ICAI Non-Corporate Entity Financial Statements Format

The ICAI Non-Corporate Entity (NCE) financial statements format is the format recommended by the ICAI for entities that are neither companies nor LLPs — sole proprietorships, partnership firms, AOPs, HUFs, trusts and societies. It presents a Balance Sheet and Statement of Profit and Loss on the same current / non-current basis as Schedule III, but the funding side uses Owners'/Partners' funds. It applies from FY 2024-25.

Non-Corporate Entity Balance Sheet format

I. Owners'/Partners' funds and liabilities

1. Owners'/Partners' funds— (a) Owners'/Partners' Capital Account: (i) Capital Account, (ii) Current Account (for firms); (b) Reserves and surplus.
2. Non-current liabilities — (a) Long-term borrowings; (b) Deferred tax liabilities (net); (c) Other long-term liabilities; (d) Long-term provisions.
3. Current liabilities — (a) Short-term borrowings; (b) Trade payables; (c) Other current liabilities; (d) Short-term provisions.

II. Assets

1. Non-current assets — (a) Property, Plant and Equipment and Intangible assets; (b) Non-current investments; (c) Deferred tax assets (net); (d) Long-term loans and advances; (e) Other non-current assets.
2. Current assets — (a) Current investments; (b) Inventories; (c) Trade receivables; (d) Cash and bank balances; (e) Short-term loans and advances; (f) Other current assets.

Statement of Profit and Loss

The Statement of Profit and Loss follows the familiar order: Revenue from operations, Other income, Total income, then Expenses (cost of materials consumed, purchases of stock-in-trade, changes in inventories, employee benefits expense, depreciation and amortisation, finance cost, other expenses), to profit before partners' remuneration and tax. Like the LLP format, the Non-Corporate format then shows Partners' remuneration as a separate line before arriving at profit before tax, followed by tax expense and the profit or (loss) for the period. Interest and remuneration to partners are appropriations governed by the partnership deed.

MSME vs Large: the two-tier classification

For applying Accounting Standards, the ICAI criteria effective for accounting periods commencing on or after 1 April 2024 classify non-company entities into just two categories — Micro, Small and Medium Sized Entities (MSMEs) and Large entities.

A non-company entity is an MSME if it meets all of the following:

• its equity or debt securities are not listed, and are not in the process of listing, on any stock exchange in India or abroad;
• it is not a bank, financial institution or insurance company;
• its turnover (excluding other income) does not exceed Rs 250 crore in the immediately preceding accounting year;
• it does not have borrowings exceeding Rs 50 crore at any time during the immediately preceding accounting year; and
• it is not a holding or subsidiary of an entity that is not an MSME.

A Large entityis any non-company entity that is not an MSME. Large entities must comply in full with all Accounting Standards, while MSMEs are given specified exemptions and relaxations. In the Accounting Standards themselves, the term “Level I” now reads as a Large entity and “Levels II to IV” read as an MSME.

Related formats

Companies use the Schedule III balance sheet format; LLPs use the ICAI LLP format.