Regardless of the size or sector of a business, each company with private limited company registration is required to undergo a financial examination conducted by certified financial professionals before the end of the financial year. This obligation, which involves selecting a financial examiner, is crucial for meeting regulatory standards. The chosen examiner must carefully inspect the company’s records, create a report on the examination, and compile audited financial statements. Afterward, these documents must be presented to the Registrar of Companies. In this blog we outline the particular regulatory procedures overseen by the MCA for accounts and audit for private limited companies.
Regulations of MCA for Accounts and Audit
The regulations given by MCA for accounts and audit are as follow:
Appointment of Auditor in Pvt Ltd Company
In a Private Limited Company as per regulations of MCA for accounts and audit, the appointment of an auditor is a crucial process governed by Mandatory rules dictate the appointment of an auditor for a fixed five-year term. Form ADT-1 formalises this appointment, and it is crucial to designate the initial auditor within a month from the company’s incorporation date.
Financial Review by Chartered Accountant
For every business entity, a required financial review by a chartered accountant is essential. This involves the examination of financial accounts at the end of the fiscal year. The appointed auditor is responsible for creating an audit report and evaluating financial statements, with the duty to submit these documents to the Registrar. Adhering to these procedures is vital for regulatory compliance and financial openness.
Yearly Report Submission (Form MGT-7)
Private Limited Companies desires to publish their annual record using Form MGT-7 within 60 days after the Annual General Meeting (AGM). The annual record covers the organisation’s comprehensive financial activities for the duration from April 1st to March 31st.
Recording Financial Details (Form AOC-4)
Following regulatory suggestions, businesses have to file financial information using Form AOC-4. This documentation includes the balance sheet, income and loss account, and director’s report. The submission closing date is 30 days after the Annual General Meeting, making sure well timed and clean reporting of the organisation’s financial performance.
Conducting Annual General Meeting and Compiling Directors’ Report
As per regulations given by MCA for accounts and audit, every Private Limited Company is obligated to maintain an Annual General Meeting each scheduled year. All corporations must make sure that there AGM takes place inside six months earlier than the conclusion of the monetary year.
The Directors’ Reports is a essential factor of regulatory compliance for company. These reports have to be carefully compiled, imparting all essential records as in keeping with the necessities mentioned in Section 134. This ensures transparency and compliance with obligations regarding corporate reporting.
Annual RoC Filings for Pvt Ltd Company
Private Limited Companies have a duty to publish annual account and returns, along with records about executives and shareholders, to the Registrar of Companies annually. These compliance arise in every 12 months and necessitate the submission of precise paperwork:
1. Form MGT-7 (Annual Return):
Private organisations have been required to submit their annual returns within 60 days of the Annual General Meeting. The encompasses the time from April 1st to March thirty first.
2. Form AOC-4 (Financial Statements):
Details of the Profit and Loss Account and Director Report need to be supplied in Form AOC-4 within 30 days of the AGM.
3. Directors’ Report:
This financial document, submitted before the conclusion of the financial year, mandates directors to disclose their positions in other organisations and provide other relevant details in hard copy.
Income Tax Compliances
Private Limited Companies are obligated to observe various income tax compliances, including:
1. Computation and Quarterly Payment of Advance Tax:
Quarterly computation and payment of advance tax are mandatory.
2. Income Tax Returns Documentation:
Documentation and submission of income tax returns at a rate of 30%, plus cess.
3. Tax Audit:
Compulsory if the business turnover or gross revenue exceeds Rs. 1 crore in the previous year.
4. Tax Audit Report Filing:
Filing of the tax audit report is a requisite.
Maintenance of Statutory Registers and Records:
As per regulations given by MCA for accounts and audit, private Limited Companies must maintain diverse statutory registers and records in accordance with company law. This includes registers of shares, directors, and members. Additionally, merger documents, board meeting resolutions, minutes of board meetings, and annual general meetings, among others, must be preserved. These records should be housed at the registered office and be available for scrutiny by members during business hours. Moreover, the books of account for at least the past eight fiscal years should be safeguarded and maintained.
Failure to Adhere to Companies Act Requirements
Not adherence to the regulations given by MCA for accounts and audit can have significant repercussions for both the company and its officers. The consequences of non-compliance may include:
1. Monetary Penalties:
The company and each responsible official may incur financial penalties for breaching regulatory provisions in the Companies Act.
2. Legal Consequences:
Individuals found in default may be liable to legal actions, potentially facing imprisonment as a result of non-compliance and being held responsible for statutory violations.
3. Penalties for Delayed Filings by MCA:
In case where there is delays in document filing, the Ministry of Corporate Affairs may impose even more additional penalty.
Final Thoughts
Private Limited Companies must have to prioritise adherence to regulations given by MCA for accounts and audit. MCA mandated of the appointment of auditors through formal procedures, requiring detailed documentation of annual returns and financial statements. Strict timelines, such as the 60-day limit for the Form MGT-7 and the 30-day limit for Form AOC-4, emphasising the critical importance of prompt compliance. Directors’ reports should be comprehensive, and compliance with income tax regulations, including advance tax computation and tax audit, is essential.
