Skip to content

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

Veda Textiles Ltd, an unlisted public company, finds that for one item its financial statements do not follow a notified accounting standard. The board wants to say nothing in the notes. Under the Companies Act, 2013, what must the company do?

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. Silence, oral intimation to the auditor or Registrar approval does not satisfy section 129(5).

  1. ANothing, provided the auditor is informed orally of the departure
  2. BDisclose the deviation, the reasons for it and the financial effects, if any, in its financial statementsCorrect
  3. CObtain prior approval of the Registrar before adopting the deviating treatment
  4. DDisclose only the financial effect in the Directors' Report and not in the financial statements

Explanation

Section 129(5) says that where the financial statements do not comply with the accounting standards, the company must disclose the deviation, the reasons for it and the financial effects, if any. The disclosure must be in the financial statements themselves. An oral intimation to the auditor or a Registrar approval is not the prescribed route.

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