MCA tweaks rules about company deposits, enhances statutory auditors' role

The Ministry of Corporate Affairs (MCA), in a bid to bring greater transparency in deposits, has amended the rules related to companies and statutory auditors. 

 

According to a report by BusinessLine, the new rules will require companies to submit information related to liquid assets. The auditors will have to submit a declaration related to exempted deposits and liquid assets. 

 

The new rules, according to experts, will widen the responsibility of directors to the statutory auditors. They came into effect on August 29. 

 

"Now, auditors will be in the front seat, where they would also need to confirm compliance with MCA guidelines. Earlier, only companies and directors had to confirm such compliance with the MCA; now, auditors also have to confirm compliance with the deposit rules to the MCA. This applies to all companies, whether private or public," Manish Gupta, partner at IndusLaw was quoted as saying in the BL report. 

 

Form DPT-3 has been amended to enhance the responsibility of auditors, the report added. DPT-3 requires the disclosure of a detailed classification of amounts from different lenders and depositors during the previous financial year. 

 

The new disclosures would contain:

• Information pertaining to opening balance.
• Loans during the year.
• Repayments during the year.
• Ageing of loans outstanding for less than a year or 1 to 3 years or over 3 years.
• The closing balance.