Implications Arising Out of New Format of Financial Statements for Non-Corporate Entities

The Institute of Chartered Accountants of India (ICAI), through its Accounting Standards Board, issued the revised "Format of Financial Statements for Non-Corporate Entities" (Revised 2022), effective from financial year 2024-25 onwards. This move aims to align the reporting practices of Non-Corporate Entities (NCEs) — including sole proprietorships, partnerships, LLPs, trusts, and others to facilitate better presentation, greater and more transparent disclosures, and enhance comparability. This article analyses the implications of the revised format and outlines the challenges and opportunities together with the way forward, both for the NCEs as well as the regulators arising out of its implementation.

INTRODUCTION

India’s financial reporting landscape has significantly evolved in the past decade. While corporate entities governed by the Companies Act, 2013 (“the Act”) have long followed standardised formats for financial reporting in the form of Schedule III (erstwhile Schedule VI), NCEs were governed largely by inconsistent legacy practices or were following formats prescribed by the tax authorities or other regulators like the Charity Commissioner. Considering the large number of such entities and their contribution to the GDP and tax base, a standardised financial reporting framework is desirable.

The Inst