financial statements of a company and its provisions

In this topic , we will discuss the financial statements of a company and provisions of Section 129 of the Companies Act, 2013 in this regard;

Financial statements

Financial statements are the statements which provide information about the profitability and the financial position of an enterprise. They provide a summary of the accounts of a business enterprise. Statement of profit and loss or income statement and the Balance Sheet are the two most important financial statements prepared by a company. Income statements reflects the net result of a business operations during particular accounting period and the Balance Sheet reflects the assets, liabilities and capital as on a particular date.

Financial statements of a company

Financial statements are the statements which are prepared by a company at the end of its each accounting year.

According to Section 2(40) of the Companies Act, 2013 ` financial statements ` in relation to a company include the following:

Balance sheet as at the end of the financial year;
Statement of profit and loss for the financial year
Cash flow statement for the financial year;
Statement of changes in equity, if applicable; and
Any explanatory note annexed to, or forming part of, any document referred to in sub clause (i) to sub clause(iv) :

Provided that the financial statement, with respect to one person company,small company and dormant company, may not include the cash flow statement.

According To section 2(41) of the companies act, 2013` financial year`, in relation to any company or body corporate, means the period ending on the 31^st day of 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 the 31^st day of March of the following year, in respect whereof financial statements of the company or body corporate are made up.

Provisions of Section 129 of the Companies Act, 2013:

Section 129 of the Companies Act, 2013 deals with preparation of financial statements. The provisions of this section are briefly discussed below;

The financial statements shall give a true and fair view of the State of Affairs of the company, comply with the accounting standards notified under Section 133 and shall be in the forms provided for different classes of companies in schedule III;
At every annual general meeting of a company, the board of directors of the company shall lay before such meeting financial statements for the financial year;
Where a company has one or more subsidiaries, it shall also prepare a consolidated financial statement of the company and of all the subsidiaries in the same form and manner as that of its own which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under Sub Section(2);
The Provisions of this Act applicable to the preparation , adoption and adult of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements referred to in Sub Section(3);
Where the Financial Statements of a company do not comply with the Accounting Standards referred to in Sub Section(1) , the company shall disclose in its financial statements , the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any , arising out of such deviation.
The Central Government may, on its own or on an application by a class or classes of companies , by notification, exempt any class or classes of companies from complying with any of the requirements of this section or the rules made thereunder, if it is considered necessary to grant such exemption in the public interest and any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.
If a company contravenes the provisions of this section, the Managing Director the whole time Director in charge of Finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the Directors shall be punishable with imprisonment for a team which may extend to 1 year or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5,00,000 or with both.