The Ministry of Company Affairs has amended the Schedule III of the Companies Act 2013 vide a notification dated 24th March, 2021 and the same will be effective from 1st April 2022. The step has been taken to ensure more transparency in Accounting.

Schedule III consist general instructions for preparation of Balance Sheet and Statement of Profit and Loss of a Company.

Following are the brief points regarding the amendments in Schedule III introduced by MCA:

• Now companies have to round off the figures appearing in the financial statements, before the amendment it was optional. Further, the criteria for rounding off the figures shall be based on “total income” in place of “turnover”.
• Company shall disclose Shareholding of Promoters.
• The Current maturities of Long-term borrowings shall be disclosed separately in the notes.
• The Trade Payables ageing schedule to be given.
• The Trade Receivables ageing schedule to be given.
• Security deposits shall not be disclosed under the head of ‘Long term loans and advances’ but disclosed under the head ‘Other non-current assets’.
• Disclosure the reason of utilization of funds for the purposes other than for which they were borrowed by the company and shall also disclose the purposes for which funds were utilised.
• Company needs to disclose whether if the books of accounts are tallied with the quarterly or monthly returns filed with banker in cases where the company has borrowed funds from banks on the basis securities of current assets, or else a separate reconciliation statement needs to be provided.
• The company shall provide the details of all the immovable property (other than the properties where the Company is lessee and the lease agreements are duly executed in favour of the company) whose title deeds are not held and where such immovable property is jointly held with others, details are required to be given to the extent of company’s share.
• In cases where revaluation has been done in case of Property Plant and Equipment, the company shall disclose if the valuation was done by registered valuer.
• For the Capital-work-in progress, ageing schedule is to be given
• For the Intangible assets under development, aging schedule is to be given.
• Disclosure of any proceedings initiated or pending against the company regarding holding of any benami property under the Benami Transactions (Prohibition)Act, 1988 to be made.
• Where a company is a declared as a wilful defaulter by any bank or financial Institution or other lender, the details of the same is to be given.
• Disclosure of any transactions with companies struck off
• Where any charges or satisfaction of the charges yet to be registered with ROC beyond statutory period, details and reasons thereof shall be disclosed.
• Following Ratios to be disclosed:
  • Current Ratio
  • Debt-Equity Ratio,
  • Debt Service Coverage Ratio
  • Return on Equity Ratio
  • Inventory Turnover Ratio
  • Trade Receivables Turnover Ratio
  • Trade Payables Turnover Ratio
  • Net Capital Turnover Ratio
  • Net Profit Ratio
  • Return on Capital Employed
  • Return on Investment
• Disclosure of Utilisation of Borrowed funds and share premium is to be given
  • Explanation is required if there is any change of more than 25% as compare to preceding financial year.
• Further disclosures shall be made where the company has received funds from any persons or entities including the foreign entities to further lend or invest or provide any guarantee, security to the third parties.
• Where a scheme of arrangement has been approved by the tribunal, disclosure shall be made of the effect of the same on the books of accounts and any deviation from accounting standards for the same.