MCA through notification dated 24 March 2021, issued the 'Companies (Audit and Auditors) Amendment Rules, 2021' which effectively amended 'Rule 11-Other Matters to be Included in Auditors Report' of the Companies (Audit and Auditors) Rule 2014.

Rule 11 prescribes the matters to be included in the auditor's report. Additional matters to be included in the audit report under 'Other Matters paragraph' are as below:

a. The management has represented that to the best of its knowledge and belief, other than as disclosed in the notes to the accounts:

i. No funds have been advanced or loaned or invested (either from borrowed funds, share premium or any other sources/kind of funds) by the company to/in any other person(s) or entity(ies), including foreign entities (intermediaries), with the understanding (recorded in writing or otherwise) that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

ii. No funds have been received by the company from any person(s) or entity(ies), including foreign entities (funding parties), with the understanding (recorded in writing or otherwise) that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

b. Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to its notice that has caused an auditor to believe that the representations under points (i) and (ii) above contain any material misstatement.

c. The dividend declared or paid during the year by the company is in compliance with Section 123 of the 2013 Act.

d. The company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility. Further, it has been operated throughout the year for all transactions recorded in the software, the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.

Further, the requirement relating to disclosures relating to specified bank notes has been done away with from Rule 11.

Effective date: The amendment for points (a) to (c) above is effective from 1 April 2021 and point (d) would be applicable from financial year commencing on or after 1 April 2022.

Source: MCA notification no G.S.R. 206(E) dated 24 March 2021 and MCA notification no G.S.R. 248(E) dated 1 April 202

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