Financial Statements For Non-Corporate Entities

Poojitha Raam , Last updated: 16 September 2022
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Financial Statements provide the information about financial position, performance, and cash flows of an enterprise this helps in various decisions for the users. The Financial Statements are like the Performance Card of the entities.

The Institute of Chartered Accountants of India has issued Guidance Note at present recommendatory on the preparation of Financials for Non Corporate Entities like sole proprietorship, Partnership Firms, HUFs, Association of Persons, Trust, Autonomous bodies etc.

All Business or Professional Entities, other than Companies incorporated under the Companies Act and Limited Liability Partnerships incorporated under Limited Liability Partnership Act are considered to be Non-Corporate entities.

To bring a uniform standardization and effective implementation of Accounting Standards the ICAI has prescribed guidance notes on the preparation of the Financials of the Non Corporate Entities.

Financial Statements For Non-Corporate Entities

APPLICABILITY OF ACCOUNTING STANDARDS

Accounting Standards apply in respect of any entity engaged in commercial, industrial or business activities.

Even if a very small proportion of the activities of an entity were considered to be commercial, industrial or business in nature, the Accounting Standards would apply to all its activities including those, which are not commercial, industrial or business in nature.

At present, there are three sets of Accounting Standards:

(i) Indian Accounting Standards (Ind AS) for specified class of companies;

(ii) Accounting Standards (AS) notified under Companies (Accounting Standards) Rules, 2021, for companies other than those following Ind AS;

(iii) Accounting Standards (AS) prescribed by ICAI for entities other than companies

Audit of Financial Statements

For a non-corporate entity, if audit of financial statements is required under a statute, the Auditor shall conduct the audit and issue the Auditors' Report in accordance with the Standards on Auditing issued by the ICAI.

For the purpose of tax audit, the auditor should issue a report taking into consideration the "Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961" issued by the ICAI.

In case of tax audit under section 44AB of the Income-tax Act, 1961, it is pertinent to note that the auditor is required to conduct audit of financial statements to give a true and fair view thereon and report the same in Form 3CB. Along with the Report in Form 3CB, they have to state the true and correct view of particulars annexed in Form 3CD.

What does Financial Statements Include?

Format of Balance Sheet of Non Corporate Entity

Part I – Form of Balance Sheet

Name of the Non-Corporate Entity…………….
Balance Sheet as at ………………
(Rupees in……………)

	Particulars	Note No	Figures as at the end of (Current reporting period) (in Rs.) __________ (DD/MM/YYYY	Figures as at the end of (Previous reporting period) (in Rs.) __________ (DD/MM/YYYY)
	1	2	3	4
I.	EQUITY AND LIABILITIES
	(1) Owners' Fund (a)Owner's Capital Account (b) Reserves and surplus
2.	(a )Long Term Borrowings
	(b) Deferred tax liabilities (Net)
	(c)Other Long term liabilities
	(d) Long-term provisions
3.	Current liabilities
	(a) Short-term borrowings
	(b) Trade payables:- (A) total outstanding dues of micro, small and medium enterprises and (B) total outstanding dues of creditors other than micro, small and medium enterprises .
	(c) Other current liabilities
	(d) Short-term provisions
	TOTAL

II	ASSETS
1.	Non-Current Assets
	(a) Property, Plant and Equipment and Intangible assets
	(i) Property, Plant and Equipment
	(ii) Intangible assets
	(iii) Capital work-in progress
	(iv) Intangible assets under development
	(b) Non-current investment
	(c) Deferred tax assets (net)
	(d) Long-term loans and advances
	(e) Other non-current assets
2.	Current assets
	(a) Current investments
	(b) Inventories
	(c) Trade receivables
	(d) Cash and bank balances
	(e) Short-term loans and advances
	(f) Other current assets
	TOTAL

PART II – Form of STATEMENT OF PROFIT AND LOSS

Name of the Non-Corporate Entity…………………….
Statement of Profit and Loss for the year ended…………………
(Rupees in…………)

	Particulars	Note	Figures for the current reporting period (in) From ________ (DD/MM/YYYY) To __________ (DD/MM/YYYY)	Figures for the previous reporting period (in) From__________ (DD/MM/YYYY) To____________ (DD/MM/YYYY)
	1	2	3	4
	Revenue from operations		xxxx	xxxx
	Other Income		xxxx	xxxx
	Total Income(I+II)		xxxxx	xxxx
	Expenses
	Cost of Goods Sold		xxxx	xxxx
	Employee Benefit Expenses		xxxx	xxxx
	Depreciation and amortization expense		xxxx	xxxx
	Finance Cost		xxxx	xxxx
	Other expenses		xxxx	xxxx
	Total expenses		xxxx	xxxx
	Profit before exceptional and extraordinary items and tax (III-IV)		xxxx	xxxx
	Exceptional items		xxxx	xxxx
	Profit before extraordinary items and tax (V - VI)		xxxx	xxxx
	Extraordinary Items		xxxx	xxxx
	Profit before tax (VII-VIII)		xxxx	xxxx
	Tax Expenses		xxxx	xxxx
(i)	Current Tax		xxxx	xxxx
(ii)	Deferred Tax		xxxx	xxxx
	Profit (Loss) for the period from continuing operations (IX-X)		xxxx	xxxx
	Profit/(loss) from discontinuing operations		xxxx	xxxx
	Tax expense of discontinuing operations		xxxx	xxxx
XIV.	Profit/(loss) from Discontinuing operations (after tax) (XII-XIII)		xxxx	xxxx
XV.	Profit/ (Loss) (XI + XIV)		xxxx	xxxx

Note:

1. In case where, compliance with the requirements of the relevant statute applicable to the non-corporate entity require any change in treatment or disclosure in the head or sub-head or any changes, inter se, in the financial statements or statements forming part thereof, the same shall be made and the formats shall be modified accordingly.

2. Any disclosure requirements which are recommended in formats are not treated as substitution of the disclosure requirements specified in the Accounting Standards; rather, they are used in addition to accounting standards issued by ICAI.

3. Information in addition to that presented in the Financial Statements may contain in notes to accounts and may provide where required in:

narrative descriptions or disaggregation's of items recognized in those statements; and
information about items that do not qualify for recognition in those statements

4. While preparing financials, every item of Balance Sheet and Statement of Profit and Loss shall be cross-referenced to any related information in the notes to accounts. A balance shall be maintained between those information which provides excessive detail that may not assist users of financial statements and not providing important information.

5. In non-corporate entities, expanding upon the Total Income, the figures appearing in the Financial Statements may be rounded off as given below:—

less than one hundred crore rupees to the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
one hundred crore rupees or more to the nearest lakhs, millions or crores, or decimals thereof.

6. The unit of measurement once used, shall be uniformly used throughout the financial statements

7.The comparative figures of the previous financial period shall also be provided while preparing the financial statements. However, in case the financial statements are provided for the first time, this condition of providing comparatives does not apply.