11 August 2011
As the revised schedule VI is applicable from 1.04.2011, what would be the implications if the company gets it accounts prepared as per revised schedule VI for the year 2010-11.
Will it be non compliance if the accounts for the year 2010-11 are not prepared as per the existing Sch VI provisions since the legal validity of revised sch VI comes into effect from 1.4.11.
11 August 2011
All account from 1.4.2011 are to be prepared as per Revised Schedule VI. Not only this but the previous year's figures are also to be re-adjusted according to the revised schedule VI.
The accounts heads which were appearing in old Schedule VI are not available in new Schedule VI and all these are to be discarded and all requirement of new Schedule VI is to be complied with.
However, i would like to ask if the company prepares its annual accounts for the FY 2010-11 as per the revised Sch VI , will it be in compliance since the revised schedule is applicable for FY 2011-12 and the company is complying in advance.
Preparing the financial statements for FY 2010-11 as per Revised Schedule VI, even though it’s officially applicable only from FY 2011-12 (i.e., from 1.4.2011), is not non-compliance.
Here’s why:
The Revised Schedule VI is mandatorily applicable from FY 2011-12 onward, but companies can adopt it early (i.e., voluntarily apply it for earlier years). Early adoption is generally allowed and is considered good practice as it aligns with future reporting requirements. As long as the company properly discloses this fact (i.e., that the accounts for 2010-11 are prepared on the basis of Revised Schedule VI), it will not be treated as non-compliance. The only point to ensure is that previous year’s figures are restated according to the revised format for meaningful comparison. Summary:
Early application of Revised Schedule VI for FY 2010-11 is permissible and compliant, provided adequate disclosures are made. Mandatory compliance starts from FY 2011-12.
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