Excerpts of Sub-section (2AA) of Section 217 of the Companies Act, 1956, which provides that the Board’s report shall also include a Directors’ Responsibility Statement, indicating therein:-
(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(ii) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period
(iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities ;
(iv) that the directors had prepared the annual accounts on a going concern basis.
The above sub-section 2aa was inserted by the Companies (Amendment) Act, 2000 w.e.f. 13-12-2000.
And thereby the responsibilities of the Directors of a company, be it Private or Public, have been expanded to include also in its purview the above areas for safeguarding the interest of the company.