Changes made to Schedule III for AS & Ind AS

Changes made to Schedule III for AS & Ind AS compliant companies

There are some changes made to the schedule III for AS & Ind AS. On October 11, 2018, the Ministry of Corporate Affairs (MCA) has amended the Schedule III to the Companies Act, 2013. Schedule III provides the format of financial statements of companies complying with Accounting Standards (AS) and Ind AS under its Division I and Division II respectively. Now, MCA has notified Division III of the Schedule which provides the format of financial statements of a Non-Banking Financial Company (NBFC) that require to comply with Ind AS.

For AS compliant companies there is no any major amendment as per Changes made to Schedule III for AS & Ind AS:

The amendments to Division I include minor changes to the wording of line items of the balance sheet of an AS compliant company like replacement of “fixed assets” word under “Non-current assets” with “Property, Plant and Equipment”.For Ind AS compliant companies, MCA has amended Division II of the Schedule III. Following are the amendments brought in for Ind AS compliant companies in respect of preparation and presentation of their financial statements:

1. AMOUNT PAYABLES (TRADE PAYABLES Ind AS compliant companies shall be required to disclose the amount payables (Trade Payables) to micro & small enterprises and enterprises other than micro& small enterprises on the face of the balance sheet. Earlier, there was no such requirement.*

2. ‘Equity’ A description of each reserve disclosed under the head ‘Equity’ in the balance sheet should be provided in the notes to financial statements. The description may include the purpose of each reserve, reason for increase and decrease in the balance of reserves during the year, etc. There was no such requirement before the amendment.

3. Non-current and current trade receivables shall be sub-classified into:

(i) Trade receivables considered good- Secured;

(ii) Trade receivables considered good- Unsecured;

(iii) Trade receivables which have a significant increase in Credit Risk; and

(iv) Trade receivables – credit impaired

Earlier, non-current and current trade receivables were required to sub-classify into:

(i) Secured, considered good;

(ii) Unsecured considered good; and

(iii) Doubtful

4. Non-current and current loans receivables shall be sub-classified into:

(i) Loans receivables considered good- Secured;

(ii) Loans receivables considered good- Unsecured;

(iii) Loans receivables which have a significant increase in Credit Risk; and

(iv) Loans receivables- credit impaired

Earlier, non-current and current loans receivables were required to sub-classify into:

(i) Secured, considered good;

(ii) Unsecured considered good; and

(iii) Doubtful

5. The following additional disclosers are required to be made relating to MSMEs:

(i) the principal amount and interest thereon remaining unpaid at the end of FY;

(ii) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), along with the amount of the payment made to the supplier beyond the appointed day during each accounting year;

(iii) the amount of interest due and payable for the period of delay in making payment (which has been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006;

(iv) the amount of interest accrued and remaining unpaid at the end of each accounting year; and

(v) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

CA Amresh Vashisht
Meerut
For updates 9837515432