ED/GN-Div-II/2019-2020/24
EXPOSURE DRAFT
OF
REVISED GUIDANCE NOTE
ON
DIVISION II – IND AS SCHEDULE III
TO THE COMPANIES ACT, 2013
(Last date for Comments: April 20, 2019)
Issued by Corporate Laws & Corporate Governance
Committee
THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA
(Set up under an Act of Parliament)
Exposure Draft of Revised Guidance Note on Division II – Ind AS Schedule III to the Companies Act, 2013 by Corporate Laws & Corporate Governance Committee ICAI
Exposure Draft
Revised Guidance Note
on
Division II – Ind AS Schedule III
to the Companies Act, 2013
Following is the Revised Guidance Note on Division II – Ind AS Schedule III to the Companies Act, 2013 issued by the Corporate Laws & Corporate Governance Committee of the Institute of Chartered Accountants of India, for comments.
The Committee invites comments on any aspect of this Exposure Draft. Comments are most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording.
Comments can be submitted using one of the following methods, so as to be received not later than April 20, 2019.
1. Electronically: Click on http: to submit comments online. (Preferred method): https://forms.gle/TaTpzeZ4EvycxwqN7
2. Email: Comments can be sent to clcgc@icai.in
3. Postal: Corporate Laws & Corporate Governance Committee, The Institute of Chartered Accountants of India, ICAI Bhawan, A- 29, Sector- 62, Noida –
Further clarifications on any aspect of this Exposure Draft may be sought by e-mail to clcgc@icai.in.
Index
| Sr. No. |
Contents | Page No. |
| 1. | Introduction | 1 |
| 2. | Objective and Scope | 2 |
| 3. | Applicability | 3 |
| 4. | Main Principles – Summary of Division II – ‗Ind AS Schedule III‘ | 4 |
| 5. | Structure of Ind AS Schedule III | 6 |
| 6. | General Instructions for Preparation of Financial Statements: Notes 1 to 9 | 7 |
| 7. | Part I Notes – General Instructions for Preparation of Balance Sheet: Notes 1 to 5 | 10 |
| 8. | Part I – Form of Balance Sheet and Notes – General Instructions for Preparation of Balance Sheet: Notes 6 to 11 | 16 |
| 9. | Part II – Statement of Profit and Loss and Notes – General Instructions for Preparation of Statement of Profit and Loss: Notes 1 to 6 | 74 |
| 10. | Other Comprehensive Income | 91 |
| 11. | Additional information to be disclosed by way of Notes to Statement of Profit and Loss | 94 |
| 12. | Part III – General Instructions for Preparation of Consolidated Financial Statements | 96 |
| Annexures | ||
| Annexure A – Division II to Schedule III (Ind AS Schedule III‘) to the Companies Act, 2013 | 105 | |
| Annexure B – Changes between Division I and Division II to Schedule III (Ind AS Schedule III) | 137 |
Exposure Draft of Revised Guidance Note on Division II – Ind AS Schedule III to the Companies Act, 2013 by Corporate Laws & Corporate Governance Committee ICAI
| Annexure C – Illustrative List of Disclosures required under the Companies Act, 2013 | 159 | |
| Annexure D – List of Indian Accounting Standards notified as on date | 161 | |
| Annexure E –General Circular No. 39 / 2014 dated 14th October 2014 | 163 | |
| Annexure F – Illustrative Standalone & Consolidated Financial Statements | 164 |
1. Introduction
1.1 Schedule III to the Companies Act, 2013 (‗the Act‘) was notified along with the Act itself on 29 August, 2013 thereby providing the manner in which every company registered under the Act shall prepare its Financial Statements. Financial Statements as defined under the Act include Balance Sheet, Statement of Changes in Equity for the period as applicable, the Statement of Profit and Loss for the period, Cash flow statement for the financial year and Notes.
1.2 Ministry of Corporate Affairs (‗MCA‘) notified Indian Accounting Standards (‗Ind AS‘) on February 16, 2015 thereby laying down the roadmap for all companies, except insurance companies, banking companies and non-banking finance companies, for adoption of Ind AS (‗MCA roadmap‘). Further, MCA notified amendments to Schedule III to the Act on 6th April 2016 whereby:
1.2.1 The existing Schedule III was renamed as ‗Division I‘ to Schedule III (‗Non-Ind AS Schedule III‘) – which gives a format of Financial Statements for Non-Ind AS companies, that are required to comply with the Companies (Accounting Standards) Rules, 2006. In other words, Non-Ind AS companies, will be required to prepare Financial Statements as per Companies (Accounting Standards) Rules, 2006, as per the format of Division I to Schedule III to the Act;
1.2.2 Division II‘ -Ind AS Schedule III‘ (Refer Annexure A, Pg 105 ) was inserted to give a format of Financial Statements for companies that are required to comply with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time (Companies Ind AS Rules‘). This is newly inserted into Schedule III for companies that adopt Ind AS as per Rule 4(1)(i) or Rule 4(1)(ii) or Rule 4(1)(iii) of the Companies Ind AS Rules. Accordingly, such Companies, while preparing its first and subsequent Ind AS Financial Statements, would apply Division II to Ind AS Schedule III to the Act.
1.3 The requirements of Ind AS Schedule III however, do not apply to companies as referred to in the proviso to Section 129(1) of the Act, i.e., any insurance or banking company, or any company engaged in the generation or supply of electricity or to any other class of company for which a form of Balance Sheet and Statement of Profit and Loss has been specified in or GN on Division II – Ind AS Schedule III to the Companies Act 2013 under any other Act governing such class of company. Moreover, the requirements of Ind AS Schedule III do not apply to Non-Banking Finance Companies (NBFCs) that adopt Ind AS as per Rule 4(1)(iv) of Companies (Indian Accounting Standards) Rules, 2015 notified in Companies (Indian Accounting Standards) (Amendment) Rules, 2016.
1.4 It may, however, be clarified that for companies engaged in the generation and supply of electricity, neither the Electricity Act, 2003, nor the rules framed thereunder, prescribe any specific format for presentation of Financial Statements by an electricity company. Section 1(4) of the Act states that the Act will apply to electricity companies, to the extent it is not inconsistent with the provisions of the Electricity Act. Keeping this in view, Ind AS Schedule III as applicable may be followed by such companies till the time any other format is prescribed by the relevant statute.
