ICAI has outlined financial statement formats for different types of non-corporate entities (NCEs) in a recently it’s 2023 Guidance Note. Among these non-corporate entities include sole proprietorship firms, Hindu Undivided Families, registered and unofficial partnership firms, statutory corporations, bodies of individuals, private or public trusts, residential welfare associations, as well as any organisations partaking in commercial activities, except LLPs.
ICAI’s Guidance Note on ‘Financial Statements of Non Corporate Entities (NCEs): August 2023 Edition
Guidance Note 2023 in place of Technical Guide 2022
In June 2022, the ICAI issued Technical Guides on “Financial Statements of Non-Corporate Entities” to address the applicability of Accounting Standards and recommend formats for their financial statements.
Now ICAI has prescribed the formats for presenting the financial statements of non-corporate entities (NCEs) in the form of a Guidance Note 2023, which shall be applicable from April 1, 2024. This guidance note is aimed to further ensure that the prescribed formats of financial statement are followed in order to achieve standardisation and improve the quality of the financial reporting of NCEs.
Not Applicable to LLPs
Limited Liability Partnerships are expressly excluded from the scope of this Guidance Note.
Effective from FY 2024-25
The Guidance Note applies to financial statements for periods starting from April 1, 2024 (FY 2024-25). Those following the principles and formats prescribed by relevant authorities, such as Trusts under Maharashtra Public Trust Rules or Autonomous Bodies under the Government of India and LLPs, are specifically excluded from the scope of this Guidance Note.
ICAI Technical Guide on ‘Financial Statements of Non Corporate Entities (NCEs)’ (June 2022 Edition)
ICAI has issued a Technical Guide on ‘Financial Statements of Non-Corporate Entities (NCEs)’ to ensure consistent and effective application of the accounting standards for strengthening and standardising the financial reporting system of these entities.
This Handbook explains about the issues relating to applicability of Accounting Standards and also about the prescribed formats of the financial statements applicable to these entities.
Entities other than incorporated entities, like ‘companies’ under the Companies Act, 2013 and LLPs under the LLP Act, 2008 are treated as non-corporate/ non-company entities (NCEs), which includes sole proprietorship firms, partnership firms, trusts, Hindu Undivided Families (HUFs), association of persons (AOPs) and co-operative societies, etc. Accordingly, entities in the form of LLPs are considered as corporate form of entities and hence are not covered under the scope of this Technical Guide.
This Technical Guide of ICAI on ‘Financial Statements of Non Corporate Entities (NCEs)’ provides recommended/ illustrative formats of financial statements applicable for Non-Corporate entities (i.e. Proprietorships, Partnerships Firms, etc.) for the guidance and help of the stakeholders.
It may be noted that ICAI has already issued the required Accounting Standards for compliance by the Non-company entities. Also ICAI has prescribed a scheme for classification of the non corporate entities into four levels, i.e. Level I (large size NCEs), Level II, III & IV (Micro, Medium and Small NCEs), for applicability of these accounting standards, with certain exemptions/ relaxations for non-company entities falling in Micro, Medium and Small sized classification.
ICAI’s Technical Guide (June 2022) on ‘Financial Statements of Non Corporate Entities (NCEs)’
Illustrative Financial Statements of Non-Corporate Entities (NCEs) by ICAI (Excel File)
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Is there any standardised format of Audit Report of Residents Associations, in Level IV category?
Is it mandatory to prepare Financial statement of Non corporate entities for FY 2022-23 and FY 2023-24 in the prescribed format?
No, it’s mandatory from 01/04/2024.