Doing Business in India - RSM Austria

3.0. STATUTORY REQUIREMENTS FOR COMPANIES
3.1 Annual Reports
All corporate entities in India irrespective of their size are required to prepare and
file audited financial statements in accordance with Accounting Standards (“AS”)
issued by the Institute of Chartered Accountants of India (“ICAI”) and their
governing statute which may include:
Companies Act for all incorporated entities;
Reserve Bank of India (RBI) Guidelines and Prudential Norms, and the
Banking Regulation Act, for banking companies;
The Insurance Act and the Insurance Regulatory and Development
Authority Act for insurance companies;
Electricity Acts for power companies, etc.;
Listing Agreement entered between the listed Companies and Stock
Exchange with which they are listed.
A set of financial statements in India generally includes:
balance sheet;
profit and loss account;
cash flow statement;
explanatory notes to the financial statements and supplementary
schedules.
Financial statements do not, however, include such items as reports by directors,
statements by the chairman, discussion and analysis by management and similar
items that may be included in a financial or annual report, which all form part of
overall financial reporting.
Financial Statements should be presented to the shareholders for their approval in
annual general meeting. The board of directors report should also include a
Directors Responsibility Statement. Directors’ Responsibility Statement basically
aims at highlighting the accountability of Directors in good corporate governance.
The financial statements of a holding company should also include a copy of the
financial statements of its subsidiary company and a statement showing the
holding company’s interest in the subsidiary. Listed public limited companies should
circulate the cash flow statements along with annual financial statements among
its members.
3.2 Audit Requirements
Every company is required to get its accounts audited under the Companies Act,
1956. The auditor should be a member of the Institute of Chartered Accountants of
India (ICAI) holding a Certificate of Practice. There are mandatory audit
requirements under certain other laws as well.
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DOING BUSINESS IN INDIA