Companies (Accounts) Second Amendment Rules, 2022

The Ministry of Corporate Affairs has recently notified the Companies (Accounts) Second Amendment Rules, 2022 vide a Notification dated 31^st March 2022. With this amendment, the MCA has extended the implementation of Audit Trail software to a financial year commencing on or after April 1, 2023, earlier such provision was applicable from April 01, 2022. Also, the timeline for filing web form CSR-2 has also been extended to May 31, 2022, earlier, such form was to be filed latest by March 31, 2022.

Form CSR-2 Due Date Extension

The MCA vide its notification dated 11th February 2022 had introduced form CSR-2 by inserting sub-rule (1B) in rule 12 of the Companies (Accounts) Rules, 2014. It was provided that for the preceding F.Y. (2020-21), form CSR-2 shall be filed on or before 31st March 2022, after filing form AOC-4. However, due to technical difficulties being faced by the stakeholders, the MCA has extended the due date by 2 months by notifying Companies (Accounts) Second Amendment Rules, 2022.

Requirement for filing form CSR-2

MCA had introduced the requirement for filing form CSR-2 for each company which is covered under section 135(1) and required to conduct CSR activities as per Company law. As per section 135 of the Companies Act, 2013, Every company having a net worth of above Rs.500 crore or turnover of Rs.1000 crore or more or a net profit of rupees 5 crores or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

The Due Date for filing CSR-2

MCA vide its notification dated 31^st March 2022 announced that Form CSR-2 shall be filed separately on or before 31st May 2022 for the preceding financial year (2020-2021) after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS). From the above, we can interpret that the due date of CSR-form 2 is:

For the financial year 2020-21, the Form CSR-2 is to be filed separately on or before 31st May 2022
For the financial year 2021-22 onwards, the Form CSR-2 is to be filed as an addendum to form AOC-4 (due date of AOC-4)

MCA Form CSR-2 – Report on the Corporate Social Responsibility

Extension of Applicability of Provisions of Audit Trail

The Ministry of Corporate Affairs vides its notification dated 24th March 2021 had introduced the concept of audit trails by inserting a proviso to rule 3(1) of the Companies (Accounts) Rules, 2014. The applicability was deferred by 1 year by amending the same vide Companies (Accounts) Second Amendment Rules, 2021. The new date of applicability was 1st April 2022. Yet again, the MCA has amended the proviso vide Companies (Accounts) Second Amendment Rules, 2022, and has deferred the applicability by one more year. Hence the provision of audit trail is now applicable with effect from1st April 2023.

Audit Trail

The objective of mandating the requirement of an audit trail feature in accounting software was to mitigate the chances of fraudulent transactions or manipulation in the books of accounts of the company and to bring in more transparency. An audit trail is a step-by-step sequential record that provides evidence of the documented history of financial transactions to its source. An auditor can trace every step of, the financial data of a particular transaction right from the general ledger to its source document with the help of the audit trail. An audit trail encourages the user for better accountability and compliance, protects against fraud, improves security, and above all, the right information reaches the public domain. For more details on Audit Trail, click here The official notification pertaining to the Companies (Accounts) Second Amendment Rules, 2022 is attached here for reference:

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