Financial reporting is the process by which an entity communicates its financial position, performance and cash flows to owners, lenders, regulators and other users through a set of financial statements. For an Indian company those statements are governed by the Companies Act 2013, Schedule III and the applicable accounting standards, and they are examined by the auditor before they are adopted.
Facts checked: 10 October 2026. Section 129, section 2(40), the components and the AGM and AOC-4 timelines were checked against secondary summaries (legal and compliance blogs and ICAI training material on Ind AS 1). I could not open the Act text on mca.gov.in or ICAI standards directly. I have given no Ind AS applicability thresholds because I could not verify them from a source; read the Companies (Indian Accounting Standards) Rules, 2015 for the current limits.
Who prepares and who reports
The board of a company is responsible for preparing financial statements; the auditor reports on them. Under section 129 of the Companies Act 2013, they must give a true and fair view of the company's state of affairs, comply with the accounting standards notified under section 133, and follow the form set out in Schedule III. Section 2(40) defines financial statements to include the balance sheet, the statement of profit and loss, the cash flow statement, a statement of changes in equity where applicable, and explanatory notes.
Listed entities report on top of this under SEBI's disclosure rules (periodic results and annual reports). That is a separate layer and not covered here.
What the statements show
| Statement | What it shows |
|---|---|
| Balance sheet | Assets, liabilities and equity at a date (Schedule III Division I or II) |
| Statement of profit and loss | Revenue, expenses and profit or loss for the period |
| Cash flow statement | Cash generated and used in operating, investing and financing activities |
| Statement of changes in equity | Movement in share capital, reserves and other equity (applies under Ind AS) |
| Notes | Accounting policies, breakdowns, contingent liabilities, related-party disclosures |
Certain classes (one person, small and dormant companies) are not required to prepare a cash flow statement under section 2(40).
The framework: Ind AS, AS and the bodies
Which standards apply depends on the company. Companies covered by the Companies (Indian Accounting Standards) Rules, 2015 follow Ind AS, which is converged with IFRS. Others follow the Accounting Standards (AS) under the Companies (Accounting Standards) Rules. Schedule III has Division I for non-Ind AS companies, Division II for Ind AS companies and Division III for NBFCs that follow Ind AS. See Schedule III: balance sheet format and divisions.
At a high level, ICAI's Accounting Standards Board develops standards, and the Central Government notifies them under section 133 on the recommendation of NFRA. NFRA also oversees audit quality for specified classes.
Timelines
- An AGM must be held within six months of the financial year end (section 96; the first AGM has a longer window).
- Financial statements are filed with the Registrar in Form AOC-4 within 30 days of the AGM (section 137).
Both come from secondary sources and have extension and late-fee rules; confirm against current MCA circulars. For the audit side see statutory audit meaning, applicability and due date.
Financial reporting and audit
Management owns the statements. The auditor forms an opinion on whether they give a true and fair view in accordance with the applicable framework, and communicates it in the report under SA 700 (Forming an Opinion and Reporting on Financial Statements). Audit adds credibility; it does not replace management's responsibility. For the sequence see the audit process from planning to report.
Illustration (not a real company)
A trading company's trial balance shows sales of ₹8,00,000, purchases of ₹5,00,000 and expenses of ₹1,50,000, so the profit and loss statement shows profit before tax of ₹1,50,000 (ignoring stock changes and tax). Cash received from customers and paid to suppliers feeds the cash flow statement; the profit increases reserves in the statement of changes in equity and on the balance sheet. All five statements come from one ledger. Start with a trial balance format and a profit and loss statement format, then check ratios with the Schedule III ratio calculator.
Frequently asked questions
What is the difference between financial accounting and financial reporting?
Accounting records and classifies transactions. Reporting presents the results as statements with disclosures for outsiders.
Are management accounts financial reporting?
They are internal. "Financial reporting" usually means the general-purpose external statements under the Companies Act.
Which statement is most important?
They work together. The balance sheet shows position, profit and loss shows performance, and cash flow shows liquidity.
Does every company need a cash flow statement?
Most do; one person, small and dormant companies are excluded under section 2(40).
Where do I find audit terms?
The audit glossary defines the common ones, and types of audit in India compares statutory, tax and internal audit.
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error