A comparative Study – Schedule VI of the Companies Act, 1956
February 4, 2012
- Structured Presentation
- Easy comparison of the figures with other peer companies internationally
- Increased transparency as the Company is required to make disclosures for any change in treatment including addition, amendment, substitution or deletion in the financial statements.
- Qualitative improvement in presentation and disclosure requirement of the financial statement as focus is on substance over form
- Analysis of the financial statements made simple
Revised Schedule VI – a Comparison with Old Schedule VI
S.No. | Particulars | Old Provision | New Provision |
1 | Authority | Provisions of Schedule VI will prevail over Accounting Standards | Provisions of Accounting Standards will be in addition to the disclosure norms as per Schedule VI |
2 | Form of Balance Sheet | Both, horizontal and vertical forms were allowed | Only vertical form is specified |
3 | Form of Profit and Loss Account | No format specified | Vertical format specified |
4 | Share Capital | No separate disclosure for issuance of Bonus shares as well as other shareholder details | Notes to accounts on the Share Capital needs more detailed disclosure and reconciliation of the number of shares held etc. including details of the No. of bonus shares allotted during last 5 years to be disclosed. Also need to disclose the names and no. of shares held by share holders holding more than 5% of shares |
5 | Borrowings | Short - term & long - term borrowings grouped together under the head Loan funds sub-head Secured / Unsecured. | Long - term borrowings to be shown under non-current liabilities and short term borrowings to be shown under current liabilities with separate disclosure of secured / unsecured loans.Period and amount of continuing default as on the Balance Sheet date in repayment of loans and interest to be separately specified in each case. |
6 | Capital Advances | Used to be shown under the head Capital Work in process under Fixed Assets | To be shown under the head "Long term Loans and Advances" |
7 | Profit & Loss (Debit Balance) | Separately disclosed in the Assets side of the Balance Sheet | Shown as negative figure under the head Surplus. Therefore, Reserve & Surplus can have a negative balance. |
8 | Debtors outstanding for more than six months | Debtors outstanding for more than six months from invoice date to be shown separately. | Debtors outstanding for more than six months from the date they became due to be shown separately. |
9 | Bank Balances | Required separate disclosure of Current account balance and fixed deposit balance | Fixed deposit with maturity of more than 12 months required separate disclosure. |
10 | Classification of Expenses | Function wise & nature wise | Nature wise |
11 | Segregation between current and non- current | Borrowings, Investments and Loans & Advances are disclosed under respective heads. | Borrowings, Investments and Loan & Advances are classified between current and non –current under respective heads. |
12 | Current Assets and Current Liabilities |
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Bifurcation to be made in current and non-current. |
13 | Proposed Dividend | Accounted as part of appropriation and shown under provisions. | Not to be accounted and disclose in Notes |
14 | TDS amount on Interest, royalty received. | TDS amount was required to be shown for Interest Income etc. | No requirement of disclosing TDS amounts separately. |
15 | ESOP Expenses | No requirement to show separately as part of Employee Benefits expense. | Expense on Employment Stocks Options Scheme (ESOP) and Employee Stock Purchase Plan (ESPP) to be shown separately as part of Employee Benefits expense |
16 | Managerial Remuneration & Commission | Payment to Directors and Detailed calculation under sec 198 was required to be disclosed. | No disclosure required of Managerial remuneration. |
17 | Quantitative Details | Quantitative details of Raw materials, purchases, stocks and turnover to be given for each class of goods. Also,Licensed, Installed and Production quantities are to be disclosed. | No quantitative details required |
18 | Rounding off of figures | Where Turnover: (i) < Rs. 100 crores – Hundreds/ Thousands (ii) Between 100 crores to 500 crores - Hundreds/ Thousands/ Lakhs/ Millions (iii) > 500 crores - Hundreds/ Thousands/ Lakhs/ Millions/ Crores | Where Turnover: (i) < Rs. 100 crores – Hundreds/ Thousands/ Lakhs/ Millions (iii) > 500 crores - Lakhs/ Millions/ Crore |
19 | Profit and Loss Appropriation | Opening Surplus, Proposed dividend and transfer to/from reserves were shown in P&L Appropriation a/c | Transfer from/to reserves to be shown under the heading Reserves & Surplus only. No separate P&L Appropriation a/c |
20 | Part IV- Balance Sheet Abstract | Required to be attached with financials | No such requirement |
21 | Schedule’s to B/S and P & L Account | Schedules to B/S and P/L form an integral part of the financial statements | As per the revised Schedules have been done away with and have been replaced with Notes to the accounts. |
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