1. Provisions relating to Accounts in The Companies Act, 2013
Presentation By
CA Anil Sharma

2. Accounts Chapter IX Sections 128 to 138 (except sections 135 & 138)
All sections are applicable w.e.f except :
Sec.130- Revision of accounts on Tribunal’s order
Sec 131- Voluntary revision of accounts
Sec NFRA
The Companies (Accounts) Rules, 2014
( applicable w.e.f )
Monday, November 12, 2018

3. Section 128- Books of Accounts to be kept by the company
Prepare and keep at its registered office:
Books of accounts,
Other relevant books and papers and
Financial statement
For every financial year
To be kept on accrual basis and according to the Double Entry system of accounting
Which give a true and fair view of the state of affairs of the company including its branch office(s)
May keep in electronic mode in such manner as may be prescribed.
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4. Books of Accounts
Section 2(13) Books of accounts include records maintained in respect of:
All money received and expended
All sales and purchases of goods and services
The assets and liabilities and
The items of cost as may be prescribed under section 148.
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5. Book and Paper
Section 2(12) - Book and Paper include books of accounts, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronics mode.
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6. Financial Statement
Section 2(40) defines ‘Financial statement’ to include:
Balance sheet
Profit and loss Account
Cash Flow Statement
Statement of Changes in Equity , if applicable
Explanatory Notes
Cash flow statement not applicable to :
OPC,
small company and
dormant company.
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7. Financial Year
Section 2(41) – means the period ending on the 31st March every year
Exception could be made by a Tribunal if a company being holding or subsidiary of a company incorporated abroad and is required to maintain accounts for a different financial year outside India
In the first year of incorporation:
If incorporated before 1st Jan, then period ending 31st March of the same financial year
otherwise, period ending 31st March of the next financial year.
Existing companies to align within two years.
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8. Rules(3)- Manner of Books of account to be kept in electronic mode
Conditions:
To remain accessible in India so as to be usable for subsequent reference.
To be retained in the same format in which originally generated sent or received.
To remain complete and unaltered.
To be capable of being displayed in a legible form.
To have proper system for storage, retrieval, display or printout of electronic records.
Not to dispose off or rendered unusable, unless permitted by law.
Information received from Branch shall not be altered.
The backup of books of account and other books and paper shall be kept in servers physically located in India on a periodical basis.
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9. Sec 129- financial Statement
It shall give true and fair view of the state of affairs of the company,
Shall comply with the accounting standards notified under section 133 and
Shall be in the form in Schedule III.
At every AGM of a company, the BOD shall lay before such meeting Financial statements for the financial year.
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10. CFS
Sub-section (3) of section 129 provides for preparation of CFS by a company having one or more subsidiaries .
‘Subsidiary’ for the purpose of this clause includes ‘ associates’ and ‘joint venture’.
CFS shall be in addition to stand alone financial statement.
Stand alone F/S to include a Statement containing salient features of F/S of subsidiaries in Form AOC-1.
Rule 6 provides for manner of consolidation.
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11. Rule 6- Manner of consolidation of accounts
To be made in accordance with the provisions of Schedule III and according to the applicable accounting standards.
In case not required to apply accounting standards, compliance of provisions on CFS as provided in Schedule III would be sufficient.
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12. Revision of accounts
Distinction between reopen and recast and revision
Section 130- reopen and recast ( on judicial directions)-
can be done only with approval of Tribunal and no objections from the Central Government, Income Tax Authorities, SEBI or any other regulator/authority
Allowed only if it is established that earlier accounts were prepared fraudulently or the affairs were mismanaged during the period casting doubt on the reliability of financial statement.
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13. Revision of accounts
Section 131- revision ( voluntarily by the company with the approval of the Tribunal)
For the three preceding financial years
If the Board feels that financial statements are not prepared according to Section 129 ( accounting standards, format)
Procedure (Draft Rules 9.8)
While granting approval , Tribunal to issue notice and hear the auditor of the original financial statement, if the present auditor is different.
After approval a GM may be called . Notice to include reasons for change, copy of approval and to accompany revised statement of directors and auditors.
Notice to be publish in newspaper
Auditor to ensure every shareholder is informed and
After adoption to be filed with Registrar by the company.
To revise all subsequent accounts, if relevant period is in between.
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14. National Financial Reporting Authority (NFRA)
Section 132- Body with advisory role having quasi-judicial powers for ensuring compliance
make recommendations to the Central Government on formulation and laying down of accounting and auditing policies and standards for adoption by companies and their auditors and
monitor and enforce the compliance with accounting standards and auditing standards by companies and their auditors.
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15. NFRA- Draft Rules The Authority shall have thee Committees :
(i) Committee on Accounting Standards,
(ii) Committee on Auditing Standards,
(iii) Committee on Enforcement.
Functions of Authority:
(i) Standard Setting
(ii) Monitoring, compliance review and overseeing quality of service
Enforcement
To conduct quality review of audit of:
Listed Companies;
Unlisted companies with net worth not less than Rs.500 crores or paid up capital not less than Rs.500 crores or annual turnover not less than Rs.1,000 crores as on 31st March of immediately preceding financial year; or
Companies having securities listed outside India
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16. Section 133- Accounting Standards
Rule 7 – Until accounting standards are specified under section 133, accounting standards as per Companies (Accounting Standards) rules, 2006 would be applicable.
Till NFRA is constituted, Central Govt. may add, amend and accounting standard as recommended by ICAI after examining recommendations of NACAS.
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17. Section 134(1)- Approval of financial Statement
The financial statement, including CFS, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board by
At least by the chairperson of the company where he is authorised by the Board or
by two directors out of which one shall be managing director and the Chief Executive Officer, if he is a director in the company,
the Chief Financial Officer and the company secretary of the company, wherever they are appointed,
in the case of a One Person Company, only by one director.
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18. Sec 134(3)- Board Report Report to include:
Extract of the annual return
Number of Board meetings
Directors Responsibility Statement
Statement of Declaration by Independent directors
Explanations or comments on every qualification, adverse remarks or disclaimer by the auditor
Particulars of loans, guarantees or investment under section 186
Particulars of related party transactions u/s 188 ( in Form AOC-2)
State of company’s affair
Proposed dividend and transfer to reserves
Material changes and commitments affecting the financial position of the company
CSR Policy, ( Refer Rule 9) Risk Management Policy
Details on conservation of energy, technology absorption, forex earning and outgo (Refer Rule 8(3))
Such other matters as may be prescribed.
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19. Sec 134(3)- Board Report
Rule 8(5)- other matters to be included in Report:
Financial summary
Changes in the nature of business
Details of changes in directors or KMPs
Changes in subsidiaries, associates or JVs
Details of deposits including which are not in compliance with the requirement of chapter V
Significant orders passed by the regulator impacting going concern status
Details of adequacy of internal financial controls w.r.t. F/S.
In case of every listed company and every other public company having paid up share capital of Rs. 25 Crores or more, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.
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20. Sec 136- Copies of FS to members
FS including CFS, if any, auditors report and other documents required to be part of the Financial statements.
Rule 10 :Listed companies can sent a statement containing salient features of financial statement in Form AOC-3.
Rules 11: In case of listed companies or such public company having net worth of more than one Crore Rupees or turnover of more than 10 Crores Rupees, the financial statement may be sent by:
Electronic mode to such members whose shareholding is in DEMAT form and ID are registered with depositories for communication purposes
Electronic mode to those others who agreed to received
To others physical copies by any recognised mode of delivery
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