Annual Balance Sheet
By: Magna Carta Law Office
A Balance Sheet is a financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. It is often described as a snapshot of a company’s financial condition as this report can be used to obtain a complete picture of the financial results and financial position of a business on the last date of the financial year. A balance sheet records the arrangement of money in a business and it shows the accounting value of all the company’s assets, liabilities and equity at one moment in time, which may lead to conclusions regarding the liquidity of the entity.
It’s called a balance sheet because the two sides balance out. A company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders’ equity). These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.
The submission of financial statements shall be in accordance with the rules and procedures prescribed by the Directors-General of the Revenue Department and the Department of Business Development. A balance-sheet must be made at least once every twelve months wherein such twelve-month period constitutes the company’s accounting period or financial year. A newly established company should close accounts within 12 months from its registration. This must be certified by a qualified external auditor and must be filed with the Revenue Department and Department of Business Development every year.
The balance-sheet must be examined by one or more auditors and submitted for adoption to a general meeting within four months after its date. A copy of it must be sent to every person entered in the list of shareholders at least three days before the general meeting. Copies must also be kept open at the offices of the company during the same period for inspection by the shareholders. When the accounts or the documents relevant thereto are lost or damaged, the person having the duty to keep accounts shall notify the Chief Accounts Inspector or the Accounts Inspector of the loss or damage, in accordance with the rules and procedures prescribed by the Director-General, within fifteen days from the date of knowledge thereof, or the date such loss or damage ought to have been known.
The company’s annual financial statement must be filed, along with its annual income tax return, with the Revenue Department and Department of Business Development, within 150 days after the end of its accounting period. If a company fails to submit its audited financial statement within the required time then the company is liable to a certain penalty or fine which may also be applicable to its responsible officer. If a company wishes to change its accounting period, it must obtain written approval from the Chief Accounts Inspector of the Revenue Department by submitting Form SorBorChor 4 together with other documents specified in the mentioned form.
