With the coming financial year 2021-22, the companies and auditors have to deal with tons of new disclosure requirements while preparing and presenting financial statements and audit reports. There has been a wide range of implications on financial reporting that should be considered while preparing the financial Statements and one among these covers the recent amendments in Schedule III to the Companies Act, 2013. Let’s hear expert’s opinion on the changes and its nearest impact on the companies and the auditors.

1. Schedule III to the
Companies Act 2013
SPEAKER: Dr T.P.Ghosh
WEBINAR ON
Implications of Recent Amendments

2. Overview
Impacting
Preparers &
Auditors
Impact on
SOCE
Impact on
BS
Impact on
P&L

3. P&L
Undisclosed
Income
CSR
Expense
Improvement in disclosure
requirements by insertion of
Sub-para (viii) & (ix) to
Paragraph 5 of General
Instructions for Preparation
of Statement of Profit and
Loss

4. Equity & Liabilities
• Share capital
• Short term
borrowings
• Trade payables
• Other current
liabilities
• Lease liabilities
Assets
• Property , Plant and
Equipment
• Intangible assets
• Capital work in
progress
• Intangible assets
under development
• Long term loans and
advances
• Other non-current
assets
• Trade receivables
Balance Sheet
Disclosures
• End use of fund
• Wilful defaulter
• Identifying ultimate
beneficiaries
• Compliance with layer
of companies
• Companies with
scheme of
arrangement
• Relationship with
struck off companies
• Details of benami
property held
Improvement to Balance Sheet Presentation and disclosures

5. 1.Improving disclosures in shareholding pattern
2.Improving terminology, and disclosure's of
Significant Changes in PPE & Intangible assets;
Ageing schedule of CWIP & Intangible Assets
under development
3.Ageing Schedule of Trade Receivables & Trade
Payables

6. 4. Detailing out Loans to related parties
5.Detailing out immovable property not held in
the name of the company ( other leasehold
property supported by lease agreement)
6. Benami property held, Wilful defaulter,
Relationship with struck off companies

7. 7. End use of fund
8.Compliance with number of layers of
companies
9. Disclosures of financial ratios

8. 10. Registration of Charges
11.Compliance with approved scheme of
arrangements
12. Improving CSR disclosures

9. 13. Disclosures relating to crypto currency or
virtual currency
14.Compliance with number of layers of
companies
9. Disclosures of financial ratios

10. Turnover is replaced by Total Income
‘may be’ replaced by
emphatic “ shall be”
It is no longer
optional

11. Rounding off principle :
Rationalised
₹ Cr. for more than ₹ 100 total income
ACC
Schedule III

12. (ba) Grants or donations received ( relevant in case if
Section 8 companies)
Amendments
Adds clarity for Section 8
companies
Schedule III

13. See Income Statement of Section 8 Company

14. Implications :
Any significant difference
would fall under Ind AS 8

15. Requirement regarding undisclosed
income has much broader implications
ass per accounting standards.

16. CSR disclosures are already there in Board’s
Report vide the Companies (Corporate
Social Responsibility Policy)
Amendment Rules, 2021 Dated 22nd
Jan 2021
Now to reconcile the Board Report and
Schedule III disclosures is an added
complexity.
Schedule III Amendment

17. [Annexure - I]
Format for the Annual Report on CSR Activities to be included in the Board's Report 1[For Financial
Year Commenced Prior To 1st Day of April, 2020]
1. A brief outline of the company's CSR policy, including overview of projects or programs proposed to be
undertaken and a reference to the web-link to the CSR policy and projects or programs.
2. The Composition of the CSR Committee.
3. Average net profit of the company for last three financial years
4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above)
5. Details of CSR spent during the financial year.
(a) Total amount to be spent for the financial year;
(b) Amount unspent, if any;
(c) Manner in which the amount spent during the financial year is detailed below.
………… See Next slide
*Give details of implementing agency:
6. In case the company has failed to spend the two per cent of the average net profit of the last three financial
years or any part thereof, the company shall provide the reasons for not spending the amount in its Board
report.
1. Inserted by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 Dated
22nd Jan 2021 Amendment effective from 22nd January 2021
CSR disclosures in Board’s Report

18. CSR disclosures in Board’s Report

19. • Assets and liabilities disclosures to relate to financial assets and
financial liabilities should be linked
• Risk disclosures to covered

20. HUL

21. Prior period errors
added !

23. Infosys 2020

24. • Balance at the beginning of the current reporting period
• Changes in accounting policies or prior period errors
• Restated balance at the beginning of the current reporting period
• Total comprehensive income during the current accounting period
• Dividends
• Transfer to Retained Earnings
• Any other change to be specified
• Balance at the end of the current reporting period
Break-up of profit
and other
comprehensive
income is missing –
one line
classification is
possible

25. • Remeasurement of defined benefit plans – this needs a separate
classification as this is common item in almost all companies pursuing
Ind AS
SOCE – Clarification!

26. II. Assets
Non-current Assets
(1) (a) Fixed Assets
(i) Property, Plant and Equipment
(ii) Intangible assets
(iii) Capital Work-in progress
(iv) Intangible assets under development

27. This is improvement over
shareholding pattern disclosures
under corporate governance

28. Reliance Industries 2019-20 Annual report

29. Check disclosures by ACC Annual report 2019-20

30. Insertion of new clause
Earlier it was presented in Other
Current Liabilities.
By this , Borrowings can be
located in one place.
Existing Position of Schedule III

31. Changed and shifted to
Short term borrowings
Pre-amendment position of Schedule III

32. Now this item should be moved to
short term borrowings - reclassified

33. A New FA. Clause has been inserted for Trade
Payable disclosures
Check complete items of “ F” in
slide 30 …

34. Maturity schedule will
signal the risk profile of
the entity
Non-current portion out
of maturity schedule
should be cross referred
to disclosures under sub-
clause D.

35. Property , Plant and Equipment
Amount of change due to
revaluation if 10% or more to be
disclosed

36. Revaluation greater
than 10% or more be
disclosed

37. Amendment
Amount of change due to
revaluation if 10% or more to be
disclosed
Pre-amendment Schedule III

38. Specimen
Disclosures

39. See Slide 41
Pre-amendment Schedule III

42. Trade Receivables Ageing Schedule

43. Amendment
See Slide 41
Pre-amended Schedule III

45. Inserted to check siphoning of fund or
use of funds against specific purpose

46. Amended

47. Title Deed of Immovable Property

49. Basis of Revaluation

50. Disclosure of Loans to Promoters, Directors and KMPs

51. CWIP progress
report
has been
introduced
Capital Work In Progress – Ageing Schedule

52. Intangible assets under development – Ageing Schedule : Similar to
CWIP monitoring

53. Benami Property

54. Borrowings from Banks or Financial Institutions on the basis of
security of Current Assets

56. May have significant impact if the
reporting entity has Investments
and Receivables or legal
implication if there is payable

59. Making more useful information
to Investors. Many companies in
the US even present Common
size Statement.
Presentation of Ratios

60. I have an article Goodwill Bubble. Accounting Regulator
should evaluate what is Goodwill.
Goodwill Bubble , Fallacy of Impairment only Model and
Reintroduction of Goodwill Amortisation
March 22, 2021, [2021] 125 taxmann.com 319

61. Anti-money laundering and
anti-FEMA violation measures
Investment via intermediaries

62. CARO Clause 3 (i) on Title of
Immovable property , Basis of
revaluation , Benami property
were covered therein ahead of
change in Schedule III
Now Management has to provide
details.
Role of auditor is essentially to
assess the completeness of
disclosures
Audit & Auditors – CARO 2020

63. CARO Clause 3 (i) on Title of
Immovable property , Basis of
revaluation , Benami property
were covered therein ahead of
change in Schedule III
Now Management has to provide
details.
Role of auditor is essentially to
assess the completeness of
disclosures
ICAI
ICAI
Audit & Auditors – CARO 2020

64. Linked to willful defaulter and end use of fund disclosures
CARO Requirements

65. Linked to financial ratios
disclosures
See Slide 59
Ageing Schedule of Trade Payables & Trade
Receivables. See Slides 33 &42
Of course, ability to meet liabilities is not
directly related to ageing schedule.
Going concern Uncertainty

66. See Slides 16 & 17 Schedule III and Board’s report disclosures as per CSR
Rules. Auditor‘s responsibility no longer limited to transfer of unspent fund.
CSR AUDIT

67. For More Information, Visit: https://taxmann.com/
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