India Inc. Directed To Make Books Of Accounts More Accessible
The amendments might seem trivial but they will add new cost requirements for companies, said an expert.
Companies will have to give the government authorities real-time access to their books of accounts stored in electronic mode, as per the recent amendment to the accounting rules.
So far, books of accounts had to be made accessible in India. The language has now been amended to say ‘’at all times’’.
Online back-up of books of accounts and other papers of the company, which are maintained in electronic mode, should be done on a daily basis in servers physically located in India, the rules say. The earlier rules required this condition to be met on a periodic basis.
The amendments notified by the Ministry of Corporate Affairs appear trivial but may have the effect of disturbing status quo for corporates, especially those which have external dependencies on third-party cloud service providers for maintaining their books of accounts, Sandeep Jhunjhunwala, partner at Nangia Andersen LLP, said.
Amendments mandating accessibility of books of accounts "at all times" in India and prescribing the periodicity of maintenance of back-up in servers physically located in India on a daily basis, not only accentuate the administrative processes for companies, but may also entail additional costs.Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP
Finally, the amendments also require companies to identify the person in charge of books of accounts in India if the service provider is located outside the country.
Service provider means the cloud service used by the company to store books of accounts in electronic mode. If this service is being provided by someone outside India, corporates need to inform the Registrar of Companies of the name and address of the person located in India to reach out to for any queries on the books of accounts, etc., as per the new rules.