Every Private Limited Company, upon its incorporation, must religiously submit the annual compliance to the Ministry of Corporate Affairs. For the licensed Private Limited Company Registration in India, they must prepare an Audited Balance Sheet and a statement of net Profit and Loss of the Company in the past financial year. By such submissions, the MCA can keep track of the growth and expansion of the Company. They can also keep records of the compliance that ought to be submitted by the Company. This article will therefore detail the guidelines for the preparation of the annual Balance Sheet and Profit or Loss Statement.
Change in Information Disclosure
Where compliance with the Act’s requirements, including Accounting Standards, are applicable to the companies. This compliance requires any change in treatment or disclosure. Such disclosure includes the following in the head or sub-head or any changes:
The Company must disclose the financial statements or statements forming part thereof. The requirements of such a Schedule will stand modified accordingly.
Also Read: Conversion of Partnership Firm into LLP
Disclosure Requirements for a Private Limited Company
The disclosure requirements specified in the Schedule are in addition to and not in substitution of the disclosure requirements specified in the Accounting Standards as prescribed under the Companies Act of 2013. The Private Limited Company must specify the additional disclosures in the Accounting Standards. Those shall be made in the notes to accounts or by an additional statement. But such information must be disclosed on the face of the Financial Statements.
Similarly, The Company must make the other disclosures required per the Companies Act in the notes to accounts in addition to the requirements set out in the Schedule.
Information-Noting by the Private Limited Company
The Private Limited Company must provide notes to accounts that contain information. This must be in addition to the information presented in the Financial Statements. Also, the Company must provide the following where required:
- Narrative Descriptions of the items recognised in financial statements
- Information about these items that do not qualify for recognition in the financial statements
The Private Limited Company must cross-reference each item on the face of the Balance Sheet and Statement of Profit and Loss for any related information in the notes to accounts. For preparing the Financial Statements, including the notes of the accounts, the Company maintain a balance between the following:
- Provision of excessive detail that may not assist users of financial statements
- Non-provision of the necessary information as a result of too much aggregation
Rounding-off of the Private Limited Company’s Turnover
Depending upon the turnover of the Private Company, the MCA can round off the figures appearing in the Financial Statements in the following manner:
- For less than One Hundred Crore rupees: To the nearest hundreds, thousands, lakhs or millions, or decimals thereof;
- For One Hundred Crore rupees or more: To the nearest lakhs, millions or crores, or decimals thereof;
Once the Company uses a unit of measurement, it shall use the unit uniformly in the Financial Statements.
Except in the case of the first Financial Statements laid before the Private Limited Company after its incorporation, The Company must give the corresponding amounts for the preceding reporting period for all items shown in the Financial Statements, including notes of account.