Accounting and Auditing issue in New Companies Act 2013
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  • 1.  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.
  • 2. NEW COMPANIES BILL 2013 470 CLAUSES 7 SCHEDULES 29 CHAPTERS
  • 3.  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.
  • 4.  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.
  • 5.  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.
  • 6.  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.
  • 7.  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.
  • 8.  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.
  • 9.  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.
  • 10.  Every company is required at its first annual general meeting (AGM) to appoint an individual or a firm as an auditor.  The NationalAdvisory Committee(NAC) of Accounting Standards renamed asThe National Financial Reporting Authority(NFRA).  No central government approval required for entering into any party transactions.
  • 11. 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 year 2.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 year 2.A statements changes in equity 3.And cash flow statements also made
  • 12.  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.  NETWORTH 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
  • 13.  SMALL COMPANIES Not defined 1.Paid up share capital of company should not exceed 50 lakhs rupees 2.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
  • 14.  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.
  • 15.  ISSUEOF 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. and Imprisonment up to one year and fine in case there is an intention to deceive the company shareholders
  • 16.  MEMORANDUMOF 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
  • 17.  WOMEN DIRECTOR Not exist As per new bill every company should have 1 women director.  ISSUEOF DEBENTURESWITH CONVERSION OPTION No such requirement existed Needs special resolution of members for the issue of debentures with conversion option wholly or partly.
  • 18.  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  MAINTAINENCEOF 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.
  • 19. 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.