ACCOUNTING AND AUDITING ISSUE S

IN NEW COMPANIES ACT

2013

INTRODUCTION

New companies bill was approved by lok sabha on 18th,december, 2012 and was approved by rajya sabha on 8thaugust 2013.

Bill has 29 chapters, 470 clause ,as against 658 sections in the existing companies act,1956 and 7 schedules.

NEW COMPANIES BILL 2013

470 CLAUSES 7 SCHEDULES 29 CHAPTERS

HIGHLIGHTS OF NEW BILL, 2013

There is a Uniform financial year for all the companies i.e. April to March.

now, Private companies now have 200 members.

the Provisions for re-opening or re-casting of the books of accounts of a company provided.

All securities are rule by bill only. Now, the companies prospectus is now

more elaborated.

There is no provision for issue of shares on discount (except issue of sweet equity shares).

New defination to Nidhi company was ordered.

Companies can accept deposits only from its members after seeking approved of its shareholders at a general meeting.

Postal Ballot to be applicable on all Companies, whether listed or not.

Financial Statements shall include Balance Sheet, Profit & Loss Account and Cash Flow Statements.

Strict advice to authority to use accounting standards .

Central govt. is not allow to enter into party transactions.

New Bill forbids insider to buying and selling of securities of the company.

Now, Companies have maximum of 15 directors.

A director of company can participate in a board meeting through video conferencing or other audio visual(AV) modes.

Loans can be given to a Director without seeking approval of the Central Government.

The Bill specify the functions of a company secretary.

Object Clause of MOA not need to be divided into Main, Ancillary and Other Objects Clause.

Any document required to be filed under this Bill, filed within specific time and have to be filed within a period of 270 days on payment of additional fees.

First annual general meeting(AGM) of a company shall be held within nine months from the ending of first financial year .

New concept of one person company introduced.

All the authority advise to use Auditing Standards and Accounting Standards.

At least one director should be a person who has stayed in India for a period, not less than 182 days in the last calendar year.

At least one-third number of directors of a listed public company should be independent directors.

All the Companies accept deposits only from its members after seeking approval of its shareholders at AGM.

Every company is required at its first annual general meeting (AGM) to appoint an individual or a firm as an auditor.

The National Advisory Committee(NAC) of Accounting Standards renamed as The National Financial Reporting Authority(NFRA).

No central government approval required for entering into any party transactions.

DIFFERENCE BETWEEN

COMPANIES ACT,1956 & COMPANIES

ACT,2013

DIFFERENCE BETWEEN COMPANIES ACT,1956 & COMPANIES BILL 2013

BASES COMPANIES ACT ,1956

NEW COMPANIES

ACT,2013 DIRECTORS Includes any person

occupying the post of directors.

Directors are appointed by board of company.

FINANCIAL STATEMENTS

1.Balance sheet made at the end of financial year2.P/L a/c or in case of NPO, an income & expenditure a/c for financial year are made.

1.Balance sheet made at the end of financial year2.A statements changes in equity3.And cash flow statements also made

FREE RESERVES It means that all reserves are created out of profits and share premiums a/c but it does not include reserves make out of revaluation of assets.

1.Share premium a/c does not form a part 2. Cr. Balance in statements of P/L a/c is not free reserves now.

NET WORTH It means the sum of all paid-up capital and free reserves after subtract all expenses.

Its says that only paid-up capital, share premium and reserves are make out of profits will handle as net worth

SMALL COMPANIES

Not defined 1.Paid up share capital of company should not exceed 50 lakhs rupees2.And the turnover as per last P/L a/c does not exceed 2 crore rupees.

DORMANT COMPANY

Not defined a dormant company is a company in which there is no significant a/c statements during accounting period

PRIVATE COMPANY

maximum numbers of members does not exceed 50

maximum numbers of members does not exceed 200

ONE PERSON COMPANY

Not defined Most exclusive rights to OPC’s are as follows:-1.Financial statements not include cash flow statements.2.No requirements of holding an annual general meeting(AGM) 3. There are minimum numbers of directors.

ISSUE OF BONUS SHARES

Not defined Private companies are not allow to issue bonus shares.

INCREASE ACCOUNTATBILITY OF AUDITORS

Penalties were provided for violation of section 227(dealing with powers and duties of auditors) and section 229 (dealing with signature of audit report).with small penalties of fine up to Rs. 10000

Penalties significantly enhanced-fine not less than 25000 but extendable to Rs. 5 lakhs. andImprisonment up to one year and fine in case there is an intention to deceive the company shareholders

MEMORANDUM OF ASSOCIATION(MOA)

MOA should have Clauses such as Name, state, main objects, other objects, subscription clause.

Now ,MOA not have other objects, and all the things remains the same.

E-GOVERNANCE Not defined Now, Maintenance of documents by companies in electronic form

WOMEN DIRECTOR

Not exist As per new bill every company should have 1 women director.

ISSUE OF DEBENTURES WITH CONVERSION OPTION

No such requirement

existed

Needs special resolution of members for the issue of debentures with conversion option wholly or partly.

MAXIMUM NUMBER OF DIRECTOR

There should be max. 12 and beyond 12 required before Central Govt.Approval.

provides for max 15 and beyond 15 by passing a special resolution

MAINTAINENCE OF BOOKS OF ACCOUNTS

Books are keep for the period of 8 years

Where investigation is ordered then they may direct the books for longer period of time.

CONCLUSION

The best thing about the new Companies bill is that it is simple, with great limpid of AIM and FUNCTION. It replaces the old law with over 700 dispute clauses with something

shorter and sweeter.470 clauses and all of it in 309 pages. Not bad for something that will govern all listed and unlisted companies in the country. Even so, a new law does not

itself become a great law, as success depends on implementation and execution.

THANK YOUPRESENTERS:SACHIN RAJSAHIL KHANADITYA NIMIKSHADISHA