The Ministry of Corporate Affairs (MCA), in an effort to bring greater transparency to filings, has changed the rules relating to companies and auditors.
According to a report by Activity area, the new rules will require companies to provide information relating to liquidity. The auditors will have to file a declaration relating to exempt deposits and cash.
The new rules, experts say, will expand liability from directors to auditors. They came into force on August 29.
“Now auditors will be in the front seat, where they will also have to confirm compliance with MCA guidelines. Previously, only companies and administrators had to confirm such compliance with the MCA; now auditors must also confirm compliance with the rules to the MCA. This applies to all companies, whether private or public,” said Manish Gupta, partner at IndusLaw, quoted in the BL report.
Form DPT-3 has been modified to strengthen auditor accountability, the report adds. DPT-3 requires the disclosure of a detailed classification of amounts from different lenders and depositors during the previous fiscal year.
The new disclosures would contain:
Opening balance information.
Loans during the year.
Refunds during the year.
Seniority of credits in progress for less than a year or 1 to 3 years or more than 3 years.
The closing balance.