Sunday, March 26, 2023

The Institute of Chartered Accountants of India (ICAI) apart from issuing Accounting Standards for Non-company entities, always takes necessary initiatives to ensure effective and consistent application of these Standards. For the purpose of applicability of Accounting Standards to non-company entities, scheme for classification of non-company entities into four levels, viz., Level I, Level II, Level III and Level IV was prescribed by the ICAI. Level I entities are large size entities and required to comply with all the standards. Level IV, Level III and Level II non-company entities are considered as Micro, Medium and Small Sized non-company Entities and have been granted certain exemptions/relaxations. Moving forward in the direction of further strengthening and standardising the financial reporting system of these entities, the Accounting Standards Board of the ICAI has issued a Technical Guide on Financial Statements of Non-Corporate Entities.

The Technical Guide recommends formats of financial statements for Non-Corporate entities (Proprietorships, Partnerships, etc.). Limited Liability Partnerships (LLPs) incorporated under Limited Liability Partnerships Act, 2008, are corporate form of entities and are scoped out of the applicability of this Technical Guide. The Technical Guide also includes Illustrative formats for Financial Statements for the guidance of the stakeholders. The Technical Guide has been designed in a simple manner to assist the preparers of financial statements and other stakeholders to follow these formats in preparing the financial statemen