Applicabilty of AS

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Nirpendra Singh (Querist)
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16 April 2009 What is mean by Small and medium companies and non small and medium companies.
SMC's and Non SMS's
as defined by company rules 2006 section 211
And why organisations are classified on the basis of SMS"s and Non SMC's concept and Level ,I-II-III concept .

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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16 April 2009 For the purpose of compliance of the Accounting Standards, all enterprises in India are classified into three broad categories:
Level I Enterprise:
Following enterprises are covered under this level:
♦ Enterprises, whose equity or debt securities are either listed or is in the process to be listed in India or outside India.
♦ Banks, Insurance Companies and Financial Institutions.
♦ All commercial, industrial and other reporting business enterprises, whose total turnover
during the previous year is in excess of Rs. 50 crores (as per the audited financial
statement).
♦ All commercial, industrial and other reporting business enterprises, whose total
borrowings including public deposits during the previous year are in excess of Rs. 10
crores (as per the audited financial statement).
♦ Holding or subsidiary company of any of the above enterprises any time during the year.
Level II Enterprise: Following enterprises are covered under this level:
♦ All commercial, industrial and other reporting business enterprises, whose total turnover
during the previous year exceeds Rs. 40 lakhs but within the limit of Rs. 50 crores (as per
the audited financial statement).
♦ All commercial, industrial and other reporting business enterprises, whose total
borrowings including public deposits during the previous year exceeds Rs. 1 crore but
within the limit of Rs. 10 crores (as per the audited financial statement).
♦ Holding or subsidiary company of any of the above enterprises any time during the year.
Level III Enterprise: All the enterprises not covered in above two levels come under this level.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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16 April 2009
reason for such a bifurcation as SMCs and non- SMCs

(a)To have a ‘simple and user friendly’ form of Schedule VI for Small and Medium
Sized Companies (SMC).
(b) The Balance Sheet and the Statement of Profit and Loss of SMC’s should not be
burdened with too many disclosure requirements.
(c) To set out minimum disclosure requirements which are considered essential
to ensure true and fair presentation of the financial position and financial
performance of the company and comparability both with the company’s previous
periods and with other companies.
(d) To attain compatibility and convergence with the International Accounting
Standards and practices.
(e) It is generally assumed that SMC’s
(i) will not have particularly complex transactions;
(ii) do not have public accountability;
(iii) do not hold assets in a fiduciary capacity for a broad group of outsiders;
(iv) accountability is limited to owners and government authorities/agencies.
(f) The ‘Users’ and ‘information needs’ of the Users of financial statements of SMCs
are limited

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