Section 131: Voluntary Revision of Accounts

Voluntary revision of financial statements section 131 of the Companies Act, 2013 allows is the directors' own route to correcting accounts that have already gone out. It is voluntary in the sense that the company starts it. It is not unilateral: the Tribunal has to approve, the Central Government and the Income-tax authorities get notice, and the Tribunal's order lands on the Registrar's record.

When section 131 voluntary revision of financial statements is available

Section 131(1) sets a single trigger with two possible objects. It applies if it appears to the directors of a company that:

• (a) the financial statement of the company, or
• (b) the report of the Board,

do not comply with the provisions of section 129 or section 134.

Those are the only two grounds. Section 129 is the true and fair view and Schedule III form standard for the financial statement; section 134 is the Board's report, including the Directors' Responsibility Statement. A revision that is not tied to non-compliance with one of those two sections is outside the section.

Note who forms the opinion and who applies. The opinion is the directors'. The application to the Tribunal is made by the company, in such form and manner as may be prescribed.

Once the Tribunal has approved, a copy of the order passed by the Tribunal shall be filed with the Registrar. That filing is the public trace of the revision, and it is what keeps a revised set of accounts from quietly replacing the original.

The three provisos to section 131(1)

The third proviso is the one worth watching in a filing. A revision does not stay confined to the revised year. It produces a disclosure in the current year's Board's report, giving detailed reasons, which means a reader of this year's report learns that an earlier year was rewritten and why.

The first proviso's notice list is shorter than the one in section 130. Section 130's proviso reaches the Securities and Exchange Board, any other statutory regulatory body or authority, and any other person concerned. Section 131's reaches the Central Government and the Income-tax authorities only.

How far a revision may go

Section 131(2) constrains the scope, and it does so only once the original has left the company's hands. Where copies of the previous financial statement or report have been sent out to members, delivered to the Registrar, or laid before the company in general meeting, the revisions must be confined to two things:

• (a) the correction in respect of which the previous financial statement or report do not comply with section 129 or section 134, and
• (b) the making of any necessary consequential alteration

Clause (b) is printed in the India Code text as "consequential alternation", with an extra n. It is read here as "alteration", which is the only reading the clause supports.

That is a repair power, not a redrafting power. The correction that justified the application, plus what follows arithmetically from it, and nothing else.

Section 131(3) leaves three matters to rules made by the Central Government:

• (a) different provisions according to which the previous statement or report are replaced, or are supplemented by a document indicating the corrections to be made
• (b) provisions with respect to the functions of the company's auditor in relation to the revised statement or report
• (c) requirements for the directors to take such steps as may be prescribed

Head (a) is the practically important one, because it decides what a reader ends up holding: a replaced document, or the original plus a correction sheet. The section itself does not choose between them.

Section 131 carries no amendment footnote on the India Code text of the Act, so it stands as enacted.

Section 131 against section 130 and section 129(5)

There are three different ways an accounting problem gets handled under Chapter IX, and they are not interchangeable.

The escalation runs left to right. A deviation from the accounting standards that the company owns up to inside the statements never reaches the Tribunal. A non-compliance the directors want to fix goes through section 131. A fraud or a mismanagement finding is somebody else's application under section 130.

• Re-opening of accounts under section 130 is the involuntary counterpart, with a longer reach back.
• Section 129 financial statements is one of the two compliance standards a revision must be grounded in.
• Directors' Responsibility Statement is part of the section 134 report that is the other ground, and the report the third proviso adds reasons to.
• How to find a company's financial statements at the ROC covers the Registrar record the Tribunal's order is filed onto.
• What is the National Company Law Tribunal is the forum whose approval section 131 requires.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.