Sections 133 and 134 of the Companies Act 2013: Accounting Standards, Financial Statements and Board Report

Section 133 - Central Government to prescribe accounting standards

The purpose of Section 133 is to provide a statutory mechanism for uniform financial reporting standards. The section should be read with Section 129, which requires financial statements to give a true and fair view and to comply with accounting standards notified under Section 133.

Accounting standards presently relevant under Section 133

• Companies (Indian Accounting Standards) Rules, 2015: prescribe Ind AS for the classes of companies to which the Ind AS roadmap applies.
• Companies (Accounting Standards) Rules, 2021: prescribe Accounting Standards for companies governed by that framework.
• Companies (Indian Accounting Standards) Amendment Rules, 2026: notified on 12 August 2026 and applicable to specified Ind AS amendments, including changes concerning financial instruments, disclosures, consolidation and cash-flow reporting. Several amendments apply for annual reporting periods beginning on or after 1 April 2026.
• Companies (Accounting Standards) Amendment Rules, 2026: further amended the Accounting Standards framework for companies governed by the 2021 Rules.

The earlier transitional proviso in Section 133 referred to the period before constitution of the National Financial Reporting Authority. NFRA has since been constituted; accordingly, current compliance should be understood with reference to the present NFRA-based statutory framework and the accounting-standard rules in force.

Section 134 - Financial statement and Board's report

Section 134 lays down the process for approval, signing and reporting of a company's financial statements and specifies the principal contents and authentication requirements of the Board's report.

Approval and signing of financial statements - Section 134(1)

The financial statement, including the consolidated financial statement where applicable, must first be approved by the Board of Directors. It is then signed on behalf of the Board in the manner prescribed by Section 134(1), including by the chairperson where authorised or by the required directors and specified key managerial personnel, wherever appointed. In the case of a One Person Company, the financial statement may be signed by one director for submission to the auditor.

Auditor's report - Section 134(2)

The auditor's report must be attached to every financial statement.

Main contents of the Board's report under Section 134(3)

The Board's report attached to the financial statements laid before the company in general meeting must contain the matters required by Section 134(3) and the Companies (Accounts) Rules, 2014, as applicable to the company. Important statutory items include:

• the web address, if any, where the annual return referred to in Section 92(3) has been placed;
• the number of meetings of the Board;
• the Directors' Responsibility Statement;
• details of frauds reported by auditors under Section 143(12), other than frauds reportable to the Central Government;
• the prescribed declaration and policy disclosures relating to independent directors and directors' appointment and remuneration, where applicable;
• Board explanations or comments on qualifications, reservations, adverse remarks or disclaimers in the auditor's report and secretarial audit report;
• particulars of loans, guarantees and investments under Section 186;
• particulars of contracts or arrangements with related parties referred to in Section 188(1), in the prescribed form;
• the state of the company's affairs, proposed transfers to reserves and recommended dividend, if any;
• material changes and commitments affecting the financial position between the end of the financial year and the date of the report;
• prescribed information on conservation of energy, technology absorption and foreign exchange earnings and outgo;
• risk-management disclosures;
• corporate social responsibility disclosures, where applicable;
• Board, committee and individual-director evaluation disclosures for the classes of companies to which the requirement applies; and
• other matters prescribed under the Companies (Accounts) Rules, 2014.

Where a disclosure required by Section 134(3) has already been included in the financial statements, the Board's report may refer to that disclosure instead of repeating it, subject to the statutory proviso. Similarly, where specified policies are available on the company's website, the Board's report may state their salient features and provide the relevant web address as permitted by the Act.

Abridged Board's report for OPC and small company - Section 134(3A)

Section 134(3A) permits the Central Government to prescribe an abridged Board's report for a One Person Company or small company. Rule 8A of the Companies (Accounts) Rules, 2014 prescribes the matters to be included in that abridged report.

Directors' Responsibility Statement - Section 134(5)

The Directors' Responsibility Statement is a statutory declaration by the Board concerning the preparation and integrity of the company's accounts and compliance systems. It must state, among other things, that:

• applicable accounting standards were followed in preparing the annual accounts, with proper explanation of material departures;
• appropriate accounting policies were selected and applied consistently and reasonable and prudent judgments and estimates were made so as to give a true and fair view;
• proper and sufficient care was taken for maintenance of adequate accounting records, safeguarding assets and preventing and detecting fraud and other irregularities;
• annual accounts were prepared on a going-concern basis;
• in the case of a listed company, internal financial controls were laid down and were adequate and operating effectively; and
• proper systems were devised to ensure compliance with applicable laws and those systems were adequate and operating effectively.

Signing and circulation requirements

Signing of Board's report - Section 134(6)

The Board's report and its annexures must be signed by the chairperson if authorised by the Board. If the chairperson is not so authorised, it must be signed by at least two directors, one of whom must be a managing director where there is one, or by the director where the company has only one director.

Documents to accompany financial statements - Section 134(7)

A signed copy of every financial statement, including the consolidated financial statement where applicable, must be issued, circulated or published together with the notes forming part of the financial statement, the auditor's report and the Board's report referred to in Section 134(3).

Penalty for non-compliance - Section 134(8)

If a company defaults in complying with Section 134, the company is liable to a penalty of Rs. 3,00,000, and every officer of the company who is in default is liable to a penalty of Rs. 50,000. The present penalty provision reflects the substitution made by the Companies (Amendment) Act, 2020 with effect from 21 December 2020.

Important rules and recent compliance updates