MCA amends Instructions For Preparation of Balance Sheet and Statement Of Profit And Loss of A Company / NBFCs
Ministry of Corporate Affairs notifies Ind AS Schedule III applicable to NBFCs. Schedule III will apply to NBFCs covered under Ind AS applicability. MCA has also amended the existing Division I (Indian GAAP) & Division II (Ind AS) Schedule III. Ind AS Schedule III changes require companies preparing Ind AS financial statements to give additional disclosures related trade receivables, loans
receivables and trade payables and also comply with the disclosure requirements under the Micro, Small and Medium Enterprises Development Act, 2006
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Notification
New Delhi, 11th October, 2018
G.S.R. (E).—In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following further amendments in Schedule III to the said Act with effect from the date of publication of this notification in the Official Gazette, namely:-
In the said Schedule,-
(a) in Division I,-
(i) under the heading “General instructions for preparation of Balance Sheet and statement of Profit and Loss of a company”, under sub-heading “General instructions”, in paragraph 4, in clause (ii), for the word “shall”, the word “should” shall be substituted;
(ii) in Part I- Balance Sheet,-
(A) under the heading “II Assets”, under sub-heading “Non-current assets”, for the words “Fixed assets”, the words “Property, Plant and Equipment” shall be substituted;
(B) in the “Notes”, under the heading “General Instructions for preparation of Balance Sheet”, in paragraph 6,-
(I) under the heading “B. Reserves and Surplus”, in item (i), in sub- item (c), the word “Reserve” shall be omitted;
(II) in clause W., for the words “fixed assets”, the words “Property, Plant and Equipment” shall be substituted;
(b) in Division II, in Part I- Balance Sheet,-
(i) under the heading “Equity and Liabilities”, for the words “Trade payables” at both the places where they occur, the following shall be substituted, namely:—
“Trade Payables :-
(A) total outstanding dues of micro enterprises and small enterprises; and
(B) total outstanding dues of creditors other than micro enterprises and small enterprises.”;
(ii) under the heading “Statement of Changes in Equity”, under sub-heading “B. Other Equity”,-
(A) for the words “Securities Premium Reserve”, the words “Securities Premium” shall be substituted;
(B) The “Note” shall be renumbered as clause (i) thereof and after clause (i) as so renumbered, the following clause shall be inserted, namely:-
“(ii) A description of the purposes of each reserve within equity shall be disclosed in the Notes.”;
(iii) in the “Notes”, under the heading “General Instructions for Preparation of Balance Sheet”,-
(A) in paragraph 6,-
(I) under the heading “A. Non-Current Assets”,-
(i) under sub-heading “VII. Trade Receivables”, for item (i), the following shall be substituted, namely:—
“(i) Trade Receivables shall be sub-classified as:
(a) Trade Receivables considered good – Secured;
(b) Trade Receivables considered good – Unsecured;
(c) Trade Receivables which have significant increase in Credit Risk; and
(d) Trade Receivables – credit impaired.”;
(ii) under sub-heading “VIII. Loans”, for item (ii), the following shall be substituted, namely:—
“(ii) Loans Receivables shall be sub-classified as:
(a) Loans Receivables considered good – Secured;
(b) Loans Receivables considered good – Unsecured;
(c) Loans Receivables which have significant increase in Credit Risk; and
(d) Loans Receivables – credit impaired,”;
(II) under the heading “B. Current Assets”,-
(i) under sub-heading “III. Trade Receivables”, for item (i) the following shall be substituted, namely:—
“(i) Trade Receivables shall be sub-classified as:
(a) Trade Receivables considered good – Secured;
(b) Trade Receivables considered good – Unsecured;
(c) Trade Receivables which have significant increase in Credit Risk; and
(d) Trade Receivables – credit impaired.”;
(ii) under sub-heading “V. Loans”, for item (ii), the following shall be substituted, namely:—
“(ii) Loans Receivables shall be sub-classified as:
(a) Loans Receivables considered good – Secured;
(b) Loans Receivables considered good – Unsecured;
(c) Loans Receivables which have significant increase in Credit Risk; and
(d) Loans Receivables – credit impaired.”;
(III) after the heading “F. Current Liabilities” and the entries relating thereto, the following shall be inserted, namely:—
“FA. Trade Payables
The following details relating to micro, small and medium enterprises shall be disclosed in the notes:-
(a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the end of each accounting year;
(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), along with the amount of the payment made to the supplier beyond the appointed day during each accounting year;
(c) the amount of interest due and payable for the period of delay in making payment (which has been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006;
(d) the amount of interest accrued and remaining unpaid at the end of each accounting year; and
(e) 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 Micro, Small and Medium Enterprises Development Act, 2006.
Explanation.- The terms ‘appointed day’, ‘buyer’, ‘enterprise’, ‘micro enterprise’, ‘small enterprise’ and ‘supplier’, shall have the same meaning as assigned to them under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006.”.
(B) in paragraph 9, after the words “For instance,”, the words “plain vanilla” shall be inserted;
(c) after Division II and the entries relating thereto, the following shall be inserted, namely:-
“Division III
Financial Statements for a Non-Banking Financial Company (NBFC) whose financial statements are drawn up in compliance of the Companies (Indian Accounting Standards) Rules, 2015.
GENERAL INSTRUCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS OF A NON-BANKING FINANCIAL COMPANY (NBFC) THAT IS REQUIRED TO COMPLY WITH INDIAN ACCOUNTING STANDARDS (Ind AS)
1. Every Non-Banking Financial company as defined in the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 to which Indian Accounting Standards apply, shall prepare its financial statements in accordance with this Schedule or with such modification as may be required under certain circumstances.
2. Where compliance with the requirements of relevant Act, Regulations, Guidelines or Circulars issued by the relevant regulator from time to time including Indian Accounting Standards (Ind AS) (except the option of presenting assets and liabilities in accordance with current, non-current classification as provided by relevant Ind AS) as applicable to the NBFCs require any change in treatment or disclosure including addition, amendment, substitution or deletion in the head or sub-head or any changes inter se, in the financial statements or statements forming part thereof, the same shall be made and the requirements under this Schedule shall stand modified accordingly.
3. The disclosure requirements specified in this Schedule are in addition to and not in substitution of the disclosure requirements specified in the Indian Accounting Standards. Additional disclosures specified in the Indian Accounting Standards shall be made in the Notes or by way of additional statement or statements unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as required by the Companies Act, 2013 shall be made in the Notes in addition to the requirements set out in this Schedule.
4. (i) Notes shall contain information in addition to that presented in the Financial Statements and shall provide where required-
(a) narrative descriptions or disaggregations of items recognised in those statements; and
(b) information about items that do not qualify for recognition in those statements.
(ii) Each item on the face of the Balance Sheet, Statement of Changes in Equity and Statement of Profit and Loss shall be cross-referenced to any related information in the Notes. In preparing the Financial Statements including the Notes, a balance shall be maintained between providing excessive details that may not assist users of Financial Statements and not providing important information as a result of too much aggregation.
5. Depending upon the total income of the NBFC, the figures appearing in the Financial Statements shall be rounded off as below:
Once a unit of measurement is used, it should be used uniformly in the Financial Statements.
6. Financial Statements shall contain the corresponding amounts (comparatives) for the immediately preceding reporting period for all items shown in the Financial Statements including Notes except in the case of first Financial Statements after incorporation.
7. Financial Statements shall disclose all ‘material’ items, i.e., the items if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the size or nature of the item or a combination of both, to be judged in the particular circumstances.
8. For the purpose of this Schedule, the terms used herein shall have the same meanings assigned to them in Indian Accounting Standards.
9. Where any Act, Regulation, Guidelines or Circulars issued by the relevant regulators from time to time requires specific disclosures to be made in the standalone financial statements of an NBFC, the said disclosures shall be made in addition to those required under this Schedule.
10. The NBFCs preparing financial statements as per this Schedule may change the order of presentation of line items on the face of financial statements or order of line items within the schedules in order of liquidity, if appropriate, considering the operations performed by the NBFC.
Note: This Schedule sets out the minimum requirements for disclosure on the face of the Financial Statements, i.e., Balance Sheet, Statement of Changes in Equity for the period, the Statement of Profit and Loss for the period (The term ‘Statement of Profit and Loss’ has the same meaning as ‘Profit and Loss Account’) and Notes. Cash flow statement shall be prepared, where applicable, in accordance with the requirements of the relevant Indian Accounting Standard.
Line items, sub-line items and sub-totals shall be presented as an addition or substitution on the face of the Financial Statements when such presentation is relevant to an understanding of the NBFC’s financial position or performance or to cater to categories of NBFCs as prescribed by the relevant regulator or sector-specific disclosure requirements or when required for compliance with the amendments to the relevant statutes or under the Indian Accounting Standards.
[F.No. 17/62/2015-CL-V Vol-I]
K.V.R. Murty, Jt. Secy
Note: Schedule III of the Companies Act, 2013 came into force with effect from the 1st April, 2014 vide Notification S.0.902 (E), dated 26th March 2014 and subsequently amended vide Notification G.S.R. 679(E), dated 4th September 2015 and vide Notification G.S.R. 404(E), dated 6th April 2016.
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