Latest format of Financial Statements of Non-Corporate Entities 2025
The ICAI has issued Guidance Note on Financial Statements of Non-Corporate Entities. This guidance note is for preparation and presentation of financial statements of non-corporate entities such as proprietary firm , partnership firm, AOP etc. Where in ICAI has prescribed format for preparation of financials which is in line with the Schedule III format for non-Ind AS following companies.
Currently, many non-corporate entities prepare financial statements using their own formats and judgments. To promote consistency and effective implementation of Accounting Standards, prescribed formats for these financial statements have been introduced. Follow the format especially for entities undergoing tax audits or seeking bank borrowings.
If you are conducting a tax audit of non-corporate entities, strictly adhere to the guidelines and prepare financial statements using the prescribed format. Even if audit is not applicable, but your client has existing or planned bank borrowings, preparing financials according to the prescribed format is crucial. Ensuring that all mandatory disclosures required by Accounting Standards are included will help prevent future issues.
I have attached a draft format of financial statements in Excel for non-corporate entities, as per the guidance note by the ICAI. Please note that this is a draft, and you can modify it to suit your specific needs. However, it is essential to maintain the integrity of the financial presentation and include all required disclosures.
Please note the Guidance Note is effective for financial statements covering periods beginning on or after April 1, 2024. Accordingly you must prepare Balance sheets for the FY 2024-25 in new format.
Please provide any feedback, suggestions, or if you identify any discrepancies in the attached file. Your input will be valuable in refining the format and ensuring its effectiveness.
FAQs on on Guidance Note on Financial Statements of Non-Corporate Entities:
ICAI has issued FAQs on Guidance Note on Financial Statements of Non-Corporate Entities. Summary of FAQs are as follows [ created with the help of A.I.]:
1. Purpose of the Guidance Note (GN):
Issued by ICAI, it provides standardized financial statement formats for non-corporate entities to enhance quality, consistency, and comparability. Applicable from April 1, 2024.
2. Applicability of financial Statements of Non-Corporate Entities:
Applies to all non-corporate entities, excluding companies and LLPs. Includes:
- Proprietorships
- HUFs
- Partnership Firms (registered/unregistered)
- AOPs, BOIs, Societies, Trusts
- Statutory bodies, autonomous authorities
- Any entity in business/profession (partly or fully)
- Exceptions: Entities governed by specific legal formats (e.g., education institutions, political parties) or those under Govt. of India instructions.
3. Supersession of Earlier Guide:
The 2022 Technical Guide on non-corporate entities stands superseded by this Guidance Note from April 1, 2024.
4. Mandatory Formats of Financial Statements of Non-Corporate Entities:
Yes, the GN prescribes mandatory formats for financial statements for applicable entities.
5. Auditor Responsibility on Non-Compliance with Guidance Note:
Though recommendatory, auditors must:
- Consider Guidance Note while auditing.
- Disclose non-compliance in audit report.
- Use professional judgment to decide on modified opinion.
6. Not-for-Profit Organizations (NPOs):
They should follow Technical Guide on Accounting for NPOs, not this Guidance note.
7. Flexibility on Add/Deletion of Line Items:
Additional or substituted line items can be added if relevant or required for better understanding or statutory needs.
8. Deletion of Nil (0 value ) Items:
Line items with zero values in both current and prior year can be omitted if they don’t affect the true and fair view.
9. Comparative Figures:
Mandatory from April 1, 2024, for all items unless it’s the first set of financials after incorporation.
10. Revised Accounting Standards Applicability (From April 1, 2024):
ICAI has revised classification of non-company entities into:
- MSMEs (Micro, Small, Medium-sized):
-
- Turnover ≤ ₹250 Cr
- Borrowings ≤ ₹50 Cr
- Not listed or in listing process in or outside of India
- Not a bank/FI/insurance co.
- Not a holding/subsidiary of a non-MSME
- Large Entities: Not meeting MSME criteria.
Compliance Requirements:
Large entities: Must comply fully with all Accounting Standards.
11. MSMEs: Eligible for several exemptions/relaxations, e.g.:
- Full exemption: AS 3 (Cash Flow), AS 17 (Segment Reporting), AS 20, AS 24
- Full exemption : AS 18 (Related Party Disclosures) and AS 28 (Impairment of Assets) if:
-
- if turnover is 50cr or below in the immediately preceding accounting year;
- Borrowing is not in excess of 10Cr at any time during the immediately preceding accounting year;
- which is not a Holding and subsidiary of an MSME not covered above
-
- Partial exemptions: AS 15 (Employee Benefits), AS 19 (Leases), AS 22 (Taxes), AS 26, AS 28, AS 29
12. Additional MSME Rules:
- Disclose if availing exemptions from applicability of any AS as discussed above para 11.
- An entity earlier non MSME classified as an MSME must remain so for two consecutive years before becoming eligible for Accounting Standards exemptions/relaxations available to MSMEs.
- Cannot use exemptions selectively in a misleading way.
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Thanks a lot
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