According to the recent press release released on the website pib.gov.in on 10th August, 2021 in respect of ‘Ministry of Corporate Affairs (MCA) amends Schedule III of Companies Act on disclosure norms in financial statements‘
As Ministry of Corporate Affairs by amendment in Rules of Schedule III on 24th march 2021 has already made lot of amendments in Schedule III of Companies Act, 2013. Schedule III stands for Financial Statement including Balance sheet, P & L (Profit and Loss) Account, Cash flow statement etc.
What is the Purpose of Amendment?
Through these amendments Ministry of Corporate Affairs is expanding stringency in compliances and adding different additional disclosures in Financial Statement, Directors Report and Audit Report. The main agenda behind these amendments is to make more transparency.
Recently in a written reply to a question in Rajya Sabha, our Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh mentioned that these amendments has been done to bring great transparency in reporting of financial statements.
He mainly focused on new disclosures with respect to the virtual currency or crypto currency transactions & Corporate Social Responsibility (CSR) spending in financial statement.
Below in two points are the disclosure with respect to the virtual currency or crypto currency transactions and Corporate Social Responsibility spending:
A. Crypto Currency or Virtual Currency Details
If the Company has traded or invested in Crypto currency or Virtual Currency during the financial year, the following components described in points be disclosed:-
- Details of profit or loss on transactions which has involvement of Crypto currency or Virtual Currency
- Details of amount of currency held as at the reporting date
- For the purpose of trading or investing in Crypto Currency or virtual currency, Deposits or advances from any person.
B. Details of Corporate Social Responsibility (CSR)
Where the company covered under section 135 of the companies act, the following will be disclosed with regard to Corporate Social Responsibility activities:-
- During the year, amount needed to be spent by the company
- Amount of expenditure incurred
- Shortfall at the Year end
- Total of previous years shortfall
- Reason for shortfall
- Nature of CSR activities
- Related party transactions details, which is contribution to a trust controlled through the company in relation to CSR expenditure according to the relevant Accounting Standard
- Where a provision is made related to a liability incurred by entering into a contractual obligation, the movements in the provision during the year should be shown separately.
Conclusion:
These recent amendment in disclosure requirement needed to mention in financial statement to be prepare for Financial Year 2021-22 which is for financial year ended 31st March 2022. These all new disclosures will enhance the transparency in many folds.