FINANCIAL
STATEMENTS & CONSOLIDATED FINANCIAL STATEMENTS UNDER COMPANIES ACT, 2013
By
CS D HEM SENTHIL RAJ AND CS K VINOTH
OVERVIEW
OF SECTION 129 OF CA, 2013
Section
129 of the Companies Act, 2013 lays
down that the financial statements shall give a true and fair view of the state
of affairs of the Company or Companies comply with the Accounting Standards and
the format of those financial statements shall be as per Schedule III of CA,
2013.
Sub
Section (3) of Section 129 of the Companies Act, 2013
mandates every company to prepare a consolidated financial statement for all
the Companies having one or more subsidiaries.
The Financial
Statements of the Company shall be laid by the Board of Directors before the
shareholders at the Annual General Meeting for each financial year.
Key
Points to Note in Subsidiary Definition under CA, 2013:
Subsidiary
includes Associate Companies and Joint Ventures both in India and Foreign country.
Applicability
of Consolidated Financial Statement (CFS):
ü
Private Limited Company
ü
Public Unlisted Company and
ü
Listed Company
Objective
of CFS:
The
Concept of CFS was brought with an objective of achieving the true and fair
view of reporting the position of the company for the financial year, since the
consolidated financial Statements are generally considered as the primary
financial statements from an economic entity perspective, whereas the
standalone Financial Statements projects only the position of the company in
its individual performance and it does not provide the true and fair view to
the shareholders about the overall
performance of the company with its subsidiaries.
Synopsis:
Previously
listed companies which are having subsidiary companies (Associate or Joint
Venture is not included in the definition of Subsidiary Company) are required
to prepare the consolidated financial statements under the Securities and
Exchange Board of India (SEBI) Regulations.
Now
the CA, 2013 mandates every Listed, unlisted public and private limited companies
to prepare consolidated financial statements which are having subsidiary
companies as defined under Section 2(87) of the Companies Act, 2013, which
includes Associate Company and Joint Venture (Both in India and Abroad).
Additional Disclosures:
The
Company in addition to the financial statements shall also attach a separate
statement containing the salient features of the financial statements of the
subsidiaries.
Format of Financial Statement:
The
Format of Financial Statement shall be as per Schedule III of the Companies
Act, 2013.
General Instruction for the
preparation of Consolidated Financial Statement are given in the Schedule III
of the CA, 2013 which provides an option to the companies to disclose the list
of subsidiaries or associates or joint ventures which have not been
consolidated in the consolidated financial statements along with the reason for
not consolidating the financial statements.
In case of non-Compliance of
Accounting Standards:
The
Company shall disclose in its financial statements with regard to any deviation
from the accounting standards along with the reasons for such deviation and the
financial effects, if any arising out of such deviation.
Penal Provisions for
non-compliance of section 129 of CA, 2013:
If any company
contravenes with the provisions of section 129 of CA, 2013, the following
officials viz.,
a) Managing
Director
b) Whole
Time Director in charge of finance
c) Chief
Financial Officer
d) Any
other person authorized by Board with the duty of complying with this
provision.
e) In
the absence of any of the officers mentioned above, all the Directors shall be
punishable.
Details of
Punishments:
(i)
Imprisonment for a term which may
extend to one (1) year or
(ii)
Fine which shall not be less than
Rs. 50,000/- but which may extend to Rs. 5,00,000/- or
(iii)
With both.
By
CS K VINOTH
CS D HEM SENTHIL RAJ
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