08-02-2025

Practical Approach to Financial Statements Financial Statements for NCEs

for Non-Corporate Entities

An attempt to standardise the formats of the financial statements to be prepared by

the non-corporate entities

Technical Guide of ICAI issued on 2022 recommends the formats of financial

Presentation at statements for non-corporate entities
One Day CPE Seminar organised by the
T Nagar West Mambalam CPE Study Circle Since LLPs are corporate form of entity, they are scoped out of the applicability of
on 08 February 2025 the Technical Guide and separate guidance issued for LLP for the format of FS

This Guidance Note is effective for financial statements covering periods beginning
on or after April 1, 2024 and supersedes the Technical Guide issued in 2022

Guidance Note aims at bringing consistency and comparability in the presentation

and disclosure of financial information
CA. Dr. Chinnsamy Ganesan
FCA DISA(ICA)

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What is new? Authoritative Status of Guidance Notes

Technical Guide (June 2022) Guidance Note (August 2023) What ICAI States?

• The formats have been prescribed by the Accounting • The Guidance Note can be applied by all non-corporate entities • Guidance Notes are recommendatory in nature.
Standards Board (ASB) of ICAI in form of Technical Guide for except where relevant law/regulation/ authority has prescribed
Non-Corporate Entities which is recommended for all non- any other specific formats for the concerned non-corporate
corporate entities
• A member should ordinarily follow recommendations in a guidance note relating to
entities
an auditing matter except where he is satisfied that in the circumstances of the case, it
• I am happy to share that to standardise the formats of the • The Guidance Note prescribes formats of financial statements may not be necessary to do so.
financial statements to be prepared by the non-corporate for Non-Corporate entities to enable these entities to
entities, the ASB has taken a significant step by formulating communicate their financial performance and financial position in • Similarly, while discharging his attest function, a member should examine whether
this Technical Guide recommending the formats of financial standardised formats (ICAI President)
statements for non-corporate entities (ICAI President) the recommendations in a guidance note relating to an accounting matter have been
• The Accounting Standards Board has now prescribed the followed or not.
• In June 2022, the Accounting Standards Board of ICAI has formats for the presentation of the financial statements of Non-
issued the Technical Guide on Financial Statements of Non- corporate Entities in the form of Guidance Note • If the same have not been followed, the member should consider whether keeping in
corporate Entities recommending formats of the financial
statements for the Non-Corporate entities. view the circumstances of the case, a disclosure in his report is necessary.

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Financial Statements for NCEs Scope exceptions

Can be used by the NCEs unless any formats/principles are specifically prescribed Non Corporate Entities Covered Non Corporate Entities excluded
by the relevant Statute or Regulator or any Authority
• Sole proprietorship firms • Non-Corporate Entities for which formats/ principles are
Complete set of financials statements include, BS, Statement of Profit and Loss, • Hindu Undivided Family specifically prescribed by the relevant Statute or Regulator or
• Partnership Firms (whether registered or not) any Authority
CFS (only for Level I NCE), Notes on Accounts and other statements
• Association of Persons • Autonomous Bodies under Government of India
Notes on accounts include Significant Accounting Policies, Disclosures required by • Body of Individuals
• Society registered under any law for the time being in force • Guidance has been specifically given by ICAI (e.g., Educational
various AS and ICDS
Institutions, Political Parties, NPOs, etc.)
• Any form of organisation that is engaged fully or partially in
Framework for the Preparation and Presentation of Financial Statements shall also any Business or Professional activities. • Limited Liability Partnership
be considered by NCEs

ASB has issued an Excel File for Illustrative Format for FS of NCEs

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Components of financial statements Balance Sheet

Assets Liabilities
Statement of profit and
Balance Sheet
loss • Non current assets • Non Current Liabilities
• Current Assets • Current Liabilities
• Owner’s Funds

Statement of Cash Flows,

Notes on accounts
if applicable

Format specified by the Guidance Note

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Balance Sheet Current Asset Decision Tree

Balance Sheet as at ………………………
(Amount in Rs. XX)
Particulars Note 31 March 20XX 31 March 20XX
I EQUITY AND LIABILITIES
1 Owners' Funds
(a) Owners' Capital Account 3 - -
(b) Reserves and surplus 4 - -
2 Non-current liabilities
(a) Long-term borrowings 5 - -
(b) Deferred tax liabilities (Net) 6 - - Expected to be realised, Whether expected to be
(c)
(d)
Other long-term liabilities
Long-term provisions
7
8
-
-
-
- sold or consumed N Is it held for- N realised within 12 N Is it unrestricted cash
3
(a)
Current liabilities
Short-term borrowings 5 - - within the normal sale? months from the end of or cash equivalent?
(b)
(c)
Trade payables
Other current liabilities 10 - -
operating cycle? the reporting period?
(d) Short-term provisions 8 - -
Total - -

II
1
ASSETS
Non-current assets
Y
(a) Property, Plant and Equipment and Intangible assets
N
(i) Property, Plant and Equipment 11 - - Y Y Y
(ii) Intangible assets 11 - -
(iii) Capital work in progress 11 - -
(iv) Intangible asset under development 11 - -
(b) Non-current investments 12 - -
(c) Deferred tax assets (Net) 6 - -
(d) Long Term Loans and Advances 13 - -
(e)
2
Other non-current assets
Current assets
14 - -
Current Assets Non Current Assets
(a) Current investments 12 - -
(b) Inventories 15 - -
(c) Trade receivables 16 - -
(d) Cash and bank balances 17 - -
(e) Short Term Loans and Advances 13 - -
(f) Other current assets 18 - -
Total - -
Brief about the Entity 1
Summary of significant accounting policies 2
The accompanying notes are an integral part of the financial statements

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Current Liabilities Decision Tree Check Points

Whether the company Understanding the clients’ business is important for asset
Whether due to be does not have an
Expected to be settled unconditional right to
classification
Is it held for- settled within 12
within the normal N N N defer settlement of the
sale? months from the end
operating cycle? liability for at least 12
of the reporting period?
months after the reporting Asset classification depends on the intention of the management
date? but should be demonstrated
Y N
Y Y Y “Expected to be realised” to be determined from the point of view
of the management

Current Liability Non Current Liability “Expected to be realised” from management perspective, whether
any audit procedures to be performed?
Emphasis is on “Due to be settled” and not “expected to be settled”

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Check Points Owners’ Capital Account

(Amount in Rs.)
Whether to restate comparatives if there is a movement from non- Sr. Name of Share of As at 1st April Capital Remuneration for the Interest for the Withdrawals Share of Profit / As at 31st March
No. Partner/ profit/ 20XX Introduced/contributed year year during the year Loss for the 20XX (Closing
current asset to current asset during the year? Proprietor/ (loss) (Opening during the year year Balance)
Owner (%) Balance)
1 -
2 -
Held for Sale – Any time limit specified? 3 -
4 -
- - - - - - -

What happens when there is breach of loan covenants of a term Previous Year (PY) - - - - - - -
loan classified as non-current liability?

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Statement of profit and loss Statement of profit and loss

Particulars Note For the year For the year Particulars Note For the year For the year
ended March ended March 31, ended March ended March 31,
31, 2025 2024 31, 2025 2024

I Revenue from Operations VI Exceptional items

II Other income VII Profit before extraordinary items, partners’ remuneration and tax (V-VI)

III Total Income (I+II) VIII Extraordinary Items

Expenses IX Profit before extraordinary items, partners’ remuneration and tax (VII-VIII)

Cost of Material Consumed X Partners’ Remuneration

Purchases of Stock in Trade XI Profit before tax (IX-X)

Changes in inventories of finished goods, Work-in-progress and Stock-in-Trade XII Tax Expense

Employee benefits Expense (a) Current tax

Depreciation and amortization Expense (b) Deferred tax

Finance Cost XIII Profit (Loss) for the period from continuing operations (XI-XII)

Other Expenses XIV Profit/(loss) from discontinuing Operations

IV Total expenses XV Tax expense of discontinuing Operations

V Profit before exceptional and extraordinary items, partners’ remuneration and tax (III-IV) XVI Profit/(loss) from Discontinuing operations (after tax) (XIV-XV)

XVII Profit/ (Loss) (XIII + XVI)

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Cash Flow Statements Financial Statements for NCEs – FAQ

Only applicable to Level I Non-Corporate Entities Can a NCE add, amend, substitute, delete any line items given in the format of FS?

Not applicable to Non-Corporate Entities falling under What are the additional considerations for disclosures in the FS of NCEs?
Level II, III and IV
Whether every item of the BS and P&L need to be cross-referenced to any related
information in the notes to accounts
Format and presentation shall be in accordance with AS 3

What would be the impact of not using the format prescribed by the Guidance Note
for Financial Statements of NCEs?

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Rounding off of FS Notes on accounts

Rules for rounding off Can a NCE give full figures in Rupees or
decimals thereof? Notes and other statements and Also include significant accounting policies
explanatory material that are an integral as required by applicable
• Total Income < Rs. 100 Crores Accounting Standards
part of the financial statements
- Round off to the nearest
hundreds, thousands, lakhs or What is meant by Total Income?
millions or decimal thereof
The disclosure requirements specified in Each item on the face of the Balance Sheet
• Total Income > Rs. 100 Crores the formats are in addition to and not in and Statement of Profit and Loss
- Round off to the nearest Can we use different units of measurement substitution of the disclosure requirements shall be cross-referenced to any related
lakhs, millions or crores, or in FS and notes? specified in the AS issued by the ICAI information in the notes to accounts
decimal thereof

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Comparatives Criteria for classification of NCE for applicability of AS

Level Turnover Limits Borrowing Limits (including Other Criteria

(Excluding Other Income) public deposits)
I More than Rs. 250 Cr More than Rs. 50 Cr Banks, Financial Institutions,
Insurance entities and holding and
subsidiaries of the entities covered
in Level I

Narrative - Comparative information II More than Rs. 50 Cr to Rs.250 More than Rs. 10 Cr to Rs.50 Cr Holding and subsidiaries of the
Numerical - Comparatives should be shall also be presented for narrative Cr entities covered in Level II
presented for at least one previous and descriptive information where
period needed III More than Rs. 10 Cr to Rs.50 Cr More than Rs. 2 Cr to Rs.10 Cr Holding and subsidiaries of the
entities covered in Level III

IV Upto Rs. 10 Cr Upto Rs. 2 Cr NA

Borrowings at any time in the

TO in the immediately preceding Entities engaged in commercial,
immediately preceding financial
financial year industrial or business activities
year

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NCE and applicability of AS NCE and applicability of AS

AS Level II Entities Level III Entities Level IV Entities
AS 1 Applicable Applicable Applicable
AS 2 Applicable Applicable Applicable
AS 3 Not Applicable Not Applicable Not Applicable
Level I entities are required to comply in full with all the Accounting
AS 4 Applicable Applicable Applicable
Standards
AS 5 Applicable Applicable Applicable
AS 7 Applicable Applicable Applicable
AS 9 Applicable Applicable Applicable
Certain exemptions/ relaxations have been provided to Level II, Level AS 10 Applicable Applicable with disclosures exemption Applicable with disclosures
III and Level IV NCEs exemption
AS 11 Applicable Applicable with disclosures exemption Applicable with disclosures
exemption
AS 12 Applicable Applicable Applicable
AS 13 Applicable Applicable Applicable with disclosures exemption
AS 14 Applicable Applicable Not Applicable
AS 15 Applicable with exemptions Applicable with exemptions Applicable with exemptions

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NCE and applicability of AS Questions?

AS Level II Entities Level III Entities Level IV Entities
AS 16 Applicable Applicable Applicable
AS 17 Not Applicable Not Applicable Not Applicable

?
AS 18 Applicable Not Applicable Not Applicable
AS 19 Applicable with disclosures exemption Applicable with disclosures exemption Applicable with disclosures exemption
AS 20 Not Applicable Not Applicable Not Applicable
AS 21 Not Applicable Not Applicable Not Applicable
AS 22 Applicable Applicable Applicable only for current tax related
provisions
AS 23 Not Applicable Not Applicable Not Applicable
AS 24 Applicable Not Applicable Not Applicable
AS 25 Not Applicable Not Applicable Not Applicable
AS 26 Applicable Applicable Applicable with disclosures exemption
AS 27 Not Applicable Not Applicable Not Applicable
AS 28 Applicable with disclosures exemption Applicable with disclosures exemption Not Applicable

AS 29 Applicable with disclosures exemption Applicable with disclosures exemption Applicable with disclosures exemption

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Thank you

ganesanca@[Link]/ 0 99401 30403

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