The National Financial Reporting Authority (NFRA) found that Prabhu Steel Industries Ltd failed to comply with certain accounting standards during the 2019-20 financial year, including failure to make appropriate disclosures.
A listed company, Prabhu Steel has agreed to prepare and issue restated financial statements in accordance with the Companies Act 2013, within 90 days in view of “pervasive errors/omissions throughout the financial statements” , the watchdog said in a Monday release.
In issuing a financial reporting quality review (FRQR) report of Prabhu Steel, NFRA said the company provided conflicting information in the director’s report and notes to the annual accounts regarding the fundamental aspect the applicable accounting framework followed in the preparation of the financial statements for 2019. -20.
”By failing to comply with the material requirements of the Ind AS framework and providing information within the previously applicable accounting framework, the company has breached the provisions of the Companies Act 2013 relating to the preparation and presentation of financial statements’ ‘, the statement said.
According to the NFRA, the company failed to present a component of the financial statements and failed to meet key requirements of the Ind ASs on financial instruments and fair value measurement.
”…it has not made a proper assessment of impairment for its primary class of financial assets, viz. trade receivables, loans and advances and bank balances; in the financial statements, there are no disclosures required by Ind AS 107 regarding the significance of financial instruments, the nature and extent of risk arising from financial instruments,’ the statement said.
Among other things, the watchdog pointed out that the company had failed to make proper disclosures regarding its borrowings in the form of loans taken out and the assets in the form of loans and advances made.
The company also failed to provide depreciation on its idle plant and machinery, thereby violating the underlying principle of Ind AS 16, according to the statement.
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