1. Eligibility for qualifying to be Small and Medium Sized Company (SMC): –A company shall qualify to be small and medium sized company if all the following conditions are satisfied as at the end of the relevant accounting year: –
i. Equity and debt securities are not listed on any stock exchange whether in India or outside or is in the process of being listed.
ii. Is neither a bank, financial institution or an insurance company
iii. Turnover does not exceed Rs 250 crores in the immediately accounting year. Turnover excludes other income .
iv. Borrowings are less than Rs 50 crores at any time during the preceding financial It includes public deposits.
v. Which is neither a holding or the subsidy of a company which is not a small and medium sized company.
2. Accounting Standards: – The accounting standards specified 1 to 5, 7and 9 to 29 as recommended by the Institute of Chartered Accountants shall be effective from 04.2021.
3. Obligations with the accounting standards: –Companies on whom Indian Accounting Rules 2015 are not applicable shall comply with these accounting standards while preparation of the financial statements.
4. Manner of complying with the accounting standards:– SMCs shall follow the following instructions while complying with the accounting standards; –
i. The SMC who has not disclosed certain information(by way of note to its financial statements) pursuant to the exemptions or relaxation given to it shall disclose the following note in the financial statements
“The company is Small and Medium Sized Company (SMC) as defined in the Companies (Accounting Standards) Rules 2021 and has complied with the Accounting Standards applicable to a SMC.”
ii. Where the company, being SMC was qualified for any exemptions or the relaxations in the previous year but no longer qualifies for the relevant exemption or the relaxation in the current accounting period, the relevant standards or requirements applicable to a non-SMC shall become applicable from the current accounting period and figures of the corresponding period of the previous accounting period need not to be revised merely because it has ceased to be SMCs but it shall be disclosed in the notes to the financial statements.
iii. In case SMC opts not to avail the exemption or relaxation in respect of any of the any of the accounting standards , the SMC shall disclose the standards in respect of which it has availed the exemption or relaxation,
iv. If the SMC desires to discloses the information which is not required to be disclosed pursuant to an exemption or relaxation available to SMCs it shall disclose the same in compliance with the relevant accounting standards.
v. The SMC may opt for availing certain exemptions or relaxations from compliance with the requirements prescribed in an accounting standards. Provided that such partial exemption or relaxation shall not be permitted to mislead any person or public.
5. Qualification for exemption or relaxation in respect of SMC: –
An existing company which was not eligible for SMC in previous accounting year and subsequent became eligible , shall be eligible for exemption and relaxation of SMC only if the company was SMC for a period of two consecutive accounting years .
General Notes
1. In case where the accounting standards are not in conformity with the law, the provisions of the law shall prevail and the financial statements shall be prepared in accordance with the provisions of the law.
2. Accounting Standards are intended to apply only to items which are material.
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