Skip to content

CS Professional · Drafting, Pleadings and Appearances · Documents under Companies Act, 2013

Ananya Textiles Ltd's board finds that, for one item, its financial statements do not follow a notified accounting standard. The CFO proposes to say nothing, since the overall picture is fair. What must the company do under Section 129?

The company must disclose in its financial statements the deviation from the accounting standard, the reasons for the deviation and the financial effects, if any. Section 129(5) requires all three elements, so staying silent or disclosing only the reasons does not satisfy the law.

  1. ADisclose the deviation, the reasons for it and the financial effects, if any, in its financial statementsCorrect
  2. BObtain prior approval of the Registrar before adopting the different treatment
  3. CDisclose only the reasons for the deviation, because financial effects are optional
  4. DMake no disclosure if the auditor considers the statements true and fair overall

Explanation

Section 129(5) requires a company whose financial statements do not comply with the accounting standards to disclose the deviation, the reasons for it and the financial effects, if any. Silence is not permitted merely because the overall picture looks fair. Disclosing only the reasons is incomplete, because all three elements are required.

Did you get it right without looking?

One question tells you little. A timed set on Documents under Companies Act, 2013 shows your real accuracy, how long you take and where you lose marks.

Practise Documents under Companies Act, 2013Free diagnostic mock

More Documents under Companies Act, 2013 questions