MCA Clarification on Applicability of Companies Act 2013 on Auditor’s Reports

MCA Clarification on Applicability of Companies Act 2013 reg. Auditor’s Reports of FY 2014-15

MCA has clarified that Auditor’s report pertaining to any financial year commencing on or before 31st march 2014, would be in accordance with the Companies Act, 1956 even if financial year ends after 1st April 2014, as under:

MCA General Circular 8/2014 dt. 4th April, 2014

Sub.: Commencement of provisions of the Companies Act 2013 with regard to maintenance of books of accounts and preparations/adoption/filing of financial statements, auditor’s report, Board’s report and attachments to such statements and reports- Applicability with regard to relevant financial Year

A number of provisions of the Companies Act, 2013 including those relating to maintenance of books of account, preparation, adoption & filing of financial statements (and documents required to be attached thereto), Auditors reports and the Board of Directors report (Board’s report) have been brought into force with effect from 1st April, 2014. Provisions of Schedule II (Useful lives to compute depreciation) and Schedule III (Format of financial statements) have also been brought into force from that date. The relevant Rules pertaining to these provisions have also been notified, placed on the website of the Ministry and have come into force from the same date.

The Ministry has received requests for clarification with regard to the relevant financial year with effect from which such provisions of the new Act relating to maintenance of books of account, preparation, adoption and filing of financial statements (and attachments thereto), auditors report and Board’s report will be applicable.

Although the position in this behalf is quite clear, to make things absolutely clear it is hereby notified that the financial statements (and documents required to be attached thereto), auditors report and Board’s report in respect of financial years that commenced earlier than 1st April, 2014 shall be governed by the relevant provisions/ Schedules/ rules of the Companies Act, 1956 and that in respect of financial years commencing on or after 1st April, 2014, the provisions of the new Act (i.e. Companies Act, 2013) shall apply.

MCA Clarification vide General Circular 8/2014

In this regard, it may be noted that the MCA, on 26th March 2014, has notified applicability of a majority of the remaining sections of the Companies Act, 2013, including sections 139 to 148, relating to audits and auditors. Said provisions of the Companies Act, 2013 are stated to be effective from 1st April, 2014.  A confusion has come up  as to whether any auditor’s report of a company being signed on or after 1st April, 2014 would be in accordance with the requirements of section 143 of the Companies Act, 2013?

However, it is clear from MCA’s above Circular that the auditor’s report of a company pertaining to any financial year commencing on or before 31st march 2014, would be in accordance with the requirements of the Companies Act, 1956 even if that financial year ends after 1st April 2014. For example, where the financial year of a company is 1st January 2014 to 31st December 2014, the statutory auditor’s report signed therefor would be in accordance with the requirements of the Companies Act, 1956.

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