Revised Schedule VI

Revised Schedule VI - Revised Schedule VI New concepts,...

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Unformatted text preview: Revised Schedule VI New concepts, disclosure requirements, key changes, implications, critical issues and Format Ministry of Corporate Affairs [MCA], Government of India, has on 3 March 2011, hosted on its website, the revised Schedule VI to the Companies Act, 1956 which deals with the Form of Balance sheet, Profit & Loss Account and disclosures to be made therein. The revised Schedule VI has been framed as per the existing non-converged Indian Accounting Standards notified under the Companies (Accounting Standards), Rules, 2006 and has no connection with the converged Indian Accounting Standards. The revised Schedule VI will apply to all the companies uniformly for the financial statements to be prepared for the financial year 2010-11 and onwards. The official notification amending the Schedule VI to the Companies Act, 1956 is still awaited. The revised Schedule VI introduces many new concepts and disclosure requirements and also does away with several statutory disclosure requirements. The practical application of the revised schedule throws up a number of questions, the answers to which may not be straight-forward or need additional guidance from the MCA or the Institute of Chartered Accountants of India (ICAI). In this document, we set out an overview of the key changes and implications, critical issues and our perspectives thereon. We expect that the revised Schedule VI will be followed by the publication of detailed guidance by the MCA / ICAI. Since these questions can only be conclusively answered by the MCA/ ICAI, companies are advised not to treat our perspectives as authoritative guidance. On critical issues, they should consult the MCA/ICAI or take legal/ professional advice. An overview of revised Schedule VI Overall approach 1. The revised schedule VI clarifies that its requirements for disclosure on the face of financial statements or in the notes are minimum requirements. Line items, sub-line items and sub-totals can be presented as an addition or substitution on the face of financial statements when such presentation is relevant for understanding of the companys financial position or performance. 2. It clarifies that disclosures required under accounting standards and in the Act are in addition to the disclosures set-out in the revised Schedule VI. A company will make such additional disclosures in the notes to accounts or by way of an additional statement unless these are required to be disclosed on the face of the financial statements. 3. The revised Schedule VI requires that if compliance with the requirements of the Act and/ or accounting standards requires a change in the treatment or disclosure in the financial statements, the requirements of the Act and/ or accounting standards will prevail over the Schedule VI. This is a significant change in the approach since earlier the requirements of Schedule VI were prevailing over accounting standards. 4. In the existing Schedule VI, break-up of amounts disclosed in main balance sheet and profit 4....
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Revised Schedule VI - Revised Schedule VI New concepts,...

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