Costing Taxonomy 2019 on MCA’s portal has decided to extend the last date of filing of Form CRA – 4 (Cost Audit Report) for all eligible companies for the F.Y. 2018-19, without payment of late fees till 31 December 2019.

For more information, click here.

Relaxation of additional fees and extension of last date of filing of forms MGT – 7 (Annual Return) and AOC – 4 (Financial Statement) under the Companies Act 2013 – 29 October 2019

The MCA, after considering the various requests received from various stakeholders seeking extension of time for filing of financial statements for the financial year ended 31 March 2019 on account of various factors, has decided to extend the due date for filing of e-forms AOC – 4, AOC - 4 (CFS), AOC – 4 XBRL up to 30 November 2019 and e form MGT – 7 up to 31 December 2019 without levy of additional fee.

For more information, click here.

Resignation of statutory auditors from listed entities and their material subsidiaries – 18 October 2019

The Securities and Exchange Board of India (SEBI) has issued a circular w.r.t. ‘Resignation of statutory auditors from listed entities and their material subsidiaries’, which provides for the listing of the various disclosures to be made by the listed entity as well as the auditor in case the auditor resigns from the listed entity and its material subsidiaries. Some of those disclosures are as follows:

• A new sub-regulation has been added in the SEBI (LODR) Regulations, 2015, which requires the listed entities to disclose detailed reasons in case of resignation of the auditor as soon as possible but not later than twenty-four hours of receipt of such reasons from the auditor;
• The listed entity is also required to obtain information from the Auditor in a prescribed format;
• The auditors are required to issue a limited review report even if they resign;
• The limited review report should provide adequate disclaimers, clearly specifying the reasons for the resignation etc.

For more information, click here.