In this article, we will discuss in detail the financial Statements of the company and its requirements and compliances under the provisions of the companies act,2013.
Financial Statement
Financial Statements are the annual statements or records prepared at the end of the accounting period or financial year by complying with the consistent accounting principles, accounting standards, etc., Financial Statements represent the financial performance and financial strength of the company. Many users rely on the financial statements to draw a conclusion on the profitability and financial position of the company.
Requirements of a Financial Statement
Financial Statements is required to be prepared in a manner which gives true and fair view of the state of affairs of the company or companies, and the same should comply with the accounting standards notified under section 133 and shall be in the form or forms as prescribed in the Schedule III of the companies act and such financial statements should be disclosed in the Annual General Meeting (AGM).
In case of a Holding company, it is required to prepare a consolidated financial statement in accordance with the applicable accounting standards and schedule III of the companies act, 2013 for the company along with that of its subsidiaries, joint ventures, associate company and should disclose the same at the annual general meeting.
Types of Financial Statements
Financial Statements consists of the following
- Profit and Loss Account (Statement of Performance)
- Balance Sheet (Statement of Financial Position)
- Cash Flow and Fund Flow Statement (Statement of movement of funds)
- And also includes
- Notes to accounts,
- supplementary schedules and any other information which forms part of such statements.
- Statement of Changes in Equity (for prescribed companies).
- And excludes
- Director’s report
- Statements of chairman and management and any other similar items.
Importance of Financial Statements
Financial Statements are the watchdog of the company’s Financial Condition It has its own relevance that helps the Stakeholders to interpret the actual Financial result of the Industry or company. The tools used in such analysis namely, Ratios (comparison depend upon industry to industry) or Trial balance and Ledger. These are the tools that help not only stakeholders to determine result but also assist the Management of the company with respect to certain particulars of Financial Statement or a part of the Financial Statement.
Financial Statement for Personal financing
Among all the financial statement, the personal cash flow statement and the personal balance sheet are the two most important personal financial statements, if the user is considering the Financial Statement for its own financing
Non-Application of Sec-129 (Financial Statement)
The provisions of section 129- Financial statement shall not be applicable to the following company which has its own Act for preparation of its Financial Statement
- Insurance Company-governed by the Insurance Act, 1938, or the Insurance Regulatory and Development Authority Act, 1999
- Banking Company governed by the Banking Regulation Act, 1949
- A company engaged in the generation or supply of electricity which is governed under the Electricity act, 2003
- Any other company governed under any other law for the time being in force.
Penalty
In case of contravention to any of the provisions of section 129 of the companies act,
- the managing director, whole-time director, Chief financial officer or any other officer appointed to comply with the provisions of section 129 or
- in case of absence of such person, all the directors
shall be punishable with imprisonment which may extend to one year or punishable with fine which shall not be less than Rs.50,000/-, but which may extend to Rs.5,00,000/- or punishable with both.