Company Law

Financial Statements [Ss. 129, 132, 133]

1.

Definition of FS

[S. 2(40)]

“financial statement” in relation to a Co, includes

  • balance sheet as at the end of FY;
  • profit and loss account/in the case of a company carrying on any activity not for profit, an income and expenditure account for FY;
  • cash flow statement for FY
    • Not applicable to OPC, Small Co, Dormant Co;
  • a statement of changes in equity, if applicable; and
  • any explanatory note annexed to, or forming part of, any document referred to above

2.

FY

[S. 2(41)]

  • period ending on 31st March every year
  • In case of a New Co incorporated on or after 1st January ➔ period ending on the  31st March of the following year

Exception: If a Co/body corporate, which is a Hold Co/Sub Co of a Co incorporated outside India and is required to follow a different FY for consolidation of its accounts outside India ➔27CG, if satisfied, may allow any period as its FY, whether or not that period is a year:

Entities existing as on 1 April 2014 were provided a period of 2 years to align its FY

3.

Financial Statements

[S. 129 (1), (2), (5)]

  • Should give a true and fair view of the state of the affairs of the Co
  • Should comply with AS notified u/s. 133; If not complied with, then Co has to disclose in its FS –
    • deviation from AS;
    • reasons for such deviation and;
    • Financial effects, if any, due to such deviation
  • Should be prepared in the form provided in Sch III of Co Act, 2013.
    Exceptions
    : these provisions are not Applicable to:
    • any Insurance/Banking Co
    • any Co engaged in the generation/supply of electricity
    • any other class of Co for which a form of FS has been specified in or under the Act governing such class of Co
  • At every AGM, BoD of the Co shall lay FS for the FY.

4.

Consolidated Financial Statement

[Ss. 129(3), R. 6, 5]

Where a # Co has one or more Sub Co/Asct Cos, then

  • in addition to stand alone FS, it has to also prepare CFS of the Co and of all the subsidiaries and associate Cos in the same form and manner as that of its own in accordance with Sch III and the applicable ASs
  • CFS should also be placed before the AGM.

A separate statement containing the salient features of the FS audits subsidiary/ies in Form AOC-1 is also required to be attached to the FS.

# If such Co is not required to prepare CFS under AS ➔ the Co has to only comply with provisions on CFS provided in Sch III of the Co Act 2013

5.

AS

[Ss. 132, 133]

For the preparation of FS, CG would prescribe the standards of accounting, as recommended by ICAI in consultation with and after examination of the recommendations made by NFRA.