MCA issues Clarification on mandating Companies to round off Figures appearing in Financial Statements

The Ministry of Corporate Affairs ( MCA ) has issued a clarification on mandating Companies to round off the Figures appearing in Financial Statements.

The MCA has said that, Amendment to Schedule III to the Companies Act, 2013 vide MCA Notification GSR. 207(E) dated 24th March 2021 mandates companies to round off the figures appearing in the Financial Statements depending upon their total income. However, if the companies provide absolute figures in e-forms ie. AOC-4, the same shall not be treated as incorrect certification by the Professionals.

Form AOC 4 is used to file the financial statements for each financial year with the Registrar of Companies (ROC). In the case of consolidated financial statements, the company shall file the AOC 4 CFS.

Financial Statements are formal records of the financial operations and position of the Company. The financial statements provide the true affairs of a business to shareholders and investors. The basic objective of financial statements is to provide information about the financial health, growth, and modifications in a company’s financial position that will be useful to a wide range of stakeholders in making business decisions.

Financial statements prepared and filed annually are the most important means of communication by the Board of Directors with its shareholders. Mandatory disclosures through financial statements including the Board’s Report and Auditor’s Report is a method of providing information to the shareholders and the public about the financial activities and position of the company.

Financial statements are useful to all stakeholders, investors, and financial institutions as they provide the true position of the company and help to make informed decisions.

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