Financial Statements preparation for period ending 31st March 2022 | Key Considerations

The Ministry of Corporate Affairs has amended Schedule III of the Companies Act 2013 on 24th March 2021 with an objective to increase transparency and provide additional disclosures to users of financial statements. These amendments are effective from 1st April 2021. Since an auditor is required to issue a true and fair view on the financial statements, the additional disclosures as prescribed in Schedule III will form part of the financial statement and hence will be covered by the auditor’s report.

With the introduction of CARO 2020, there is an increased responsibility on the auditor to disclose the required details as mentioned in the Order. However, all such information can be extracted from the financial statements therefore, it was important the financial reporting framework is aligned with reporting under CARO 2020. Accordingly, the necessary changes were made in ScheduleIII to the Companies Act, 2013 The main rationale behind such amendments in ScheduleIII is to align the financial reporting framework in accordance with the reporting structure required in CARO 2020 and to increase the transparency of the financial statements.

Applicability of amendments

The amendment is not clear on the applicability of these amendments with respect to full / condensed Interim Financial statements as per Ind AS 34 on Interim Financial Reporting and Quarterly / Half- Yearly Results as per the Securities and Exchange Board of India (SEBI) Regulations. In absence of any specific guidance, few points can be argued with respect to their applicability

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