♦ Applicability of Cash Flow Statement:-

According to Section 2(40) of Companies Act, 2013, The Financial statements of a company include Cash Flow Statement. Cash Flow Statement is governed by The Companies (Accounting Standards) Rules, 2006 (AS 3) and The Companies (Indian Accounting Standards) Rules, 2015 (Ind AS 7), as applicable.

The following companies are given exemption from filing Cash Flow Statement:-

  • One Person Company1
  • Dormant Company2
  • Small Company3

♦ Applicability of The Companies (Auditor’s Report) Order:-

For Financial Year 2019-20, The Companies (Auditor’s Report) Order, 2016 would be applicable.

The CARO, 2016 would not be applicable to the following companies:-

  • A Banking Company as per section 5(c) of The Banking Regulation Act, 1949.
  • An Insurance Company as per The Insurance Act, 1938.
  • A Company licensed to operate under Section 8 (Company with charitable purpose).
  • One Person Company
  • Small Company
  • A Private Company not being a subsidiary or holding company of a Public company

> Having Paid up capital and reserves and surplus upto one crore rupees.

> Having borrowings upto one crore rupees.

> Which does not have a total revenue as disclosed in Scheduled III to the Companies Act (including revenue from discontinuing operations) exceeding ten crore rupees during the financial year.

According to order number S.O. 849(E) of MCA dated 25th March, 2020, For Financial Year 2020-21, The Companies (Auditor’s Report) Order, 2020 would be applicable.

The CARO, 2020 would not be applicable to the following companies:-

  • A Banking Company as per section 5(c) of The Banking Regulation Act, 1949.
  • An Insurance Company as per The Insurance Act, 1938.
  • A Company licensed to operate under Section 8.
  • One Person Company
  • Small Company
  • A Private Company not being a subsidiary or holding company of a Public company

> Having Paid up capital and reserves and surplus upto one crore rupees.

> Having borrowings upto one crore rupees.

> Which does not have a total revenue as disclosed in Scheduled III to the Companies Act (including revenue from discontinuing operations) exceeding ten crore rupees during the financial year.

♦ Applicability of Internal Financial Control:-

Reporting of Internal Financial Control shall be as per section 143(3)(i) of Companies Act, 2013 and Rule 10A of The Companies (Audit & Auditors) Rules, 2014.

Reporting on Internal Financial Control is applicable to all companies except:-

  • One Person Company
  • Small Company
  • A company whose turnover is less than fifty crores as per latest audited financial statement.
  • A company whose borrowing from banks, financial institutions or body corporate is less than twenty five crores.

> Definitions:-

1. One Person Company:-

According to section 2(62), One Person Company means a company which has only one person as a member.

2. Small Company:-

According to section 2(85), Small company means a company, other than public company whose

(i) Paid up share capital of which does not exceed fifty lakh rupees or such higher amount as may me prescribed which shall be not be more than ten crore rupees.

(ii) Turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees.

Provided that nothing shall apply to –

[A] a holding or a subsidiary company

[B] a company registered under section 8

[C] a company or body corporate governed by any special Act.

3. Dormant Company:-

According to section 455(1) of Companies Act, 2013, Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company.

DISCLAIMER:

The entire material or contents of this write-up/Article have been prepared on the basis of relevant provisions, Circulars and as per the information existing at the time of the preparation. While we endeavor to keep the information up to date and correct. We make no representations or warranties of any kind, express or implied. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided in the said write-up/Article for any purpose. The user of the information shall agree that the information is not a professional advice. IN NO EVENT I/WE SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM THE USE OF THE INFORMATION.

Details of Authors:

Saurabh Chhatrala and CS Govil Rathi(Authors are associated with Ahemdabad based CS firm GOVIL RATHI & ASSOCIATES)

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Author Bio

Qualification: CS
Company: GOVIL RATHI & ASSOCIATES
Location: AHMEDABAD, Gujarat, IN
Member Since: 04 Mar 2020 | Total Posts: 8
CS Govil Rathi is Member of Institute of Companies Secretaries of India having terrific experience in legal and secretarial matters. He is Young, dynamic, Enthusiastic, self-motivated and optimistic practicing Company secretary having rich professional experience in Company law matters and other com View Full Profile

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2 Comments

  1. Binod Banka says:

    now the turnover limit for small company increased to 20 crore then in those small company having less then 20 crore t/O cash flow not required.Is it correct

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