The Hindu Business Line : Balance sheets to sport new look with revised disclosure norms

DISCLOSURE requirements in financial statements of companies are in for a change. The Central Council of the Institute of Chartered Accountants of India (ICAI) has approved a revised Schedule VI of the Companies Act, 1956 that would mandate disclosures in tune with the current governance requirements.

Schedule VI prescribes the format in which balance sheet and profit and loss account are to be prepared by companies. India Inc has been claiming and complaining that some of the disclosure requirements in the financial statements are superfluous and only adds to the publishing costs of companies. DCA had, about two years back, asked ICAI to suggest a revised schedule VI.

"The council has approved the revised Schedule VI at its recent meeting held early this week. A Government nominee to the Council recommended some changes.

These will be incorporated and then forwarded next week to the Department of Company Affairs for notification," an ICAI council member told Business Line here. The horizontal form of balance sheet has been dispensed with in the revised Schedule VI. "There will be only vertical form of balance sheet in the revised schedule VI," sources said.

The revised Schedule VI has also done away with Part IV of the Schedule that related to disclosure of balance sheet abstract and company's general business profile.

Further, companies need not henceforth disclose the amounts contributed to provident funds. Disclosure of amounts contributed to provident funds are no longer considered relevant in view of the changed socio-economic structure and level of development of the economy.

Regulators have often found themselves in a tricky situation in trying to strike a balance between the demands of companies to bring down compliance costs and the need to meet the information requirements of investors for making informed investment decisions.

One of the studies had estimated compliance costs for corporates at Rs 300 crore annually.