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2(41) is mandatory or optional

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CA Vishnu Naidu

6 Points Posted on 09 May 2020

as per sec 2(41), if company incorporated on or after january of the year, period ending of 31st march of following year is considered as financial year for which financial statements to be prepared.

is it mandatory or optional? if it is mandatory, company need not to be audited in current year and audit can be done for entire 15months in following year.

Replies (2)

Quick Summary

This discussion clarifies whether the financial year definition under Section 2(41) for companies incorporated between January and March is mandatory or optional. The consensus is that it's mandatory, meaning companies must prepare financial statements covering the period up to the following March 31st. This often results in an initial financial year of around 14-15 months, potentially impacting the timing of audits.

Harish choursiya

Student cs professional

249 Points Posted on 17 May 2020

As per understanding of the provisions wrt Financial year the company should prepare the annual Financial result of entire 15 months initially to provide full Fledged information.

For example Co. Incorporated in between January to March 2020 suppose 28 Jan 2020 and the first financial years shall be consider March 2021.

Now the financial reporting period should be (12 months, April to March +2 (Feb +March) months. Almost 14 months should be considered.