Choose the format before mapping
Companies subject to section 129 use the applicable reporting framework and format. Schedule III Division I is for companies following notified Accounting Standards (AS), Division II is generally for Ind AS companies and Division III is for applicable Ind AS NBFCs. Check industry-specific statutory formats and exceptions. Under ICAI’s 31 March 2026 announcement, separate Guidance Notes for non-corporate entities and LLPs apply to entities in scope with turnover exceeding ₹5 crore for periods starting on or after 1 April 2025, and to all entities in scope for periods starting on or after 1 April 2026. The announcement does not add a ₹1 crore borrowing trigger. Determine the relevant accounting level, disclosures and AS 3 applicability separately.
Classify and reconcile each balance
The operating cycle runs from acquiring assets for processing through conversion into cash or cash equivalents. For Division I, if it cannot be clearly identified, use twelve months. A current asset normally meets at least one of the operating cycle, trading, twelve-month realisation or unrestricted cash criteria. A current liability meets at least one of the operating cycle, trading, twelve-month maturity or lack of an unconditional right to defer for at least twelve months criteria. Apply the wording and measurement requirements of the applicable division and standards, and review the rights and terms at the reporting date. Division I separately discloses current maturities of long-term borrowings under short-term borrowings.
| Unusual ledger balance | What to verify | Presentation |
|---|---|---|
| Debit in payables | Supplier advance, refund due or posting error; operating or capital purpose | Separate genuine advances from unrelated trade payables where required. Classify capital advances separately under the applicable framework. |
| Credit in receivables | Customer advance, refund payable or posting error | Recognise the relevant obligation and assess when it will be settled. An Ind AS 115 advance can be a contract liability. Apply the relevant offsetting requirements. |
| Credit in bank ledger | Actual overdraft, unpresented cheques or another reconciling item | Assess bank and creditor balances and evidence of settlement. Do not recognise a bank borrowing merely because the ledger is negative. |
| Debit in accumulated profit and loss | Reconcile opening balances, current result, transfers and distributions | In Division I, show the deficit as a negative amount under surplus within reserves and surplus. A deficit in reserves does not by itself make total equity negative. |
Rounding and ratios
The 2021 amendment made rounding mandatory using total income. Below ₹100 crore, use hundreds, thousands, lakhs or millions, or decimals thereof; at ₹100 crore or more, use lakhs, millions or crores, or decimals thereof. Use one unit consistently. Reconcile the displayed amounts to the unrounded ledger. Use permitted precision or a transparent presentation reconciliation rather than posting a fabricated income or expense.
Division I lists the ratios below. The examples of components are practical starting points, not formulas set by the statute. Use the applicable guidance, document the components and apply a consistent basis across periods. Explain changes of more than 25% from the preceding year and consider comparability and non-applicability, including zero or negative denominators. Lending benchmarks are agreement-specific.
| Ratio | Illustrative components to document |
|---|---|
| Current ratio | Current assets ÷ current liabilities |
| Debt-equity | Defined total debt ÷ shareholders’ equity |
| Debt service coverage | Earnings available for debt service ÷ debt service, including principal and interest on the stated basis |
| Return on equity | Profit available to equity holders ÷ average equity on a consistent basis |
| Inventory turnover | Cost of goods sold ÷ average inventory |
| Trade receivables turnover | Net credit sales ÷ average trade receivables |
| Trade payables turnover | Net credit purchases ÷ average trade payables |
| Net capital turnover | Net sales ÷ defined working capital |
| Net profit ratio | Net profit ÷ net sales on the stated basis |
| Return on capital employed | Earnings before interest and tax ÷ defined capital employed |
| Return on investment | Investment returns using a disclosed method appropriate to the holdings, timing and cash flows |
Four worked cases
1. Map an extract from an ₹85 crore manufacturer
Apex Industrial Valves has 45 ledgers in a larger 31 March 2024 trial balance. The table is an extract, so use it to check mapping and arithmetic rather than to establish a balanced statement.
| Source line | Division I mapping and check |
|---|---|
| 1,00,000 equity shares at ₹100; reserves ₹24.50 crore | Share capital ₹1 crore; present the ₹24.50 crore balance under the appropriate reserves and surplus components. |
| Five-year term loan of ₹12 crore | Assuming ₹2.40 crore is due within twelve months and the remaining amount qualifies as non-current, disclose ₹2.40 crore current maturities and ₹9.60 crore long-term borrowing. |
| Gross payables ₹14.20 crore; supplier advance ₹1.80 crore | Payables split into ₹3.20 crore micro and small enterprise dues and ₹11 crore others. Present the supplier advance separately, assuming it is current and no offset is permitted. |
| Boiler customer advance ₹0.95 crore | Separate obligation, with current presentation if the classification criteria are met. |
| Bank ledger credit ₹0.45 crore | Trace unpresented cheques and identify any actual overdraft before mapping. Leave this reconciling item out of the illustrative subtotals below. |
| Property, plant and equipment ₹42 crore; accumulated depreciation ₹12.50 crore | Net carrying amount ₹29.50 crore; reconcile gross and net movements in the notes. |
| Capital work in progress ₹4.80 crore | ₹3.80 crore under one year and ₹1 crore aged one to two years on the assumed ledger evidence. Review completion reporting separately. |
| Inventory ₹16.20 crore; gross receivables ₹18.90 crore | Test inventory against cost and net realisable value. Reconcile the ₹18.40 crore considered good and ₹0.50 crore doubtful receivable amounts to ageing and assess any allowance separately. |
The listed asset amounts excluding the unresolved bank item total ₹71.20 crore before any receivable allowance, and the listed equity and liability lines total ₹52.65 crore. Neither is the total of the full trial balance. Reconcile the missing ledgers and provision before issuing statements.
2. Partnership reporting
Mahalakshmi Engineering’s turnover was ₹18.40 crore in FY 2024–25 and it reports ₹4.20 crore of borrowings. For FY 2025–26 confirm the applicable Phase I turnover criterion. Fixed capital of ₹50 lakh, ₹30 lakh and ₹20 lakh totals ₹1 crore. With current accounts of ₹1.45 crore, illustrative partner funds total ₹2.45 crore. Reconcile remuneration, interest, drawings and profit shares to the deed and ledger; tax deductibility is a separate matter. Do not infer the applicable accounting level or cash flow requirement from these two figures alone. The company promoter and ratio requirements do not become partnership disclosures because the statements are vertical.
3. Round without changing the accounts
Horizon’s total income of ₹42,84,72,189 is ₹4,28,472.189 thousand, or ₹4,28,472 thousand at whole-thousand precision. Assume both sides agree in exact rupees, but individually rounded asset and equity-plus-liability lines sum to ₹5,41,289 thousand and ₹5,41,290 thousand. The ₹1 thousand difference is a display effect. Confirm the exact totals and use permitted decimal precision or a transparent presentation reconciliation. Do not charge ₹1,000 to other expenses.
4. Reuse mappings safely across engagements
For a firm handling 65 audits a year, start with the approved mapping by industry and reporting framework. Test imports by comparing debit and credit totals and account counts, flag unmapped and unusual balances, and require sign-off before applying any suggested grouping. On each reimport, identify changed balances, rerun all tie-outs, and compare each export with the approved statements. Check actual software features before relying on them.
Questions at final review
Do ageing schedules reconcile to the general ledger? Use the applicable division’s bands and dispute or credit quality categories. Test promoter holdings, title deed and Benami disclosures under their specific triggers. Section 2(40) allows eligible small companies, OPCs and dormant companies to omit a cash flow statement. For small-company status, confirm the applicable date, both monetary limits and all statutory exclusions. From 1 December 2025 the limits are ₹10 crore paid-up capital and ₹100 crore preceding-year turnover, replacing ₹4 crore and ₹40 crore immediately before the change.
Under section 129(7), a company’s contravention of section 129 can expose the managing director, whole-time director in charge of finance, CFO or another person charged by the board with compliance, and in their absence all directors, to imprisonment up to one year, a fine of ₹50,000 to ₹5 lakh, or both. The statutory language and allocation of responsibilities matter; it is not an automatic fine for every rounding difference.
Sources
- India Code: Companies Act, 2013, sections 2(40), 2(85), 129 and 133
- Schedule III: classification, presentation and notes; read with the amendments
- MCA: 2021 Schedule III amendment
- Gazette: G.S.R. 880(E), revised small-company thresholds
- ICAI: Division I Schedule III Guidance Note, revised January 2022
- ICAI: separate non-corporate and LLP Guidance Notes and application dates
- ICAI: AS 3 scope and applicability
- Companies (Accounting Standards) Rules, 2021
- MCA: Ind AS 115, customer consideration and contract balances