I. Compulsory Reporting Requirements
1.
Consolidated
Financial Statement:
Applicable: To all the Companies having one or more
subsidiaries.
Subsidiary includes: Associate Companies and Joint Venture Companies
Crux of the point: In addition to the stand alone
financial statements prepared by the companies a combined
financial statements of the parent company and its subsidiaries is to be
prepared.
Challenges in adhering to the Act:
a.
When there is complex group structure in place.
b.
When the Joint venture companies follow different methods of financial
reporting.
2. Cash flow statement:
Applicable: To all the Companies except one person companies, small companies and dormant companies
Crux of the
point: All the respective companies have to include a Cash
Flow Statement in their Annual Financial Statement.
(Rules are yet
to specify the list of companies)
3.
Reporting on Fraud: Serious Fraud
Investigation Office (SFIO)
Applicable: To all the
Companies on satisfying any one of the following:
-
When the Frauds
are happening frequently or
-
When the fraud
amount involved or is likely to be involved is not less than
o
5% of net profit
or
o
2% of the
turnover of the company for the preceding financial year.
Fraud: Fraud includes corrupt practices, deceit, conflicts of
interest and bribery, also.
4.
Others:
a. Reporting
by Independent Director:
One of the duties of independent director as per
Schedule IV is to report concerns about unethical behaviour, actual or
suspected fraud or violation of the company’s code of conduct.
b.
Re-opening / restatement of Financial Statements:
Voluntary revision
of Financial Statements by Board:
-
The financial
statements can be voluntarily revised based on an application by the Board.
-
The accounts of
only 3 preceding financial years can be revised.
Revision of
Financial Statements by SEBI, Regulatory authorities or Auditors:
-
A legal
framework has been put in place for the SEBI, Regulatory Authorities or Auditors
to apply for restatement of company’s financial statement if needed.
-
There is no time
restriction if the revision has been initiated by the statutory regulatory
authorities.
Challenges in
adhering:
The tax implication has to be
evaluated again by the companies based on the revised financials.
c. Maintenance of Books of Accounts:
The books of accounts and other relevant papers can be maintained in electronic mode in the prescribed manner.
II. Disclosures
1.
Disclosures in the Board of Directors’ Report:
a.
Extract of Annual Return
b.
Number of board meetings
c.
CSR initiatives and policy
d.
Particulars of loans, guarantees,
investments etc.
e. Secretarial Audit Report to be annexed to the
Board’s report
f. Detailed reasons for revision of financial
statements - Board’s duty to send revised financial statements to shareholders
g.
Listed
company to disclose the ratio of the remuneration paid to directorsand
employees.
h. Receipt of commission by a director from the
holding company or subsidiary company
i. Every related party transaction along with the
justification for entering into such transaction has to be disclosed.
j. Additional information in Directors’ Responsibility
Statement
o
For
listed companies - directors to lay down
internal financial controls and ensure such controls are adequate and operating
effectively
o
Principal
business activities, particulars of its holding, subsidiary and associate
companies
o
Details
of shares, debentures and other securities with shareholding pattern
o
Indebtedness
o
Members
and debenture holders with changes therein
o
Promoters,
directors, KMP with changes therein
o
Meetings
of members or class thereof, board and other committees and details of
attendance
o
Penalties
imposed on the company, its directors or officers and details of compounding of
offence
o
Shares
held by FIIs
2.
Disclosures in the Auditor’s Report:
a.
Auditors to conduct
a more integrated audit and to give their opinion on the financial reporting
and internal controls of the Company.
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