- May 18, 2021
- Posted by: TeamSCK
- Category: Economics
Subject to the provisions of Section 467 of the Companies Act, 2013, the Central Government has made some amendments to the Schedule III of the said Act, which shall come into effect from 1St April, 2021.
Some significant amendments have been mentioned below:
Preparation of Balance Sheet
Round Off
The figures appearing in the financial statements must be rounded off and total income should be taken as a basis of such round off –
| Total Income | Round off to the nearest |
| Less than Rs. 100 Cr. | Hundreds, Thousands, Lakhs |
| Rs. 100 Cr. Or more | Thousands, Lakhs |
Promoter’s Shareholdings
In ‘Note to Accounts’ of the Balance Sheet, under head ‘Share Capital’, details of Promoter’s shareholdings shall be provided separately for each class of shares.
Substitution of Words
Under head ‘Non- Current Assets’ after the word ‘Property Plant and Equipment (PPE)’ the words ‘and Intangible Assets’ has been added and in place of ‘Tangible Assets’, ‘Property Plant and Equipment’ has been replaced.
Ageing Schedule
The notes to Trade Payables and Trade Receivables shall consist of an ageing schedule.
Periods in Ageing Schedule
| Trade Payables | Trade Receivables |
| 1-1 Year | 0-6 Months 6M- 1 Year |
| 1-2 Years | 1-2 Years |
| 2-3 Years | 2-3 Years |
| 3 < | 3 < |
Reclassification
Earlier, Current Maturities of Long-term Borrowings was classified under heading ‘Other Current Liabilities’, after the amendment the same would be under head ‘Short-term borrowings’.
Security Deposits shall now be reclassified as ‘Other Current Assets’ instead of ‘Long term loans and advances’.
Utilization of funds
If the funds borrowed for a specific purpose has been used for a purpose other than the specified one, details of such utilization should be disclosed.
Disclosure of change in assets
A reconciliation statement shall be provided in respect of gross and net carrying amount of each class of assets at the beginning and at the end of the reporting period showing additions, disposals, acquisitions, revaluations, and various other adjustments.
Other Discloures
If the compnay has been declared as a wilful defaulter by any bank or financial institution, the same has to be disclosed Disclosure of company’s relationship with entities whose name has been struck off.
Corporate Social Responsibility
Company covered under Section 135 of the Companies Act, shall disclose certain CSR activities, namely –
- Amount to be spent on CSR during the year
- Amount actually incurred
- Shortfall, if any, at the end of the year and the reason of such shortfall
- Nature of CSR activities
Loans to Promoters/Directors, etc.
If any loans or advances in the nature of loans have been granted to Promoters, KMPs and other Related Parties, the same should be disclosed.
Disclosure of Ratios
Disclosure of the following ratios is required:
- Current Ratio
- Debt-Equity Ratio
- Debt Service Coverage Ratio
- Return on Equity Ratio
- Inventory Turnover Ratio
- Trade Receivables Turnover Ratio
- Trade Payables Turnover Ratio
- Net Capital Turnover Ratio
- Net Profit Ratio
- Return on Capital Employed
- Return on Investment
Benami Property
In case, any proceedings have been initiated or pending against the entity under the Benami Transactions (Prohibitions) Act, 1988, the corresponding disclosures shall be provided in the financial statements.
Revaluation of PPE
Disclosure as to whether the revaluation of Property, Plant and Equipment, if any, is as done by a Registered Valuer.
Layer of Subsidiaries
The Companies Act, 2013, provides that a company cannot have more than two layers of subsidiaries. Hence, the name and the CIN of the companies beyond the specified layers shall be disclosed as a part of financial statements.
Utilization of Borrowed Funds
Details of utilization of Borrowed funds and share premium in respect of transactions where entity has provided or received funds from any person or entity, including foreign entity shall be provided.
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