ICAI FAQs for Guidance Note on Financial Statements of Non-Corporate Entities The Institute of Chartered Accountants of India (ICAI) has released a set of Frequently Asked Questions (FAQs) to furnish explanation towards the Guidance Note on Financial Statements of Non-Corporate Entities, which have been come into force for accounting periods commencing on or after April 1, 2024.
The Accounting Standards Board and the Auditing and Assurance Standards Board of ICAI have issued these FAQs, which serve as an addendum to the Guidance Note, whose major objective was to get the uniformity, comparability, and improved transparency to the financial reporting practices of non-corporate entities, along with the sole proprietorships, partnerships, trusts and similar structures.
Standardized formats and specific disclosure requirements to align Indian non-corporate reporting with global best practices have been defined by the Guidance Note, implemented from April 1, 2025. A host of practical questions have been addressed by the newly issued FAQs that have arisen during its early implementation phase.
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Reaffirmation is among the major clarifications that the Guidance Note supersedes the earlier Technical Guide on Financial Statements for Non-Corporate Entities, and that the formats and principles included therein are now mandatory for the relevant entities, except where statutory regulators or specific ICAI guidance stipulate otherwise.
FAQs elaborate on the Guidance Note applicability, outlining that it extends to all non-corporate entities, though it does not have the companies and Limited Liability Partnerships. The note has the information of the nature of entities it covers, here being proprietorships, Hindu Undivided Family (HUFs), partnership firms (registered and unregistered), societies, trusts, and autonomous bodies.
A major element in the FAQs is for the cases in which the Guidance Note shall not be applicable, like when a statute or regulator furnishes a separate format or when the particular ICAI norms are in force currently for the specific types of organizations, such as Educational Institutions, Political Parties, and Not-for-Profit Entities.
If a non-corporate entity is unable to comply with the specified formats, then one area of redressal is given under the FAQs relevant to the auditor’s obligation.
Guidance Note stayed suggestion oriented, while FAQs specify that auditors should reveal these non-compliances by non-corporate entities in their respective reports and practice the professional ruling on whether the case requires a modified audit opinion.
Also, the FAQs explain the requirement for presenting comparative figures, verifying that earlier period data should be furnished in the new format, except for first-time adopters.
Attention is also towards the amendment in the applicability of the Accounting Standards to non-corporate entities, describing the revised classification and exemptions for Micro, Small, and Medium-Sized Entities (MSMEs) versus larger entities.
ICAI, via such explanations, asks to furnish useful guidance for both preparers and auditors while adopting the updated reporting framework and pushes for lessening the complexity of the implementation problems that have been covered in the original Guidance note.
ICAI official Latest FAQs Guidelines: https://resource.cdn.icai.org/86963asb-aps1419-faq-gn-of-fs-of-nces.pdf
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