Old Notes Disclosure by Companies

The Lok Sabha has recently passed  the Specified Bank Notes (Cessation of Liabilities) Bill, 2017. The  Bill related to the holding, transfer and receiving of old Rs.500 and Rs.1000 denomination currency makes it unlawful to hold, transfer or receive the currency notes that were demonetized in November 2016. In this article, we look at the disclosure required by all Companies in the Financial Statements pertaining to handling of the depreciated Rs.500 and Rs.1000 bank notes. 

Specified Bank Notes (Cessation of Liabilities) Bill, 2017

As per the  Specified Bank Notes (Cessation of Liabilities) Bill, 2017, any person who is holding more than 10 banned notes of the Rs.500 or Rs.1000 currency is punishable with a fine of Rs. 10, 000 or five times the cash held, either of which is higher. Further, the Bill also mentions that an Indian citizen, who was outside India between November 9 and December 30 2016, will be entitled to tender the demonetized notes within the specified period.

Mandatory Disclosure in Balance Sheet

As according the Specified Bank Notes (Cessation of Liabilities) Bill, 2017, the Ministry of Company Affairs released G.S.R. 308(E) on 30th March, 2017.

As per G.S.R. 308(e), relevant to the Companies Act, 2013, the following is applicable for all Companies:

• Every company will reveal the details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as mentioned in the notification. The financial statement of all the Companies for financial year ended 31.03.2017 must compulsory provide for the information along with closing cash in hand as on 08.11.2016, (+) Permitted receipts, (-) Permitted payments, (-) Amount deposited in Banks, Closing cash in hand as on 30.12.2016.
• The table for disclosure of old notes can be framed as follows in the financial statement:

Disclosure in Auditor Report

All companies are mandatorily required to prepare and file audited financial statement with Auditors Report each year. As per MCA Notification No. G.S.R. 307(E) dated 30th March, 2017 there is an amendment in Companies (Audit and Auditors) Rules, 2014. As per the amended rules, Auditors are required to certify:

• Whether the company had provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and if so, whether these are in accordance with the books of accounts maintained by the company.