If we look around ourselves when it comes the performance of any entity, be it company or otherwise, they are always gauged by its financial performance. That is why financials of any body corporate is very important and are being given a separate section under various Acts and other governing statues for treatment.
When we talk about financials of Indian company, the treatment of Financials statement is given under section 129, 133, Schedule III of Companies Act, 2013 read with The Companies (Indian Accounting Standards) Rules, 2015, The Companies (Accounts) Rules, 2014 and other amendment and notifications/(s) applicable from time to time. Some of the important highlights are:-
- A company financial statement must give a true and fair view and in consonance with standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India.
- A company shall place its financial statement along with Auditor’s report on same for each financial Year.
- Consolidated Financial statement should be prepared as per the applicable standards of accounting, if a company has subsidiary/(ies) and/or associate/(s) companies along with AOC-1 containing the salient features as attachment in the Board report.
- In case company has prepared financials which are not in consonance with standards of accounting or any addendum thereto, then company shall disclose in its financial statements, the deviation from the accounting standards as well as the reasons for such deviation and the financial effects, if any, arising out of such deviation.
EXCEPTIONS:-
The companies which are governed by below given Act/(s) need not to compulsorily follow the provision of financial Statement under Companies Act, 2013:–
- in the case of an insurance company, governed by the Insurance Act, 1938, or the Insurance Regulatory and Development Authority Act, 1999;
- in the case of a banking company, governed by the Banking Regulation Act, 1949;
- in the case of a company engaged in the generation or supply of electricity, governed by the Electricity Act, 2003;
- in the case of a company governed by any other law for the time being in force, any matters which are not required to be disclosed by that law.
PENALTY:-
If a company contravenes the provisions of section 129, the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
Disclaimer:– The above article is extract of preparation of financial statement of company. While preparing the financial statement, there are other important aspects also which are considered and are kept in mind while preparing them. Hence, the accountant/(s) or professional/(s) who are in charge of preparation of financials of company need to be updated with all the applicable laws which are binding for the time being.
(The Author is Corporate Consultant and provides varied array of services including secretarial, financial, Intellectual property, start-ups, taxation, Audit, GST, Book keeping and other ancillary advisory service and can be contacted through email id:- triptishakyacs2017@gmail.com )
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