IS THERE ANY WAY TO REVISE BALANCE SHEET OF THE COMPANY

[MOHD SAGIR]

Dear Professional,

 is there any way to revise balance sheet filed with ROC?

[CS_SrikanthReddyKolli]

Hi

FYI pls

Currently, the MCA circular allows a company to reopen and revise its accounts after their adoption in the AGM and filing with the registrar to comply with technical requirements of any other law to achieve the objective of exhibiting a true and fair view. The revised annual accounts are required to be adopted either in the EGM or in the subsequent AGM and filed with the registrar. The Companies Act, 2013 contains separate provisions relating to: (a) Re-opening of accounts on the court/Tribunal’s order (b) Voluntary revision of financial statements or board’s report Re-opening of accounts on the court/Tribunal’s order 2. On an application made by the Central Government, the Income-tax authorities, the SEBI, any other statutory/ regulatory body or any person concerned, the Tribunal/ court may pass an order to the effect that: (i) The relevant earlier accounts were prepared in a fraudulent manner, or (ii) The affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements 3. If the Tribunal/court issues the above order, a company will need to re-open its books of account and recast its financial statements. Voluntary revision of financial statements or board’s report 4. If it appears to directors that financial statements/board’s report do not comply with the relevant Companies Act, 2013 requirements, the company may revise financial statements/board report in respect of any of the three preceding financial years. For revision, a company will need to obtain prior approval of the Tribunal. 5. The Tribunal, before passing the order for revision, will give notice to the Central Government and the Income-tax authorities and consider their representations, if any. 6. Detailed reasons for revision of such financial statement/ board’s report will be disclosed in the board’s report for the relevant financial year in which such revision is being made. Re-opening/revision of accounts 7. If copies of financial statements/report have been sent to members, delivered to the registrar or laid before the general meeting, revisions must be restricted to corrections arising from non-compliances stated at 4 above and consequential changes. 8. A company will not revise its financial statements/ board’s report more than once in a year. 9. The Central Government may make further rules as to the application of these requirements. Impact analysis 1. While the Companies Act, 2013 sets out a three-year time limit for voluntary revision of financial statements/board report, no such time limit has been prescribed for reopening of accounts due to the court/Tribunal’s order. 2. Revision/reopening of financial statements for a period earlier than immediately preceding financial year may impact financial statements for subsequent years also. 3. Many merger, amalgamation and reconstruction schemes approved by the court contain an appointed date which is earlier than the beginning of the current financial year. It seems likely that in these cases, a company may be able to voluntarily revise its financial statements for earlier periods after taking prior approval of the Tribunal, to give effect to the court scheme from the appointed date. 4. In case of a voluntary change in the accounting policy, error and reclassification, Ind-AS requires that comparative amount appearing in the current period financial statements should be restated. The ICAI has recently issued an ED of the revised AS 5 Accounting Policies, Changes in Accounting Estimates and Errors to replace the notified AS 5 Net Profit or Loss for the Period, Prior Items and Changes in Accounting Policies. The said ED contains proposals that are similar to Ind-AS. One may argue that restatement of comparative amount appearing in the current period financial statements tantamount to revision/re-opening of accounts for earlier periods. If so, a company may have to follow the cumbersome procedure prescribed for voluntary revision, particularly in the case of correction of errors.