SHORT SUMMARY
In this article, the author shall discuss a very famous issue of Company Secretaries that is in relation to Round Off. The question are followings:
- Whether round off figure can be mentioned in AOC-4?
- If round-off figures mentioned in AOC-4, whether it shall be considered as Compliance or non-compliance?
- If considered as noncompliance what are the consequences on the Professionals?
- Whether Attachment of round of financials are enough or actual figures financials are also required to attach?
PROVISION OF THE LAW
A. ROUND OFF
As per MCA notification dated 23 March 2021 in relation to amendment in Schedule III of Companies Act, 2013.
As per this amendment, Financial Statement of every Company include (Small, Non-Small, listed etc.) should be prepared in round off. It means, preparation of financial statement in actual figure are not allowed under Companies Act, 2013 from FY 2021-22.
Conclusion, from FY 2021-22 every year financial statement of all the Companies shall be prepared in round off nearest to Rs. 100 as per the total income of the Company.
I. Whether round off figure can be mentioned in AOC-4?
To answer this question, we must take help of the provisions of the Companies Act, 2013.
Screenshot of AOC-4
As mentioned in Note of AOC-4 "Figures appearing in the e-form should be entered in Absolute Rupees only."
Screenshot of AOC-4 Instruction Kit
As mentioned in above screensshot, company has to mention "Amount in Rupees" instead of amount in round off in e-form AOC-4.
Conclusion
On the basis of above two screenshots one can opine that, figures in AOC-4 should be actual figures in Rupees instead of Round off Figure.
II. If round off figures mentioned in AOC-4, whether it shall be considered as Compliance or non-compliance
To answer this question, first we should study question no. 1. After studying question no 1 it is clear that figures in AOC-4 should be in Actual Rupees.
Certification by Director
As mentioned in above screens shot, Director is certifying that whatever is mentioned in the form is correct. However, one can opine that it is not correctly certified as it is not as per the guidelines of the form as mentioned in question no. 1. Therefore, it can be opined it is non compliance.
Certification by Professional
As mentioned in above screens shot, professional is certifying the correctness of the form. However, one can opine that it is not correctly certified as it is not as per the guidelines of the form as mentioned in question no. 1. Therefore, it can be opined it is non compliance.
Conclusion
Based on above two screenshots one can opine that, mentioning of figures in round-off in AOC-4 can be considered as non-compliance. Another reason there is no option to select the round off denomination. Therefore, actual figures in rupees preferable.
III. What are the consequences on professionals in case of above-mentioned non-compliance?
As mentioned at the place of certification of AOC-4 that professional shall be liable for action under Section 448 of the Companies Act, 2013 for wrong certification, if any found at any stage.
Provision of Section 448
Save as otherwise provided in this Act, if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,-
(a) which is false in any material particulars, knowing it to be false; or (b) which omits any material fact, knowing it to be material, he shall be liable under section 447.
Screenshot of one Latest Resubmission of AOC-4
As per the screenshot, ROC has sent an AOC-4 in resubmission as the Company has mentioned round-off figures in AOC-4 instead of Actual Figures and ROC asked why action should not take place u/s 448 of Companies Act, 2013.
Conclusion
Based on above screenshots and combined reading of Section 448 read with Rule 8(9) & 8(10) of the Companies (Registration Offices and Fees) Rules, 2014 director and professional are liable for punishment for such non-compliance.
Whether Attachment of round of financials are enough or actual figures financials are also required to attach?
The answer of Question No 4 we will mention in next article of the series.
Conclusion
At the outset after reading the above questions, Screenshot and the resubmission remarks given by the Hon'ble ROC, it can be opined that it is mandatory from the FY 2021-22 to mention Actual Figures in Rupees in e-form AOC-4 irrespective of the Fact is that Financial Statements are mandatory to prepare in Round off Figures.
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