Revised Schedule Vi
ACCOUNTING AND AUDITING UPDATE
This heading style is set in Univers bold 27.5pt on 30pt Revised Schedule VI
February 2012
This paragraph style is set at 12pt with 16pt leading and 8pt space after.
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1 | Accounting and Auditing Update - February 2012
© 2012 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Accounting and Auditing Update - February 2012 | 2
Editorial
It is with immense pleasure we bring forth the February 2012 edition of the Accounting and Auditing Update. Schedule VI to the Companies Act, 1956 (Act), which, prescribes the format for presentation of Balance Sheet and Statement of Profit and Loss by companies was introduced in 1960 and is almost as old as the Act itself. It is inevitable that regulators in India have felt the imperative need to marry the accounting advancements witnessed over the last two or three decades with that of the manner in which the financial information is presented. Further, some of the presentation and disclosure requirements as set out in the pre-revised Schedule VI appear to have become outdated and do not appear to synchronise with the objective of a fair presentation of financial information. Although from time to time, the Central Government had amended Schedule VI, some of the disclosures required by that Schedule such as licensed capacity, CIF value of imports, etc. are quite irrelevant from the perspective of today’s investor. Furthermore, the current version of Schedule VI does not require a company to distinguish current assets from non-current assets and current liabilities from their non-current counterparts. For example, a security deposit
This heading style is set in Univers bold 27.5pt on 30pt Revised Schedule VI
February 2012
This paragraph style is set at 12pt with 16pt leading and 8pt space after.
Also in this issue: • Secondary headline number one Description written here • Secondary headline number one Description written here • Secondary headline number one Description written here
1 | Accounting and Auditing Update - February 2012
© 2012 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Accounting and Auditing Update - February 2012 | 2
Editorial
It is with immense pleasure we bring forth the February 2012 edition of the Accounting and Auditing Update. Schedule VI to the Companies Act, 1956 (Act), which, prescribes the format for presentation of Balance Sheet and Statement of Profit and Loss by companies was introduced in 1960 and is almost as old as the Act itself. It is inevitable that regulators in India have felt the imperative need to marry the accounting advancements witnessed over the last two or three decades with that of the manner in which the financial information is presented. Further, some of the presentation and disclosure requirements as set out in the pre-revised Schedule VI appear to have become outdated and do not appear to synchronise with the objective of a fair presentation of financial information. Although from time to time, the Central Government had amended Schedule VI, some of the disclosures required by that Schedule such as licensed capacity, CIF value of imports, etc. are quite irrelevant from the perspective of today’s investor. Furthermore, the current version of Schedule VI does not require a company to distinguish current assets from non-current assets and current liabilities from their non-current counterparts. For example, a security deposit