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Directors' Responsibility Statement
Sub-section (5) of Section 134 of the Companies Act, 2013provides the provisions/contents of Directors' Responsibility Statementthat has to be included in the Board’s report of a company [Section 134(3)(c)].
The scope of the responsibilities of the Directors
of a company, be it Private or Public, have been expanded to include
also in its purview the areas mentioned in for Directors' Responsibility Statementultimately aiming at safeguarding the interest of the
Format of Directors responsibility statement under the companies act 2013
In pursuance of section 134 (5) of the Companies Act, 2013,the Directors hereby confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied themconsistently 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 and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the company and for preventing and detecting fraud andother irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors, in the case of a listed company, had laid down internal financialcontrols to be followed by the company and that such internal financial controls are adequate and were operating effectively. Explanation.—For the purposes of this clause, the term “internal financialcontrols” means the policies and procedures adopted by the company for ensuringthe orderly and efficient conduct of its business, including adherence to company’spolicies, the safeguarding of its assets, the prevention and detection of frauds anderrors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information; (f) the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
1. Earlier provisions for Directors' Responsibility Statement were prescribed undersub-section (2AA) of Section 217 of the Companies Act, 1956. 2. The point (e) mentioned above is applicable to listed company only, other companies may strike out that point.