Corporate and Other Laws · Accounts of Companies

Board's Report under Section 134 – CA Intermediate Corporate Laws

Updated 4 October 2026 · Fact-checked

The Board's Report is a report by the directors, attached to the financial statements laid before the members in general meeting. Section 134(3) lists what it must contain, including the Directors' Responsibility Statement under Section 134(5). To answer, list the contents, state who signs it, and mention the penalty for default.

Understand Board's Report

The financial statements show numbers. The Board's Report explains them. It tells members how the company performed, what the directors propose to do with profits, and what risks and events matter. It is the directors' own account of the year.

Section 134(3) says the report must be attached to statements laid before a company in general meeting. It then lists the items it must include. Think of them in groups: governance (number of Board meetings, independent directors' declarations, policy on directors' appointment and remuneration, annual evaluation of Board performance), financial (state of affairs, transfer to reserves, dividend recommended, loans, guarantees and investments under section 186, related party contracts under section 188), audit-related (Board's explanations on every qualification, reservation, adverse remark or disclaimer by the auditor and by the secretarial auditor, and frauds reported by auditors under section 143(12) other than those reportable to the Central Government), and other (material changes after the year-end, conservation of energy and technology absorption, foreign exchange earnings and outgo, risk management policy, CSR policy, web address of the annual return).

The Directors' Responsibility Statement (DRS) is part of the report. Section 134(5) says what it must state: applicable accounting standards were followed with explanation of material departures; accounting policies were selected and applied consistently with reasonable and prudent judgments, to give a true and fair view; proper and sufficient care was taken for adequate accounting records, to safeguard assets and prevent and detect fraud and other irregularities; accounts were prepared on a going concern basis; in a listed company, internal financial controls were laid down and are adequate and operating effectively; and proper systems were devised to ensure compliance with all applicable laws, and they are adequate and operating effectively.

There are special rules by company type. For a One Person Company, the report means only a report with the Board's explanations or comments on every qualification, reservation, adverse remark or disclaimer in the auditor's report (section 134(4)). For a One Person Company or small company, the Central Government may prescribe an abridged report (section 134(3A)). If disclosures are already in the financial statements, you refer to them instead of repeating them. If the CSR policy or the directors' appointment and remuneration policy is on the company's website, the report needs only its salient features and the web address.

Key rules to remember

Attachment of the report: Board's report is attached to statements laid before the company in general meeting – Section 134(3); The auditor's report is attached to every financial statement – Section 134(2).
Who approves and signs the financial statement: Approved by Board, then signed by chairperson (if authorised by Board) or by two directors, one of whom must be the managing director, if any, plus CEO, CFO and company secretary wherever appointed; in an OPC, by one director – Section 134(1); Signing is for submission to the auditor for his report. The managing director is needed here only if the company has one.
Who signs the Board's report: Chairperson if authorised by the Board; otherwise at least two directors, one of whom is a managing director; or the director where there is only one director – Section 134(6); Do not mix this up with the signing of the financial statement in section 134(1). Section 134(1) says the managing director is needed 'if any'. Section 134(6) has no such qualifier in its text.
Directors' Responsibility Statement: Section 134(5): (a) accounting standards followed; (b) policies, prudent judgments, true and fair view; (c) proper accounting records, safeguarding assets, preventing and detecting fraud and other irregularities; (d) going concern; (e) internal financial controls (listed companies); (f) compliance systems; Clause (e) applies to listed companies only. Clauses (a) to (d) and (f) apply to all companies.
One Person Company: Board's report = Board's explanations on every qualification, reservation, adverse remark or disclaimer in the auditor's report – Section 134(4); Nothing else is required in the OPC report.
Penalty for default: Company: ₹3,00,000. Every officer of the company who is in default: ₹50,000 – Section 134(8); The company is liable to ₹3,00,000 on default. Each officer who is in default is liable to ₹50,000. Whether a particular officer is in default depends on the facts.
Documents issued with the signed financial statement: Notes, auditors' report and Board's report – Section 134(7); A signed copy of the financial statement, including consolidated one, is issued with these.
Revision of report: Tribunal approval; any of the three preceding financial years; not more than once in a financial year – Section 131; Reasons for revision must be disclosed in the Board's report of the year in which revision is made.

How to solve Board's Report questions

Most questions ask what the Board's report must contain, what the DRS must state, or what applies to a particular company. Use this method.

1Identify what is asked: contents, DRS, signing, special company type, or penalty.
2Name the provision: Section 134(3) for contents, 134(5) for DRS, 134(6) for signing, 134(4) for OPC, 134(8) for penalty.
3If the case involves a company type, check it first. An OPC has a limited report. A listed company must also give the internal financial controls statement. A small company or OPC may use an abridged report if the Central Government prescribes one.
4List the relevant items in groups and match them to the facts of the question.
5Apply the facts: for example, whether the auditor gave a qualification, whether a fraud was reported under section 143(12), or whether the policy is on the website.
6State the conclusion clearly, with the penalty if the facts show a default.
7Write in provision, facts, conclusion order.

Quickest way: Group-and-match for MCQs and written answers

When to use it: Use for MCQs on what the report includes and for short written answers on contents.

For MCQs, check which clause of section 134(5) the statement matches. Remember that the internal financial controls clause is for listed companies only.
Eliminate options that put OPC contents beyond auditor-remark explanations.
Remember the penalty pair: ₹3,00,000 for the company and ₹50,000 for each officer in default.
For written answers, write the section number, then bullet the items in the four groups: governance, financial, audit-related, other.
Close with the signing rule and the penalty to pick up easy marks.

Common mistakes in Board's Report

Saying the internal financial controls statement in the DRS applies to every company.
Students remember the list but miss the words in the case of a listed company.
Fix: Clause (e) of section 134(5) applies to listed companies only. The other clauses apply to all companies.
Mixing up who signs the financial statement and who signs the Board's report.
Both rules mention the chairperson and two directors.
Fix: Under section 134(1), the financial statement is signed by the chairperson if authorised by the Board, or by two directors, one of whom must be the managing director, if any. The CEO, CFO and company secretary also sign wherever appointed. Under section 134(6), the Board's report is signed by the chairperson if authorised, otherwise by at least two directors, one of whom is a managing director, or by the director where there is one director.
Writing a full list of contents for an OPC.
Students apply section 134(3) to every company.
Fix: For an OPC, section 134(4) limits the report to explanations or comments on auditor qualifications, reservations, adverse remarks or disclaimers.
Stating the wrong penalty, such as one amount for both the company and officers.
Penalty amounts are memorised loosely.
Fix: Company: ₹3,00,000. Every officer who is in default: ₹50,000.
Leaving out the explanation of the secretarial auditor's remarks.
Students remember only the statutory auditor.
Fix: Section 134(3)(f) covers both: the auditor's report and the company secretary in practice's secretarial audit report.
Thinking the full CSR or remuneration policy must always be reproduced in the report.
The provisos are overlooked.
Fix: If the policy is on the company's website, the report needs the salient features and changes in brief, plus the web address.

Worked examples

Example 1

The auditor of Sunrise Ltd., a listed company, has given a qualified opinion on its financial statements. The directors want to leave this out of the Board's report because it is already in the auditor's report. Advise them. Also state what the Directors' Responsibility Statement must say about internal financial controls.

Show the solution

Provision: Section 134(3)(f) requires the Board's report to include explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report and by the company secretary in practice in the secretarial audit report.
Facts: The auditor has given a qualification. Because section 134(3)(f) makes the Board's explanation a required item, the fact that the qualification already appears in the auditor's report does not remove the duty.
Conclusion on the first point: The directors cannot leave it out. The Board must explain or comment on the qualification in its report.
On the DRS: Section 134(5)(e) requires, in the case of a listed company, a statement that the directors had laid down internal financial controls and that such controls are adequate and were operating effectively.
Sunrise Ltd. is listed, so this statement is required. Internal financial controls mean the policies and procedures adopted for the orderly and efficient conduct of business, including adherence to company policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

Answer: The directors must include the Board's explanations on the auditor's qualification under section 134(3)(f). As Sunrise Ltd. is listed, the DRS must also state that internal financial controls were laid down and are adequate and operating effectively under section 134(5)(e).

Example 2

Alpha Ventures OPC Private Limited failed to attach a Board's report to its financial statements laid before the members. Its only director asks (a) what the report needed to contain and (b) what penalty applies.

Show the solution

Provision for (a): Section 134(4) says that for an OPC the Board's report means a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
Facts: Alpha Ventures is an OPC, so the full list in section 134(3) is not required. The report is limited to responses on the auditor's remarks. If the auditor made no such remarks, there is nothing to explain, but the report must still be attached.
Provision for (b): Section 134(8) applies on any default in complying with section 134. Failing to attach the Board's report is such a default. The company is then liable to a penalty of ₹3,00,000, and every officer of the company who is in default is liable to a penalty of ₹50,000.
Application: The company is liable to ₹3,00,000. Whether the sole director is an officer in default depends on the facts. If the director was responsible for the failure to attach the report, the director is also liable to ₹50,000.
Signing point: Section 134(6) allows the Board's report to be signed by the director where there is one director.

Answer: (a) The report needed only the Board's explanations or comments on auditor qualifications, reservations, adverse remarks or disclaimers, and it could be signed by the sole director. (b) Under section 134(8), the company is liable to a penalty of ₹3,00,000. The sole director is liable to a further ₹50,000 only if, on the facts, the director is an officer in default.

Exam tips

Learn section 134(5) as six points and tag clause (e) with the word listed.
In written answers, cite the sub-section for each point: 134(3) contents, 134(4) OPC, 134(5) DRS, 134(6) signing, 134(8) penalty.
Group the many items in 134(3) into governance, financial, audit-related and other, so you can recall them under time pressure.
MCQs often test who signs: separate the financial statement rule from the Board's report rule.
Mention section 131 if a question asks about correcting a report: Tribunal approval, three preceding years, once in a financial year.

Practice questions from Accounts of Companies

Board's Report in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Board's Report: frequently asked questions

What must the Board's Report contain under Section 134(3)?

It must include items such as the annual return web address, number of Board meetings, the DRS, independent directors' declarations, explanations on auditor and secretarial auditor remarks, the state of affairs, reserves and dividend proposals, material changes, and risk management and CSR policy details. Section 134(3) lists the full set. You can group them to remember them.

What is the Directors' Responsibility Statement?

It is a statement in the Board's report that confirms how the accounts were prepared and controlled. Section 134(5) says it must cover accounting standards, accounting policies and judgments, accounting records, the going concern basis, internal financial controls for listed companies, and compliance systems.

What is the Board's report for a One Person Company?

For an OPC, the report means only the Board's explanations or comments on every qualification, reservation, adverse remark or disclaimer made by the auditor in his report. The Central Government may also prescribe an abridged report for OPCs and small companies.

What is the penalty for default under Section 134?

The company is liable to a penalty of ₹3,00,000. Every officer of the company who is in default is liable to a penalty of ₹50,000. Whether an officer is in default depends on the facts.