MCA notifies Accounting Standards for Small and Medium Sized Companies
The Ministry of Corporate Affairs (MCA) notified the accounting standards for small and medium companies (SMC) that revise the turnover and borrowing limits and help in making disclosure requirements less onerous. The Government notified on 23 June , 2021, the Companies (Accounting Standards) Rules, 2021. The notification has included the revised definition of SMCs. Under the revised SMC definition, the turnover limit has been increased from Rs 50 crore to not exceeding Rs 250 crore and with borrowings not exceeding Rs 50 crore. This is in addition to the requirements that such entities should be unlisted companies, which are not banks, financial institutions or insurance companies.
Every company, other than companies on which Indian Accounting Standards as notified under Companies (Indian Accounting Standards) Rules, 2015 are applicable, and its auditor(s) shall comply with the Accounting Standards. The Accounting Standards shall be applied in the preparation of Financial Statements.
An existing company, which was previously not a SMC and subsequently becomes a SMC, shall not be qualified for exemption or relaxation in respect of accounting standards available to a SMC until the company remains a SMC for 2 consecutive accounting periods.
The Accounting Standards shall come into effect in respect of accounting periods commencing on or after the 1st day of April, 2021.
MCA Notification dated 23rd June, 2021 can be accessed at https://mca.gov.in/bin/dms/getdocument?mds=RKk43Bmg99ksfV0bUGr6XA%253D%253D&type=open