The Institute of Chartered Accountants of India (ICAI) has issued the guidance note for the Chartered Accountants (CAs) in respect of financial statements of non-corporate entities with effect from 1 April 2024 and not April 2025 as reported by various news portals.
With the objective to enhance the quality and comprehensiveness of financial statements of non-corporate entities and to prescribe authoritative guidance for the members of ICAI for the effective implementation of Accounting Standards for preparation of financial statements of such entities, the ASB has upgraded this Technical Guide into Guidance Note on Financial Statements of Non-Corporate Entities.
Similar to the Technical Guide, the Guidance Note also includes Illustrative formats of Financial Statements for the ease of the stakeholders in the preparation of financial statements. The Guidance Note can be applied by all non-corporate entities except where relevant law/regulation/authority has prescribed any other specific formats for the concerned non-corporate entities and the Limited Liability Partnerships which are corporate form of entities.
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Non-corporate entities are businesses or organizations that are not incorporated as companies under the Companies Act or as Limited Liability Partnerships (LLPs) under the LLP Act. These entities can operate under various legal structures, and the most common ones include:
- Sole Proprietorship – A business owned and operated by one person.
- Hindu Undivided Family (HUF) – A family-based business structure.
- Partnership Firms –
- Registered Partnership Firms
- Unregistered Partnership Firms
- Association of Persons (AOP) – Includes various groups like:
- Partnerships not registered
- Body of Individuals (BOI)
- Resident Welfare Associations (RWA)
- Society – A group registered under applicable laws.
- Trust – A private or public trust, either registered or unregistered.
- Statutory Corporations, Autonomous Bodies, and Authorities – Organizations established by a government or law.
- Other Organizations – Any entity involved in business or professional activities.
In June 2022, the Accounting Standards Board of ICAI issued guidelines on the financial statements of non-corporate entities, providing rules for accounting and the formats of financial statements.
The Accounting Standards Board has now prescribed the formats for the presentation of the financial statements of Non-corporate Entities in the form of Guidance Note, which were earlier issued as a part of Technical Guide. The objective is to standardise the formats of financial statements for these entities and to enhance the quality and comprehensiveness of the financial reporting by these entities.
The Guidance Note is relevant for the purpose of preparation of the financial statements of the above mentioned Non-Corporate Entities unless any formats/principles are specifically prescribed by the relevant Statute or Regulator or any Authority, e.g., formats have been prescribed for Trusts under Maharashtra Public Trust Rules, Autonomous Bodies under Government of India are required to compile their accounts in a uniform format of accounts as prescribed by Government of India, Ministry of Finance, Guidance has been specifically given by ICAI (e.g., Educational Institutions, Political Parties, NPOs, etc.).
