Requirement of Schedule 3 of Companies Act for preparation of financial statements

The Schedule III of the companies act, 2013 provides the manner in which every company registered
under the act shall prepare its Statement of profit and loss, Balance Sheet and notes to the financial
statements. It provides the format of financial statements of companies complying with Accounting
Standards (AS) and Ind AS. Most provisions for the preparation of the statement of profit and loss and
balance sheet are on the same lines as in the existing Schedule VI.

The summary of the Schedule 3 is as follows:

Corresponding to the existing section 210, Section 129 of Companies Act, 2013 provides the format of
preparing the financial statements. It provides that the financial statements will be prepared complying
with the accounting standards under new section 133 and shall give a true view of the state of affairs of
the company.

The companies will prepare the financial statements in the new form provided in the new Schedule 3.
Section 2(40) will include the balance sheet, profit and loss account/income and expenditure account,
cash flow statement, statement of changes in equity and explanatory notes.

The new Schedule III provides the detailed instructions and the form for preparing the consolidated
financial statements of a company if it has one or more subsidiaries. The salient features of the
financials of the subsidiary companies will have to be attached with the financial statement. This rule
also applies if the company has a joint venture or interest in any associate company.

Any disclosure requirements specified in the schedule are considered as an addition to the already
prescribed disclosure requirements specified in the Accounting Standards under the Companies Act,
2013.