Financial Statements of Non-Corporate Entities: Scope, Timing and Preparation Under the ICAI Guidance Note

This article covers the ICAI Guidance Note on Financial Statements of Non-Corporate Entities, its phased applicability announced on 31 March 2026, how it differs from Schedule III to the Companies Act, 2013, and how an accountant should prepare and review the statements.

Proprietorships and partnership firms have long prepared accounts in no prescribed format, and the Guidance Note aims at consistent presentation. Because applicability is tied to the start of the accounting period and to turnover for the first phase, practitioners need to settle the position entity by entity before closing FY 2025-26 accounts.

Scope and Relationship to Schedule III

The Guidance Note is distinct from Schedule III to the Companies Act, 2013. Schedule III sets presentation rules for companies covered by that Act and does not apply to proprietorships or partnership firms. The expression "Schedule III style" is only an informal description of a structured Balance Sheet, Statement of Profit and Loss and notes. It does not make Schedule III binding on a non-corporate entity.

Limited liability partnerships are not assessed under this Guidance Note. ICAI has issued a separate Guidance Note for LLPs, and an LLP should be tested against that document.

Timing

ICAI announced phased applicability on 31 March 2026: