l.4iQ4SSm (a5O\A<:m5 m /3gP3TTm(a5O83^CUT\m ( m"^: m ,3L<\m m$3YI<^CT?m m m&=em*VB_4Jm*V4; m&=em =KBD m m S;D4m (AUT< m m 1<6\E`<m m f _4iQ4SS 9VQm R3EMm m ]4K=] _4hQ4SS 9VQ +<?: m '>8<m m m2=]_m)bSH47Dm 4@B m&=em =KBD m m S;D4m <c<LUW<:m5km .4Sm)ZDS_]m S;D4 m)d_ m#_; m m!Q m%DK=m-_VS= m&4_FVS4Km D@Be4j m*VB_4Jm*V4;m 0DNK4@=m*VB4; m D]__ m B4HH4[m 4[j4S4 m S;D4m R3Gm m ]4K=] _4SXZDS_] 9VQ C\8L3CP<Ym : 2AC 27C" 6C ,C+ C70C :0# C 22026C02C0+#66#0,6C#,C7"#6C19 (# 7#0, C ,C61#7 C0 C7"#6 C 22026C+ AC 2 1C#, C -AC+#67 & C 2202C02C 6 2 1 , AC,07 C+ AC C 209 "7C70C092C,07# C <"# "C6" )(C C7 & ,C 2 C0 C#,C7" C, @7C #7#0, C 7C#6C,07# C7" 7C, #7" 2C7" C19 )#6" 2C,02C7" C 97"02C02C6 )( 2C?((C C2 610,6# ( C 2C ,AC + C02C(066C0 C 7#0,C70C ,AC0, C0 C ,AC'#, C#,C ,AC+ ,, 2 C7" 2 0+ C 7C#6C69 67 C7" 7C70C :0# C ,AC 09 7C7" C2 2C6"09* C 2066 " &C )(C 7" C 76 C ( =C , C 0,7 ,76C 0 C7" C 19 )# 7#0,C ?7"C 03#!. (C 0: 5+ ,7C 19 )# 7#0,C 02C ,07# 7#0,6 C 0C1 27C0 C7"#6C 00&C+ AC C2 120 9 C02C 01# C#,C ,AC 2+C02C AC ,AC + ,6C 2 1"# C ( 720,# C02C+ " ,# ( C$. (9 #, C1"070 01B, C2 02 #, C7 1#, C02C#, 2+ 7#0,C2 74 : (C 6A67 +6 C 02C 2 120 9 C 0,C ,AC #6 C 7 1 C 1 2 2 7 C + # C 02C 07" 2C #, 2+ 7#0,C 6702 C ;# C 7 C>#7"097C8 C=2#77 ,C1 2+#66#0,C0 C7" C19 )#6" 26 C 2 "C0 C7"#6C 0, #7#0,C#6C(# ( C 2C( (C 7#0, C ((C #6197 6C 2 C69 % 7C70C ("#C%92#6 # 7#0,C0/A C
Preface to Eleventh Edition 4HE OVERWHELMING SUCCESS OF EARLIER EDITIONS ENCOURAGED ME TO PRESENT THE %LEVENTH REVISED EDITION OF THE BOOK h#ORPORATE !CCOUNTINGv 4HE BOOK IS DESIGNED STRICTLY FOR " #OM (ONS 3EMESTER )) 0APER $3# " #OM 3EMESTER )) 0APER $3# AS PER 5NDERGRADUATE #URRICULUM &RAMEWORK 5'#& BASED ON .ATIONAL %DUCATION 0OLICY .%0 4HE BOOK HAS BEEN THOROUGHLY REVISED AS PER THE LATEST SYLLABUS 4HEORY AND ACCOUNTING TREATMENT HAS BEEN REVISED AS PER !CCOUNTING 3TANDARD 2EVISED #OMPANIES !MENDMENT !CT -INISTRY OF #ORPORATE !FFAIRS .OTIlCATION DATED &URTHER BALANCE SHEETS HAVE BEEN GIVEN AS PER 3CHEDULE ))) BOTH IN QUESTIONS AND SOLUTIONS IN CASE OF ALMOST ALL ILLUSTRATIONS 3EVERAL ILLUSTRATIONS ON 3TATEMENT OF #HANGES IN %QUITY HAVE BEEN GIVEN 3OME ILLUSTRATIONS ON !CCOUNTING 2ATIO HAVE BEEN ADDED ) AM THANKFUL TO THE FACULTY OF VARIOUS COLLEGES OF $ELHI 5NIVERSITY TEACHING #ORPORATE !CCOUNTING FOR THEIR VALUABLE SUGGESTIONS AND SUPPORT ) AM THANKFUL TO MY SON #! $EEPAK 'OEL 3ENIOR 6ICE 0RESIDENT #ORPORATE 0LANNING AND 4REASURY "ENETTON )NDIA 0RIVATE ,IMITED FOR GIVING VALUABLE SUGGESTIONS FOR PREPARING lNANCIAL STATEMENTS AS PER 3CHEDULE ))) OF THE #OMPANIES !CT MY DAUGHTER IN LAW -RS .IDHI 'OEL FOR CHECKING THE COMPUTATION OF THE ILLUSTRATIONS MY WIFE -RS 'ITA 'OEL FOR ENCOURAGING ME TO WRITE THE BOOK AND MY YOUNGER SON -R 4ARUN 'OEL FOR PROVIDING ME THE NECESSARY SUPPORT TO COMPLETE THE BOOK ) AM ALSO THANKFUL TO THE 4!8-!.. FOR PUBLISHING THE BOOK WITHIN A SHORT PERIOD OF TIME
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%VERY EFFORT HAS BEEN MADE TO AVOID PRINTING ERRORS THOUGH SOME MIGHT HAVE CREPT IN INADVERTENTLY ) SHALL BE HIGHLY OBLIGED IF SUCH ERRORS IF ANY ARE BROUGHT TO MY NOTICE ) INVITE SUGGESTIONS FROM THE ACADEMIC COMMUNITY FOR IMPROVEMENT OF THE BOOK WHICH WILL BE DULY ACKNOWLEDGED BHUSHAN KUMAR GOYAL
-OBILE % MAIL BHUSHANGOYAL REDIFFMAIL COM - + 6ICTORIA 'ARDEN !ZADPUR $ELHI
Acknowledgement
Sh. Nawang
Shri Ram College of Commerce
Ms. Ritika
Shri Ram College of Commerce
Ms. Shakshi Gambhir
Kirori Mal College
Ms. Priyanka Aggarwal
Shri Ram College of Commerce
Ms. Richa Goel
Shri Ram College of Commerce
Ms. Saroj Joshi
Shri Ram College of Commerce
Ms. Varda Sardana
Shri Ram College of Commerce
Ms. Dipika Bansal
Shri Ram College of Commerce
Ms. Manpreet Sharma
Shri Ram College of Commerce
Sh. Dikshit Yadav
Shri Ram College of Commerce
Sh. Mahesh Kumar Madan
SGND Khalsa College
Dr. Somya Sharma
Daulat Ram College
Sh. Bibhu Prasad
SGTB Khalsa College
Ms. Rachan Kaur
SGTB Khalsa College
Dr. Madhu Jain
Maitreyi College
Ms. Ritika
Maitreyi College
Ms. Amla Gour
Satyawati College
Ms. Anjali Dayal
Satyawati College
Ms. Vandana Goswami
Satyawati College
Sh. Raj Kumar
Satyawati College
Ms. Navdeep Kaur
Sri Guru Gobind Singh College of Commerce
Ms. Surjeet Sood
Sri Guru Gobind Singh College of Commerce
Ms. Meenu Gupta
Sri Guru Gobind Singh College of Commerce
Ms. Manju Bhatia
Sri Guru Gobind Singh College of Commerce
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Ms. Sunita
Daulat Ram College
Ms. Savita Sachdeva
I.P. College
Dr. Indu Gupta
Dyal Singh College (Eve.)
Sh. V.P. Jain
Dyal Singh College
Dr. S.C. Panda
Satyawati College (Eve.)
Ms. Richa
Satyawati College (Eve.)
Ms. Shikha Sharma
Shaheed Bhagat Singh College
Ms. Vandana Dahiya
Shaheed Bhagat Singh College
Ms. Nikunj Aggarwal
Shaheed Bhagat Singh College
Sh. Ashok Gupta
P.G.D.A.V. College
Sh. Chetan Negi
P.G.D.A.V. College
Dr. N.K. Aggarwal
School of Open Learning
Dr. K.B. Gupta
School of Open Learning
Ms. Vrinda Kapoor
Janaki Devi Mahavidyalaya
Ms. Nidhi Gupta
Gargi College
Ms. Soma Garg
Maharaja Agrasen College
Sh. Arun Zulka
Maharaja Agrasen College
Ms. Arushi Zareen
Bharati College
Ms. Anu Jain
Aditi Mahavidyalaya
Sh. Satish C. Bhatia
Zakir Husain College (E.)
Dr. Pakeeza Samed
Zakir Husain College (E.)
Dr. Shivani Abrol
Zakir Husain College (Mor.)
Dr. N.K. Oberoi
Swami Shraddhanand College
Sh. V.K. Batra
Aurobindo College (E.)
Sh. Bhupinder Kumar
Delhi College of Arts and Commerce
Ms. N. Tiwari
S.P.M. College
Ms. Neerja Arya
College of Vocational Studies
Ms. Shikha Gupta
Keshav Mahavidyalaya
Ms. Soumya Jain
Shaheed Sukhdev Singh College of Bus. Studies
Dr. Ramesh Kumar
Shaheed Sukhdev Singh College of Bus. Studies
Mrs. Kusum
Lady Shri Ram College
Sh. Himanshu
Ramanujan College
Ms. Divya Gill
Kirori Mal College
Dr. Sunil
Deen Dayal Upadhyaya College
Dr. Deepak Sehgal
Deen Dayal Upadhyaya College
!#+./7,%$'%-%.4
Dr. Sucheta Gauba
Lakshmibai College
Ms. Patinder Kaur
Hans Raj College
Ms. Shastha
Hans Raj College
Ms. Anjula Bansal
Kalindi College
Dr. Renu Gupta
Jesus & Mary College
Dr. Rajendra Kumar
Rajdhani College
Dr. K.M. Bansal
B.R. Ambedkar College
Mr. Deepak Balani
Sri Aurobindo College (Day)
Ms. Lavleen Gupta
Hindu College
Dr. Rakesh
Tutor
Sh. Harsh Khanna
Tutor
Dr. R.K. Sah
Shri Ram College of Commerce
Dr. Sandeep
Acharya Narendra Dev College
Dr. Alok Kumar
Shri Ram College of Commerce
Sh. Amit Kumar
Maharaja Agrasen College
Ms. Amita Motwani
Jesus and Mary College
Ms. Priyanka Sahni
Maitreyi College
Ms. Radhika Goel
S.G.T.B. Khalsa College
Ms. Anupreet Kaur
S.G.T.B. Khalsa College
Ms. Shikha Gupta
Shaheed Bhagat Singh College
Ms. Arpit Paul
Sri Venkateswara College
Dr. Mahadev Prasad Meena
Bhim Rao Ambedkar College
Ms. Meenu
Deshbandhu College
Sh. Rajinder Kumar
Shyam Lal College (Evening)
Dr. Deepak Srivastava
Keshav Mahavidyalaya
Ms. Gita Sidharth
Gargi College
Ms. A. Porchelvi
Lakshmibai College
Ms. Sonia Dhingra
P.G.D.A.V. College (Evening)
Sh. Anil Kumar Verma
P.G.D.A.V. College (Evening)
Ms. Manmeet
S.G.N.D. Khalsa College
Dr. Rita Vats
Ram Lal Anand College
Dr. Awadesh
P.G.D.A.V. College (Evening)
Dr. Surinder Singh Solanki
P.G.D.A.V. College
Dr. Rakesh Kumar
P.G.D.A.V. College
Ms. Simranjeet Kaur
Sri Venkateswara College
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Dr. Rajesh Kumar
Shivaji College
Mr. Bunny
Sri Aurobindo College
Mrs. Rimi Jain
P.G.D.A.V. College (Evening)
Mrs. Jasmine
Shri Guru Nanak Dev Khalsa College
Ms. Parul Tomar
Kamla Nehru College
Ms. Chandni
Shaheed Bhagat Singh College
Sh. Aditya Wadhwa
DDU College
Dr. Kalpana Kataria
Bharati College
Dr. Vinod Kumar
Shyam Lal College
Ms. Deepti Singh
Bharati College
Ms. Rashi Paliwal
Aditi Mahavidyalaya
Ms. Indu
Aditi Mahavidyalaya
Mr. Kishore Kumar
Delhi College of Arts and Commerce
Mr. Anuj Jain
Delhi College of Arts and Commerce
Ms. Neha
Dyal Singh College (Eve.)
Mr. Sandeep Garg
Dyal Singh College
Ms. Jyoti Paul
Dyal Singh College
Mr. Ashok K. Bagrial
Shivaji College
Mr. Ritesh Bansal
Shivaji College
Ms. Shilpa
Vivekanand College
Ms. Veena Jain
Vivekanand College
Sh. Gagan Kapoor
Gagan Kapoor Classes
Contents Page Preface to Eleventh Edition
/ͳϱ
Acknowledgement
/ͳϳ
Syllabus
/ͳϭϯ
CHAPTER 1
INTRODUCTION
ϭ͘ϭ
CHAPTER 2
ISSUE, FORFEITURE AND REISSUE OF SHARES
Ϯ͘ϭ
CHAPTER 3
ISSUE OF RIGHTS AND BONUS SHARES
ϯ͘ϭ
CHAPTER 4
EMPLOYEE STOCK OPTION PLAN
ϰ͘ϭ
CHAPTER 5
UNDERWRITING OF SHARES AND DEBENTURES
ϱ͘ϭ
CHAPTER 6
REDEMPTION OF PREFERENCE SHARES
ϲ͘ϭ
CHAPTER 7
hzͳ < K& ^, Z ^
ϳ͘ϭ
CHAPTER 8
ISSUE AND REDEMPTION OF DEBENTURES
ϴ͘ϭ
CHAPTER 9
FINANCIAL STATEMENTS OF COMPANIES
ϵ͘ϭ
CHAPTER 10
CASH FLOW STATEMENT
ϭϬ͘ϭ
CHAPTER 11
VALUATION OF INTANGIBLE ASSETS AND SHARES
ϭϭ͘ϭ
CHAPTER 12
VALUE ADDED STATEMENTS
ϭϮ͘ϭ
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Page CHAPTER 13
AMALGAMATION
ϭϯ͘ϭ
CHAPTER 14
INTERNAL RECONSTRUCTION
ϭϰ͘ϭ
CHAPTER 15
CORPORATE FINANCIAL REPORTING
ϭϱ͘ϭ
Contents Page CHAPTER 1
ACCOUNTING FOR SHARE CAPITAL AND ESOP
1.1
CHAPTER 2
UNDERWRITING OF SHARES AND DEBENTURES
2.1
CHAPTER 3
REDEMPTION OF PREFERENCE SHARES
3.1
CHAPTER 4
BUY BACK OF SHARES
4.1
CHAPTER 5
ISSUE AND REDEMPTION OF DEBENTURES
5.1
CHAPTER 6
FINANCIAL STATEMENTS OF COMPANIES
6.1
CHAPTER 7
CASH FLOW STATEMENT
7.1
CHAPTER 8
VALUATION OF INTANGIBLE ASSETS AND SHARES
8.1
CHAPTER 9
VALUE ADDED STATEMENTS
9.1
CHAPTER 10
AMALGAMATION
10.1
CHAPTER 11
INTERNAL RECONSTRUCTION
11.1
CHAPTER 12
CORPORATE FINANCIAL REPORTING
12.1
QUESTION PAPERS
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15 C H A P T E R
CORPORATE FINANCIAL REPORTING LEARNING OBJECTIVES After studying this chapter, the students will be able to understand ¾ -EANING .EED AND /BJECTIVES OF #ORPORATE &INANCIAL 2EPORTING ¾ #ONSTITUENTS OF !NNUAL 2EPORT ¾ $IFFERENCE BETWEEN !NNUAL 2EPORT AND &INANCIAL 3TATEMENTS ¾ #ONTENTS OF THE 2EPORT OF "OARD OF $IRECTORS ¾ 8"2, 2EPORTING ¾ $RAFTING OF .OTES TO !CCOUNTS ¾ 3EGMENT 2EPORTING AS PER !3 ¾ 3USTAINABILITY 2EPORTING ¾ 4RIPLE "OTTOM ,INE 2EPORTING ¾ #32 2EPORTING
MEANING, NEED AND OBJECTIVES OF CORPORATE FINANCIAL REPORTING Meaning of Corporate Financial Reporting &INANCIAL 2EPORTING IS THE REPORTING OF ACCOUNTING INFORMATION OF A CORPORATE OR NON CORPORATE ENTITY TO A USER OR GROUPS OF USERS #ORPORATE &INANCIAL 2EPORTING IS COMMUNICATION OF PUBLISHED FINANCIAL STATEMENTS AND RELATED INFORMATION FROM A COMPANY TO INVESTORS CREDITORS GOVERNMENT AUTHORITIES AND OTHER EXTERNAL USERS 4HE TERM @FINANCIAL REPORTING IS NOT RESTRICTED TO INFORMATION COMMUNICATED THROUGHFINANCIAL STATEMENTS 15.1
15.2
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&INANCIAL REPORTING HAS A BROADER SCOPE THAN THE FINANCIAL STATEMENTS &INANCIAL STATEMENTS ARE ONLY ONE OF THE MANY MEANS OF CONVEYING INFORMATION ABOUT FINANCIAL PERFORMANCE AND FINANCIAL POSITION OF THE ENTERPRISE &INANCIAL STATEMENTS ARE CENTRAL FEATURE OF FINANCIAL REPORTING 4HEY ARE PRINCIPAL MEANS OF COMMUNICATING ACCOUNTING INFORMATION TO THOSE OUTSIDE AN ENTERPRISE !LTHOUGH FINANCIAL STATEMENTS MAY CONTAIN INFORMATION FROM SOURCES OTHER THAN ACCOUNTING RECORDS BUT ELEMENTS OF FINANCIAL STATEMENT i.e. ASSETS LIABILITIES REVENUES EXPENSES AND EQUITY PROVIDE THE BULK OF THE INFORMATION FOR FINANCIAL STATEMENTS 4HE FINANCIAL STATEMENT IN RELATION TO A COMPANY INCLUDES BALANCE SHEET STATEMENT OF PROFIT AND LOSS OR IN CASE OF A COMPANY CARRYING ON ACTIVITY NOT FOR PROFIT AN INCOME AND EXPENDITURE ACCOUNT CASH FLOW STATEMENT AND EXPLANATORY NOTES )T WILL ALSO INCLUDE STATEMENT OF CHANGES IN EQUITY IN CASE OF COMPANIES WHICH ARE REQUIRED TO PREPARE FINANCIAL STATEMENTS AS PER )ND !3 4HESE ARE CALLED GENERAL PURPOSE FINANCIAL STATEMENTS &INANCIAL REPORTING INCLUDES NOT ONLY FINANCIAL STATEMENTS BUT ALSO OTHER MEANS OF COMMUNICATING INFORMATION -ANAGEMENT MAY COMMUNICATE INFORMATION TO THOSE OUTSIDE AN ENTERPRISE BY MEANS OF FINANCIAL REPORTING OTHER THAN GENERAL PURPOSE FINANCIAL STATEMENTS EITHER BECAUSE THE INFORMATION IS REQUIRED TO BE DISCLOSED BY REGULATORY RULE OR BECAUSE THE MANAGEMENT CONSIDERS IT USEFUL TO THE THOSE OUTSIDE THE ENTERPRISE AND DISCLOSES IT VOLUNTARILY 3UCH INFORMATION MAY TAKE VARIOUS FORMS AND RELATE TO VARIOUS MATTERS SUCH AS FINANCIAL FORECASTS NEW CUSTOMERS ADDED IN CASE INFORMATION TECHNOLOGY COMPANIES BUDGETS CAPITAL EXPENDITURE PLANS NEW PRODUCTS RESTRUCTURING AND RESEARCH AND DEVELOPMENT INITIATIVES )N RECENT YEARS VOLUNTARY DISCLOSURE i.e. DISCLOSURE OVER AND ABOVE THOSE SPECIFIED BY LAW HAS BECOME AN IMPORTANT ASPECT OF FINANCIAL REPORTING Need or Importance of Corporate Financial Reporting 1. Financial Reporting of accounting information specified by law and accounting standards !S PER !MERICAN !CCOUNTING !SSOCIATION !!! h!CCOUNTING IS THE PROCESS OF IDENTIFYING MEASURING AND COMMUNICATING ECONOMIC INFORMATION TO PERMIT INFORMED JUDGMENT AND DECISIONS BY USERS OF INFORMATION v 4HE DEFINITION EMPHASISES THE NEED OF COMMUNICATING ECONOMIC INFORMATION SO THAT THE USERS OF THE INFORMATION CAN TAKE INFORMED JUDGMENT AND DECISIONS 4HERE IS NEED FOR PREPARATION AND COMMUNICATION OF GENERAL PURPOSE FINANCIAL STATEMENTS TO THE USERS OF ACCOUNTING INFORMATION PARTICULARLY TO THE EXTERNAL USERS 4HEREFORE COMPANIES MUST DISCLOSE MINIMUM AMOUNT OF INFORMATION SPECIFIED BY LAW AND ACCOUNTING STANDARDS -ANAGERS SHOULD DISCLOSE THE FINANCIAL PERFORMANCE OF THE YEAR OR QUARTER THAT WENT BY AND IN SIMPLE LANGUAGE THAT AN INVESTOR CAN UNDERSTAND 2. Voluntary disclosure -ANY COMPANIES VOLUNTARY DISCLOSE INFORMATION OVER AND ABOVE THOSE SPECIFIED BY LAW AND ACCOUNTING STANDARDS 6OLUNTARY DISCLOSURE HAS BECOME AN IMPORTANT ASPECT OF FINANCIAL REPORTING 4HE NEED FOR VOLUNTARY DISCLOSURE ARISES FROM THE FOLLOWING a Capital market forces : )NVESTORS AND CAPITAL MARKET ANALYSTS PREFER THE FIRMS WHICH ARE MORE TRANSPARENT TO FIRMS THAT JUST SATISFY MINIMUM DISCLOSURE REQUIREMENTS
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15.3
&IRMS THAT PROVIDE MORE DISCLOSURES ENJOY GREATER CREDIBILITY WITH THE INVESTORS AND SUCH COMPANIES ATTRACT MORE CAPITAL AT RELATIVELY LOWER COSTS b High Standard of Corporate Governance : #USTOMERS ARE MORE COMFORTABLE WITH SUPPLIERS THAT FOLLOW HIGH STANDARDS OF CORPORATE GOVERNANCE SUCH AS )NFOSYS ,TD AND EXTENSIVE VOLUNTARY DISCLOSURES #OMPANIES MAY DISCLOSE IN ADVANCE THE NEW PRODUCTS TO BE LAUNCHED &OR EXAMPLE -ICROSOFT ANNOUNCED NEW OPERATING SYSTEM WELL IN ADVANCE 3IMILARLY "OEING ANNOUNCED NEW AIRCRAFT IN ADVANCE SO THAT THE AIRPORT AUTHORITIES PREPARE THE REQUIRED INFRASTRUCTURE c Maintenance and enhancement of reputation in managerial labour market : -ANAGERS EARN THEIR REMUNERATION BY SUPPLYING THEIR TALENT FOR MANAGING ENTERPRISES 4HEY CAN MAINTAIN AND ENHANCE THEIR REPUTATION BY PROVIDING USEFUL VOLUNTARY DISCLOSURES TO THE EXTERNAL WORLD 4HUS THERE IS NEED FOR BETTER FINANCIAL REPORTING
Objective of Corporate Financial Reporting 4HE MAJOR OBJECTIVES OF FINANCIAL REPORTING ARE AS FOLLOWS 4O PROVIDE INFORMATION ABOUT FINANCIAL PERFORMANCE i.e. PROFIT EARNED OR LOSS INCURRED OF A COMPANY IN CONFORMITY WITH THE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ACCOUNTING STANDARDS AND THE LAW DURING THE REPORTING PERIOD 4O PROVIDE INFORMATION ABOUT FINANCIAL POSITION i.e. ASSETS LIABILITIES SHARE CAPITAL AND RESERVES AND SURPLUS OF A COMPANY IN CONFIRMITY WITH THE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ACCOUNTING STANDARDS AND THE LAW AS AT THE END OF THE REPORTING PERIOD 4O PROVIDE INFORMATION ABOUT CASH FLOWS FROM OPERATING INVESTING AND FINANCIAL ACTIVITIES OF A COMPANY DURING THE REPORTING PERIOD 4O PROVIDE INFORMATION USEFUL TO PRESENT AND POTENTIAL INVESTORS CREDITORS AND OTHER USERS IN MAKING RATIONAL INVESTMENT CREDIT AND SIMILAR DECISIONS 4O PROVIDE INFORMATION ON MANAGEMENT ACCOUNTABILITY TO JUDGE MANAGEMENT S EFFECTIVENESS IN UTILISING THE RESOURCES AND RUNNING A COMPANY -ANAGEMENT ACCOUNTABILITY INCLUDES SAFE KEEPING OF ASSETS ENTRUSTED INFORMATION ABOUT FUTURE ACTIVITIES BUDGETS FORECAST FINANCIAL STATEMENTS CAPITAL EXPENDITURE PROPOSALS ETC -ANAGEMENT ACCOUNTABILITY IS BEYOND THE COMPANY S LEGAL RESPONSIBILITIES TO SHAREHOLDERS DEBENTURE HOLDERS AND CREDITORS 4O PROVIDE ENVIRONMENT SOCIAL AND GOVERNANCE %3' INFORMATION %3' INFORMATION IS IMPORTANT FOR UNDERSTANDING THE LONG TERM FUTURE AND SOLVENCY OF BUSINESS SIMILAR TO THE NUMBER IN THE FINANCIAL STATEMENTS ! COMPANY S CONCERNS ABOUT CLIMATE CHANGE EMPLOYEE WELLBEING ETHICS PRODUCT SAFETY SUSTAINABILITY CHILD LABOUR DATA SECURITY ETC ARE HIGHLY RELEVANT TO DECISION MAKERS 4O PROVIDE RELIABLE INFORMATION ABOUT ECONOMIC RESOURCES AND OBLIGATIONS OF A COMPANY SO THAT THE USERS i CAN EVALUATE ITS STRENGTHS AND WEAKNESSES ii KNOW ITS FINANCIAL AND INVESTMENT iii CAN EVALUATE ITS ABILITY TO MEET ITS COMMITMENTS AND iv SHOW ITS RESOURCE BASE FOR GROWTH
15.4
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4O PROVIDE FINANCIAL INFORMATION FOR ESTIMATING EARNINGS POTENTIAL OF A COMPANY 4O SUPPLY INFORMATION USEFUL FOR JUDGING MANAGEMENT S ABILITY TO COMPANY RESOURCES EFFECTIVELY IN ACHIEVING THE ORGANISATION S GOALS
MEANING, PURPOSE, IMPORTANCE AND CONSTITUENTS OF ANNUAL REPORT Meaning and Purpose of Annual Report Annual Report of a company is a comprehensive report on the company’s operations, activities, financial performance and cash flow for previous accounting period and financial position as at the end of the accounting period. )T PROVIDES DETAILED FINANCIAL NUMBERS RELATING TO COMPANY S FINANCIAL PERFORMANCE FINANCIAL POSITION CASH FLOWS AND PROVIDES VARIOUS REPORTS SUCH AS "OARD S REPORT AUDITOR S REPORT CORPORATE SOCIAL RESPONSIBILITY REPORT CORPORATE GOVERNANCE REPORT BUSINESS RESPONSIBILITY REPORT AND OTHER INFORMATION ABOUT THE COMPANY AND ITS ACTIVITIES 4HE FINANCIAL STATEMENTS ARE THE MOST IMPORTANT PART OF AN ANNUAL REPORT 4HE PURPOSE OF AN ANNUAL REPORT IS TO PROVIDE DETAILED ACCOUNTING INFORMATION ON A COMPANY S OPERATIONS AND FINANCIAL PERFORMANCE TO THE EXTERNAL WORLD !NNUAL REPORT ALSO CONTAIN A NUMBER OF REPORTS AND OTHER INFORMATION FOR THE BENEFIT OF THE USERS AND TO COMPLY WITH THE LEGAL AND REGULATORY REQUIREMENTS #OMPANIES USE ANNUAL REPORTS AND QUARTERLY REPORTS TO COMMUNICATE WITH THEIR INVESTORS -ANAGERS ARE EXPECTED TO TELL FINANCIAL PERFORMANCE AND FINANCIAL POSITION AND OTHER INFORMATION OF THE YEAR OR QUARTER WHICH HAVE BEEN ACHIEVED 4HEY ARE EXPECTED TO EXPLAIN WHAT THEY ARE ACHIEVED OR FAILED TO ACHIEVE TO MEET THE EXPECTATIONS OF THE INVESTORS 7ARREN "UFFET THE LEGENDARY INVESTOR RECOMMENDS THE USE OF SIMPLE LANGUAGE IN MANAGEMENT COMMUNICATION (OWEVER SOME COMPANIES DO NOT SHARE THIS VIEW 3OMETIMES THE COMPANY DO NOT EXPLAIN THE LOWER PROFIT INSPITE HIGHER REVENUES &URTHER THE COMPANIES BLAME EXTERNAL FACTORS FOR LOWER PROFIT 4HE ANALYST SHOULD READ CAREFULLY THE CHAIRMAN S STATEMENT DIRECTOR S REPORT AUDITORS REPORT FINANCIAL STATEMENTS AND OTHER INFORMATION GIVEN IN ANNUAL REPORT
Importance of Annual Report !NNUAL 2EPORT IS REGARDED AS THE MOST IMPORTANT SOURCE OF INFORMATION ABOUT THE FINANCIAL PERFORMANCE FINANCIAL POSITION CASH FLOWS DIRECTOR S REPORT AUDITORS REPORT AND OTHER INFORMATION ABOUT A COMPANY S AFFAIRS DUE TO THE FOLLOWING REASONS i !NNUAL 2EPORT IS RELATIVELY EASILY ACCESSIBLE THAN ANY OTHER SOURCE OF INFORMATION ii 4HE ANNUAL REPORT CONTAINS AUDITED FINANCIAL STATEMENTS WHICH ARE MORE RELIABLE iii !NNUAL 2EPORT INCLUDES NOT ONLY FINANCIAL STATEMENTS BUT ALSO "OARD S REPORT AUDITORS REPORT SOME OTHER REPORTS AND SOME MORE DETAILED INFORMATION SUCH AS HISTORICAL SUMMARY BUSINESS RESULTS COMPANY S PLANS WHICH ARE NOT AVAILABLE IN OTHER SOURCES OF INFORMATION
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15.5
iv )NFORMATION GIVEN IN THE !NNUAL 2EPORT IS USED BY INVESTORS TO PREDICT COMPANY S FUTURE PERFORMANCE v !NNUAL 2EPORT PROVIDES TO THE INVESTORS A BASE FOR ESTIMATING FUTURE SHARE PRICES OF THE COMPANY AND RELATED CASH FLOWS 4HEREFORE THERE IS NEED TO MAKE PUBLISHED CORPORATE ANNUAL REPORTS MORE INFORMATIVE 4HEY SHOULD CONTAIN SUCH INFORMATION WHICH SATISFY THE INFORMATION NEEDS OF THE USERS
Constituents of Annual Report 4HE CONSTITUENTS OF !NNUAL 2EPORT INCLUDE FINANCIAL STATEMENTS BRIEF HISTORY OF THE COMPANY PURPOSE AND VALUES CHAIRMAN S STATEMENT #HIEF %XECUTIVE /FFICER AND -ANAGING $IRECTOR S 3TATEMENT "OARD OF $IRECTORS "USINESS -ODEL OF THE #OMPANY "OARD S 2EPORT -ANAGEMENT $ISCUSSION AND !NALYSIS #ORPORATE 3OCIAL 2ESPONSIBILITY 2EPORT "USINESS 2ESPONSIBILITY 2EPORT #ORPORATE 'OVERNANCE 2EPORT 3ECRETARIAL !UDIT 2EPORT %CONOMIC 6ALUE !DDED 3TATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF SUBSIDIARIES ASSOCIATE COMPANIES JOINT VENTURES #ORPORATE )NFORMATION AND .OTICE OF !NNUAL 'ENERAL -EETING !NNUAL 2EPORT MAY BE DIVIDED INTO FOLLOWING SECTIONS /VERVIEW 2EPORTS &INANCIAL STATEMENTS
3TANDALONE &INANCIAL 3TATEMENTS
#ONSOLIDATED &INANCIAL 3TATEMENTS
/THER )NFORMATION 7E CAN BETTER UNDERSTAND THE CONSTITUENTS OF THE !NNUAL 2EPORT FROM THE FOLLOWING CONTENTS OF !NNUAL 2EPORT OF (INDUSTAN 5NILEVER ,IMITED FOR THE YEAR “Overview /UR (ISTORY 0URPOSES AND 6ALUES !T A 'LANCE #HAIRMAN S 3TATEMENT #HIEF %XECUTIVE /FFICER AND -ANAGING $IRECTOR S 3TATEMENT "OARD OF $IRECTORS /UR 0ERFORMANCE &INANCIAL %NVIRONMENTAL 3OCIAL AND 'OVERNANCE %VOLVING #ONSUMER 4RENDS /UR 3TRATEGY (5, #OMPASS #OMMITMENTS
15.6
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/UR "USINESS -ODEL 2EIMAGINE (5, Reports 2EPORT OF "OARD OF $IRECTORS AND -ANAGEMENT $ISCUSSION AND !NALYSIS !NNUAL 2EPORT ON #ORPORATE 3OCIAL 2ESPONSIBILITY "USINESS 2ESPONSIBILITY 2EPORT #ORPORATE 'OVERNANCE 2EPORT 3ECRETARIAL !UDIT 2EPORT %CONOMIC 6ALUE !DDED Financial Statements Standalone Financial Statements )NDEPENDENT !UDITORS 2EPORT "ALANCE 3HEET 3TATEMENT OF 0ROFIT AND ,OSS 3TATEMENT OF #HANGES IN %QUITY 3TATEMENT OF #ASH &LOWS .OTES Consolidated Financial Statements )NDEPENDENT !UDITORS 2EPORT "ALANCE 3HEET 3TATEMENT OF 0ROFIT AND ,OSS 3TATEMENT OF #HANGES IN %QUITY 3TATEMENT OF #ASH &LOWS .OTES &ORM !/# Others #ORPORATE )NFORMATION .OTICE OF !NNUAL 'ENERAL -EETING 0ROFILE OF $IRECTORSv 2EPORT OF "OARD OF $IRECTORS AND -ANAGEMENT $ISCUSSION AND !NALYSIS 3USTAINABILITY 2EPORTING 8"2, 2EPORTING 4RIPLE "OTTOM ,INE 2EPORTING AND #32 2EPORTING HAVE BEEN DISCUSSED LATER IN THIS CHAPTER
Explanation of some of the Constituents of Annual Report (5, S COMPASS COMMITMENTS ARE a Respect : h7E RESPECT EACH OTHER FAIRLY AND WITH RESPECT v
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b Growth : h7E HAVE OPPORTUNITIES TO DEVELOP AND PROGRESSv c Teamwork : h7E WORK AS PART OF A POSITIVE AND CARING TEAM v 4HESE COMMITMENTS REPRESENT THE FOUNDATION STONE OF THEIR CULTURE WHICH PLACES THEIR PEOPLE AT THE HEART OF THE BUSINESS
Business Responsibility Report "USINESS 2ESPONSIBILITY 2EPORT IS DISCLOSURE OF ADOPTION OF RESPONSIBLE BUSINESS PRACTICES BY A LISTED COMPANY TO ALL ITS STAKEHOLDERS INCLUDING THE LARGER SOCIETY
Corporate Governance Report #ORPORATE 'OVERNANCE MEANS THE WAY A COMPANY IS GOVERNED !CCORDING TO 3OLOMON AND 3OLOMON h#ORPORATE 'OVERNANCE IS THE SYSTEM OF CHECKS AND BALANCES BOTH INTERVAL AND EXTERNAL TO THE COMPANIES WHICH ENSURES THAT THE COMPANIES DISCHARGE THEIR ACCOUNTABILITY TO ALL THEIR STAKEHOLDERS AND ACT IN A SOCIALLY RESPONSIBLE WAY IN ALL AREAS OF THEIR BUSINESS ACTIVITY v )T IS A SYSTEM BY WHICH COMPANIES ARE DIRECTED AND GOVERNED 4HE BASIC PRINCIPLES OF CORPORATE GOVERNANCE ARE ACCOUNTABILITY TRANSPARENCY FAIRNESS RESPONSIBILITY AND RISK MANAGEMENT 'OOD CORPORATE GOVERNANCE ENSURES ROBUST RISK MANAGEMENT SYSTEM 4HE MAIN PURPOSE OF CORPORATE GOVERNANCE IS TO CREATE VALUE FOR SHAREHOLDERS AND SAFEGUARD THE INTERESTS OF ALL STAKEHOLDERS )T IS NOT AN END ITSELF BUT A MEANS TO PRACTICE AND FOLLOW CORPORATE DEMOCRACY AT ALL LEVELS 4HE #ORPORATE 'OVERNANCE 2EPORT OF (INDUSTAN 5NILEVER ,IMITED OF STATED AS FOLLOWS h4O SUCCEED WE BELIEVE REQUIRES THE HIGHEST STANDARDS OF CORPORATE BEHAVIOUR TOWARDS EVERYONE WE WORK WITH THE COMMUNITIES WE TOUCH AND THE ENVIRONMENT ON WHICH WE HAVE AN IMPACT 4HIS IS OUR TRADE TO SUSTAINABLE PROFITABLE GROWTH AND CREATING LONG TERM VALUE FOR OUR SHAREHOLDERS OUR PEOPLE AND OUR BUSINESS PARTNERS v
Secretarial Audit Report Meaning of Secretarial Audit : 3ECRETARIAL AUDIT IS A MECHANISM TO MONITOR COMPLIANCE WITH COMPANY LAW AND OTHER LAWS APPLICABLE TO THE CORPORATE SECTOR INCLUDING THE RULES AND REGULATIONS MADE THEREUNDER 4HUS SECRETARIAL AUDIT IS COMPLIANCE AUDIT )T IS A PART OF THE TOTAL COMPLIANCE MANAGEMENT IN AN ORGANISATION Need for Secretarial Audit : .OW A DAYS THERE ARE A NUMBER OF LAWS RULES AND REGULATIONS IN THE COUNTRY WHICH HAVE TO BE COMPLIED WITH BY THE CORPORATE SECTOR -OREOVER THESE LAWS ARE COMPLEX AND THERE ARE HEAVY PENALTIES AND PUNISHMENT FOR NON COMPLIANCE OF SOME OF THESE LAWS RULES AND REGULATIONS 4HEREFORE THERE SHOULD BE AN EFFECTIVE COMPLIANCE SYSTEM TO AVOID NON COMPLIANCE 4HE SECRETARIAL AUDIT IS AN EFFECTIVE TOOL FOR CORPORATE COMPLIANCE MANAGEMENT )T HELPS ENSURE TIMELY CORRECTIVE MEASURE WHEN NON COMPLIANCE IS DETECTED Applicability : !S PER THE 3ECTION OF THE #OMPANIES !CT READ WITH 2ULE OF THE #OMPANIES !PPOINTMENT AND 2EMUNERATION OF -ANAGERIAL 0ERSONNEL 2ULES
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THE FOLLOWING COMPANIES ARE REQUIRED TO OBTAIN @3ECRETARIAL !UDIT 2EPORT FROM THE COMPANY SECRETARY IN PRACTICE IN SUCH FORM AS MAY BE PRESCRIBED %VERY LISTED COMPANY %VERY PUBLIC COMPANY HAVING A PAID UP SHARE CAPITAL OF CRORE RUPEES OR MORE OR %VERY PUBLIC COMPANY HAVING A TURNOVER OF CRORE RUPEES OR MORE 3ECRETARIAL AUDIT IS ALSO MANDATORY TO A PRIVATE COMPANY WHICH IS SUBSIDIARY OF A PUBLIC COMPANY AND WHICH FALLS UNDER THE AFORESAID PRESCRIBED CLASS OF COMPANIES Board’s report : 4HE "OARD OF $IRECTORS IN THEIR REPORT SHALL EXPLAIN IN FULL ANY QUALIFICATION OR OBSERVATION OR OTHER REMARKS MADE BY THE COMPANY SECRETARY IN PRACTICE IN HIS SECRETARIAL AUDIT REPORT ;3ECTION =
Economic Value Added %CONOMIC 6ALUE !DDED IS THE NET OPERATING PROFIT AFTER TAX EARNED BY THE FIRM less COST OF FINANCE OF THE FIRM S CAPITAL BOTH DEBT AND EQUITY %6! .ET /PERATING 0ROFIT AFTER 4AX n A #APITAL #HARGE ./0!4 n # /PERATING #APITAL %MPLOYED 7HERE # 7EIGHTED !VERAGE #OST OF #APITAL 7!## 4O COMPUTE ACCOUNTING PROFIT INTEREST ON BORROWINGS IS CONSIDERED BUT IMPUTED COST OF EQUITY IS IGNORED )N CASE OF ECONOMIC PROFIT INTEREST ON BORROWINGS AS WELL AS IMPUTED COST FOR EQUITY ARE CONSIDERED 4HE ECONOMIC PROFIT HAS GIVEN RISE TO ECONOMIC VALUE ADDED %6! )T IS ALSO KNOWN AS RESIDUAL INCOME (IGHER THE %6! THE BETTER THE FIRM S OPERATING EFFICIENCY &OLLOWING IS THE EXTRACT OF THE VALUE ADDED STATEMENT OF (INDUSTAN 5NILEVER ,IMITED FOR YEAR AND Hindustan Unilever Limited Economic Value Added, Year ended March 31
0ROFIT AFTER TAX BEFORE EXCEPTIONAL ITEM Add: )NTEREST AFTER TAX .ET /PERATING 0ROFIT AFTER 4AX Deduct: #OST OF #APITAL %MPLOYED %CONOMIC 6ALUE !DDED
!MOUNT IN ` MILLIONS ` `
Form AOC-1 (Form of Statement Containing Salient features of the financial statements of subsidiaries/associate companies/joint ventures 2ULE OF THE #OMPANIES !CCOUNTS 2ULES STATES THAT THE STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENTS OF A COMPANY S SUBSIDIARY ASSOCIATE COMPA-
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NY OR COMPANIES OR JOINT VENTURE OR VENTURES UNDER THE FIRST PROVISO TO SUB SECTION SHALL BE IN &ORM !/#
Auditor’s Report 3ECTION OF THE #OMPANIES !CT PROVIDES THAT THE AUDITOR SHALL MAKE A REPORT TO THE MEMBERS OF THE COMPANY ON THE ACCOUNTS EXAMINED BY HIM AND ON EVERY FINANCIAL STATEMENTS WHICH ARE REQUIRED BY OR UNDER THIS !CT TO BE LAID BEFORE THE COMPANY IN GENERAL MEETING 4HE AUDITOR SHALL AFTER TAKING INTO ACCOUNT a THE PROVISIONS OF THE !CT b THE ACCOUNTING AND AUDITING STANDARDS AND c MATTERS WHICH ARE REQUIRED TO BE INCLUDED IN THE AUDIT REPORT UNDER THE PROVISIONS OF THIS !CT OR ANY RULES MADE THEREUNDER OR UNDER ANY ORDER MADE UNDER SECTION AND TO THE BEST OF HIS INFORMATION AND KNOWLEDGE THE SAID ACCOUNTS FINANCIAL STATEMENTS GIVE A TRUE AND FAIR VIEW OF THE STATE OF THE COMPANY S AFFAIRS AS AT THE END OF ITS FINANCIAL YEAR AND PROFIT AND LOSS AND CASH FLOW FOR THE YEAR AND SUCH OTHER MATTERS AS MAY BE PRESCRIBED
DIFFERENCE BETWEEN ANNUAL REPORT AND FINANCIAL STATEMENTS 4HE TERM @FINANCIAL REPORTING IS NOT RESTRICTED TO INFORMATION COMMUNICATED TO THE USERS THROUGH FINANCIAL STATEMENTS &INANCIAL REPORTING HAS A BROADER SCOPE THAN FINANCIAL STATEMENTS &INANCIAL 3TATEMENTS ARE ONE OF THE MANY MEANS OF CONVEYING INFORMATION ABOUT FINANCIAL PERFORMANCE AND FINANCIAL POSITION OF AN ENTERPRISE &OLLOWING ARE THE DISTINCTIONS BETWEEN ANNUAL REPORT AND FINANCIAL STATEMENTS Basis
Annual Report
Financial Statements
!NNUAL 2EPORT IS A COMPREHENSIVE REPORT ON A COMPANY S ACTIVITIES AND FINANCIAL PERFORMANCE DURING THE PRECEDING MONTHS AND FINANCIAL POSI TION AS AT THE END OF THOSE MONTHS
&INANCIAL STATEMENTS ARE THE STATEMENTS WHICH SHOW inter alia AN ACTUAL VIEW OF FINANCIAL PERFORMANCE OF A COMPANY DURING THE PRECEDING MONTHS AND FINANCIAL POSITION AS AT THE END OF THE THOSE MONTHS
2. Constituents !NNUAL 2EPORT INCLUDES NOT ONLY FINANCIAL STATEMENTS BUT ALSO "OARD S 2EPORT !UDITOR S 2EPORT #ORPORATE 3OCIAL 2ESPONSIBILITY 2EPORT ETC WHICH ARE REQUIRED TO BE DISCLOSED BY LAW REGULATORY FRAMEWORK CUSTOM OR BECAUSE THE MANAGEMENT CONSIDERS IT USEFUL TO THOSE OUTSIDE THE ENTERPRISE AND DISCLOSES IT VOLUNTARILY
&INANCIAL STATEMENTS WHICH ARE PREPARED BY A )ND !3 COMPLIANT COMPANY INCLUDES i A BALANCE SHEET AS AT THE END OF THE PERIOD ii A STATEMENT OF PROFIT AND LOSS FOR THE PERIOD iii A STATEMENT OF CHANGES IN EQUITY iv A STATEMENT OF CASH FLOWS FOR THE PERIOD v NOTES COMPRISING SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION vi COMPARATIVE INFORMATION IN RESPECT OF THE PRECEDING PERIOD
1. Meaning
3. Financial and !NNUAL 2EPORT COMPRISES INFORMATION &INANCIAL STATEMENTS COMMUNICATE non-financial GENERATED BY THE ACCOUNTING SYSTEM AS INFORMATION GENERATED BY THE ACCOUNTinformation WELL AS ON NON FINANCIAL MATTERS SUCH AS ING SYSTEM IMPACT OF COMPANY S POLICY AND PRODUCTS ON ENVIRONMENT AND THE SOCIETY
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Annual Report
Financial Statements
4. Audit
Basis
-OST OF THE FINANCIAL REPORTING OUTSIDE THE FINANCIAL STATEMENTS ARE PROVIDED BY MANAGEMENT WITHOUT AUDIT OR REVIEW BY OUTSIDE PERSON
!NNUAL &INANCIAL 3TATEMENTS ARE AUDITED BY INDEPENDENT AUDITORS FOR ENHANCING CONFIDENCE IN THEIR RELIA BILITY
5. Purpose
4HE PURPOSE OF !NNUAL REPORT IS TO GIVE LARGER PICTURE OF THE ORGANISATION TO THE USERS )T ALSO INCLUDES INFORMATION ABOUT NEW PRODUCTS NEW STRATEGIES 4HEREFORE !NNUAL 2EPORT IS FOR MORE COMPREHENSIVE THAN FINANCIAL STATEMENTS
4HE MAIN PURPOSE OF FINANCIAL STATEMENT IS TO COMMUNICATE COMPANY S FINANCIAL PERFORMANCE AND POSITION TO THE USERS
CONTENTS OF THE REPORT OF BOARD OF DIRECTORS "OARD S 2EPORT OR "OARD OF $IRECTOR S 2EPORT OR $IRECTOR S 2EPORT IS A DOCUMENT PREPARED BY THE BOARD OF DIRECTORS UNDER THE REQUIREMENTS OF THE #OMPANIES !CT WHICH GIVE DETAILS OF THE STATE OF THE COMPANY AND ITS COMPLIANCE WITH A SET OF FINANCIAL ACCOUNTING AND CORPORATE SOCIAL RESPONSIBILITY AND OTHER STANDARDS 5NDER SECTION OF THE #OMPANIES !CT THE BOARD OF DIRECTORS OF A COMPANY MUST PREPARE THE "OARD S REPORT AT THE END OF EACH FINANCIAL YEAR )T ENSURES GREATER TRANSPARENCY 4HE SHAREHOLDERS CAN MAKE INFORMED DECISIONS WITH THE HELP OF INFORMATION GIVEN IN THE REPORT !CCORDING TO SUB SECTION OF 3ECTION A REPORT BY THE "OARD OF $IRECTORS CONTAINING THE FOLLOWING DETAILS SHALL BE ATTACHED TO EVERY FINANCIAL STATEMENT LAID BEFORE COMPANY IN GENERAL MEETING a THE WEB ADDRESS IF ANY WHERE ANNUAL RETURN REFERRED TO IN SECTION HAS BEEN PLACED &URTHER AN EXTRACT OF THE ANNUAL RETURN SHALL FORM PART OF THE "OARD S REPORT )T SHALL BE ATTACHED WITH "OARD S REPORT b NUMBER OF MEETINGS OF THE "OARD c $IRECTORS 2ESPONSIBILITY 3TATEMENT ca DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION OTHER THAN THOSE WHICH ARE REPORTABLE TO THE #ENTRAL 'OVERNMENT d A STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION e IN CASE OF A LISTED COMPANY AND PRESCRIBED CLASS OR CLASSES OF COMPANIES COMPANY S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS PROVIDED UNDER SECTION f EXPLANATION OR COMMENTS BY THE "OARD ON EVERY QUALIFICATION RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE i BY THE AUDITOR IN HIS REPORT AND ii BY THE COMPANY SECRETARY IN PRACTICE IN HIS SECRETARIAL AUDIT REPORT
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g PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION h PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION IN THE PRESCRIBED FORM i THE STATE OF THE COMPANY S AFFAIRS j THE ACCOUNTS IF ANY WHICH IT PROPOSES TO CARRY TO ANY RESERVES k THE AMOUNT IF ANY WHICH IT RECOMMENDS SHOULD BE PAID BY WAY OF DIVIDEND l MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT m THE CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO IN SUCH MANNER AS MAY BE PRESCRIBED n A STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY FOR THE COMPANY INCLUDING IDENTIFICATION THEREIN OF ELEMENTS OR RISK IF ANY WHICH IN THE OPINION OF THE "OARD MAY THREATEN THE EXISTENCE OF THE COMPANY o THE DETAILS ABOUT THE POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON CORPORATE SOCIAL RESPONSIBILITY INITIATIVES TAKEN DURING THE YEAR p IN CASE OF A LISTED COMPANY AND EVERY OTHER PUBLIC COMPANY HAVING SUCH PAID UP SHARE CAPITAL AS MAY BE PRESCRIBED A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE "OARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS q SUCH OTHER MATTERS AS MAY BE PRESCRIBED (OWEVER WHERE DISCLOSURES REFERRED TO IN THIS SUB SECTION HAVE BEEN INCLUDED IN THE FINANCIAL STATEMENTS SUCH DISCLOSURES SHALL BE REFERRED TO INSTEAD OF BEING REPEATED IN THE "OARD S REPORT &URTHER WHERE THE POLICY REFERRED TO IN CLAUSE e OR CLAUSE o IS MADE AVAILABLE ON COMPANY S WEBSITE IF ANY IT SHALL BE SUFFICIENT COMPLIANCE OF THE REQUIREMENTS UNDER SUCH CLAUSES IF THE SALIENT FEATURES OF THE POLICY AND ANY CHANGE THEREIN ARE SPECIFIED IN BRIEF IN THE "OARD S REPORT AND THE WEB ADDRESS IS INDICATED THEREIN AT WHICH THE COMPLETE POLICY IS AVAILABLE 3UB SECTION ! OF SECTION PROVIDES THAT THE #ENTRAL 'OVERNMENT MAY PRESCRIBE AN ABRIDGED "OARD S REPORT FOR THE PURPOSE OF COMPLIANCE WITH THIS SECTION BY /NE 0ERSON #OMPANY OR 3MALL #OMPANY
Directors’ Responsibility Statement [Section 134(5)] 4HE $IRECTORS 2ESPONSIBILITY 3TATEMENT REFERRED ABOVE SHALL STATE THAT a IN THE PREPARATION OF THE ANNUAL ACCOUNTS THE APPLICABLE accounting standards HAD BEEN FOLLOWED ALONG WITH PROPER EXPLANATION RELATING TO MATERIAL DEPARTURES b THE DIRECTORS HAD SELECTED SUCH accounting policies AND APPLIED THEM CONSISTENTLY AND MADE judgements and estimates THAT ARE REASONABLE SO AS TO GIVE A TRUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE COMPANY AT THE END OF THE FINANCIAL YEAR AND OF THE PROFIT AND LOSS OF THE COMPANY FOR THAT PERIOD
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c THE DIRECTORS HAD TAKEN PROPER AND SUFFICIENT CARE FOR THE MAINTENANCE OF ADEQUATE ACCOUNTING RECORDS IN ACCORDANCE WITH THE PROVISIONS OF THIS !CT FOR SAFEGUARDING THE ASSETS OF COMPANY AND FOR PREVENTING AND DETECTING FRAUD AND OTHER IRREGULARITIES d THE DIRECTORS HAD PREPARED accounts going concern basis; e THE DIRECTORS IN THE CASE OF A LISTED COMPANY HAD LAID DOWN internal financial controls TO BE FOLLOWED BY THE COMPANY AND THAT SUCH FINANCIAL CONTROLS ARE ADEQUATE AND WERE OPERATING EFFECTIVELY AND f THE DIRECTORS HAD devised proper system to ensure compliance WITH THE PROVISIONS OF ALL APPLICABLE LAWS AND THAT SYSTEM WERE ADEQUATE AND OPERATING EFFECTIVELY Matters to be included in the Board’s Report as per Rule 8 of the Companies (Accounts) Rules, 2014 4HE "OARD S 2EPORT SHALL BE PREPARED BASED ON THE STAND ALONE FINANCIAL STATEMENTS OF THE COMPANY AND SHALL REPORT ON THE HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY DURING THE PERIOD UNDER REPORT 4HE 2EPORT OF THE "OARD SHALL CONTAIN THE PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB SECTION OF SECTION 4HE REPORT OF THE "OARD SHALL CONTAIN THE FOLLOWING INFORMATION AND DETAILS NAMELY (A) Conservation of energy: i THE STEPS TAKEN OR IMPACT ON CONSERVATION OF ENERGY ii THE STEPS TAKEN BY THE COMPANY FOR UTILIZING ALTERNATE SOURCES OF ENERGY iii THE CAPITAL INVESTMENT ON ENERGY CONSERVATION EQUIPMENTS (B) Technology absorption: i THE EFFORTS MADE TOWARDS TECHNOLOGY ABSORPTION ii THE BENEFITS DERIVED LIKE PRODUCT IMPROVEMENT COST REDUCTION PRODUCT DEVELOPMENT OR IMPORT SUBSTITUTION iii IN CASE OF IMPORTED TECHNOLOGY IMPORTED DURING THE LAST THREE YEARS RECKONED FROM THE BEGINNING OF THE FINANCIAL YEAR a THE DETAILS OF TECHNOLOGY IMPORTED b THE YEAR OF IMPORT c WHETHER THE TECHNOLOGY BEEN FULLY ABSORBED d IF NOT FULLY ABSORBED AREAS WHERE ABSORPTION HAS NOT TAKEN PLACE AND THE REASONS THEREOF AND iv THE EXPENDITURE INCURRED ON 2ESEARCH AND $EVELOPMENT (C) Foreign exchange earnings and outgo: 4HE &OREIGN %XCHANGE EARNED IN TERMS OF ACTUAL INFLOWS DURING THE YEAR AND THE &OREIGN %XCHANGE OUTGO DURING THE YEAR IN TERMS OF ACTUAL OUTFLOWS Provided THAT THE REQUIREMENT OF FURNISHING INFORMATION AND DETAILS UNDER THIS SUB RULE SHALL NOT APPLY TO A 'OVERNMENT COMPANY ENGAGED IN PRODUCING DEFENCE EQUIPMENT
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%VERY LISTED COMPANY AND EVERY OTHER PUBLIC COMPANY HAVING A PAID UP SHARE CAPITAL OF TWENTY FIVE CRORE RUPEES OR MORE CALCULATED AT THE END OF THE PRECEDING FINANCIAL YEAR SHALL INCLUDE IN THE REPORT BY ITS "OARD OF $IRECTORS A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE "OARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL $IRECTORS )N ADDITION TO THE INFORMATION AND DETAILS SPECIFIED IN SUB RULE THE REPORT OF THE "OARD SHALL ALSO CONTAIN i THE FINANCIAL SUMMARY OR HIGHLIGHTS ii THE CHANGE IN THE NATURE OF BUSINESS IF ANY iii THE DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR iiia A STATEMENT REGARDING OPINION OF THE "OARD WITH REGARD TO INTEGRITY EXPERTISE AND EXPERIENCE INCLUDING THE PROFICIENCY OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR Explanation.— &OR THE PURPOSE OF THIS CLAUSE THE EXPRESSION hPROFICIENCYv MEANS THE PROFICIENCY OF THE INDEPENDENT DIRECTORS AS ASCERTAINED FROM THE ONLINE PROFICIENCY SELF ASSESSMENT TEST CONDUCTED BY THE INSTITUTE NOTIFIED UNDER SUB SECTION OF SECTION iv THE NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED ITS SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR v THE DETAILS RELATING TO DEPOSITS COVERED UNDER #HAPTER 6 OF THE !CT a ACCEPTED DURING THE YEAR b REMAINED UNPAID OR UNCLAIMED AS THE END OF THE YEAR c WHETHER THERE HAS BEEN ANY DEFAULT IN REPAYMENT OF DEPOSITS OR PAYMENT OF INTEREST THEREON DURING THE YEAR AND IF SO NUMBER OF SUCH CASES AND THE TOTAL AMOUNT INVOLVED i AT THE BEGINNING OF THE YEAR ii MAXIMUM DURING THE YEAR iii AT THE END OF THE YEAR vi THE DETAILS OF DEPOSITS WHICH ARE NOT IN COMPLIANCE WITH THE REQUIREMENTS OF #HAPTER 6 OF THE !CT vii THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY S OPERATIONS IN FUTURE viii THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE &INANCIAL 3TATEMENTS ix A DISCLOSURE AS TO WHETHER MAINTENANCE OF COST RECORDS AS SPECIFIED BY THE #ENTRAL 'OVERNMENT UNDER SUB SECTION OF SECTION OF THE COMPANIES !CT IS REQUIRED BY THE #OMPANY AND ACCORDINGLY SUCH ACCOUNTS AND RECORDS ARE MADE AND MAINTAINED
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x A STATEMENT THAT THE COMPANY HAS COMPLIED WITH PROVISIONS RELATING TO THE CONSTITUTION OF )NTERNAL #OMPLAINTS #OMMITTEE UNDER THE 3EXUAL (ARASSMENT OF 7OMEN AT 7ORKPLACE 0REVENTION 0ROHIBITION AND 2EDRESSAL !CT OF xi THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE )NSOLVENCY AND "ANKRUPTCY #ODE OF DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE &INANCIAL YEAR xii THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE "ANKS OR &INANCIAL )NSTITUTION ALONG WITH THE REASONS THEREOF 4HIS RULE SHALL NOT APPLY TO /NE 0ERSON #OMPANY OR 3MALL #OMPANY -ATTERS TO BE INCLUDED IN "OARD S 2EPORT FOR ONE PERSON COMPANY AND SMALL COMPANY AS PER 2ULE ! OF THE #OMPANIES !CCOUNTS 2ULES 4HE "OARD S 2EPORT OF /NE 0ERSON #OMPANY AND 3MALL #OMPANY SHALL BE PREPARED BASED ON THE STANDALONE FINANCIAL STATEMENT OF THE COMPANY WHICH SHALL BE IN ABRIDGED FORM AND CONTAIN AND FOLLOWING a THE WEB ADDRESS IF ANY WHERE ANNUAL RETURN REFERRED TO IN SUB SECTION OF SECTION HAS BEEN PLACED b NUMBER OF MEETING OF THE "OARD c $IRECTORS 2ESPONSIBILITY 3TATEMENT AS REFERRED TO IN SUB SECTION OF SECTION d DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB SECTION OF SECTION OTHER THAN THOSE WHICH ARE REPORTABLE TO THE #ENTRAL 'OVERNMENT e EXPLANATIONS OR COMMENTS BY THE "OARD ON EVERY QUALIFICATION RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE AUDITOR IN HIS REPORT f THE STATE OF THE COMPANY S AFFAIRS g THE FINANCIAL SUMMARY OR HIGHLIGHTS h MATERIAL CHANGES FROM THE DATE OF CLOSURE OF THE FINANCIAL YEAR IN THE NATURE OF BUSINESS AND THEIR EFFECT ON THE FINANCIAL POSITION OF THE COMPANY i THE DETAILS OF DIRECTORS WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR j THE DETAILS OR SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY S OPERATIONS IN FUTURE 4HE 2EPORT OF THE "OARD SHALL CONTAIN THE PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB SECTION OF SECTION IN THE &ORM !/#
Disclosure about CSR Policy (Rule 9 of the Companies (Accounts) Rules, 2014) 4HE DISCLOSURE OF CONTENTS OF #ORPORATE 3OCIAL 2ESPONSIBILITY 0OLICY IN THE "OARD S REPORT AND ON THE COMPANY S WEBSITE IF ANY SHALL BE AS PER ANNEXURE ATTACHED TO THE #OMPANY #ORPORATE 3OCIAL 2ESPONSIBILITY 0OLICY 2ULES
Corporate Accounting | UGCF | NEP AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
: : : : : : :
BHUSHAN KUMAR GOYAL TAXMANN JANUARY 2024 11TH EDITION 9789357789776 1170 PAPERBACK
Rs. 1195
Description This book is a University Grants Commission (‘UGC’) & Univeristy of Delhi recommended comprehensive & authentic textbook. It aims to help readers to acquire conceptual knowledge of corporate accounting systems. It also enables them to learn how to prepare the companies’ financial statements. This book is divided into two volumes: Volume I – Text & Illustrations Volume II – Assignments This book aims to fulfil the requirements of the following students of undergraduate courses in commerce and management: B.Com. (Hons.) | Semester II | Paper DSC – 2.1 under the UGCF Programme as per the New Education Policy B.Com. | Semester II | Paper DSC – 2.1 under the UGCF Programme as per the NEP Non-Collegiate Women’s Education Board (NCWEB) School of Open Learning of the University of Delhi (SOL) Various Central Universities throughout India The Present Publication is the 11th Edition, authored by Bhushan Kumar Goyal, with the following noteworthy features: [Amended & Updated] n Theory & Accounting treatment has been revised as per the following u Accounting Standards – 4 (Revised) u Companies (Amendment) Act, 2019 u MCA Notification – Dated 29-03-2021 n Balance Sheets have been given as per the amended Schedule III of the Companies Act, both in questions and solutions in case of illustrations n Several illustrations on Statement of Changes in Equity have also been given n Illustration on Accounting Ratios has been added [Simple, Systematic and Comprehensive Explanation] of the concept and theories underlyingCorporate Accounting [Student-Oriented Book] This book has been developed keeping in mind the following factors: n Interaction of the author/teacher with their students in the classroom n Shaped by the author/teacher’s experience of more than 39 years n Reactions and responses of students have also been incorporated at different places in the book [Comprehensive Coverage of Accounting Treatment] has been provided so that it becomes easy to solve practical problems [Illustrations for Better Understanding] have been given in each chapter [Careful Selection of Illustrations] to cover all aspects of the topics
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