Earlier Company act 1956 didnt include cash flow statement in the Defination of Financial statement, However as per New Company Act 2013, the Cash flow statement shall to prepare.
As per Sec 2(40) for “financial statement” in relation to a company, includes—
(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):
Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement
However there is an Exemption of making Cash flow statement for - OPC, small company and dormant Company.
1. OPC:
SEC 2(62) “One Person Company” means a company which has only one person as a member and only one as a director. They no need to make CFS.
2. DORMANT COMPANY :
SEC 455
(1) Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company.
Explanation.—For the purposes of this section,—
(i) “inactive company” means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years;
(ii) “significant accounting transaction” means any transaction other than—
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.
3.SMALL COMPANIES:
Sec 2(85) ‘‘small company’’ means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:
Provided that nothing in this clause shall apply to—
(means following companies must to prepare CFS)
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
Simply cash flow statement is SHALL prepared for all companies(including Private Company) however exemption is give to following three companies only
1. OPC
2. DORMANT COMPANIES
3. SMALL COMPANIES
For More Information and query please submit comments below
Thanks
Sameer Ahmed
(CA FINAL)
CAclubindia
