An overview of the ICAI clarification on maintenance of books of accounts under Companies Rules
ICAI announced clarification on 16.8.22 wrt maintenance of books of accounts under Companies Rules
- MCA has stepped up the record keeping requirements of businesses in a bid to make sure that various documents and records are readily available for the authorities to check any time.
- The Companies (Accounts) Fourth Amendment Rules, 2022 amended that the books of account and other relevant books and papers maintained in electronic mode should remain accessible in India “at all times”.
- The latest amendment says that the back up of the books of account and other documents kept in electronic mode, including at any place outside India have to be kept in servers physically located in India “on a daily basis.” The earlier requirement was to maintain them in servers in India on a periodic basis.
- Also, companies have to give more information about the service provider that maintains the books of accounts and other documents in electronic mode. The amendment says that where the service provider is located outside India, the name and address of the person in control of the books of account and other books and papers in India has to be reported. This has to be reported to the registrar of companies on an annual basis at the time of filing of financial statements: (must be AOC 4)
- The idea seems to make sure that the financial and key operational details of businesses are available for the authorities at any given point in time. This reflects the increased monitoring that regulatory agencies are undertaking for better compliance.