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instructions for preparation of financial statements out of which some are landmark changes. These instructions are being reproduced along with their analysis in this Chapter:-

General Instructions Analysis

1. Where compliance with the requirements of the Act including Accounting Standards as applicable to the companies require any change in treatment or disclosure including addition, amendment, substitution or deletion in the head/sub-head or any changes inter se, in the Financial Statements or statements forming part thereof, the same shall be made and the requirements of the Schedule VI shall stand modified accordingly.

This para has been taken as it is from Revised Schedule VI. This was a landmark change in the history of Financial Reporting System prevalent in India as Revised Schedule VI as well as Schedule III has given supremacy to the provisions of the Companies Act and Accounting Standards over the Revised Schedule VI / Schedule III, whereas earlier Old Schedule VI requirements were supreme and were overriding the Accounting Standards.

Now whenever accounting standards are changed, the resultant accounting treatment, presentation and disclosures will not be in conflict with the requirements of Schedule III as the same shall stand modified accordingly.

2. The disclosure requirements specified in this Schedule are in addition to and not in substitution

Here also importance of Accounting Standards is again reiterated as all the disclosure requirements specified

of the disclosure requirements specified in the Accounting Standards prescribed under the Companies Act, 2013. Additional disclosures specified in the Accounting Standards shall be made in the Notes to Accounts or by way of additional statement unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as required by the Companies Act shall be made in the Notes to Accounts in addition to the requirements set out in this Schedule.

in the Accounting Standards need to be complied with in the Notes to Accounts / additional statement / on the face of the Financial Statements, besides compliance with Schedule III.

Also all other disclosures as required by the Companies Act shall be made in the Notes to Accounts.

Companies need to comply with the disclosure requirements of all three i.e. Schedule III, Accounting Standards and Companies Act, 2013. However in the event of any conflict between Schedule and AS or Companies Act, the later will prevail and Schedule will take a back seat. 3. (i) Notes to Accounts shall contain

information in addition to that presented in the Financial Statements and shall provide where required (a) narrative descriptions or disaggregations of items recognized 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 and Statement of Profit and Loss shall be cross- referenced to any related information in the Notes to Accounts. In preparing the Financial Statements including the Notes to Accounts, a balance shall be maintained between providing excessive detail that may not assist users of Financial

Notes to accounts have been defined and disaggregations (break up) which prior to Revised Schedule VI were disclosed in Schedules will also be part of Notes. Consequently each item on the face of the Balance Sheet and Statement of Profit and Loss shall be cross-referenced to any related information in the Notes to Accounts (as against Schedules in old Schedule VI).

Statements and not providing important information as a result of too much aggregation.

4. (i) Depending upon the turnover of the company, the figures appearing in the Financial Statements MAY BE rounded off as below:

Turnover Rounding off Less than one hundred To nearest Hundreds, thousands, lakhs or millions or decimal thereof. One hundred crore or more To nearest lakh, millions or crore, or decimal thereof.

(ii) Once a unit of measurement is used, it should be used uniformly in the Financial Statements.

The rounding off is optional and not mandatory. However, if rounding off is opted then the said rule needs to be complied with.

The limit of turnover and the extent of rounding off has been kept intact in line with Revised Schedule VI. Further requirement of using the same unit of measurement uniformly across the financial statements has been retained. This implies that if a company has opted to round off in millions, then it need to apply it uniformly in Balance Sheet, Statement of Profit and Loss and Notes to Accounts

5. Except in the case of the first Financial Statements laid before the Company (after its incorporation) the

corresponding amounts (comparatives) for the immediately

preceding reporting period for all items shown in the Financial Statements including notes shall also be given.

There is no change here vis-à-vis Revised Schedule VI wherein also previous year’s figures were required to be given.

6. For the purpose of this Schedule, the terms used herein shall be as per the applicable Accounting Standards.

The terms used such as ‘associate’, ‘related parties’, etc. shall be as per the notified Accounting Standards. For glossary of terms refer to chapter-9.

Balance Sheet