After the big announcement of demonetization by Prime Minister Mr. Narendra Modi to remove black money/unaccounted money from the system, Ministry of Corporate Affairs has issued several notifications requiring the auditors to provide proper disclosure in their audit report about dealings in demonetized specified bank notes during the period from 8th November to 31st December 2016. In recent notification issued, The Aditors have to state in their audit report about the demonetized old notes as per the Guidelines to disclose demonetised/SBN/old notes in Audit Report issued
Guidelines to disclose demonetised/SBN/old notes in Audit Report
Ministry of Corporate Affairs vide notification dated on 30th March 2017 has notified the companies (Audit and Auditors) Amendment Rule, 2017 and Amendement to Schedule III to the Companies Act 2013. The clause (c) of Rule 11 says that the audit report must contain the disclosure whether the company has made required disclosures in their financial aspects as to holding and dealing in old notes during the period from 8th November to 31st December 2016. Be amending Schedule III of Companies Act 2013 it is also included in the “General instruction for preparation of Balance Sheet” in Paragraph 6 after Clause W. The disclosure shall contain:
Format to disclose demonetised/SBN/old notes in Audit Report
|SBNs (Old Notes)||Notes in other denomination||Total|
|Closing cash in hand as on 08.11.2016|
|(+) Permitted Receipts|
|(-) Permitted Payments|
|(-) Amount deposited in banks|
|Closing cash in hand as on 31.12.2016|
There is an urgent need for ICAI to provide guidance on how the Statutory Auditors requires to follow these guidelines while discharging their statutory responsibility for an entity.
The Audit and Assurance Board has issued this Implementation Guidelines on Audit Report for the above disclosure. The implementation guidelines issued contains detailed guidelines and various other information such as frequently asked questions, illustrative list of audit procedures, reporting scenarios etc.