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POINTS TO PONDER FOR FINANCIAL STATEMENTS
AS PER SCHEDULE III OF THE COMPANIES ACT, 2013:
DIVISION I

Schedule III to the Companies Act, 2013 provides the manner in which the Financial Statements of a Company shall be prepared. The Schedule III sets out the minimum requirements for disclosure on the face of Financial Statements. To bring harmony and synchronization with the notified Accounting Standards and other applicable disclosures in various reports, Schedule III has been amended to include certain additional disclosures, change in presentation and change in some existing disclosures which is applicable from 01.04.2021. Thus, the Financial Statements for FY 2021-22 shall be prepared in accordance with the amended Schedule III.

AMENDED PROVISIONS ARE DETAILED HEREUNDER:

1. Depending upon Total Income of the Company, the figures appearing in the Financial Statements shall be rounded off:

TOTAL INCOME (in INR)   ROUNDING OFF
(i)       Less than one hundred crore  To the nearest hundreds, thousands, lakhs or millions or decimals thereof
(ii) One hundred crore or more To the nearest lakhs, millions or crores or decimals thereof.

It is now compulsory to apply rounding off and a company cannot continue to disclose full figures.

2. Presentation of Fixed Assets: Now, the Fixed assets shall be named as Property, Plant and Equipments and Intangible Assets.

3. Shareholding Pattern of the Promoters w.r.t. to each class of shares shall be disclosed separately as below:

Shares held by Promoters at the end of the year % Change during the
Year
S.No. Promoter’s Name No. Of Shares % of Total Shares

Definition of Promoter should be considered as per the Companies Act, 2013.

The prescribed Format requires disclosure only in respect of shares held at the end of the year.

4. TRADE PAYABLES: Information relating to MSME Creditors:

♦ Trade payables shall be classified as:

(A) Total outstanding dues of Micro Enterprises and Small Enterprises; and

(B) Total outstanding dues of Creditors other than Micro Enterprises and Small Enterprises

Further details relating to MSME shall be disclosed in the notes:

a) The principal amount remaining unpaid to any supplier at the end of each accounting year;

b) Interest due thereon;

c) the amount of interest paid by the buyer in terms of Section 16 of MSMED Act, 2006 along with the amount of the payment made to the supplier beyond the appointed day during each accounting year

d) the amount of interest due and payable for the period of delay in making payment but without adding the interest specified under the MSMED Act, 2006;

e) the amount of interest accrued and remaining unpaid at the end of each accounting year;

f) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under Section 23 of the MSMED Act, 2006.

TRADE PAYABLES AGEING SCHEDULE:

(Amount in Rs.)

Particulars Outstanding for following periods from due date of payment
Less than 1
Year
1-2 Years 2-3 Years More than 3 Years Total
i) MSME
ii) Others
 iii)Disputed                  dues – MSME
i) Disputed dues – Others Good

Here, unbilled dues shall be disclosed separately.

5. PROPERTY, PLANT AND EQUIPMENT:

A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and at the end of the reporting period showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment) and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed separately.

6. TRADE RECEIVABLES AGEING SCHEDULE:

(Amount in Rs.)

Particulars Outstanding for following periods from due date of payment
Less than 6 Months 6 Months – 1 Year 1 – 2 Years 2-3 Years More than 3 Years Total
i)     Undisputed Trade Receivables      –

Considered Good

ii)    Considered Doubtful
iii)  Disputed
Trade Receivables      –Considered Good
iv) Considered Doubtful

Here, unbilled dues shall be disclosed separately.

7. UTILISATION OF BORROWED FUNDS:

Where the Company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the Company shall disclose the details of where they have been used.

8. Whether TITLE DEEDS OF IMMOVABLE PROPERTY held in name of the Company?

The Company shall provide the details of all the immovable property whose title deeds are not held in the name of the Company AND if such immovable property is jointly held with others, details are required to be given to the extent of Company’s share.

Here, Immovable properties do not include the properties where the Company is the lessee and the lease agreements are duly executed.

Points To Ponder Amended Schedule III of Companies Act, 2013

9. REVALUATION OF PROPERTY, PLANT AND EQUIPMENT:

If the Company has revalued its PPE, then the Company shall disclose as to whether the revaluation is based on the Valuation by a Registered Valuer. In case the Company has not used registered valuer for such fair value/revaluation purposes, the fact needs to be disclosed in the Financial Statements.

10.LOANS AND ADVANCES MADE TO PROMOTERS, DIRECTORS, KMPs OR THEIR RELATIVES:

The Company shall disclose the following details if the company has granted Loans and Advances to its Promoters, Directors, KMPs and the related parties, either singly or jointly with any other person that are whether repayable on demand or without specifying any terms or period of repayment.

Type of Borrower Amount of loan or advance in the nature of loan outstanding % to the total Loans and Advances in the nature of Loans
Promoters
Directors
KMPs
Related Parties

For the purpose of this disclosure, the relationship should be considered on the date of loan and the amount should be outstanding as at the balance sheet date.

11. CAPITAL WORK IN PROGRESS:

The Company shall provide an ageing schedule for all the Projects, whose total amount shall tally with the CWIP amount stated in the Balance Sheet.

The Company shall also provide a Project wise completion schedule. Details of suspended projects shall be given separately.

12. INTANGIBLE ASSETS UNDER DEVELOPMENT:

The Company shall provide an ageing schedule for all the Intangible Assets under development, whose total amount shall tally with the Intangible Assets under development amount stated in the Balance Sheet.

The Company shall also provide a Project wise completion schedule. Details of suspended projects shall be given separately.

13. DETAILS OF BENAMI PROPERTY HELD:

The Company shall disclose the details as specified, if any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and the rules made thereunder.

14. BORROWINGS FROM BANKS OR FINANCIAL STATEMENTS ON THE BASIS OF CURRENT ASSETS:

If the Company has borrowings from Banks or Financial Statements on the basis of Current Assets, the following disclosure shall be made:

a) Whether quarterly returns or statements of current assets filed by the Company to the Bank or Financial Institutions are in agreement with the books of accounts;

b) If not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

Such returns or statements may include stock statements, book dent statements, ageing analysis of the debtors or other receivables submitted to the lender on periodic basis.

15. WILFUL DEFAULTER:

Where a company is a declared wilful defaulter by any bank or financial Institution or other lender, following details shall be given:

  • Date of declaration as wilful defaulter,
  • Details of defaults (amount and nature of defaults)

16. RELATIONSHIP WITH STRUCK OFF COMPANIES:

If the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, it shall disclose the details of such transactions.

17.CREATION OR SATISFACTION OF CHARGES WITH ROC:

The Company shall disclose the details and reasons thereof about the creation or satisfaction of Charges which are yet to be registered with Registrar of Companies beyond the statutory period.

18. COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES:

If the Company has not complied with the number of layers as prescriber under Section 2(87) read with relevant rules, it shall disclose the details of the Companies beyond such permissible layers.

19. DISCLOSURE OF ANALYTICAL RATIOS:

The Company shall disclose the specified Analytical Ratios along with the explanation of the items included in numerator and denominator for computing the above ratios.

Further explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding years.

20. COMPLIANCE WITH APPROVED SCHEMES OF ARRANGEMENT:

If applicable, the Company shall disclose the effect of any approved scheme which has been accounted for in the books of accounts.

21. UTILISATION OF BORROWED FUNDS AND SHARE PREMIUM:

The Company shall disclose the details as specified if company has advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person or entity, including foreign entities (Intermediaries) OR a company has received any fund from any person or entity, including foreign entities (Funding Party).

SOURCE: Schedule III to the Companies Act, 2013.

Guidance Note issued on Financial Statements issued by the ICAI.

DISCLAIMER: The content of this article is for informative purposes only and should not be considered as any legal advice on the topic covered. The information is based on the facts and relevant provisions of the applicable laws.

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3 Comments

  1. DEEPAK SONI says:

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