Procedure For Finalisation of Accounts

Procedure-For-Finalisation-of-Accounts
Procedure For Finalisation of Accounts 


1.   At the close of the financial year of the company, the company should prepare Profit and Loss Account (Income and Expenditure Account for non-profit making company), and Balance Sheet as at the close of the financial year. It should be ensured that the annual accounts are being prepared in accordance with the Schedules III to the Companies Act, 2013.
2.    The basic/primary accounts are to be kept and maintained at the Registered Office of the Company. However, they can be kept and maintained at a place other than the Registered Office of the company. All or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place. The company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed.
For this purpose –
(i)     Call a Board meeting by giving notice in writing to all the directors.
(ii)    Hold a meeting of the Board and pass a resolution for keeping accounts at a place other thanthe registered office.
(For specimen resolution, please see Annexure at the end of this Study).
(iii)  File the Certified true copy of the resolution with the concerned Registrar of Companies in e-Form MGT-14, with requisite filing fees.
3.  The Accounts are to be prepared on a going concern basis and on accrual basis by following all the applicable accounting standards and proper and sufficient care should be taken in maintenance of adequate accounting records in pursuance of the provisions of the Act.
Note: - In case of listed companies, Para IV (B) of clause 49 of the listing agreement is relevant. As per this para, where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the management’s explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction in the Corporate Governance Report.
4.   Every balance sheet and profit and loss account shall give a true and fair view of the state of affairs/profit or loss for the financial year of the company at the end of financial year and shall be in the form set out in Part I and Part II of Schedule III of the Act respectively and shall be in accordance with the accounting standards.
5.  Internal audit and statutory audit of the accounts is a continuous process. Hence, the annual accounts so prepared and finalised should be duly audited.
6. After the annual accounts have been audited, these are required to be approved by the Board of Directors:
(i)  For this purpose, call a Board meeting by giving a notice in writing to all the directors.
(ii)    If the company is listed, notice of such Board meeting should also be sent to the stock exchanges where the company’s securities are listed.
(iii)    At the Board Meeting, first of all the draft annual accountsshall be approvedby the Board of Directors.
The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by the chairperson of the company where he is authorised by the Board or by two directors out of which one shall be managing director and the Chief Executive Officer, if he is a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon.
(iv)   Such approved annual audited accounts together with Directors’ report, Auditors Report, and notice of meeting will be sent to the members, directors, auditors of the company and others entitled as provided in the Act.
(v)     The annual accounts and reports are to be laid before the annual general meeting of the members of the company for their adoption. For the purpose, the maximum period prescribed is six months from the date of closing of the relevant financial year, in case of subsequent annual general meetings.
A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting. The statement containing salient features of the financial statement of a company’s subsidiary under section 129 shall be in Form AOC-1.
Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached, duly signed along with the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within thirty days of the last date before which the annual general meeting should have been held.
Note:- The requirement of preparation of balance sheet and profit and loss account as per Schedule III is not applicable to insurance company or banking company or electricity company or other class of company for which a separate form is specified under the respective Acts governing them.
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