Chapter 11 Accounts and Annual Returns Flashcards
What does “Books and Paper” include?
Books of accounts, cost accounting records, deeds, vouchers, writings, documents, minutes, and registers (whether paper or electronic).
What does “Books of Accounts” include?
Records of:
1. All sums of money received and expended.
2. All sales and purchases of goods and services.
3. All assets and liabilities.
4. Items of cost for production, processing, manufacturing, or mining.
What is the “Financial Year” of a company?
The period for which a company prepares financial statements, whether it is a full year or not.
Where must a company keep its books of accounts?
- At the registered office.
- At another place approved by the Board (must notify the Registrar within 7 days).
How long must a company retain books of accounts?
10 years for public companies.
5 years for private companies.
What additional records must be kept by a manufacturing company?
Cost records related to materials, labor, and overheads.
What are the requirements for a branch office?
- A company must maintain proper books of accounts at the branch office.
- Summarized returns must be sent periodically to the registered office.
Who is allowed to inspect books of accounts?
- Directors can inspect at any time.
- Members have no automatic right unless authorized by the Act, directors, or a general meeting.
What are the penalties for not maintaining proper books of accounts?
Fine and liability for responsible officers.
Who prepares financial statements?
The Board of Directors.
What must financial statements present?
A true and fair view of the company’s financial position.
What are the components of financial statements?
- Statement of Financial Position (Balance Sheet).
- Statement of Profit or Loss and Other Comprehensive Income.
- Statement of Changes in Equity.
Statement of Cash Flows. - Notes to the Financial Statements.
- Comparative information of the previous period.
Who signs financial statements?
The CEO and at least one director.
For listed companies, the CFO must also sign.
What is the deadline for preparing financial statements?
Within 4 months after the close of the financial year.
When must financial statements be filed?
Listed Companies: Within 30 days after the AGM.
Other Companies: Within 15 days after Board approval.
Where should listed companies file financial statements?
- With SECP, Registrar, and Stock Exchange.
- Must also be uploaded on the company’s website.
Which companies are required to prepare a Directors’ Report?
- Public companies.
- Private companies that are subsidiaries of a public company.
- Private companies with paid-up capital exceeding Rs. 3 million.
What must the Directors’ Report include?
- State of affairs of the company.
- Dividend details (if any).
- Transfers to reserves (if any).
What additional details are required in the Directors’ Report for public companies?
- Names of directors.
- Principal activities and risks.
- Material changes affecting business.
- Major subsequent events.
- Explanation of modified audit opinion (if any).
- Pattern of shareholding.
- Holding company details.
- Earnings per share and reasons for loss (if applicable).
- Defaults in payment of debts (if any).
- Comments on internal control adequacy.
What additional details in director’s report are required for listed companies?
- Trends and factors likely to affect business.
- Environmental impact.
- Corporate social responsibility activities.
- Adequacy of internal financial controls.
Which companies must file an annual return?
All companies except SMCs and private companies with paid-up capital below Rs. 3 million.
What is the filing deadline for annual returns?
30 days from the date of the AGM.
What happens if an AGM is not held?
The annual return must be prepared as of December 31 and filed by January 29.
Which forms are used for filing annual returns?
- Form A – For companies with share capital.
- Form B – For companies without share capital.
- Form C – If no changes occurred since the last return (not required for SMCs or private companies with paid-up capital up to Rs. 3 million).
Who is responsible for approving and signing the annual return?
The CEO and at least one director.
Which companies are required to prepare quarterly financial statements?
Listed companies must prepare quarterly financial statements.
What is the deadline for preparing quarterly financial statements?
- First and third quarters: 30 days after the quarter ends.
- Second quarter (half-yearly): 60 days after the quarter ends.
Extendable for first Quarter for 30 days if extension was given for Annual Financial Statements by SECP.
Do half-yearly financial statements require an audit?
No, but they must be reviewed by external auditors.
Where must quarterly financial statements be submitted?
- To the SECP, Registrar, and Stock Exchange.
- They must also be published on the company’s website.
Which companies must prepare consolidated financial statements?
Holding companies must prepare and attach group accounts to their financial statements.
Are there any exemptions from preparing consolidated financial statements?
Private companies and their subsidiaries are exempt if neither has paid-up capital exceeding Rs. 1 million.
What happens if the financial year of a subsidiary is different from the holding company?
If the difference is more than 90 days, the subsidiary must prepare interim financial statements.
Who is responsible for auditing consolidated financial statements?
The auditor of the holding company.
