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Financial Statements Approval and Signing under Section 134

Updated 11 October 2026 · Fact-checked

Under section 134(1) of the Companies Act, 2013, the Board first approves the financial statement. It is then signed for the Board by the authorised chairperson, or by two directors (one being the managing director, if any), plus the CEO, CFO and company secretary where appointed. It then goes to the auditor for his report.

Understand Financial Statements and Approval Process

A company's financial statement is the formal record of its finances. The law does not let one person simply prepare and publish it. First the Board must approve it, so that the directors take collective responsibility. Only then is it signed.

Section 134(1) sets the order. The Board approves the financial statement, including the consolidated financial statement if any. After approval, it is signed on behalf of the Board. Only then is it submitted to the auditor for his report. So approval comes before signing, and signing comes before audit.

The signing rule has two parts. The first is the directors. The chairperson signs if the Board has authorised him. Otherwise two directors sign, and one of them must be the managing director, if the company has one. The second is the officers. The CEO, CFO and company secretary also sign, wherever they are appointed. If the company has no CFO, there is nothing to sign for that post. A One Person Company is simple: only one director signs.

Two attachments complete the picture. Section 134(2) says the auditor's report is attached to every financial statement. Section 134(3) says the Board's report is attached to statements laid before the company in general meeting. Section 134(7) says a signed copy of the financial statement must be issued, circulated or published along with the notes, the auditor's report and the Board's report.

Failure to comply attracts a penalty under section 134(8): ₹3,00,000 on the company and ₹50,000 on every officer in default. In an exam, always link the facts to these steps: approve, sign, audit, attach.

Key rules to remember

Approval and signing (s.134(1)): Board approval → signing on behalf of the Board → submission to auditor; Approval must come before signing. The statement includes the consolidated financial statement, if any.
Who signs: directors: Chairperson (if authorised by the Board) OR two directors, one of whom is the managing director, if any; The chairperson can sign alone only when the Board has authorised him.
Who signs: officers: CEO + CFO + company secretary, wherever appointed; They sign along with the directors. If a post is not filled, that signature is not required.
One Person Company: Only one director signs; No officer signatures are listed for a One Person Company.
Auditor's report (s.134(2)): Auditor's report attached to every financial statement; No exception for any class of company.
Circulation (s.134(7)): Signed financial statement + notes + auditor's report + Board's report; All four go together when the statement is issued, circulated or published.
Penalty (s.134(8)): Company: ₹3,00,000; every officer in default: ₹50,000; This is a penalty, not imprisonment.

How to solve Financial Statements and Approval Process questions

Case questions on this topic ask who must approve, who must sign, or what must go with the statement. Use the same short method each time.

1Identify the company type from the facts: ordinary company or One Person Company.
2Check that the Board has approved the financial statement, including the consolidated statement if any, before anything is signed.
3Find out who signed. Check whether the chairperson was authorised by the Board. If not, count the directors and check whether one is the managing director, if there is one.
4List the officers appointed: CEO, CFO, company secretary. Check that each appointed officer signed.
5Check the sequence: signed statement was submitted to the auditor for his report.
6Check the attachments: auditor's report and the Board's report, with notes, for issue or circulation.
7State the conclusion: compliant or not, and the penalty under section 134(8) if there is default.

Quickest way: Approve-Sign-Audit-Attach check

When to use it: Use it for short case questions where you must spot the defect in a few lines.

Approve: was there a Board approval first?
Sign: chairperson authorised, or two directors with the MD? Plus CEO, CFO, CS where appointed. One director for an OPC.
Audit: was it sent to the auditor after signing?
Attach: auditor's report, Board's report, notes.
Penalty: ₹3,00,000 on the company and ₹50,000 on each officer in default.

Common mistakes in Financial Statements and Approval Process

Saying any two directors can sign.
Students remember 'two directors' and forget the managing director condition.
Fix: Write that one of the two must be the managing director, if the company has one.
Saying the chairperson can always sign alone.
The chairperson is seen as the senior-most person.
Fix: The chairperson signs only if authorised by the Board. Mention the authorisation every time.
Leaving out the CEO, CFO and company secretary.
Students focus on directors only.
Fix: Add that these officers also sign wherever they are appointed.
Treating the CFO signature as mandatory when no CFO exists.
Students ignore the words 'wherever they are appointed'.
Fix: Check the facts. Required only where the post is filled.
Applying the normal rule to a One Person Company.
The OPC exception is easy to miss.
Fix: For an OPC, only one director signs.
Mixing up the order: audit before Board approval.
Students think the auditor reviews first.
Fix: Board approves, then signing, then submission to the auditor for his report.

Worked examples

Example 1

Arjun Textiles Ltd has a chairperson, Mr. Rao, who has not been authorised by the Board to sign. The company has a managing director, Ms. Iyer, and two other directors. It has a CFO and a company secretary but no CEO. The Board approved the financial statement. Who must sign it?

Show the solution

The Board has approved the statement, so section 134(1) signing can follow.
The chairperson is not authorised by the Board, so he cannot sign alone for the Board.
Two directors must sign, and one of them must be the managing director. So Ms. Iyer plus one other director.
The CFO and company secretary must also sign, as they are appointed.
There is no CEO, so no CEO signature is required.
After signing, the statement goes to the auditor for his report.

Answer: Ms. Iyer (managing director) and one other director sign for the Board, along with the CFO and the company secretary. No CEO signature is needed, and Mr. Rao cannot sign alone as he is not authorised.

Example 2

Meera Foods Pvt Ltd is a One Person Company with a sole director, Ms. Meera. The statement was sent to the auditor without being signed, because she felt a Board resolution was impossible. Advise.

Show the solution

Section 134(1) requires the financial statement to be signed before submission to the auditor.
For a One Person Company, only one director signs.
So Ms. Meera, as the sole director, can and must sign it herself.
Submitting it unsigned is a default of section 134.
Under section 134(8), the company is liable to a penalty of ₹3,00,000 and every officer in default to ₹50,000.

Answer: Ms. Meera alone must sign the statement before it goes to the auditor. Sending it unsigned is a default, attracting penalties of ₹3,00,000 on the company and ₹50,000 on each officer in default.

Exam tips

Write the sequence in one line: approval by the Board, signing, then submission to the auditor.
Quote the exact signing condition: chairperson if authorised, otherwise two directors with one MD.
Always apply the facts: name the persons and state whether each signature is needed.
Close with the penalty under section 134(8) when the facts show default.
Do not mix this topic with the content of the Board's report. That belongs in section 134(3).

Practice questions from Board Disclosures and Website Disclosures

Financial Statements and Approval Process in other exams

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

Financial Statements and Approval Process: frequently asked questions

Who signs the financial statements of a company under the Companies Act, 2013?

Under section 134(1), the chairperson signs if authorised by the Board. Otherwise two directors sign, one being the managing director if there is one. The CEO, CFO and company secretary also sign wherever they are appointed. In a One Person Company, one director signs.

Does the Board approve the financial statement before it is signed?

Yes. Section 134(1) says the statement shall be approved by the Board before it is signed. After signing, it is submitted to the auditor for his report.

What must be attached to the financial statement?

The auditor's report must be attached to every financial statement under section 134(2). When the statement is issued, circulated or published, a signed copy goes along with the notes, the auditor's report and the Board's report under section 134(7).

What is the penalty for default under section 134?

Under section 134(8), the company is liable to a penalty of ₹3,00,000. Every officer of the company in default is liable to a penalty of ₹50,000.