Page 117 - DCOM204_AUDITING_THEORY

Unit 6: Laws and Regulations in Audit

7. All commercial, industrial and business reporting enterprises having borrowings, Notes
including public deposits, in excess of ` 100 million at any time during the accounting
period.
8. Holding and subsidiary enterprises of any one of the above at any time during the accounting
period.

Level II Company: Enterprises, which are, not Level I enterprises but fall in any one or more of
the following categories are classified as Level II enterprises;
1. All commercial, industrial and business reporting enterprises, whose turnover for the
immediately preceding accounting period on the basis of audited financial statements
exceeds ` 4 million, but does not exceed ` 500 million. Turnover does not include ‘other
income’.
2. All commercial, industrial and business reporting enterprises having borrowing, including
public deposits, in excess of ` 10 million but not in excess of ` 100 million at any time
during the accounting period.
3. Holding and subsidiary enterprises of any one of the above at any time during the accounting
period.
Level III Company: Enterprises, which are not covered under Level I and Level II are considered
as Level III enterprises.

6.11 Applicability

Level II and Level III enterprises are considered as SMEs.
Level I enterprises are required to comply fully with all the accounting standards.
No relaxation is given to Level II and Level III enterprises in respect of recognition and
measurement principles. Relaxations are provided with regard to disclosure requirements.
Accordingly, Level II and Level III enterprises are fully exempted from certain accounting
standards, which mainly lay down disclosure requirements. In respect of certain other accounting
standards, which lay down recognition, measurement and disclosure requirements, relaxations
from certain disclosure requirements are given.

Table 6.1: Levels of Applicability
Sr. No. Particulars Applicability
1. Disclosure of Accounting Policies I, II, III
2. Valuation of Inventories I, II, III
3. Cash Flow Statements I
4. Contingencies and Events Occurring After the Balance I, II, III
Sheet Date
5. Net Profit or Loss for the period, Prior period Items and I, II, III
Changes in Accounting Policies.
6. Depreciation Accounting I, II, III
7. Construction Contracts I, II, III
8. Accounting for Research and Development (This standard As withdrawn
has been withdrawn w.e.f. 01.04.2004 for all levels of
enterprises and AS 26 is applicable)

Contd...

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