A new rule introduced by the Ministry of Corporate Affairs (MCA) is forcing companies to reconcile their financial statements, creating challenges for many in filing the fiscal year 2022 accounts before the October 31 deadline.
Under this rule, companies must file their financial statements for fiscal 2022 onwards with rounded-off values. Since the previous year’s numbers weren’t rounded off, auditors have to now prepare two sets of reports for like-for-like comparison, said compliance experts.
The increased complexity, along with a few other factors, has prompted the professional governing body of company secretaries to write to the ministry, seeking a two-month extension to the deadline to file the statements.
According to experts, one of the key issues is filling of the AOC4 form, which must be filed with annual financial statements. The form still allows auditors to file statements with absolute numbers.
“When the professional tries to file the AOC 4 for FY21-22, which will include the financial statements for FY20-21 as well, there will be a mismatch between financial statement values for the same year due to difference between rounded and absolute values,” said Rishi Agarwal chief executive officer, Teamlease Regtech, which assists companies with compliance. “This can potentially be construed as misleading information by the RoC (Registrar of Companies) and leads to the requirement of two sets of financial statements for every company; one that is on a rounded-off basis and the other on an absolute-number basis.”
The Institute of Company Secretaries (ICSI) on October 11 wrote to the MCA requesting that the October 31 deadline be extended to December 31.
“With the MCA notification…made effective from April 1, 2021, mandating round-off of the figures appearing in the financial statements but absolute figures required to be filed in Form AOC-4, it is taking extra time for preparation of two different sets of audited forms,” the ICSI said in its representation.
It said also that the October 31 deadline was coinciding with the income tax deadlines and the festival season, and hence auditors were facing manpower challenges as well.
Compliance experts said this might be a one-time issue, since in their FY22 filings, companies would disclose the rounded-off values which would be directly comparable with the FY23 numbers. Hence, companies needn’t file two sets of financials from next time onwards.
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Seriously I feel ashamed to see ICSI is seeking an extension of deadline for filing Docs due on 31.10.2022 pointing out to this funny reason of round off of previous figures … I am a member of both the Institutes and I am not convinced this small additional requirement could be another reason for seeking extension of deadline date . This may show our own desire to invoke helplessness when we have been trained in such high complex subjects …
Ideally the financials to be audited by 1st September to give atleast 21 days clear notice to call the AGM (last date of which is 30th September). The hardship is the financials are audited post 30th September and than given to us as per the Tax Audit and Income Tax return last date (extended date), not as per the provisions of the Company Law.
If you are ashamed to see ICSI seeking of extension, when there are so many CA’s why dont they can complete the audit on timely manner. Overburdened are they and keep the minority CS professionals under pressure on the last moment.
MCA site must be banned and physical filings and courier be done..
only assistants are struggling to complete day and night according to requirement and new to all auditors and not easy to complete