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Accounting and Audit News


​Amendments in Schedule III

On 24 March 2021 Ministry of Company Affairs (MCA) announced changes under Schedule III of the Companies Act, 2013 with effect from 1 April 2021. These rules were introduced to ensure more transparency in the company through an increased disclosure in the financial statements and notes to accounts.


1. Additional Disclosure in Notes to Balance Sheet:

a. Shareholding of Promoter:

In addition to the existing disclosure under share capital schedule, the Shareholding of the Promoter along with changes, if any, during the Financial Year needs to be disclosed.


b. Short Term Borrowings:

Earlier current maturities of long term borrowing which was payable within one year of balance sheet date was disclosed under "other current liabilities". Now as per this notification the disclosure has to be made under "Short Term Borrowings" as “Current Maturities of Long Term Borrowings”.


c. Trade Payable (Creditors) ageing Schedule:

Trade payable due for payment and ageing has to be disclosed in following manner:


Particulars Outstanding for following periods from due date of payment ​ ​ ​ Total
< 1 yr.1-2 yrs.2-3 yrs.> 3 yrs.
Disputed dues – MSME
Disputed dues – Others


Similar information has to be given where no due date of payment is specified, in that case the disclosure shall be given from date of the transaction. Hence, it is important to determine the credit period with all vendors. Unearned dues are required to be disclosed separately


d. Tangible and Intangible Assets:

"Tangible Assets" shall be substituted with “Property, Plant & Equipment”. For each class of assets including intangible assets a reconciliation of gross and net carrying amount at beginning and end of reporting period showing addition, disposal, acquisitions through business combinations, revaluation (if changes is more than 10 per cent of net carrying value), other adjustment, depreciation and impairment needs to be disclosed separately.


Reclassified from Long Term Loans & Advances to Other Non-Current Assets.


f. Trade receivables (Debtors) ageing Schedule:

For trade receivables outstanding following ageing schedule shall be disclosed.


Particulars Outstanding for following periods from due date of payment ​ ​ ​ ​ Total
< 6 months6 months – 1 year1-2 yrs.2-3 yrs.> 3 yrs.

1. Undisputed Trade receivables – considered good

2. Undisputed Trade Receivables – considered doubtful
3. Disputed Trade Receivables – considered good
4. Disputed Trade Receivables – considered doubtful


It should be noted that even though the new disclosures are applicable from 1 April 2021, while preparing financial statements for year ended 31 March 2022, corresponding previous year’s information is also required to be disclosed. Hence, the activity of ageing has to be worked out from 1 April 2020 itself in the system for both debtors and creditors.


g. Utilisation of Borrowings:

Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they have been used.


h. Title deeds of Immovable Property not held in name of the Company:

The Company shall provide the details of the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the Company in the prescribed format. If such immovable property is jointly held with others, details are required to be given to the extent of the Company’s share.


i. Disclosure on revaluation of Assets:

Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017.


j. Disclosure on Loans/Advance to Directors/KMP/Related parties:

Where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person, following disclosure is required:

  •  repayable on demand or
  • without specifying any terms or period of repayment


k. Capital Work-In-Progress (CWIP):

For capital work-in-progress following ageing shall be given:


CWIP Amount in CWIP for a period of Total
< 1 year1-2 yrs.2-3 yrs.> 3 yrs.

Project in Progress

Projects temporarily suspended


For projects whose completion is overdue or has exceeded its cost compared to original plan, period to be completed to be given in above format.


  • Details of such property, including year of acquisition,
  • Amount thereof,
  • Details of Beneficiaries,
  • If property is in the books, then reference to the item in the Balance Sheet,
  • If property is not in the books, then the fact shall be stated with reasons,
  • Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor then the details shall be provided,
  • Nature of proceedings, status of same and company’s view on same.


m. Details of Borrowing:

Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose the following:

  • whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
  • if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.


n. Wilful Defaulter:

Where a company is a declared wilful defaulter by any bank or financial Institution or other lender, following details shall be given:

  • Date of declaration as wilful defaulter,
  • Details of defaults (amount and nature of defaults)


o. Relationship with Struck off Companies:

Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, the Company shall disclose the nature of transactions, outstanding balance and relationship with the struck off company, if any.


p. Registration of charges or satisfaction with Registrar of Companies:

Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed.


q. Compliance with number of layers of companies:

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship/extent of holding of the company in such downstream companies shall be disclosed.


r. Disclosure of Ratios

The companies are required to disclose the following ratios- Current Ratio, Debt-Equity Ratio, Debt Service Coverage Ratio, Return on Equity Ratio, Inventory turnover ratio, Trade Receivables turnover ratio, Trade payables turnover ratio, Net capital turnover ratio, Net profit ratio, Return on Capital employed, Return on investment.

Note: The company shall explain the items included in the numerator and denominator for computing the above ratios and an explanation shall be provided for any change in the ratio by more than 25 per cent  as compared to the preceding year.


s. Details in respect of Utilization of Borrowed funds and share premium shall be provided in respect of:

  • Transactions where an entity has provided any advance, loan, or invested funds to any other person (s) or entity/ entities, including foreign entities.
  • Transactions where an entity has received any fund from any person (s) or entity/ entities, including foreign entity.


t. Compliance with approved Scheme(s) of Arrangements:

Where any Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013, the Company shall disclose that the effect of such Scheme of Arrangements have been accounted for   in the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance   with accounting standards’ and deviation in this regard shall be explained of holding of the company in such downstream companies shall be disclosed.


2. Additional Disclosure in Notes to Profit and Loss Account:

a. Undisclosed Income (Reconciliation of Income Tax and Companies Act):

The Company shall give details of any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961, unless there is immunity for disclosure under any scheme and also shall state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.


b. CSR Disclosure:

Where the company covered under section 135 of the Companies Act, the following shall be disclosed with regard to CSR activities:

  •  amount required to be spent by the company during the year,
  • amount of expenditure incurred,
  • shortfall at the end of the year,
  • total of previous years shortfall,
  • reason for shortfall,
  • nature of CSR activities,
  • details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR expenditure as per relevant Accounting Standard,
  • where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements in the provision during the year should be shown separately.


c. Details of Crypto Currency or Virtual Currency:

Where the Company has traded or invested in Crypto currency or Virtual Currency during the financial year, the following shall be disclosed:

  • profit or loss on transactions involving Crypto currency or Virtual Currency amount of currency held as at the reporting date,
  • deposits or advances from any person for the purpose of trading or investing in Crypto Currency/ virtual currency.


Our comments

Considering the level of changes, disclosures being introduced, it is important for the management to have a robust system to keep track of the same. The accounting software should be fine-tuned to extract information like ageing without manual adjustments. Further, the accounting of company has to be accurate and up to the mark considering the level of disclosure controls. The authorities have also released another notification where management is required to have a system where audit trails is mandatorily available for each financial transaction.

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