As per latest format prescribed under the Companies Act. 2013

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Final Accounts: Prescribed Format under the Companies Act, 2013

The Companies Act, 2013 introduced several key changes to the preparation and presentation of financial statements, significantly altering requirements compared to the previous Act. This comprehensive update aims to enhance transparency, accuracy, and accountability in financial reporting.

Provisions under the New Act

1. Definitions Impacting Financial Statements

  • Financial Year (Section 2(41)):
    • Ends on March 31 each year, with exceptions for companies incorporated after January 1, which may have a financial year ending on March 31 of the following year. Companies can also align their financial year with their foreign holding company's financial year with Tribunal permission.
  • Financial Statement:
    • Includes balance sheet, profit and loss account (or income and expenditure account for non-profit entities), cash flow statement, changes in equity statement, and explanatory notes. Private and small companies are exempt from including the cash flow statement.
  • Holding, Subsidiary, and Associate Companies:
    • Holding Company (Section 2(46)): A company that controls one or more other companies.
    • Subsidiary Company: A company controlled by a holding company through board composition or majority shareholding. Unlike the Old Act, this includes control over both equity and preference shares.
    • Associate Company: A company in which another company has significant influence (typically holding 20% or more of the share capital), but is not a subsidiary.

2. Maintenance and Preservation of Books of Account (Section 128)

  • Books of Account:
    • Must be kept at the registered office or another location in India with board resolution. Companies can maintain electronic records, which must be retrievable and legible.
  • Branch Accounts:
    • Branch offices can maintain separate books, with summarized returns sent to the registered office or designated place regularly.
  • Inspection and Preservation:
    • Books must be available for inspection by directors and preserved for a minimum of 8 years. Penalties for non-compliance include fines and imprisonment.

3. Financial Statement Preparation and Compliance (Section 129)

  • Preparation:
    • Financial statements must be prepared in the prescribed format (Schedule III) and adhere to accounting standards. Deviations must be disclosed.
  • Consolidation:
    • Companies with subsidiaries must prepare consolidated financial statements. Exemptions may apply if consolidation is not required due to international parent company rules.
  • Exemptions and Penalties:
    • The Central Government may exempt certain companies from requirements under specific conditions. Violations may result in fines and imprisonment for responsible officers.

4. Revision of Financial Statements (Section 131)

  • Revision Restrictions:
    • Financial statements can be revised only for the past 3 years and only with Tribunal approval. Reasons for revision must be detailed, and notices must be given to relevant authorities.
  • Procedure:
    • Applications for revision must be filed within 2 weeks of board resolution, with steps similar to those for adopting original accounts. Auditors must review and report on revised statements.

5. Authentication of Accounts (Section 134)

  • Approval and Signature:
    • Financial statements must be approved by the Board of Directors and signed by the chairperson, two directors (including one MD or CEO), CFO, and company secretary (if appointed). In One Person Companies, the sole director can authenticate the statements.

Summary

The Companies Act, 2013 introduces significant changes to the preparation and presentation of financial statements. Key aspects include new definitions, enhanced requirements for maintaining books, and updated rules for financial statement preparation, consolidation, and revision. These changes aim to improve transparency and accountability in financial reporting.