ICAI provides relaxation in compliance with Guidance Notes

ICAI Provides One-Year Relaxation in Compliance with Guidance Notes on Financial Statements for Non-Corporate Entities and LLPs (FY 2024–25)

1. Background

• ICAI had issued two Guidance Notes in August 2023:
  1. Financial Statements of Non-Corporate Entities
  2. Financial Statements of Limited Liability Partnerships (LLPs)
• These were to be mandatory for accounting periods beginning on or after April 1, 2024.

2. Relaxation for 2024–25

• For the annual reporting period 2024–25, ICAI has given relaxation.
• Compliance with the Guidance Notes is not compulsory this year.
• Entities may apply them voluntarily.
• Applicability may become mandatory from 2025–26 onwards.

3. Clarification

• This relaxation does not affect:
  • The applicability of Accounting Standards (AS), and
  • The Framework for Preparation and Presentation of Financial Statements.
• These must continue to be followed.

4. Impact on FY 2024–25 Working

• No immediate change in the way financial statements are prepared for FY 2024–25.
• Practitioners can continue preparing accounts as per existing AS and ICAI framework.
• Less compliance burden for this year – especially for small firms, LLPs, and other non-corporate entities, since they don’t need to restructure their formats/schedules immediately.
• Firms may choose to apply the new Guidance Notes voluntarily if they want to get familiar and prepare for future mandatory implementation.
• This year’s audit and reporting workload will therefore be similar to earlier years, with no additional responsibility arising from the new Guidance Notes.

✅ In short: For FY 2024–25, members can carry on their accounting and audit work without adopting the new formats, unless they voluntarily wish to. This postpones any additional workload or changes by one year.

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