Financial statements are the set of audited books of accounts & other secretarial documents of company for a particular year. Many times financial statements are required of a company for various reasons. Don’t get confuse, the financial statements are defined in companies act, 2013. I have mentioned most of the information related to What is Financial Statement of a Company.
What financial statement includes?
As per section 2(40) financial statement includes:
- a balance sheet as at the end of the financial year;
- a profit and loss account, or in the case of a company carrying on anyactivity not for profit, an income and expenditure account for the financial year;
- cash flow statement for the financial year;
- a statement of changes in equity, if applicable; and
- any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):
So next time when anybody asked you of financial statements, you should provide the above documents.
And you should remember, it is clear from above definition that financial statement does not include:
- Audit report
- Director report
- Any other tax report like tax audit report etc.
- Notice of AGM
We know that you anybody can download the public documents of a company from MCA website. So what actually public documents means? Public documents are not defined in companies act, 2013. These are the documents which are filed by a company with registrar (MCA) and available for download for general public. Almost all the documents are filed by the company can be downloaded by the general public.
Is profit & loss statement is public document?
Profit & loss statement is an important and confidential document of a company. It includes its revenue and cost. So question is whether it is available for download to general public.
As per section 220 of companies Act. 1956 provides no person other than member of a company was entitled to inspect, or obtain copies from registrar (MCA), of profit & loss account. So as per companies Act, 1956, profit & loss account was a private document.
But after applicability of Companies Act, 2013, there is no such exemption provided to profit & loss account of private company in the corresponding section 137 of the act. So profit & loss account of any company is no more a private document.
How financial statement should be?
Section 129 of Companies Act 2013 provides the following:
- 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 notified under section 133 and shall be in the form or forms as may be provided for different class or classes of companies in Schedule III: This shall not apply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of financial statement has been specified in or under the Act governing such class of company:
- At every annual general meeting of a company, the Board of Directors of the company shall lay before such meeting financial statements for the financial year.
- Where a company has one or more subsidiaries, it shall, in addition to financial statements, prepare a consolidated financial statement of the company and of all the subsidiaries in the same form and manner as that of its own which shall also be laid before the AGM of company along with laying of its financial statement. Provided that the company shall also attach along with its financial statement, a separate statement having the salient features of financial statement of its subsidiary or subsidiaries in such form as may be prescribed:. Subsidiary shall include associate company and joint venture.
- The provisions of Companies Act, 2013 applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements.
- Where the financial statements of a company do not comply with the accounting standards, the company shall disclose in its financial statements, the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any, arising out of such deviation.
- If a company contravenes the provisions of this section, the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
Who shall approve or sign financial statements?
As per section 134 the financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of Board 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, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon.
What are other documents attached to Financial statement for presenting at AGM?
As per section 134 following shall be attached with financial statements.
- Auditors’ report shall be attached to every financial statement.
- There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors
- In case of a One Person Company, a report containing explanations or comments by the Board on every qualification, adverse remark or disclaimer made by auditor in his report.
- The Board’s report and any annexures thereto shall besigned by its chairperson of the company if he is authorised by the Board and where he is notso authorised, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director.
What are the other reports forms part of financial statement for circulation or publication?
As per section 134(7), a signed copy of every financial statement, including consolidated financial statement, if any, shall be issued, circulated or published along with a copy each of—
(a) Any notes annexed to or forming part of such financial statement;
(b) Auditor’s report; and
(c) Board’s report
If a company contravenes the provisions section 134, the company shall be punishable with fine which shall not be less than 50 thousand rupees but which may extend to 25 lakh rupees and company’s every officer who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or withboth.
When financial statement to be filed with Registrar?
Following are the various cases under which financial statement are presented with Registrar of companies.
Normal AGM: Financial adopted
As per section 137(1) A copy of the financial statements, including consolidated financial statement, if any, along with all documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall befiled with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed within the time specified under
Normal AGM: Financial Unadopted
Provided that where the financial statements under sub-section (1) are not adopted atannual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose:
Adjourned AGM: Financial Unadopted
Provided further that financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed within the time specified under section 403.
One Person Company
Provided also that a One Person Company shall file a copy of the financial statements duly adopted by its member, along with all documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year:
Provided also that a company shall, along with its financial statements to be filed withthe Registrar, attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India.
AGM not held
(2) Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under sub-section(1), duly signed along with the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within 35 days of the last date before which the annual general meeting should have been held and in such manner, with such fees or additional fees as may be prescribed within the time specified, under section 403.
What is the penalty for not filing financial with registrar with time?
As per section 137(3), If a company fails to file the copy of the financial statements before the expiry of the period specified in section 403, the company shall be punishable with fine of Rs.1000 for every day during which the failure continues but which shall not be more than Rs.1000000, and managing director and Chief Financial Officer of company, if any, and, in the absence of managing director and Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with provisions of this section, and, in the absence of any such director, all directors of company are liable for imprisonment for a term which may extend to 6 months or with fine which shall not be less than Rs.100,000 but which may extend to Rs.500,000, or with both.
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