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Applicability of CSR in case of unaudited figures

Radhika Sharma (Student CS) (30 Points)

12 May 2022

If a Company gets to know from an internal audit that , the net profit for the financial year 21-22 is more than 5 crores, will the CSR becomes applicable to the Company from there onwards OR the Company shall wait for the Audited Financials to be made public (till AGM to be held in September) and based on the audited financials, the CSR becomes applicable?

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4 Replies

Kev Men (756 Points)
Replied 12 May 2022

As per the Companies (CSR Policy) Rules 2014, 'net profit' means the net profit of the company as per its financial statements prepared in accordance with the applicable provisions of the Act,.....

So in my opinion, in the above scenario, the CSR becomes applicable when the financial statements are prepared by the company. There is no need to wait for 'audited financials'.

CA Puja Sharma (Chartered Accountant) (4874 Points)
Replied 12 May 2022

In my opinion, the CSR provisions will apply during the FY 2022-23.

Since the management prepares the financial statements and the auditor only gives their opinion, the liability to make CSR expenditures will apply before the ABS is filed.

1 Like

CA Raj Doshi (Practising CA) (8723 Points)
Replied 12 May 2022

CSR calculated for fy 21-22( 2% of average profits of last 3 years) has to be paid before March 2023. so do from audited balance sheet of fy 21-22 only

2 Like

Chirag (Professional) (1979 Points)
Replied 19 May 2022

CSR provision applicable on the basis of immediate Preceding FY ( Net Worth / Turnover or Profit ) ,So On the basis of audited F/S of FY 21-22 ,for next FY CSR is applicable and remains applicable for next 3 Consecutive FY ( even in shortfall in successive years and till it not in shortfall for consecutive 3 Yrs )