Schedule VI Presentation before WIRC of ICAI

CA Manoj FadnisMember Central Council ICAI &

Chairman ASB

New Format Applicable for accountingperiod starting from 1st April 2011,earlier adoption not permissible

Comparative Information to be givenComparative Information to be givenfor FY 2010-11

Only vertical format- horizontal formatdone away with

Applicability

� New Format Applicable for accountingperiod starting from 1st April 2011, earlieradoption not permissibleadoption not permissible

� Comparative Information to be given for FY2010-11

� Only vertical format- horizontal formatdone away with

Non- Applicability of Schedule VI

� Does not apply to

� Electricity Companies

� Banking Companies� Banking Companies

� Insurance Companies

� Any other company for which a format is prescribed under the relevant statute

Half Yearly Balance Sheet of Listed Companies

� Where full set of financial statements prepared –New format to be used

� Where condensed financial statements- the Old Format to be used

� Para 10 & 11 of AS 25

Format for IPO/ FPO during 2011-12

The presentation of financial statements for the limited

purpose of IPO/FPO during the financial year 2011-12maybe in the format of the pre revised schedule VI underthe companies Act, 1956. However, for period beyond 31stthe companies Act, 1956. However, for period beyond 31stMarch 2012, they would prepare only in the new format asprescribed by the present Schedule VI of the CompaniesAct, 1956

MCA General Circular no 62/2011 dated 5th September 2011

PART I – Form of BALANCE SHEETName of the Company…………………….Balance Sheet as at ………………………

(Rupees in…………)(Rupees in…………)Particulars Note No. Figures as at the end of

current the previous reporting reportingperiod period

1 2 3 4

I.EQUITY AND LIABILITIES(1) Shareholders’ funds(a) Share capital(b) Reserves and surplus(c) Money received against share warrants

(2) Share application money pending allotment

(3) Non-current liabilities(a) Long-term borrowings(a) Long-term borrowings(b) Deferred tax liabilities (Net)(c) Other Long term liabilities(d) Long-term provisions

(4) Current liabilities(a) Short-term borrowings(b) Trade payables(c) Other current liabilities(d) Short-term provisions

TOTAL

II. ASSETS(1) Non-current assets(a) Fixed assets(i) Tangible assets(ii) Intangible assets (iii) Capital work-in-progress(iv) Intangible assets under development(b) Non-current investments(c) Deferred tax assets (net)(d) Long-term loans and advances (e) Other non-current assets (e) Other non-current assets

(2) Current assets (a) Current investments (b) Inventories(c) Trade receivables(d) Cash and cash equivalents(e) Short-term loans and advances (f) Other current assets

TOTAL

Significant ChangesSignificant Changes

� Format of P&L Account for the first time-Cash Flow as per AS 3

� Part IV – Abstract – Not Applicable

� Schedule VI to be based on AccountingStandards

Schedules and Notes

� Present Schedule VI

� Break Up of amountdisclosed in B.S. &

� New Schedule VI

� Concept ofSchedules eliminated

All information indisclosed in B.S. &P& L A/c inSchedules

� Additionalinformation in Notes

� All information inNotes with CrossReferencing

Greater Emphasis on AS

� Accounting Standards to prevail overSchedule VI

� Terms used in Schedule VI to have samemeaning as used in AS

� Associates as per AS 23

� Related Party as per AS 18

Current and Non Current

� Assets and liabilities to be classified asCurrent and Non Current

� current maturities of a long term borrowing will� current maturities of a long term borrowing willhave to be classified under the head “Othercurrent liabilities.”

� New concept based on IndAS1- IAS 1

Striking Balance

� Balance to be maintained between providingexcessive detail that may not assist users offinancial statementsfinancial statements

And

� Not providing important information as aresult of too much aggregation

Rounding Off

� Explicit requirement to use the same unit ofmeasurement uniformly throughout thefinancial statements.financial statements.

� Rounding off requirements have beenchanged to eliminate the option ofpresenting figures in terms of hundreds andthousands if turnover exceeds Rs 100crores.

Share Holding Details

� Number of shares held by each shareholder holding morethan 5 percent shares in the company now needs to bedisclosed.

� Information should be based on shares held as on the Balance Sheet date.

� Aggregate number and class of shares allotted forconsideration other than cash, bonus shares and sharesbought back to be disclosed only for a period of five yearsimmediately preceding the Balance Sheet date

Share Application Money Pending Allotment

� Application money not exceeding the capitaloffered for issuance and to the extent notrefundable to be shown separately on therefundable to be shown separately on theface of the Balance Sheet.

� The amount in excess of subscription or ifthe requirements of minimum subscriptionare not met to be shown under “Othercurrent liabilities.”

Miscellaneous Expenditure To The Extent Not Written Off or Adjusted

� This item is deleted

� Such items to be classified as –ve items in Reserves and Surplus

Trade Debtors

� ‘Trade receivables’ are defined as dues arising only fromgoods sold or services rendered in the normal course ofbusiness.

� Amounts due on account of other contractual obligationscan no longer be included in the trade receivables.

� Separate disclosure of “trade receivables outstanding for aperiod exceeding six months from the date the bill/invoice isdue for payment.”

Capital Advances

� Present Schedule VI

Classified as Capital

� New Schedule VI

To be classified as Classified as Capital WIP

To be classified as Loans & Advances

Tangible Assets on Lease

Classification as per AS 19

Assets on Operating Lease – in the BalanceAssets on Operating Lease – in the BalanceSheet of the Lessor

Assets on Finance Lease – in the Balance Sheetof the Lessee

Commitments

� Presently only Capital Commitments to bedisclosed

� Proposed- All Commitments even onRevenue Account

Loan Defaults

� Disclosure required under CARO

� New Schedule VI requires disclosure of all � New Schedule VI requires disclosure of all such defaults

Current Assets

Expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle;

� Held primarily for the purpose of beingtraded;traded;

� Expected to be realized within twelve monthsafter the reporting date; or

� Cash or cash equivalent unless it is restrictedfrom being exchanged or used to settle aliability for at least twelve months after thereporting date.

All other assets shall be classified as non-current.

Operating Cycle

An operating cycle is the time between theacquisition of assets for processing and theirrealization in cash or cash equivalents.realization in cash or cash equivalents.

Where the normal operating cycle cannot beidentified, it is assumed to have a durationof 12 months

Current Liability Classification

� 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 thereporting date; or

� The company does not have an unconditional right to defersettlement of the liability for at least twelve months afterthe reporting date. Terms of a liability that could, at theoption of the counterparty, result in its settlement by theissue of equity instruments do not affect its classification.

All other liabilities shall be classified as non-current.

Additional Disclosure- Share Capital & Loans

� Share Capital

Rights, preferences and restrictions attaching to each� Rights, preferences and restrictions attaching to eachclass of shares including restrictions on the distributionof dividends and the repayment of capital

� Loans

� Terms of repayment of loans and period

Additional Disclosure -Investments

� Details regarding names of the bodies corporate,indicating separately whether such bodies are

� (i) subsidiaries,

� (ii) associates,� (ii) associates,

� (iii) joint ventures, or

� (iv) controlled special purpose entities,

in whom investments have been made andthe nature and extent of the investment madein each such body corporate (showingseparately partly-paid investments)

Additional Disclosure - Investment

� Partnership Firms� Capital

� Names of the firms with the names of all theirpartnersNames of the firms with the names of all theirpartners

� Total capital and the shares of each partner

� Impairment� Aggregate provision for diminution in value of

investments (separately for current and long-term investments)

Additional Disclosure – Stock in Trade

Stock-in-trade held for trading purposes,to be disclosed separately from otherfinished goodsto be disclosed separately from otherfinished goods

Disclosures not required

� Quantitative Details

� Managerial Remuneration computed u/s 198

� Capacity- Licensed, Installed & Actual� Capacity- Licensed, Installed & Actual

� Investments purchased & sold

� S. Debtors, Investments, Loans & Advancesto Companies under the same management

� Commission, Brokerage and Non TradeDiscounts

Statement of Profit and Loss

� Name has been changed to “Statement of Profit and Loss”as against ‘Profit and Loss Account’ as contained in the OldSchedule VI.

� Classification based on Nature of Expenses and not onFunction

� No appropriation item on face.

� ‘Below the line’ adjustments to be presented under“Reserves and Surplus” in the Balance Sheet.

Thresh hold for separate disclosure

� Revised Schedule VI

Any item of incomeor expense which

� Existing Schedule VI

1 % of total revenueor Rs5,000or expense which

exceeds one percentof the revenue fromoperations or Rs100,000

or Rs5,000whichever is higher,

Dividend of Subsidiary

� Presently – Dividend declared by Subsidiary recognized

� Proposed- Dividend to be recognized only when shareholders approve the resolution

Classification of Revenue

� Sale of Products

� Sale of Services

� Other Operating Income � Other Operating Income

“Operating” to be based on guidance given in

AS-3.

Structure of Schedule VI

General Instructions

Part I Form of Balance Sheet

General Instructions for Preparation of Balance SheetGeneral Instructions for Preparation of Balance Sheet

Part II- Form of Statement of Profit and Loss

General Instructions for Preparation of Statement of Profit and Loss

GENERAL INSTURCTIONSGENERAL INSTURCTIONS

GENERAL INSTURCTIONS

� Requirements of Schedule VI shall stand modified by any changerequired by the Act, AS & other applicable legal requirements.

� Disclosure requirements specified in Part I and Part II of Schedule VIare in addition to and not in substitution of the disclosure requirementsspecified in the AS . Additional disclosures specified in the AS to bespecified in the AS . Additional disclosures specified in the AS to bemade in the notes to accounts .

� Notes to accounts to have proper cross-referencing & shall providewhere required

� Narrative descriptions or disaggregations of items recognized inthose statements and

� information about items that do not qualify for recognition in thosestatements.

General Instructions

Turnover Rounding Off

(i)less than one hundred crore rupees To the nearest hundreds, thousands,lakhs or millions, or decimals thereof

(ii) one hundred crore rupees or more To the nearest, lakhs, millions orcrores, or decimals thereof

Once a unit of measurement is used, it should be used uniformly in theFinancial Statements

GENERAL INSTURCTIONS

� Comparatives for the immediately precedingreporting period for all items shown in theFinancial Statements including notes shallFinancial Statements including notes shallalso be given.

� Exception in the first year

� Terms used herein shall be as per theapplicable Accounting Standards.

General Instructions For General Instructions For Preparation of Balance Sheet

Current Assets

Expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle;

� Held primarily for the purpose of beingtraded;traded;

� Expected to be realized within twelve monthsafter the reporting date; or

� Cash or cash equivalent unless it is restrictedfrom being exchanged or used to settle aliability for at least twelve months after thereporting date.

All other assets shall be classified as non-current.

Operating Cycle

� An operating cycle is the time between theacquisition of assets for processing and theirrealization in cash or cash equivalents.

� Where the normal operating cycle cannot beidentified, it is assumed to have a duration of 12months

� In case of company with multiple business,

operating cycle for each business to be determined

Examples of Current Assets

� Raw material and stores which are intended forconsumption or sale in the course of the company’snormal operating cycle.

Assets held primarily for the purpose of being� Assets held primarily for the purpose of beingtraded such as inventory of finished goods.

� Trade receivables which are expected to berealized within twelve months from the reportingdate

� Cash and cash equivalents which are not under anyrestriction of use.

Inventories

� Inventories shall be classified as:

� Raw materials;

� Work-in-progress;

Finished goods;� Finished goods;

� Stock-in-trade (in respect of goods acquired for trading);

� Stores and spares;

� Loose tools;

� Others (specify nature).

� Goods-in-transit shall be disclosed under the relevant sub-head of inventories.

� Mode of valuation shall be stated

Trade Receivables

Aggregate amount of Trade Receivables outstanding for a period

� exceeding six months from the date they are due for payment should be separately stated.

� Trade receivables shall be sub-classified as:

� Secured, considered good;

� Unsecured considered good;

� Doubtful.

� Allowance for bad and doubtful debts shall be disclosed under the relevant heads separately.

� Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member should be separately stated.

Slow moving Inventory not likely to beconsumed in the normal operating cycle?consumed in the normal operating cycle?

Does not meet the condition

Expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle;operating cycle;

Meets the condition

Held primarily for the purpose of being traded

Trade Receivables due beyond thenormal operating cycle and alsobeyond 12 months from thebeyond 12 months from thereporting date

Not a Current Asset

Current Liability Classification

� 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 thereporting date; or

� The company does not have an unconditional right to defersettlement of the liability for at least twelve months afterthe reporting date. Terms of a liability that could, at theoption of the counterparty, result in its settlement by theissue of equity instruments do not affect its classification.

All other liabilities shall be classified as non-current.

Current Liabilities – Employee Benefits

� Bonus-

� Current

� Accumulated Leave –

� To the extent, the employee has unconditional right to avail the� To the extent, the employee has unconditional right to avail theleave - “current” even though the same is measured as other long-term employee benefit as per AS-15.

� If right to defer the employee’s leave is available unconditionallywith the company, needs to be evaluated on a case to case basis

� Post employment long term benefit obligations

� Actuarial valuation to be obtained for the current and the non-current

Investment

� Current investment is an investment that is by its naturereadily realisable and is intended to be held for not morethan one year from the date on which such investment ismade.made.

� Intention as on the date of acquisition

� A long-term investment is an investment other than currentinvestment

� The portion of long-term investment which is expected to berealized within twelve months from the Balance Sheet date needs tobe shown as Current Investment under the Revised Schedule VI.

Convertible Debts

� Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issueof equity instruments do not affect itsclassificationclassification

� Timing of such settlement would decide theclassification of such liability in terms of Current orNon-current

Preference Share Capital

� To be classified as Share Capital

� Companies which have earlier adopted AS � Companies which have earlier adopted AS 30,31 & 32 to classify between Debt and Equity

Form of Balance SheetForm of Balance Sheet

Allotment for Cash

� If the subscription amount is adjusted against a bona fide debt payable

� in money at once by the company;� in money at once by the company;

� Conversion of loan into shares in the event of default in repayment.

Reserves

� Reserve’ as “the portion of earnings, receipts or othersurplus of an enterprise (whether capital or revenue)appropriated by the management for a general or aspecific purpose other than a provision for depreciation orspecific purpose other than a provision for depreciation ordiminution in the value of assets or for a known liability.”

� Revenue reserve is a reserve which is available fordistribution through the Statement of Profit and Loss.

� Capital Reserve is a reserve not availible for distribution

Disclosures under MSMED Act

Continue to be applicableContinue to be applicable

Fixed Assets

S.No. Particulars Relevant Accounting Standards

as notified under Companies

(Accounting Standards) Rules,

2006

1 Tangible assets AS 10, AS 6

2 Intangible assets AS 26

3 Capital work-in-progress AS 10

4 Intangible assets under development AS 26

Controlled Special Purpose Entity

� As per AS-21 Consolidated Financial Statements, asubsidiary is defined as an enterprise that iscontrolled by another enterprise.

� “Controlled” entity would be a subsidiary as perAS-21.

� Accordingly, no disclosures would be additionallyrequired to be made under this caption.

Advances for Fixed Assets

� Capital advances to be classified as Loans and Advancesand not as Capital WIP fixed assets.

� To be classified as non-current assets irrespective ofwhen the fixed assets are expected to be received.

Classification of Trade Receivables

� Six Months from the date the receivablesbecome due

� Where no due date is specifically agreedupon, normal credit period allowed by thecompany to be taken into consideration

Contingent Liabilities

� Contingent liabilities shall be classified as:

� Claims against the company not acknowledged as debt;

� Guarantees;� Guarantees;

� Other money for which the company is contingently liable

� Decision Tree in Appendix B to AS 29

Exceptional Items

� The term ‘Exceptional Items’ is not defined in Revised Schedule VI.

� AS-5 “Net Profit or Loss for

L disposals of items offixed assets;

L disposals of long-terminvestments;� AS-5 “Net Profit or Loss for

the period, Prior period items and Changes in Accounting Policies” has a reference to such items in Paras 12, 13 and 14.

investments;

L legislative changeshaving retrospectiveapplication;

L litigation settlements;and

L other reversals ofprovisions.

MAT Credit

Disclosure as a seperate line item

Current tax (MAT) payable XXCurrent tax (MAT) payable XX

Less : MAT credit entitlement (XX)

Net Current tax liability XX

Additional DisclosuresAdditional Disclosures

Manufacturing Company

Particulars Consumption

Raw materials

Raw material A XX

(YY)

Raw material B XX

(YY)

Others XX

(YY)

Total XX

(YY)

Cont:-Particulars Purchases

Goods purchased

Traded item A XX

(YY)(YY)

Traded item B XX

(YY)

Others XX

(YY)

Total XX

(YY)

Particulars Sales

values

Closing Inventory Opening Inventory

Manufactured goods

Finished goods A XX

(YY)

XX XX

Finished goods B XX

(YY)

XX XX

Others XX

(YY)

XX XX

Total XX XX XXTotal XX

(YY)

XX XX

Traded goods

Traded goods A XX

(YY)

XX XX

Traded goods B XX

(YY)

XX XX

Others XX

(YY)

XX XX

Total XX

(YY)

XX XX

Cont:-Particulars WIP

Work in Progress

Goods A WIP XX

(YY)

Goods B WIP XX

(YY)

Others XX

(YY)

Total XX

(YY)

Trading Company

Particulars WIP

Traded goods

Traded goods A XX

(YY)

Traded goods B XX

(YY)

Others XX

(YY)

Total XX

(YY)

Service Company

Particulars WIP

Services rendered

Service A XX

(YY)

Service B XX

(YY)

Others XX

(YY)

Total XX

(YY)

Dividend Provision

� AS 4 vs Schedule VI

A new controversy?A new controversy?

Thank You

Please mail your comments at manojfadnis@icai.org