Transcript Revised Schedule VI PPT

Revised Schedule VI
Introduction
 Notified by MCA on February 28, 2011.
 Specifies Vertical format for Balance Sheet and Statement of
Profit and Loss Account.
By: CA Tarun Kumar Goel
Applicability
 Applicable for the year commencing on or after April 1, 2011.
 The requirements does not apply to Banking and Insurance
companies.
 Applicable to companies engaged in generation or supply of
electricity as no format is prescribed under Electricity Act,
2003 or rules thereto.
Applicability contd/ Interim financial reporting as per AS 25 up to March 31, 2012:
Presents complete set of financial statement: Revised Schedule VI
 Presents condensed financial statement: Old Schedule VI

 Companies listed under listing agreement with SEBI:
For Half Yearly Results: Format specified in Annexure IX to
listing agreement (Till its revised)
 For Annual Results: Revised Schedule VI

Main Principles
 Compliance with the Act and/or Accounting standards:
Requirements of the Act and/or Standards will override the
related requirement of Schedule VI
 Disclosures as required by Accounting Standards:
Additional disclosure specified in the Accounting standards
shall be made in the notes to accounts or by way of
additional statements unless required to be disclosed on the
face of the Financial Statements.
Main Principles Contd/ All items of Assets and Liabilities to be bifurcated between
current and non-current portions for presentation.
 Information in Schedule to Balance Sheet and Statement of
Profit and Loss Account shall be furnished as a part of Notes to
Accounts.
 The terms used in Revised Schedule will carry the meaning as
defined in by applicable Accounting Standards. Ex: Related
parties, associates etc.
Main Principles Contd/ Rounding off rules (where opted for) based on turnover

Where turnover up to Rs. 100 crores.- Hundreds, thousands, lakhs
or millions or decimal thereof.

Where turnover exceeds Rs. 100 crores- lakhs, millions or crores
or decimal thereof.
Once a unit of measurement is used, it should be used uniformly in the
Financial Statement.
Main Principles Contd/ Only vertical format of Balance sheet and Statement of Profit
and loss account are specified.
 Title of Balance Sheet:
Liability Side
Asset Side
 Changed from
Sources of Funds
Changed from
Application of Funds
 To Equity and
Liabilities
 To Assets
Depiction of Balance Sheet
EQUITY AND LIABILITIES
 Shareholder’s Funds
 Share capital
 Reserves and Surplus
 Money received against share warrants
 Share application money pending allotment
 Non-current liabilities
 Long-term borrowings
 Deferred tax liabilities (Net)
 Other long term liabilities
 Long-term provisions
 Current liabilities
 Short-term borrowings
 Trade payables
 Other current liabilities
 Shot-term provisions
Depiction of Balance Sheet contd/ASSETS
 Non-current assets
 Fixed assets
 Tangible assets
 Intangible assets
 Capital work-in-progress
 Intangible assets under development
 Non-current investments
 Deferred tax assets (Net)
 Long-term loans and advances
 Other non-current assets
 Current assets
 Current investments
 Inventories
 Trade receivables
 Cash and Bank Balance
 Short-term loans and advances
 Other current assets
Depiction of Statement of Profit and
Loss
I.
II.
III.
IV.
Revenue from operations
Other Income
Total Revenue (I-II)
Expenses:
 Cost of materials consumed
 Purchases of Stock-in-trade
 Changes in inventories of finished goods, work in progress and Stock-intrade
 Employee benefit expenses
 Finance cost
 Depreciation and amortization expenses
 Other expenses
V.
Profit before exceptional and extraordinary items and tax (III-IV)
VI. Exceptional items
VII. Profit before extraordinary items and tax (V-VI)
VIII. Extraordinary items
IX. Profit before tax (VII-VIII)
Depiction of Statement of Profit and
Loss contd/X.
XI.
XII.
XIII.
XIV.
XV.
XVI.
Tax expense:
 Current tax
 Deferred tax
Profit/(Loss) for the period from continuing operations (IX-X)
Profit/(Loss) from discontinuing operations
Tax expense from discontinuing operations
Profit/(Loss) from discontinuing operations after tax (XII-XIII)
Profit/(Loss) for the period (XI+XIV)
Earning per equity share:
 Basic
 Diluted
Criteria for classifying Current Liability/
Asset:
 It is expected to be settled in the company’s normal
operating cycle.
 It is held primarily for the purpose of being traded.
 It is due to be settled within twelve months after the
reporting date; or
 The company does not have an unconditional right to
defer settlement of the liability/asset for at least twelve
months after the reporting date.
Other than that all should be classified as Non Current
Liabilities/Assets
Major changes related to Balance Sheet
items:
 New Line Items - Liabilities:
Money received against Share Warrants
Share Application Money pending allotment
Trade Payables
Separate headings for classifying Non-current and
Current Liabilities.
 New Line Items - Assets:
Intangible Assets under development
Trade Receivables
Separate headings for classifying Non-current and
Current Assets.
Cash and cash equivalents.
New Disclosures in Share Capital:
 A reconciliation of the number of shares outstanding at
the beginning and at the end of the reporting period
 Number of shares held by each shareholder holding
more than 5% shares in the company as on balance sheet
date.
 For the period of five years immediately preceding the
balance sheet date:
 aggregate number of shares allotted as fully paid up:
pursuant to contract(s) without receiving payment
being received in cash
by way of bonus share.
 Aggregate number and class of shares bought back
Major changes related to balance sheet items
Reserves and Surplus:
 Surplus i.e. balance in Statement of Profit and Loss
disclosing allocations and appropriations such as
dividend, bonus shares and transfer to/from reserves etc.
 Debit balance of P&L A/c to be shown as a negative
figure under the head ‘Surplus’
Major changes related to balance sheet items
Share application money pending allotment
 Application money not exceeding the capital offered for
issuance and to the extend not refundable shall be shown
separately on the face of the Balance Sheet.
 The amount in excess of subscription or if the requirements
of minimum subscription are not met will be shown under the
head “Other current liabilities”.
Major changes related to balance sheet items
Non-current and current liabilites:
 Separate disclosure for Long term borrowings and short




term borrowings under non- current and current
liabilities.
Loans and advances from subsidiaries has been replaced
by Loans and advances from related parties.
Period and amount of continuing default as on the
balance sheet date in repayment of loans and interest,
shall be specified separately in each case.
Current maturities of non-current liability due within 12
months from the Balance Sheet date shall be re classified as current liabilities.
Bifurcation of Long and Short term provision as noncurrent and current liabilities.
Major changes related to balance sheet items
Other current liabilities:
 Share Application Money:
Application money received for allotment of securities
and due for refund and interest accrued thereon.
 The period for which the share application money has
been pending beyond the period for allotment as
mentioned in the document inviting application for
shares along with the reason for such share application
money being pending shall be disclosed.
 Trade Payable:
Classified as trade payable if ,it is in respect of the
due on account of goods purchased or services rendered
in normal course of business.
Separate disclosure for MSME not required on the
face of Balance Sheet. However, same shall be given in
Notes to Accounts.
Major changes related to balance sheet items
Fixed Assets:
 Assets under lease shall be separately specified for each
class of assets
 Accumulated depreciation shall be shown as a part of
referring note to fixed assets and, not on the face of
Balance Sheet.
 Intangible asset under development shall be disclosed
separately.
 Capital advances shall be disclosed under Non-current
Assets under the sub heading of Loans and Advances
irrespective of the time when assets are expected to be
received.
Major changes related to balance sheet items
Non-current Investments:
 Under each classification, details shall be given of names
of the bodies corporate, indicating separately whether
such bodies are
i. Subsidiaries,
ii. Associates,
iii. Joint ventures, or
iv. Controlled special purpose entities (Term not yet
defined under the Act, Standards or rules)
 Investments carried at other than cost should be
separately stated specifying the basis of valuing them.
Major changes related to balance sheet items
Long term Loans and Advances
 It shall include :
Capital Advances
Security deposits
Loans and Advances to Related Parties.
Other Loans and advances (Specify nature).
 Separate disclosure no longer required for:
Due from companies under the same management
within the meaning of Section 370 (1B).
Maximum amount due by directors and other
officers of the company at any time during the year .
Major changes related to balance sheet items
Inventories:
 Goods-in-transit shall be disclosed under the relevant
sub-head of inventories
 Separate disclosure for Stock-in-trade held for trading
purpose.
Trade receivables:
 Defined as dues arising only from goods sold or services
rendered in the normal course of business.
 Aggregate amount of Trade receivables outstanding for a
period exceeding six months from the date they are due
for payment should be separately disclosed.
Major changes related to balance sheet items
Cash and Bank Balance
 Cash and Cash Equivalents :
Shall carry the same meaning as defined under AS-3,
Cash flow statements.
Bank deposits with more the 12 months maturity shall
be disclosed separately under the same heading.
 Other Bank Balances:
 Balance with banks held as margin money or security
against borrowings etc. which doesn’t qualify as cash and
cash equivalents as per AS-3 shall be disclosed under this
head.
Major changes related to balance sheet items
Miscellaneous Expenditure (to the extend not
written off or adjusted:
 No separate line item for such expenses.
 Such expenses can be disclosed as “Unamortized
Expenses” under the head Non-current or Current assets
depending on whether the amount will be amortized in
the next 12 months or thereafter.
Major changes related to balance sheet items
Contingent Liabilities :
 The amount of dividends proposed to be distributed to
equity and preference shareholders for the period and the
related amount per share shall be disclosed separately.
 Proposed dividend is not to be provided for, in the
financial statements.
Major changes related to balance sheet items
Major highlights of Statement of
Profit and Loss
 Vertical Format specified in new Schedule.
 Exceptional and extraordinary items need to be disclosed
separately on the face of the Statement of Profit and Loss. The
details of the same ,as also of any prior period items should be
disclosed in the notes
 Profit / loss before and after tax from discontinuing operations
and the tax expense from discontinuing operations need to be
disclosed separately on the face of the Statement of Profit and
Loss.
Major highlights of Statement of Profit and Loss
 Where company collects indirect taxes like VAT etc. as
intermediary, revenue should be presented net of taxes.
 Employee Benefits expense should be disclosed
separately as:
Salaries and wages
Contribution to provident and other funds
Expense on ESOP and ESPP
Staff welfare expenses
Major highlights of Statement of Profit and Loss
 Payments to auditor (in different capacities shall be
disclosed separately as):
 Auditor
 For taxation matters
 For company law matters
 For management services
 For other services
 For reimbursement of expenses
 Finance cost shall be classified as interest expense, other
borrowing costs & Gain / Loss on foreign currency
transaction & translation
Major highlights of Statement of Profit and Loss
 Any item of income or expenditure which exceeds one
percent of the revenue from operations or Rs. 1,00,000
whichever is higher should be disclosed separately.
 Broad heads shall be decided taking into account the
concept of materiality and presentation of true and fair
view of financial statements.
Major highlights of Statement of Profit and Loss
Additional Disclosures
 Disclosures no longer required:
 Commission paid to sole selling agents.
 Payments provided or made to the directors (Including MD
and manager) on account of managerial remuneration,
allowances, commission, perquisites, benefits, pension, gratuity
etc.
 In case of manufacturing companies:
 The licensed capacity
 The installed capacity
 The actual production.
Major highlights of Statement of Profit and Loss
Comparison between the Old and Revised
Schedule VI
Particulars
Old Schedule VI
Authority
Provisions of Schedule VI Provisions of Accounting
will prevail over
Standards will prevail over
Accounting Standards
Schedule VI
Form of Balance
Sheet
Both horizontal and
vertical form were
allowed
Form of Profit
No format specified for
and Loss Account Profit and Loss Account
Revised Schedule VI
Only vertical form of Balance
Sheet has been specified in
the revised Schedule VI
Form of Profit and Loss
Account specified under Part
II
Headings in
Balance Sheet
“Sources of funds” and
“Application of funds”
“Equities and Liabilities” and
“Assets”
Profit and Loss
Appropriation
Account
Opening surplus,
proposed dividend and
transfer to/ from reserves
were shown in Profit and
Loss Appropriation
Account
Transfer from/ to reserves to
be shown under the heading
Reserves & Surplus only. No
requirement of separate Profit
and Loss Appropriation
Account.
Comparison contd/Particulars
Old Schedule VI
Revised Schedule VI
Proposed
Dividend
Proposed Dividend
required to be provided
for
Proposed Dividend to be
disclosed in notes
Quantitative
Details
Quantitative details of
Raw materials, purchases,
stocks and turnover to be
given for each class of
goods. Also licensed and
installed capacity and
production quantity to be
given for manufacturing
companies
No quantitative details
required. Limited
requirements for disclosure
for CIF and FOB values etc.
Comparison contd/Particulars
Old Schedule VI
Revised Schedule VI
Share Capital
No requirement to
disclose separately bonus
shares issued during last 5
years.
In addition to the disclosure
requirements of old Schedule
VI following additional
disclosures are also required
Also no requirement for
details of shareholders
holding more than 5% of
shares
•Number of bonus shares/
shares allotted without
payment being received in
cash/ shares bought back
during last 5 years
•Names and number of shares
held by shareholders holding
more than 5 percent of total
shares
Comparison contd/Particulars
Old Schedule VI
Revised Schedule VI
Net Working
Capital
Current assets &
Liabilities are shown
together under application
of funds. The net working
capital appears on balance
sheet.
Assets & Liabilities are to be
bifurcated in to current &
Non-current and to be shown
separately. Hence, net
working capital will not be
appearing in Balance sheet.
Fixed Assets
There was no bifurcation
required in to tangible &
intangible assets.
Capital advances used to
be shown under the Head
Capital Work in Progress
under Fixed Assets
Fixed assets to be shown
under non-current assets and
have to be bifurcated in to
Tangible & intangible assets.
Capital advances to be shown
under the head ‘Long term
Loans and Advances
Comparison contd/Particulars
Old Schedule VI
Revised Schedule VI
Borrowings
Short term & long term
borrowings are grouped
together under the head
Loan funds sub-head
Secured / Unsecured
Long term borrowings to be
shown under non-current
liabilities and short term
borrowings to be shown under
current liabilities with
separate disclosure of secured
/ unsecured loans.
Period and amount of
continuing default as on the
balance sheet date in
repayment of loans and
interest to be separately
specified.
Deposits
Lease deposits are part of
loans & advances
Lease deposits to be disclosed
as long term loans & advances
under the head non-current
assets
Comparison contd/Particulars
Old Schedule VI
Deferred Tax assets /
liabilities to be disclosed
separately on the face of
Balance Sheet.
Revised Schedule VI
Sundry Debtors
Debtors outstanding for
more than six months
from invoice date to be
shown separately
Debtors outstanding for more
than six months from the date
they became due to be shown
separately.
Profit & Loss
(Debit Balance)
P&L debit balance to be
Debit balance of Profit and
separately disclosed in the Loss Account to be shown as
Balance Sheet.
negative figure under the head
Surplus. Therefore, Reserve &
Surplus can have a negative
balance
Deferred Tax
Assets /
Liabilities
Deferred Tax assets /
liabilities to be disclosed
under non-current assets /
liabilities as the case may be.
Comparison contd/Particulars
Other current
liabilities
Separate line
item Disclosure
criteria
Old Schedule VI
No specific mention for
separate disclosure of
Current maturities of long
term debt
No specific mention for
separate disclosure of
Current maturities of
finance lease obligation
Any item under which
expense exceeds one per
cent of the total revenue
of the company or Rs.
5,000 which ever is
higher; shall be disclosed
separately
Revised Schedule VI
Current maturities of long
term debt to be disclosed
under other current liabilities.
Current maturities of finance
lease obligation to be
disclosed.
Any item of income / expense
which exceeds one per cent of
the revenue from operations
or Rs. 1,00,000, which ever is
higher; to be disclosed
separately
Comparison contd/Particulars
Old Schedule VI
Revised Schedule VI
Purchases
The purchase made and
the opening & closing
stock, giving break up in
respect of each class of
goods traded in by the
company and indicating
the quantities thereof.
Goods traded in by the
company to be disclosed in
broad heads in notes.
Disclosure of quantitative
details of goods is diluted.
Goods-in-transit to be
separately disclosed
TDS amount on
Interest, royalty
received
TDS amount was required No requirement of disclosing
to be shown for Interest
TDS amounts separately
income etc.
Managerial
Remuneration
and Commission
Payment to directors and
detailed calculation under
section 198 was required
to be disclosed
No disclosure requirements
for Managerial Remuneration
Comparison contd/Particulars
Old Schedule VI
Revised Schedule VI
ESOP expenses
No requirement to show
separately as part of
Employee Benefits
expense
Expense on Employee Stock
Option Scheme (ESOP) and
Employee Stock Purchase
Plan (ESPP) to be shown
separately as part of
Employee Benefits expense
Part IIIInterpretation
Terms provision, reserve,
capital reserve, quoted
investment etc. were
defined
No such specific definitions.
Part IV- Balance
Sheet Abstract
Details of company
registration number,
capital raised, Balance
Sheet details, products
etc. were required to be
attached with financials
No such requirement.
Issues and complexities:
 Reclassification of Previous Year/Period figures.
 Computation of Net-working capital for finance.
 Ageing for receivables to be calculated from due date of
payment.
 Substantial efforts required by companies to recast and
auditors to audit previous reporting period’s figures.
 Challenges in getting information of shareholders
holding more than 5% of share capital from Depository
Participants, GDR / ADR custodians.
Issues and complexities contd/ Clarification required for nature and definition of
“Controlled Special Purpose Entity”.
 Ageing based on due date of invoice will require
significant systemic changes.