- Section 129 of companies act 2013, provides for preparation of financial statements.
- 2(40) to include balance sheet, profit and loss account/income and expenditure account, cash flow statement, statement of changes in equity and any explanatory note annexed to the above.
- New section 129 corresponds to existing section 210. It provides that the financial statements shall give a true and fair view of the state of affairs of the company and shall comply with the accounting standards notified under new section 133.
- It is also provided that the financial statements shall be prepared in the form provided in new schedule III of Companies Act, 2013.
- It may be noted that in the new schedule III the provisions for preparation of balance sheet and statement of profit and loss have been given which are on the same lines as in the existing schedule VI.
- Further, in the new Schedule III detailed instructions have been given for preparation of consolidated financial statements as consolidation of accounts of subsidiary companies is now made mandatory in section 129.
- It may be noted that for the first time a provision has been made in the new section 129(3)that if a company has one or more subsidiaries it will have to prepare a consolidated financial statement of the company and of all the subsidiaries in the form provided in the new schedule III of Companies Act, 2013.
- The company has also to attack along with its financial statement, a separate statement containing the salient features of the financials of the subsidiary companies in such form as may prescribed by the rules.
- It is also provided that if the company has interest in any associate company or a joint venture the accounts of that company as well as joint venture shall be consolidated.
- For this purpose associate company has been definedinnewsection2(6) company has significant influence i.e. it has. 20% of the total share capital of the company or has control on the business decision under an agreement.
11 .The Central Government has power to exempt any companies from complying with any of the requirements made under the section.
(1) Where compliance with the requirements of the Act including Accounting Standards as applicable to the companies require any change in treatment or disclosure including addition, amendment, substitution or deletion in the head or sub-head or any changes, in the financial statements or statements forming part thereof, the same shall be made and the requirements of this Schedule shall stand modified accordingly.
(2) The disclosure requirements specified in this Schedule are in addition to and not in substitution of the disclosure requirements specified in the Accounting Standards prescribed under the Companies Act, 2013. Additional disclosures specified in the Accounting Standards shall be made in the notes to accounts or by way of additional statement unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as required by the Companies Act shall be made in the notes to accounts in addition to the requirements set out in this Schedule.
(3) (i) Notes to accounts shall contain information in addition to that presented in the Financial Statements and shall provide where required
(a) Narrative descriptions or disaggregation’s of items recognised in those statements; and
(b) Information about items that do not qualify for recognition in those statements.
(ii) Each item on the face of the Balance Sheet and Statement of Profit and Loss shall be cross-referenced to any related information in the notesto accounts. In preparing the Financial Statements including the notes to accounts, a balance shall be maintained between providing excessive detail that may not assist users of financial statements and not providing important information as a result of too much aggregation
(4) (i) Depending upon the turnover of the company, the figures appearing in the Financial Statements maybe rounded off as given below:—
|(a) less than one hundred’ crore rupees||To the nearest hundreds, thousands, lakhsormillions, or decimals thereof|
|(b) one hundred crore rupees or more||To the nearest lakhs, millions or crores, or decimals thereof.|
(ii) Once a unit of measurement is used, it shall be used uniformly in the Financial Statements.
(5) Except in the case of the first Financial Statements laid before the Company (after its incorporation) the corresponding amounts (comparatives) for the immediately preceding reporting period for all items shown in the Financial Statements including notes shall also be given.
(6) For the purpose of this Schedule, the terms used herein shall be as per the applicable