Transcript Document

REVISED SCHEDULE VI – A NEW WAY
OF FINANCIAL REPORTING BY
COMPANIES
1
FINANCIAL STATEMENTS –
COMMON UNDERSTANDING Vs FACTS
Common Understanding
 Financial
statements
are
complicated and are only meant for
bankers, accountants and equity
analysts.
 Audited Financial statements are
entirely accurate and reliable
Facts
 Financial statements show you
where a company’s money came
from and where it went
 Even
the
audited
financial
statements cannot be relied upon;
case in point is Satyam scandal
2
FINANCIAL STATEMENTS –
COMMON UNDERSTANDING Vs FACTS
Common Understanding
 Profits = cash
 Financial statements are just history
Facts:
 Profits
shown
in
financial
statements may not exactly equate
to
cash
on
account
of
amortisations & other adjustments
 Although financial statements are
prepared for periods which are
completed they do provide clues to
the sustainability of any business
3
UNDERSTANDING FINANCIAL
STATEMENTS
4
FINANCIAL REPORTING STANDARDS
AND SCHEDULE VI
 Financial reporting is regulated by Generally Accepted
Accounting principles (GAAP) comprising of accounting
standards, company law, stock market regulations etc.
 Globally, accounting framework is shaped by International
Financial Reporting standards (IFRS)
 In India, the Accounting Standards (AS) lay down the
regulations for various accounting transactions (Date for the
Indian Accounting Standards (IAS) is yet to be notified)
 The Companies Act, 1956 mandates that all companies
except companies for which separate reporting format is
prescribed to present their financial statements as per
Schedule VI to the Act.
5
NEED FOR REVISION OF REPORTING
FORMATS
 The
various economic and
regulatory reforms that have
taken place for companies, a
need was felt for revision of
Schedule VI
 The need for harmonising and
synchronising the disclosure
requirements with international
formats so as to achieve
convergence
of
Indian
Accounting Standards with IFRS
to make Indian companies
competitive globally has made
the revision inevitable
6
Capital
Reserve & Surplus
Loan Funds
Secured Loan
Unsecured Loan
TOTAL
Capital
Reserves & Surplus (Dr. balance of P
& L A/c)
Money Received against share
warrants
Share Application money
Non Current Liabilities
Long term borrowings
Deferred Tax liability (net)
Other long term liabilities
Long term provisions
Current Liabilities
Short term borrowings
Trade payables
Other short term liabilities
Short term provisions
REVISED SCHEDULE VI
Shareholders’
Funds
Shareholders’ Funds
EQUITIES AND LIABILITIES
SOURCES OF FUNDS
OLD SCHEDULE VI
KEY REVISIONS – BALANCE SHEET –
OLD Vs REVISED – LIABILITIES
TOTAL
7
Non-Current Assets
Fixed Assets
Tangible Assets
Intangible Assets
Capital Work in Progress
Intangible assets under
development
Non Current Investments
Deferred Tax Asset (Net)
Long Term Loans & Advances
Other Non-current Assets
Current Assets
Current Investments
Inventories
Trade Receivables
Cash and Cash Equivalents
Short Term Loans & Advances
REVISED SCHEDULE VI
Fixed Assets
Gross Block
Less : Depreciation
Net Block
Capital Work in Progress
Investments
Current Assets, Loans and
Advances
Inventories
Sundry Debtors
Cash and bank balances
Loans and advances
Less:
Current Liabilities
Provisions
Net Current Assets
Misc. Exp. to the extent not written
off
Profit and Loss Account
TOTAL
ASSETS
APPLICATION OF FUNDS
OLD SCHEDULE VI
KEY REVISIONS – BALANCE SHEET –
OLD Vs REVISED - ASSETS
Other Current Assets
TOTAL
8
KEY REVISIONS – BALANCE SHEET GENERAL
 Only vertical form of balance sheet allowed with significant changes




vis-à-vis the structure
Concept of presenting schedules to financial statements
discontinued. The schedules to the financial statements now called
“notes to accounts“
Additional disclosures pertaining about shareholders holding more
than 5% of any class of shares and share application money with
terms and conditions, expected date of allotment, no. of shares to be
issued, amount of premium, etc.
Disclosure of all defaults in repayment of loans and interest thereon
to be specified in each case
Terms of repayment of long term loans to be disclosed
……
9
KEY REVISIONS – BALANCE SHEET GENERAL
 Operating cycle forms the basis for classification of assets into
current and non-current. This is the time between the
acquisition of assets for processing and their realization in cash
or cash equivalents. Where the cycle cannot be identified, it is
assumed to have a duration of 12 months
 Capital Advances specifically required to be presented
separately under the head “Loans & Advances”
 Separate disclosures for loans and advances received from or
given to related parties
 Provision for diminution in value of investments to be
disclosed separately for current and long term investments
10
KEY REVISIONS – STATEMENT OF
PROFIT & LOSS
 Name changed to Statement of Profit and Loss
 Format prescribed for Statement of Profit and Loss
 Any item or expense exceeding one per cent of
revenue from operations or Rs.1.00 lakh whichever is
higher to be disclosed separately
 For companies other than finance companies, revenue
from operations to be disclosed as three categories,
viz., revenue from sale of products, sale of services and
other operating revenues
11
ANY QUESTIONS ??
13
THANK YOU
14