Companies required to follow IndAS to report Abridged Financial Statements in AOC3A. Companies (Accounts) Amendment Rules 2018. MCA Notification
Ministry of Corporate Affairs (MCA) has issued Notification amending the Companies (Accounts) Rules, 2014 by Companies (Accounts) Amendment Rules, 2018.
Section 136 of the Companies Act, 2013 provides for the right of a member of the company to have copies of the audited financial statements. According to the provisions, the financial statements, director’s report, audit report and consolidated financial statements etc. are required to be sent to every member at least 21 days before the General Meeting where such documents are to be laid.
However, in the case of a listed company, compliance can be made if the copies of such documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form is sent to the members of the company at least twenty-one days before the date of the meeting unless the shareholders ask for full financial statements.
Rule 10 of 2014 Rules provide that the statement containing features shall be in Form AOC-3.
However the Rule 10 has been now amended to provide that the Companies which are required to comply with the Indian Accounting Standards (IndAS) as prescribed under Companies (Indian Accounting Standards) Rules, 2015, shall forward such statement in Form AOC-3A.
Accordingly Form AOC-3A has been inserted into the Rules providing for the information to be furnished in the said Statement in the form of Abridged Financial Statements in following four parts:
(i) Abridged Balance and;
(ii) Abridged Statement of Changes in Equity
(iii) Abridged Statement of Profit and Loss
(iv) Abridged Cash Flow Statement
Also, the above Abridged Financial Statements shall be supplemented by the Notes to the Abridged Financial Statements.
Notes to the Abridged Financial Statements
1. Complete Balance Sheet, Statement of Changes in Equity, Statement of Profit and Loss, Statement of Cash Flows (wherever applicable) and other statements and notes thereto prepared as per the requirements of Division II to the Schedule III to the Act are available at the Company’s website at link……………………. Copy of financial statement is also available for inspection at the registered office of the company during working hours for a period of 21 days before the date of AGM.
2. The amounts to be shown here should be the same as shown in the corresponding aggregated heads in the financial statements as per Schedule III.
3. Amount, if material, by which any item shown in the financial statements are affected by any change in the accounting policy, should be disclosed separately.
4. The amount of contingent liabilities and that of commitments (to the extent not provided for) should be disclosed separately, as per Division II, Schedule III.
5. All notes forming part of the financial statements as per Schedule III to which specific attention has been drawn by the auditors or which form a subject matter of qualification by the auditor should be reproduced.
6. Any item which constitutes 20% or more of the total income or expenditure (including provisions) should be shown separately.
7. Notes shall include the notes, if any, contained in the financial statements pertaining to the following:
(a) Period and amount of defaults on the balance sheet date in repayment of borrowings (other than Trade Payables) and interest thereon.
(b) Business combination like Amalgamations, acquisitions, restructurings, and demergers during the Reporting period.
(c) Material events affecting the going concern assumption.
(d) Investigation and inspection conducted or ordered under the provisions of Companies Act, 2013.
(e) Non-compliance with any law during the Reporting period and the penalties imposed/compounding fees paid.
(f) Any other note considered significant by the Management.
8. Disclosure of Related Party Transaction shall be made in terms of the requirements of Ind AS- 24.
9. Details of cash and cash equivalents shall be disclosed as follows:
a Balances with banks;
b. Cheques, drafts on hand;
c. Cash in hand;
d. Others( specify nature)
(Separate disclosure should be made for cash and cash equivalents earmarked for specific purposes).
10. Segment Reporting shall be in the same format/details as reported in audited financial statements.
The above stated salient features of the abridged financial statements should be authenticated in the same manner as the main financial statements.
DIRECTOR ‘S REPORT
Salient features of Director’s Report shall be disclosed. Salient features shall include the following.
- State of affairs of the company
- Details of Dividend declared
- Details of frauds, if any, reported
- Details of auditor’s qualifications and reply thereon
- Highlights of the company’s performance. These highlights shall be separately given for the companies material subsidiaries.
CONSOLIDATED FINANCIAL STATEMENTS
Where a company is required to prepare Consolidated Financial Statements, i.e. consolidated balance sheet and consolidated statement of profit and loss, the company shall mutatis mutandis follow the requirements of Division IIto the Schedule III of the Act, as applicable to a company in the preparation of balance sheet and statement of profit and loss. In addition, the consolidated financial statements shall disclose the information as per the requirements specified in the applicable Indian Accounting Standards (Ind AS) including the items specified at Serial numbers (1) and (2) under the heading “general instructions for the preparation of consolidated financial statements” contained in the said Schedule. The company should follow the above requirements mutatis mutandis while presenting the abridged consolidated financial statements .
The Auditor’s report on unabridged financial statements shall also be attached alongwith this Abridged financial statements.
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