The purpose is to standardise the presentation of financial statements for non-corporate entities. This improves comparability, clarity, and reliability for decision-making by stakeholders. It prescribes minimum line items, notes, and disclosure requirements to ensure completeness.
Format is applicable to non-corporate entities such as, Sole Proprietorships, Hindu Undivided Families, Registered and Unregistered Partnership Firms, Association of Persons (AoP), Body of Individuals (BoI), Welfare Associations, Private Trusts, Statutory Corporations, Authorities, and Autonomous Bodies.
Companies, Co-operative Society and charitable Trusts are excluded as separate statutory formats have been prescribed by the respective law.
Adopting a uniform and standard format for financial statements is not just a regulatory formality—it has a strategic advantage. When financials are presented in a consistent, structured manner with complete disclosures, they carry greater credibility and weight before banks, making it easier to secure funding on better terms. Investors, too, place more trust in businesses whose financials follow a recognised format, as it signals transparency and professionalism. Beyond external perception, a standard format empowers businesses themselves—making it simpler to compute profitability and liquidity ratios, track trends over time, and benchmark performance against industry peers. It streamlines compliance assessments, reduces the risk of missing mandatory disclosures, and saves time during audits or due diligence. The cost of adopting a standard format is minimal compared to the benefits of improved trust, better decision-making, and enhanced access to capital.
Earlier, formats for such entities were not standardised, leading to inconsistencies and lack of comparability.
While the format prescribed by Guidance Note is recommended (not mandatory), its use is highly encouraged due to its advantages. Further, if the financial statements are being audited, auditors are required to report any deviations and non-compliance. Such a qualified report can affect the acceptance of financial statements by banks regulators and other authorities.
Yes. If a statute, regulator, or government authority prescribes specific formats (e.g., Co-operative Societies Act, Public Charitable organization, Companies), those prevail.
These formats are very easy to understand and generally won't have any significant cost and won't need any special software or any additional infrastructure. A small training session with your financial advisor will be sufficient for your existing team to adopt the format.
You can add, modify or substitute line items if they are relevant for understanding financial position or performance, or if industry-specific needs require them. Minimum disclosure requirements must still be complied with.
Comparative figures for the immediately preceding year must be presented in the same format, except for entities preparing financial statements for the first time after incorporation.
Yes, if a line item has zero balance in both current and previous year, and its omission does not affect the true and fair view.
Various Accounting Standards issued by the ICAI are applicable to non-corporate entities, taking into account the organization's size such as borrowing and turnover.
No, there is no statutory penal provision for non-compliance with the format.
Yes, however such a statement may not conform to the prescribed format and therefore may not be advantageous over the standard format. Moreover, the auditor may report such non-compliance.
ICAI has prepared an excel based version and has hosted it on the website. It can be downloaded from below link