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Companies Act 1956	Companies Act 2013
Section 2(8) provides definition of `book and paper’ and `book or paper’ whereas `books of accounts’ have been defined in Section 209 of the Act.	Section 2(12) defines `book and paper’ and `book or paper’ whereas `books of accounts’ have been defined in Section 2(13) of the Act.
Section 2(17) defines Financial year.	Section 2(41) defines financial year.
Section 209 to Section 223 governs provisions relating to accounts .	Section 128 to Section 137 governs provisions relating to accounts
Revised Schedule VI provides for general instructions for preparation of Balance sheet and Statement of Profit and loss.	Schedule III provides general instructions for preparation of Balance sheet and Statement of profit and loss of a Company

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Companies Act 1956	Companies Act 2013
Schedule XIV to the Act provides the rates at which depreciation is to be provided on different class of assets ( on WDV or SLM basis)	Schedule II provides Useful Lives to compute depreciation on various assets and manner of computing depreciation
Section 350 providing ascertainment of depreciation	Section 123 (2)
Companies (Accounting Standard s) Rules 2006	Companies (Account) Rules 2014 inter alia, provides: Manner of keeping books of accounts. Maintenance and inspection of certain financial information by directors. As a transitory provision Accounting Standard rules 2006 continue to be in force till the time new rules are announced. (Rule 7)

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Companies Act 1956	Companies Act 2013
Books
Though the Companies Act, 1956 does not define ‘Books of Account’ , but section 209(1) prescribed the manner of keeping books of account as : 1) Every company shall keep at its registered office proper books of account with respect to: (a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place ; (b) all sales and purchases of goods by the company ; (c) the assets and liabilities of the company ; and	Section 2 (12) �book and paper� and �book or paper� include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form; Section 2(3) defining `Books of accounts’ as “books of account� includes records maintained in respect of� (i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;

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Companies Act 1956	Companies Act 2013
Books
(d) in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilization of material or labor or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account :	(ii) all sales and purchases of goods and services by the company; (iii) the assets and liabilities of the company; and (iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section; yet to be notified.

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Changes:

Definition of ‘book and paper’ and ‘book or paper’ is modified, so as to include minutes and registers and all documents maintained in electronics form also form part of it.
Now `books of account’ are specifically defined.

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Companies (Account) Rules 2014 inter alia, provides manner of keeping books of accounts in electronic mode. It reads as;
3. Manner of books of account to be kept in electronic mode.- (1) The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.
(2) The books of account and other relevant books and papers referred to in sub-rule (1) shall be retained completely in the format in which they were originally generated, sent or received, or in a format which shall present accurately the information generated, sent or received and the information contained in the electronic records shall remain complete and unaltered.
(3) The information received from branch offices shall not be altered and shall be kept in a manner where it shall depict what was originally received from the branches.

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(4) The information in the electronic record of the document shall be capable of being displayed in a legible form.

(5) There shall be a proper system for storage, retrieval, display or printout of the electronic records as the Audit Committee, if any, or the Board may deem appropriate and such records shall not be disposed of or rendered unusable, unless permitted by law:

Provided that the back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a periodic basis.

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(6) The company shall intimate to the Registrar on an annual basis at the time of filing of financial statement-

(a) the name of the service provider;

(b) the internet protocol address of service provider;

(d) where the books of account and other books and papers are maintained on cloud, such address as provided by the service provider.

Explanation.- For the purposes of this rule, the expression "electronic mode" includes “electronic form” as defined in clause (r) of sub-section (1) of section 2 of Information Technology Act, 2000 (21 of 2000) and also includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) and “books of account ” shall have the meaning assigned to it under the Act.

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Unlike The Companies Act 1956, now manner of maintenance of books of accounts under electronic mode have prescribed along with filling of the details of the service providers with its IP Address, Location of servers etc.
It is also provided that vouchers be maintained in legible form.
Audit committee or board is required to evolved a system for storage, retrieval and display of print out of electronic records and disposal there of.
In case of accounts being maintained in electronic mode out side India it is required that the back ups there of be kept in servers physically located in India.

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Companies Act 1956, did not permit inspection of books of accounts by any director of the company.

CA 2013 by Section 128 (3) provides that provides that books of accounts etc shall be open for inspection by any of the director of the company and under Rule 4 it provides the manner and conditions of inspection of books of accounts of company and its subsidiary.

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Financial Statement

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Companies Act, 1956	Companies Act, 2013
“Financial Year” means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not:	“Financial Year” means in relation to any company or body corporate, means the period ending 31^st day of the March every year, and where it has been incorporated on or after the 1^st day of January of a year, the period ending on 31^st day of march of the following year, in respect where of financial statement of the company or body corporate is made up.

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Changes

1. Definition - now financial year can only be of April to March and only a company or body corporate, which Is a holding company or subsidiary company of a company incorporate outside India and is required to follow a different financial year for consolidation of its accounts out side India, may have different financial year subject to approval of tribunal.
2. A transition period of 2 year has been prescribed for companies existing on the commencement of this Act to align their financial year to April-March.

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The definition of Financial Statement is not provided under the Companies Act, 1956.
But the manner of keeping books of account is provided in section 209 of the Companies Act, 1956

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MEANING OF “FINANCIAL STATEMENT” �[Sec. 2(40)]

In relation to company, includes:

a) Balance Sheet at the end of financial year.

b) statement of Profit & Loss for the financial year

c) Cash Flow statement (not mandatory for small companies, OPCs & Dormant companies) for the financial year.

d) Statement of Changes in equity, if applicable

e)Explanatory statement Note annexed to & forming part of Financial statements.

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Changes

The Companies Act, 2013 provides that books of accounts may be kept in electronic form also.
Every Company shall now be required to prepare and keep financial statements, other relevant books, minutes and registers at its registered office.
The term Balance Sheet, Profit & Loss Account, has been define collectively as Financial Statement under the Act, cash flow statement and statement showing change in equity (if applicable) of the company also forms part of the same.

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Small Company :

Small Company is not defined under the Companies act, 1956.
As per section 2(85) of the Companies Act, 2013, small company means a company, other than a public company-
Paid up share capital does not exceed Rs.50 lakh or such higher amount as may be prescribed which shall not be more than Rs. 5 crore or
Turn over as per its last statement of profit and loss does not exceed Rs. 2 crore or such higher amount as may be prescribed which shall not be more than Rs. 20 crore.

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Small Company (Contd..)

This clause shall not apply to –

A holding company or subsidiary company
A company registered under section 8 (formation for charitable objects)
A company or body corporate governed by any special Act.

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Requirements of Financial Statement �(Sec. 129)

The FS shall give a true and fair view and comply with the AS & shall be in the form as provided in Schedule III.

The FS shall be laid in the AGM within six months form the end of the financial year.
The holding company shall in addition, prepare a Consolidated Financial Statement of the Company along with its all subsidiaries, associates & joint ventures and lay before the AGM.

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Consolidated Financial Statement (CFS)

Neither the Companies Act, 1956 nor AS 21 requires the Companies to prepare Consolidated Accounts. At present, Clause 32 of the Listing Agreement mandates listed Companies to publish its Consolidated Accounts which is neither required to be laid before the AGM nor to be filed with ROC.

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Under the Companies Act, 2013 where a company has one or more subsidiaries, it shall, in addition to financial statements, prepare consolidated financial statement of the company and laid before the annual general meeting of the company.
All subsidiaries, associates and joint ventures will be covered under CFS.
Company shall prepared the Consolidated Financial Statements according to Schedule III of the Companies Act, 2013 which is in line with revised schedule VI.
All Companies including unlisted and private companies, with subsidiaries will need to prepare CFS.

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General Instructions for preparation of CFS

Where a company is required to prepare CFS, the company will mutatis mutandis follow the requirements of this Schedule.
Profit or Loss attributable to ‘minority interest’ and to owners of the parent in the statement of profit and loss shall be presented as allocation for the period.
A company will disclose the list of subsidiaries or associates or joint ventures, which have not been consolidated along with the reasons for non consolidation.

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Form 9.2 provided in draft rules requires disclosure of effect of revision on –
Assets
Liabilities (including contingent liabilities)
Revenue
Profit/loss before taxes
Net profit after tax/loss
Earning per share
Dividend
Any other item (specify in detail)

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The revised account along with board’s report there on is required to be approved by board and to be placed before the AGM along with report of the auditors there on.
However if the original financial statement was audited by different auditor, than, the revised financials shall accompanied by the consent letter from the auditor who reported upon the financial statements sought to be revised.
In case such auditor does not agree or the company is unable to procure the consent letter, reasons for such different opinion or inability to procure consents shall be explained.
Such revised financials are required to be filed with ROC and in case of listed company with stock exchange.

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A. Following AS are applicable to all companies, without exception:
AS-1 Disclosure of Accounting Policies
AS-2 Valuation of Inventory
AS-4 Contingencies and Events occuring after Balance sheet date
AS-5 Net Profit or Loss for the period. Prior period items and changes in Accounting policies
AS-6 Depreciation Accounting

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AS-7 Construction Contracts
AS-9 Revenue Recognition
AS-10 Accounting for Fixed Assets
AS-11 The effects of changes in Foreign exchange Rates
As-12 Accounting for Government grants
AS-13 Accounting for Investments
AS-14 Accounting for Amalgamations
As-16 Borrowing costs
AS-18 Related Party Transactions

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As-22 Accounting for taxes on Income
As-24 Discontinuing operations
As-26 Intangible Assets

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B. At present, following AS are applicable to companies only if, the preparation of consolidated FS/Interim FS are either mandatory or these companies voluntary chooses to do so. However, till the time IND AS are notified, companies required to prepare consolidated FS would have to follow;
AS- 21ConsolidatedFinancial Statements
As-23 Accounting for investments in Associates
AS-27 Financial Reporting of Interest in Joint Ventures
AS-25 Interim Financial Reporting

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Following standards are not applicable to SMCs in its entirety:
AS-3 Cash Flow
AS-17 Segment Reporting
SMC as per Accounting Standard Rules 2006 are the companies:
a. Whose equity or debt securities are not listed on any stock exchange or are not in process of listing.
b. which is not a bank, financial institution or an insurance company.

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c. Whose turnover excluding other income does not exceed Rs.50 Crore in immidiately preceding previous year.
d. which does not have borrowings including public deposits in excess of Rs.10 Crore
e. which is not a holding or subsidiary of a company which is not SMC

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D. Following Standards are applicable to SMCs with certain exemptions

Accounting Standard	Exemption paragraphs
AS-15 Employee Benefits	Para 11 t0 16 Para 46 and 130 Para 50 to 116 Para 117 to 123 Para 129 to 131
AS-19 Leases	Para 22©, (e) and (f) Para 25(a),(b) and (e) Para 37(a) and (f) Para 46(b) and (d)
AS -20 Earnings per share	Disclosure of Diluted earning

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D. Following Standards are applicable to SMCs with certain exemptions

Accounting Standard	Exemption paragraphs
AS-28 Impairment of Asset	Certain provisions relating to measurement of `Value in Use’ and para121(g)
AS-29 Provisions, Contingent Liabilities and Contingent Assets	Para 66and 67

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Though MCA has issued 35 Ind AS in February 2011 yet they are not notified.
Upon its’ Notification, companies would be required to follow Ind AS issued by MCA.

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BOD shall approve FS (Sec. 134)

This Section provides that the Financial Statements, including CFS should be approved by the BOD before they are signed and submitted to auditor. The Board’s Report & Auditor’s Report are to be attached with every FS before it is issued.

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Board Report (Sec. 134)
Financial Statement shall be signed by at least the chairperson if authorized by board or by at least 2 directors one of whom shall be managing director and CEO if he is a director in the company and CFO and Company Secretary where ever they are appointed. In case of OPC only by one director.

Board report to contain following information:-

Extract of the Annual Return as prescribed under section 92 in Form MGT - 9
No. of Board Meeting held.
Director’s Responsibility Statement.
Declaration by Independent Directors regarding their appointment
Co.s policy on Director’s appt. & remuneration if required to constitute Nomination and Remuneration Committee.

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Explanation/Comments by the Board on every qualification, reservation or adverse remark or disclaimer made by Auditor in his Audit Report and Company Secretary in his Secretarial Audit Report
Particulars of loans, guarantees or investments under section 186.
Particulars of contracts or arrangements with related parties in Form AOC - 2 pursuant to Rule 8(2)
The state of the company’ s affairs.
The amounts, if any, which it propose to carry to any reserves.
The amount, if any, which it recommends should be paid by way of dividend.

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Material changes & commitments affecting company’s financial position between previous year and current year & date of the report.
Statement indicating development and implementation of risk management policy
Details of policy developed and implemented on CSR applicable to companies having net worth of Rs. 500 crore or more or turnover of Rs. 1000 crore or more or net profit of Rs. 5 crore or more during the financial year.
For listed companies & prescribed companies , a statement of manner of annual evaluation of its own performance, its committees and individual directors.

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Directors Responsibility Statement to contain following additional statement:-

Laying down of Internal Financial Control in case of listed company.
Devising proper system to ensure compliance of all applicable laws.

Company no longer required to disclose the following in the Directors Report:-

Reasons for non-completion of buy back within time period specified in the Bill.
Details of employees in receipt of remuneration not less than the prescribed rate of remuneration.

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Section 136 of the Act provides for circulation of financial statements and in case of listed companies preparation and manner of circulation of abridged financial statements.

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Copy of FS to be filed with Registrar �(Sec. 137)

This Section provides that a copy of FS, auditor’s report etc shall be filled with the Registrar within 30 days.
In case a company does not hold an AGM or the AGM has been adjourned in any year, a statement of facts and reasons along with FS and attachment has to be filed with the Registrar.
In case the accounts are not adopted at AGM or adjourned meeting, the unadopted accounts shall be filed with ROC who shall take them in his records as provisional till final accounts are filed.

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Copy of FS to be filed with Registrar (Contd..)

One Person Co. (OPC) is required to file the FS with the Registrar within 180 days from the date of meeting.
Now every company at the time of filling their FS with registrar shall also attach the accounts of its subsidiaries which have been incorporated o/s India.

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