Financial statements of companies and lays down the form, content, and compliance requirements for preparation and presentation of such statements. The aim is to ensure standardized, transparent, and true disclosure of a company’s financial position.

This section mandates that the financial statements must present a true and fair view of the company’s affairs and must comply with accounting standards notified under Section 133.

Meaning of Financial Statement

As per Section 2(40) of the Companies Act, 2013, a “Financial Statement” includes:

• a. Balance Sheet
• b. Profit and Loss Account (or Income & Expenditure Account for not-for-profit companies)
• c. Cash Flow Statement (not mandatory for One Person Company, Small Company, and Dormant Company)
• d. Statement of Changes in Equity (if applicable)
• e. Any explanatory notes annexed to or forming part of any document referred above

Financial statements must:

• Be prepared in Schedule III format of the Companies Act.
• Follow accounting standards notified under Section 133.
• Show a true and fair view of the company’s affairs.

If there’s any deviation from accounting standards, the company must:

• Disclose the reason,
• Mention how it affects financial results.

Board Approval & AGM

• The financial statements must be approved by the Board of Directors.
• Then, they must be signed by authorized directors and presented in the Annual General Meeting (AGM).

Consolidated Financial Statements (CFS)

If a company has subsidiaries, associates, or joint ventures, it must also prepare:

• Consolidated Financial Statements, and
• Attach separate or summary financial data of these entities in Form AOC-1.

Filing with ROC

• The company must file its financial statements with the Registrar of Companies (ROC) using Form AOC-4.
• The filing must be done within 30 days of the AGM.

Key Forms & Formats

Penalty for Non-Compliance – Section 129(7)

If a company violates Section 129:

Responsible directors or officers may face:

• Fine: ₹50,000 to ₹5,00,000
• Jail up to 1 year
• Or both

Who Is Exempt from Preparing a Cash Flow Statement?

The following companies don’t need to prepare a Cash Flow Statement:

• One Person Company (OPC)
• Small Companies
• Dormant Companies

Conclusion

1. Financial statements must follow either Indian GAAP or Ind AS, depending on applicability.
2. The Board Report must also be attached with the financial statements (as per Section 134).
3. You cannot revise the financial statements unless allowed under Section 131 or by a court under Section 130.