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CA Final Nov 21 Audit Amendmements
CA Final Nov 21 Audit Amendmements
CA Final Nov 21 Audit Amendmements
in
Company Audit
Amendments in Definition of Small Company
Sec 2 (85) Amended on 1st April 21
Limits Changed
Paid up capital limit of 50 lakhs is increased to 2 crores
Previous year turnover limit of Rs 2 crore is increased to 20 crores
Accounting Under these rules CG has issued new requirement with respect to accounting
Software with software, which is applicable from 1st April 2022
Audit Trail
Proviso added in rule.
Provided that for the financial year commencing on or after the 1st day of April,
2022, every company which uses accounting software for maintaining its books
of account, shall use only such accounting software which has a
feature of recording audit trail of each and every transaction (Edit
History of Each Transaction),
creating an edit log of each change made in books of account along
with the date (Log showing changes made to books of accounts) when
such changes were made and
ensuring that the audit trail (above 2 things) cannot be disabled.
Sec 129 (1) Amended on 24th March 21
& Schedule III
Schedule III is issued under Sec 129 (1)
Changes are introduced in schedule III, on 24th March, these changes are not core
part of audit syllabus, changes related to disclosure of funds given and funds
received are relevant for audit.
Sec 134 (3) Amended on 24th March 21
&
Company Sec 134 (3) provides matters to be specified in BOD report. Clause (q) gives
Account Rules power to central government to specify additional matters in rules.
Additional Under these rules CG has issued 2 additional requirements to be specified in BOD
Reporting report.
Requirements
in BOD Report (xi) the details of
o application made or any proceeding pending under the
Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the
year
o along with their status as at the end of the financial year.
Rule 11 Sec 143 (3) (j) gives power to central government to prescribe additional matters
Amendment to be specified in audit report
Under above provision Rule 11 of Company Audit & Auditor’s Rule 2014 is issued
by CG. Earlier there were 3 points now it has increased to 6 points
Bank Audit
Above changes as given in company audit are relevant for banking companies also under bank
audit chapter.
Specified Date
For assesses not requiring audit, it is 31st July
For assesses requiring audit it is 31st Oct
These dates get extended by government as per situations.
10th Oct – Payment to the tune of Rs 30 lakhs was made from above
expenses.
As per amendment such revised audit report can be filed under Rule 6G
on income tax portal
So assesses use to delay returns & tax audit report so that they can
arrange funds, make payments, take benefits and then file returns. This
use to lead to last minute rush, now such things wont happen.
If Answer is No
If the assessee has not opted for any concessional rates as provided
under the sections 115BA, 115BAA, 115BAB, 115BAC and 115BAD, of
the Act, then, the tax auditor is not required to take any further steps
and no further audit procedure is required to be followed. The answer
to such question as per the clause in such case can be given as “No” only.
If Answer is Yes
However, if the assessee informs that it has opted for the confessional
rate of taxation as per the provisions of sections 115BA, 115BAA,
115BAB, 115BAC and 115BAD of the Act, then the audit approach is
required to be modified.
Under Sec 43CA (Transfer of Business Asset) & Sec 50C (Transfer of
Capital Asset), if consideration goes below stamp act value then also we
will deem stamp act as consideration.
But such deeming fiction will apply only if stamp act value is exceeding
110% of consideration. So difference should be more than 10% of
consideration.
◊ From 1st April 21 rate was changed to 10% (Finance Act 2020) –
Finance Act 2020 is applicable for May & Nov 21 Exams
When these sections get applicable first time, there can be situation
where unabsorbed additional depreciation may be remaining
outstanding, assessee will not be able to take its setoff in future, to give
relief to assessee, such unabsorbed additional depreciation should be
added to block of asset. So that deduction is received over period of
time.
Clause 32 In this clause sub clause (a) we give details related to losses and unabsorbed
depreciation.
As certain specified losses and unabsorbed additional depreciation is not allowed
as deduction, such balances should be removed and such removal should be
shown
Example Suppose Co-Operative society has opted for reduced taxation under Sec
115BAD. In first year, they had accumulated unabsorbed losses of 50 lakhs and
accumulated unabsorbed depreciation of 30 lakhs. Out of 50 lakhs suppose 10
lakhs is of not allowed category and in 30 lakhs there is unabsorbed additional
depreciation of 5 lakhs which is again of not allowed category.
CA Ravi Taori Auditguru.in
Now things which are not allowed should be removed, 10 lakhs should be shown
in Column 5 above and 5 lakhs should be shown in column 6. Further unabsorbed
additional depreciation which is not allowed should be added back to WDV under
clause 18
Clause 36 Omitted