CA Vivekanand Pote
Books of accounts to be kept by Company ( Section 128 )
The books of accounts showing true and fair financial statements and relevant papers shall be kept at the registered address of the company. The books shall be kept on accrual basis and according double entry system of accounting. The books of accounts and relevant papers may be kept at other place in India as BOD may decide. A seven days notice shall be given to ROC for communication of new address. The accounts can be kept in electronic mode.
The books of accounts related to to branch office can be kept at the branch howeQver proper summarised returns shall be sent to registered office periodically.
The books of accounts shall be open for director’s inspection at registered office or other place during business hours. The copies of financial information maintained outside India shall be produced for inspection. The inspection of subsidiary can be done only after authorization from BOD.
The books of accounts of the company shall be kept in good order for a period of 8 FYs and in case investigations ordered by CG it may direct a longer period.
MD, WTD in charge of finance, CFO and such other person charged by the BOD with compliance of this section, contravenes the provisions shall be punishable with imprisonment for maximum 1 year or with fine ( Rs. 50,000 to Rs. 5,00,000 ).
Financial Statements ( Section 129 )
The financial statement –
Contravention of the provisions of this section; MD, WTD in charge of finance, CFO and such other person charged by the BOD with compliance of this section and in the absence of any such officers all the directors shall be punishable with imprisonment for maximum 1 year or with fine ( Rs. 50,000 to Rs. 5,00,000 ).
Reopening of accounts on court’s or Tribunal’s orders ( Sec. 130 )
Application made by CG, Income tax authority, SEBI, any other regulatory body, authority or any person concerned and an order made by a court or the tribunal stating that the accounts were prepared in fraudulent manner and the affairs of the company were mismanaged during the relevant period casting a doubt the doubt on reliability of financial statements., then a company can re-open and recast its financial statements. Court or Tribunal shall give the notice to the specified authorities and the representations made by the applicant shall be considered before passing the order. The accounts revised or recast shall be final.
Voluntary revision of financial statements or Board’s report ( Section 131 )
If it appears to the directors of a company that the financial statements of the company or the board’s report do not comply with the provisions of Section 129 or section 134, financial statements or the board reports for the 3 preceding financial years may be revised. For this purpose company shall make an application to Tribunal and Tribunal will pass an order. The order shall be filed with ROC by the company. Tribunal shall give notice to CG & Income Tax authorities and the representations shall be considered before passing an order by tribunal. Revised financials and report can be filed once in a financial year. Details of reasons for revision shall be stated. If the previous financial statement and board report copies are already sent to the members or ROC or laid in AGM the revision must be confined to the correction and consequential alterations.
Constitution of National Financial Reporting Authority ( Section 132 )
CG may constitute NFRA.
NFRA shall –
NFRA shall consist 1 chairperson having expertise in the field of accountancy, auditing, finance or law appointed by CG and other members maximum 15. Conflict of interest and lack of independence in respect of appointment shall be declared by the member. Chairperson and members in full time employment shall not be associated with any audit firm ( including consultancy firms ) during the course of their appointment after ceasing their appointment.
Powers of NFRA will be –
Any person aggrieved by any order of NFRA may prefer appeal before appellate authority as prescribed.
Central Government to prescribe accounting standards ( Section 133 )
AS shall be prescribed by CG, recommended by ICAI in consultation with and after examination of the recommendations made by NFRA.
Financial Statements, board’s report etc.
FS including CFS ( if any ) shall be approved by BOD. FS shall be signed at least by the chairperson of the company or by two directors out of which one shall be MD and CEO if he is director , CFO and CS of the company. Auditors’ report shall be attached with FS.
FS and board’s report shall be laid before the company in AGM. Board’s report shall include –
Board report shall be attached to FS. Board report shall be signed by Chairperson if authorised by board otherwise by at least two directors.
Corporate Social Responsibility ( CSR ) ( Section 135 )
Company having net worth Rs. 500 crores or more, turnover Rs. 1000 crores or more net profit of Rs. 5 crores or more during any financial year shall constitute a CSR Committee of the board consisting of 3 or more directors, one shall be independent director.
Right of the member to copies of audited financial statement ( Section 136 )
Financial Statements including Consolidated Financial Statements, auditors’ report and other documents which are to be laid down before AGM shall be sent to every member and trustee of debenture holder and all other required persons at least before 21 days of AGM. In case of listed company these documents can be kept for inspection at least before 21 days of AGM.
Copy of FS to be filed with Registrar ( Section 137 )
The financial statements including consolidated financial statements shall be filed with Registrar within 30 days from the date of AGM.
(Author is Working as Finance Professional in Automobile Industry and can be contacted at [email protected] )