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, i.e. to deal with issues relating to applicability of Accounting Standards and to prescribe 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)’