Chapter 11: Accounts and Annual Returns Flashcards by Saadat Ahmed

Books and papers/ Book or Paper definition (8)

Books of accounts
Cost accounting records
deeds
vouchers
writings
documents
minutes
registers
maintained on paper or electronically

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Books of accounts definition (5)

records maintained in respect of:
- all sums of money received and expended by the co.
- matters relating to ^such receipts and payments
- all sales/purchases of goods/services by co.
- all assets/liabilities of co.
- items of cost relating to production, processing, manufacturing or mining

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Nature timing extent for maintaining books of accounts (5)

A company must maintain proper books of accounts (representing its state of affairs and fair record of all transactions)
For secondary sector companies = maintain cost accounts as well
in the form of hardcopy books or any computerized system
for at least 10 years must be preserved
Liquidator of company is also required to maintain the above books during its winding up.

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Where should the books be kept? (4)

Books must be kept at REGISTERED OFFICE of the company
Directors may opt to keep these books AT SOME OTHER PLACE (pass resolution in directors meeting and intimate registrar W7D)

If company has a BRANCH OFFICE:
- Proper BOOKS OF THAT BRANCH maintained at branch
- Proper summarized returns should REACH registered office or other specified place
periodically

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Inspection of books of accounts by Directors (3)

Directors are entitled to INSPECT books during BUSINESS HOURS.

If some financial information is maintained outside country:
- COPIES shall be maintained and shall be made AVAILABLE FOR INSPECTION by any director.
- Employees shall give FULL ASSISTANCE TO DIRECTOR for inspection

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Inspection of books of accounts by Members (2)

Members do not have absolute right to inspect books of accounts
Companies Act 2017, or directors or general meeting may authorize member(s) to inspect books of accounts.

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Time Limit to present the F/S (4)

Directors are required to present F/S in a general meeting,
1. W120D of close of financial year (EVERY CALENDAR YEAR)

First accounts = W16M of date of incorportation
Company can apply for 30 days extension in presenting accounts:
- Listed = SECP
- Others = Registrar
Company should not prepare accounts for more than 12 months
(On application of company the registrar may extend this period)

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Audit of financial statements (2)

Such accounts shall be audited and the auditor’s report shall accompany the accounts
not applicable to a private company having paid up capital not exceeding Rupees 1 million or such higher amount as may be notified by SECP

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Authentication of Financial Statements (6)

Directors authenticate financial statements in meeting by passing RESOLUTION.
Chief executive and at least 1 director SIGN F/S (CFO too for listed)
If CEO out of PAK, then at least 2 directors SIGN F/S
Pvt co. w/SC<1m = F/S accompanied by AFFIDAVIT from CEO/Director(any of two)
SMC = F/SSINGED BY 1 DIRECTOR
Members only receive accounts and can ask any QUESTIONS in AGM. (not authenticate)

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Sending copies of financial statements (5)

Copy of F/S with Auditor’s, Directors (& Chairman’s if listed) report
1. sent to MEMBERS at least 21 days before meeting
2. LISTED co shall also dispatch at least 3 COPIES of the above to SECP, Registrar and PSX.
3. LISTED co shall also file copies of above ELECTRONICALLY to SECP
4. Co. shall RETAIN a copy of above at registered office (every member allowed to inspect these)
5. Reports shall be made available on co.’s WEBSITE for a specified time period

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Filing of Accounts (after AGM) - approval of members in agm (3) AND EXCEPTION

Co shall send 1 copy of F/S signed as per req of this act > to registrar:
- W30D of AGM (LISTED)
- W15D of AGM (other)
If general meeting DOES NOT ADOPT these accounts and reports, mention this FACT with such copies
PVT co. w/SC<10M not required for the above

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Deadline for Quarterly Accounts of Listed Companies (3)

Within
- 30 days of close of 1st and 3rd Quarter
- 60 days of close of 2nd Quarter

SECP > EXTEND > on application of Co. > for maximum 30 days (if previously allowed extension for F/S in AGM)

Requirements of approval & authentication of final accounts are also applicable to the quarterly accounts

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Additional requirements for second quarter accounts (3)

cumulative figures for the half year i.e. six months must be presented
subjected to a limited scope review by the statutory auditors of the company
limited scope review = MANNER + according to such TERMS AND CONDITIONS
^ as may be determined by ICAP + approved by the Commission.

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Quarterly financial statements posting/publication (3)

posted on COMPANY’S WEBSITE for information of its members (for specified time)
TRANSMITTED ELECTRONICALLY to SECP, securities exchange and registrar within 30/60 days
Dispatched in PHYSICAL FORM, if so requested by any MEMBER, without any fee

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Requirements of Consolidated financial statements for a holding company (3)

Attach Consolidated F/S of the group to the F/S of holding at Y.END of holding
Such Consolidated F/S shall comply with DISCLOSURE REQUIREMENTS of 4th schedule and ifrs.
Where F/S year end of subsidiary and holding have a gap of 90+ days, an INTERIM CLOSING of subsidiary shall be made at Y.End of holding

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Exception of Consolidated financial statements

Private company and its subsidiary, where none of the holding and subsidiary company has the paid up capital exceeding Rs. 1 million.

Audit of Consolidated F/S (2)

Every auditor of a holding company shall also report on Consolidated F/S:
- in specified form
- and exercise all rights and duties under law

Disclosure of qualification in the consolidated financial statements (2)

Disclose
- Any qualifications contained in auditors’ reports of subsidiary/subsidiaries
- Any note or saving contained in such accounts to call attention to a significant matter

Authentication of consolidated F/S (2)

Signed by same ppl who sign the individual F/S of holding co.
All provisions of accounts & filling shall apply to these consolidated accounts as well

Consequences of contravention of not presenting consolidated f/s

Penalty = LEVEL 2

Relaxation of Consolidated F/S by the commission

SECP may (on application of a holding company) direct that in relation to any subsidiary, provisions of this section shall not apply to such extent as may be specified in the direction.

Financial year of holding company and subsidiary (Sec 229) (ensuring coinciding) (3)

BOD of a holding Co shall ensure that financial year of each of its subsidiaries coincides with its own financial year (except when reasons against it)

SECP may (on application of holding/subsidiary):
- Extend the financial year of any such company
- Grant such other relaxations as may be necessary while granting extension

Exception of Director’s report

Private Company having paid up capital not exceeding Rs. 3 million, also not a subsidiary of a public company

Statement of compliance (4)

SECP may by general or special order
direct such class or classes of companies
to prepare a statement of compliance
with such contents as may be specified.

Board shall prepare a directors’ report for each financial year.

Minimum contents of directors’ report (3)

* **state of the company’s affairs** and a **fair review** of its business * amount (if any), that the directors **recommend as dividend** * amount (if any), they propose to carry to the **Reserve Fund, General Reserve or Reserve Account**

Additional contents of directors’ report (13) | for Public co, and Private co that are subsidiary of public

1. **names** of the persons who were **directors** of the company **at any time** during year 2. **principal activites** and **development + performance** of the co.'s **business** during the year 3. any **changes in nature of business** of co./subsidiary/co. of interest, during the year 4. description of the **principal risks and uncertainties** facing the company 5. information & **explanation** relating to any contents of **modification in the auditor’s report** 6. information about the **pattern of holding of the shares** in the form specified 7. **name and country** of origin of the **holding** company, if its foreign company 8. **earning per share** 9. **reasons for loss** if incurred during the year and **future prospects of profit** 10. information about **defaults** in payment of any debts and **reasons** 11. Comments about adequacy of **internal financial controls** 12. Any **material changes and commitments** affecting the financial position of the company from **FY.end till report date** 13. Disclosure of **remuneration package** of each of the **directors and chief executive** any other information as may be specified.

Authentication of directors’ report

**Directors’ report** and statement of compliance must be: - **approved by the board** and - signed by the **chief executive and a director** of the company

Business review section of directors’ report | in the case of a listed company

1. main **trends and factors** likely to affect the **future development, performance and position** of the company’s business 2. **environmental impact** of compay's business 3. Activites of **CSR** 4. **Directors’ responsibility** regarding adequacy of **Internal Financial Controls** 5. legitimate **reasons for not declaring dividend** despite earning profits, AND **future prospects of dividend**

Requirements as to annual return (2) | 8 elements in second point

* **Snapshot of general information** about a company as on a specific date * giving details of CEO, directors, CFO, secretary, legal adviser and auditors, registered office address, members and share capital (8)

Date of annual return (2)

- on the **date of the AGM** - if no meeting held/concluded then, **last day of the calendar year**

Requirement and specified form of annual report (2)

Contain the particulars as given in following specified forms: - **Form A** – Company having **share capital** - **Form B** – Company **not** having share capital

Deadline of filing of annual return(2)

The annual return shall be filed with the **registrar**: - **W30D** from **annual return date** - **listed company = extension of max 15 days** for special reasons

No change of particulars of annual return since the last return (3)

If, **SMC** or **Pvt** co w/SC not more than **Rs. 3m** = **no need** to file a new annual return **OTHER Companies** = **inform the registrar** in a specified manner **(Form C)** about no change

Any contravention or default in complying with requirements of annual return (2)

An offence liable: - **Listed** = penalty of **level 2** on the standard scale - **Others** = penalty of **level 1** on the standard scale