FOURTH SCHEDULE
(See section 234)

REQUIREMENTS AS TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF LISTED COMPANIES

PART I
GENERAL

1.  In this Schedule, unless there is anything repugnant  in  the subject or context.:-

(i)  "accounting policies" includes the principles, bases, conventions, rules and procedures adopted by directors in preparing financial statements of a company;

(ii) "controlled" means a firm the management of which is controlled by a company or where the company is entitled to more than fifty per cent of its profits or is liable to bear more than fifty per cent of its losses;

(iii)"debts" includes loans and advances and other receivables where it relates to amounts written off and provision for doubtful and bad debts;

(iv) "executive" means an employee, other than the chief executive and directors, whose basic salary exceeds one hundred rupees in a financial year;]

(v)  "finance lease" means a lease that transfers substantially all the risk and rewards incidental to ownership of an asset. Title may not eventually be transferred;

(vi) "financial statements" includes balance-sheet, profit and loss account and statement of changes in the financial position or statement of sources and application of funds;

(vii)"fund" in relation to any reserve, shall be used only where such a reserve is represented by specifically earmarked investments or other assets realizable at not less than the amount of the reserve;

(viii)"liability" includes all liabilities in respect of expenditure contracted for an all contingent liabilities;

(ix) "operating lease" means a lease other than a financial lease;

(x)  "prior period items" means charges or credits that arise in the current financial year as a result of errors or omissions in the preparation of financial statements of one or more prior financial years;

(xi) "provision" means any amount written off or retained by way of providing for depreciation, renewals and diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy:

Provided that any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, not being an amount written-off in relation to fixed assets 4[...] or any amount retained by way of providing for any known liability, is in excess of that which, in the opinion of the directors, is reasonably necessary for the purpose, the excess shall be treated for the purpose of this Schedule as a reserve and not as a provision;

(xii)  "reserve" subject to the proviso to clause (ix), does not include any amount written off or retained by way of providing for depreciation, renewals or diminution or value of assets or retained by way of providing for any known liability;

(xiii) "turnover" means the gross income exclusive of trade discount shown on invoices of bills, derived from sale of goods or from rendering, giving or supplying services or benefits or from execution of contracts;

(xiv)  "unusual items" means gains or losses that derive from events or transactions which are distinct from the ordinary activities of a company and therefore are not expected to recur frequently or regularity; and

(xv)  any terms or expression not defined in the Ordinance or this Schedule shall be construed to mean the same as under the generally recognised accounting principles.

2. The following shall be disclosed in the financial statements namely::-

(i)  all material information necessary to make the financial years statements clear and understandable;

(ii)  if a fundamental accounting assumption, namely, going concern, consistency and accrual is not followed in preparation of financial statements, that fact together with the reasons therefor;

(iii) significant accounting policies preferably in one place;

(3) For the purpose of this section, any costs or expenses incurred by the Authority in or in connection with proceedings brought by the Authority under section 276 shall be treated as expenses of the investigation giving rise to the proceedings.

(4) Any liability to reimburse the Authority imposed by clauses (a) and (b) of sub-section (1) shall, subject to satisfaction of the right of the Authority to reimbursement, be a liability also to idemnify all persons against liability under clause (c) of that sub-section.

(5) Any such liability imposed by clause (a) of sub-section (1) shall, subject as aforesaid, be a liability also to indemnify all persons against liability under clause (b) of that sub-section.

(6) Any person liable under clause (a) or clause (b) or clause (c) of sub-section (1) shall be entitled to contribution from any other person liable under the same clause according to the amount of their respective liabilities thereunder.

(7) Insofar as the expenses to be defrayed by the Authority under this section are not recovered thereunder, they shall be borne by the Federal Government.

278. Inspector's report to be evidence:-

A copy of any report of any inspector or inspectors appointed under section 263 or section 265 authenticated in such manner, if any, as may be inspectors in relation to any matter contained in the report.

279. Imposition of restrictions on shares and debentures and prohibition of transfer of shares or debentures in certain cases:-

(1) Where it appears to the Authority in connection with any investigation that there is good reason to find out the relevant facts about any shares, whether issued or to be issued, and the Authority is of opinion that such facts cannot be found out unless the restrictions specified in sub-section (2) are imposed, the Authority may, by order, direct that the shares shall be subject to the restrictions imposed by sub-section (2) for such period not exceeding one year as may be specified in the order:

Provided that, before making an order under this sub-section, the Authority shall provide an opportunity of showing cause against the proposed action to the company and the persons likely to be affected by the restriction.

(2) So long as any shares are directed to be subject to the restrictions imposed by this sub-section:-

(iv) change in an accounting policy that has material effect in the current year or may have material effect in the subsequent years together with reasons for the change and the financial effect of the change, if material;

(v)  the basis of conversion or translation into rupees of assets and liabilities in foreign currencies and the accounting policy followed in respect of exchange, gains or losses;

(vi) particulars of any charge on the assets of the company to secure the liabilities of any other person including, where practicable, the amount so secured;

(vii) where determinable, the capacity of an industrial unit, actual production and the reasons for shortfall, if any, except in a case where the Authority upon an application agrees that such information need not be disclosed in the public interest;

(viii) the general nature of any credit facilities available to the company under any contract, other than trade credit available in the ordinary course of business, and not availed of at the date of the balance-sheet.

3. Where any suppressed, concealed or unaccounted income, duty or gain has been declared, disclosed or admitted before any authority charged with the assessment or recovery of any tax, duty or gain, by or on behalf of any company, the amount, nature and financial impact thereof on the company shall be disclosed alongwith information as to how the directors have or propose to treat the same in the financial statements of the company.

4. Any penalty (in terms of money or otherwise) impose any law by any authority shall be disclosed in the first annual report furnished after the imposition of the penalty. If, as a result of any appeal, revision, petition, or review application, such penalty is reduced, enhanced or waived, the original penalty imposed shall nevertheless be disclosed, and the fact of any reduction, enhancement or waiver shall be disclosed in the first annual report furnished after such reduction, enhancement or waiver.

5. Where any material shown in the financial statements or included in amount shown therein cannot be determined with substantial accuracy, an estimated amount described as such shall be included in respect of that item together with the description of the item.

6. Except for the first financial statements laid before the company, financial statements shall also give the corresponding figures for the immediately preceding financial years. This requirement shall, in the case of companies required to prepare half-yearly financial statements, shall be applicable accordingly to the immediately preceding corresponding period.

7. No provision with respect to the information to be given in the financial statements shall be deemed to require the amount of any item that is of no material significance to be given separately.

8. Any information required to be given in respect of any of the items in the financial statements shall, if it cannot be included in such statements, be furnished in a separate note, schedule or statement to be attached to and which shall be deemed to form an integral part of the financial statements.

9. The figures in the financial statements may be rounded off to the nearest thousand of rupees.

10. Where any property or asset, acquired with the funds of the company, is not held in the name of the company or is not in the possession and control of the company, this fact shall be stated; and the description and value of the property or asset, the person in whose name and possession or control it is held shall be disclosed.

11. If any loan or advance has been granted or debt allowed on terms softer than those generally prevalent in trade or any relief or concession allowed in matter of interest, payment, security or documentation, details with reasons thereof shall be stated alongwith the nature of interest of the company or its directors or other officers.

PART II

REQUIREMENTS AS TO BALANCE SHEET

1. The assets and liabilities shall be classified under the heading appropriate to the company's business distinguishing as regard assets between fixed assets, long-term pre-payments and deferred costs, investments, loans and advances and current assets and as regards liabilities between share capital and reserves, long-term loans, 5[redeemable capital] debentures and deferred liabilities and current liabilities and provisions.

FIXED ASSETS

2. (A) Fixed assets (other than investments) shall be distinguished between tangible and intangible and shall be classified under appropriate sub-heads, duty itemized such as:-

(i)  tangible:

(a) land (distinguishing between free-hold and leasehold); 

(b) buildings (distinguishing between building on free-hold land and those on leasehold land);

(c) plant and machinery;

(d) furniture and fittings;

(e) vehicles;

(f) capital work in progress indicating significant itemwise details; and

(g) others (to be specified);

(ii) intangible:

(a) goodwill;

(b) patents, copyright, trade marks and designs; and

(c) others (to be specified).

(B) Under each sub-head, other than capital work-in-progress, the original cost or the amount of valuation, as the case may be, and the additions thereto and deductions therefrom since the date of the previous balance-sheet be stated and the aggregate amount written off, or provided or retained, up to the date of the balance-sheet, by way of provision for depreciation or amortization or diminution in value shall be shown as deduction therefrom.

(C) Where sums have been written off on a reduction of capital or revolution of assets and where sums have been added by writing up the assets, the first balance-sheet subsequent to the reduction or revaluation or writing up shall show the original cost; the reduced or increased figures, as the case may be, alongwith the date of and amount of the reduction or increase made, basis thereof and name and qualification of the valuer who should be an independent person competent to do so. Every balance-sheet subsequent to the reduction or revaluation or writing up, shall show the year and the total amount of the reduction or revaluation or writing up and the element thereof excluded from or included in the book value of the assets.

(D) Any exchange, gain or loss in any year, as a consequence of fluctuations in rate of exchange, relative to the foreign currency borrowings out of the proceeds of which assets were acquired may be added to or deducted from the value of the respective assets and where such addition or deduction is made, the amount thereof under each sub-head shall be disclosed together with the depreciation policy therefor.

(E) In the case of a company which, immediately before the commencement of this Ordinance, has been providing for depreciation or amortization or diminution in value by way of lump sum charge to profit and loss account or as appropriation of profit without allocating the amount so provided to different sub-heads the amount retained in the books of the company at the commencement of the said Ordinance as provision of reserve for depreciation or amortization or diminution in value shall be allocated against the respective sub-head.

(F) In every case where the original cost cannot be ascertained without unreasonable expenses or delay, the valuation shall be the net amount at which as asset stood in the books of the company as at the commencement of this Ordinance after deduction of the amounts previously provided or written off for depreciation or amortization or diminution in value.

(G) Fixed assets used by the company that are the subject of finance lease shall be separately identified by each major class of assets.

LONG TERM INVESTMENTS

3. (A) There shall be shown under separate sub-heads the aggregate amount respectively of the company's:-

(i)   investments in subsidiary companies, controlled firms, managed modarabas and other associated undertakings;

(ii)  investments in listed companies and modarabas other than those included in (i) above;

(iii) investments in unlisted companies and modarabas other than those included in (i) above;

(iv) investments in immovable properties;

(vi) investments in debentures and bonds issued by a Government, Municipal Committee or other local authority; and

(vii) other investments (to be specified).

(B) Under each of the sub-heads of Paragraph 3 (A), where applicable there shall be stated:-

(i)  the nature and extend of the investment made;

(ii) the name of each company, modaraba, firm, Government, Municipal Committee and local authority;

(iii) in case of shares, various classes and different paid up values together with the terms of redemption, if any, in case of preferences shares;

(iv) in case of modaraba and 8[redeemable capital] the number of certificates and the nominal value of each certificates; and

(v) in case of debentures and bonds, the terms of redemption, if any, and the rate of interest.

(C) There shall be stated under sub-head 3(A) (iii) the name of the chief executive, managing agent or modaraba company.

(D) Percentage of the equity held by the company in an investee company or modaraba or a controlled firm or other associated undertaking, where it exceeds ten per cent of the investee's total equity, shall be disclosed.

(E) The mode of valuation of investments, e.g. cost or market value, shall be stated separately and, if investments in listed companies or modarabas are valued otherwise than at market value, the aggregate amount of the market value thereof shall be shown. Value of investments in unlisted investees to which paragraph (D) applies, circulated by reference to net assets of the investee on the basis of the last available audited accounts in the case of unlisted companies and modarabas and last available accounts in case of other investees together with the period of such accounts shall be disclosed.

(F) Provisions, if any, made for diminution in the value of investments and in respect of losses of subsidiary companies shall be shown as deduction from the gross amounts of the respective sub-head.

(G) Investment made against any specific fund or other item shown on the liabilities side especially those required to be made under any law shall be stated separately for each item.

LONG-TERM LOANS AND ADVANCES

4. (A) There shall be shown under separate sub-heads, distinguishing between considered good and considered bad or doubtful, aggregate amount respectively of the company's:-

(i) loans and advances to subsidiary companies, controlled firms, managed modarabas and other associated undertakings;

(ii) loans and advances to the directors, chief executive, managing agents and executives of the company and to any of them severally or jointly with any other person;

(iii) other loans and advances.

(B) There shall be stated under sub-head 4 (A) (i) the name of each borrower together with the amount of loans and advances, the terms of loan and advance and the particulars of collateral security held, if any.

(C) There shall be stated under sub-head 4 (A) (ii) separately the aggregate amount of loans and advances to the directors, chief executive and executives together with the purposes for which loans and advances were made and the general terms of repayment.

(D) There shall stated under sub-head 4 (A) (iii) in respect of loans and advances other than those to the suppliers of goods or services, the name of the borrower and term of repayment if the loan or advance is material together with the particulars of collateral security, if any.

(E) There shall be disclosed separately in respect of sub-head 4 (A) (ii) the maximum aggregate amount of loans and advances outstanding at any time since the date of incorporation or since the date of the previous balance-sheet, whichever is later. Such maximum amounts to be calculated by reference to month-end balance.

(F) Provision, if any, made for bad or doubtful loans and advances shall be shown as a deduction under each sub-head of paragraph 4 (A).

(G) Loans and advances due for payment after a period of twelve months from the date of balance-sheet shall be shown under this head indicating separately:-

(i) outstanding for periods exceeding three years; and

(ii) others.

LONG-TERM DEPOSITS, REPAYMENTS AND DEFERRED COSTS

5. (A) There shall be stated separately long-term deposits, long-term deposits, long-term prepayments and deferred costs. Any material item shall be disclosed separately.

(B) Deferred costs shall include preliminary expenses, amount allowed on the issue of shares, if any, and expenses incurred on the issue of shares including any sums paid by way of commission of brokerage on the issue of shares, to the extend not written off or adjusted and each of these items shall be stated separately.

(C) In respect of each material item of prepayments and deferred cost, the basis on which each item is being amortized or written off shall be stated and in respect of each item of deferred costs the reasons for carrying forward such costs shall be stated. Deferred costs shall be written off during a period not exceeding five years commencing from the financial year in which the costs were incurred.

CURRENT ASSETS

6. (A) Current assets shall be classified under sub-heads appropriate to the company's affairs, including, where applicable, the following::- 

(i)  stores and spare parts distinguishing, where practicable, each from the other;

(ii)  loose tools;

(iii) stock-in-trade, distinguishing where practicable, between (a) stock of raw materials and components (b) work in progress (c) stock of finished products and (d) other stocks;

(iv) trade debts which shall include amounts due in respect of goods sold or services rendered or in respect of other contractual obligations but shall not include the amounts which are in the nature of loans or advances. Debts considered good and debts considered doubtful or bad shall be separately stated. Debts considered good shall be distinguished between those which are secured and those for which the company holds no security other than the debtor's personal security;

(v) loans and advances due for repayment within a period of twelve months from the date of the balance-sheet, showing separately those considered good and those considered doubtful or bad;

(vi)  trade deposits and short term prepayments and current account balances with statutory authorities;

(vii) bills receivable;

(viii) marketable securities, other than long-term investments; 

(ix)  interest accrued or interest outstanding;

(x)  other receivables specifying separately the materials items;

(xi)  tax refunds due from Governments, showing separately excise duties customs duties, sales tax, income tax, etc.; and

(xii) cash and bank balances, distinguishing between (a) amount in hand, (b) amount in transit and (c) balance with banks indicating the nature thereof, e.g., on current or deposit account.

Amounts required to be kept in special or separate accounts under any law shall be shown separately.

(B) In the case of sub-heads 6 (A) (i), (ii) and (iii), the respective basis of valuation shall be stated. If the basis such as "cost", "net realisable value" or "cost or net realisable value whichever is lower" is given, there shall also be given to the extent practicable a general indication of the method of determining the "cost" or "net realisable value" e.g., "average cost", "first-in, first out" or "last in, first-out". Where the basis of valuation involves departure from the recognized accounting principles, the reasons therefor alongwith financial impact.

(C) In the case of sub-heads 6 (A) (iv), (v) and (x) the following particulars shall be stated separately::-

(a) the aggregate amount due by directors, chief executive, managing agents and executives of the company and any of them severally or jointly with any other person;

(b) aggregate amount due by associated undertakings, controlled firms and managed modarabas names to be specified in each case.

(c) the maximum amount of debts under each of the preceding items (a) and (b), at any time since the date of incorporation or since the date of previous balance-sheet, whichever is the later. Such maximum amounts to be calculated by reference to month-end balance.

(D) In the case of sub-head 6 (A) (viii), same information, as far as applicable, shall be disclosed as specified in paragraph 3 in respect of long-term investments.

(E) Provision, if any, made for diminution in the value of or loss in respect of any current asset shall be shown as a deduction from the gross amount of the respective assets.

(F) In the opinion of the directors any of the current assets have, on realization in the ordinary course of the company's business, a value less than the amount at which they are stated in the financial statements, a disclosure of the fat that the directors are of that opinion together with their estimates of the realisable value and the reasons for assigning higher values in the balance-sheet shall be required.

SHARE CAPITAL AND RESERVES

7. (A) Share capital and reserve shall be classified under the following sub-heads::- 

(i)   paid up capital, distinguishing between different classes of shares and the amount paid up in respect of each class; and

(ii)  reserves, distinguishing between capital reserves and revenue reserves, capital reserves shall include capital redemption reserve, share premium account, [...] profit prior to incorporation or any reserve not regarded free for distribution by way of dividend (to be specified), while revenue reserves shall include general reserve dividend equalisation reserve, [...] other reserves created out of profit (to be specified), and unappropriated profit (i.e. credit balance of profit and loss account after appropriations for the period to the date of balance-sheet). Additions to and deductions from each item of reserves shall be shown in the balance-sheet under the respective items unless they are disclosed in the profit and loss account or a statement or a report annexed thereto. Accumulated loss-adverse balance of profit and loss account shall be shown as deduction from the capital and reserves.

(B) There shall be shown in the balance-sheet:-

(i) authorised share capital, distinguishing between various classes of shares and stating the number and value of each class;

(ii) issued share capital, distinguishing between various classes of shares and stating the number and value in respect of each class;

(iii) subscribed shares capital, distinguishing between various classes of shares and stating the number and value in respect of each class. In the case of preference shares, the rate of dividend shall be stated;

(iv) called up share capital, distinguishing between various classes of shares and stating the number, value and the amount called up in respect of each class;

(v) calls unpaid as a deduction from called up capital, distinguishing calls unpaid by (a) directors (including chief executive), (b) managing agents, (c) executives, and (d) others;

(vi) paid up share capital, distinguishing in respect of each class between (a) shares allotted for consideration paid in each, (b) shares allotted for consideration other than cash, and (c) bonus shares stating the number and value of each class;

(vii) particulars of any option on unissued shares, such as amount of option, class of shares, issued price during which option is exercisable, etc.;

(viii) in the case of redeemable preference shares, the terms of redemption or conversion, if any together with the earliest date on which the company has power to redeem or the company or the holder of the shares has power to convert the share; and

(ix) in the case of subsidiary companies the number of shares of each class held by the holding company.

(C) Where circumstances permit, authorised, issued, subscribed and paid up capital or any two or more of them may be shown as one item.

2SURPLUS ON REVALUATION OF FIXED ASSETS

7-A. The surplus on revaluation of fixed assets shall be treated and shown as specified in Section 235. Addition to, deductions from, adjustments in or application of the surplus or revaluation, whether resulting from disposal of the revalued asset(s) or otherwise (details to be provided), shall also be stated.

REDEEMABLE CAPITAL

7-B. (1) The finance obtained by issue of, or representing redeemable capital shall be distinguished between:-

(i)    participatory redeemable capital and other redeemable capital; and

(ii)   secured and unsecured.

(2) Under each class, the finance obtained shall be distinguished as obtained on the basis of or representing:

(i)    participation term certificate (PTC);

(ii)   musharika arrangement;

(iii)  term finance certificates (TFC);

(iv)  long-term running finance utilised under mark-up arrangement; and

(v)  other securities or instruments (to be specified).

(3)  There shall be shown:-

(i)   face value or nominal value;

(ii)  nature of instrument evidencing investment of holder in such capital;

(iii)  all material terms and conditions of the agreement for the issue, including:-

(a)  consideration received or to be received by the company, whether in cash or in specie or against any promise, guarantee, undertaking or indemnity issued to or in favour of or for the benefit of the company;

(b)  mode and basis of repayment or redemption stating the purchase price or mark-up amount to be repaid;

(c)  arrangement for sharing of profit and loss;

(d)  provision, if any, for creation of a participatory reserve by the company;

(e)  the right, if any, of the holders to convert the outstanding balance of such capital or part thereof into ordinary shares of the company and the event(s) in which such right is exercisable.

(f)  the details of events of default in payments or otherwise which have occurred and resulted in or may result in exercise of the option referred to in clause (c) or any other right or option available in consequence thereof; and 

(g)  where any part of redeemable capital is secured otherwise than by the operation of law on any asset of the company, the fact that it is so secured, together with a statement of the assets upon which it is secured and, where more than one class of liabilities or redeemable capital is so secured, their relative priorities with respect to payment or return, mark up or profit and redemption.]

DEBENTURES AND LONG-TERM LOANS

8. (A) Borrowing in respect of debentures shall be separately shown classified as secured and unsecured together with a statement of the assets upon which they are secured and where more than one class of liabilities is so secured their relative priorities and material terms with respect to payment of interest and redemption shall be stated.

(B) There shall be stated in respect of each class of debentures-

(a) the rate of interest;

(b) terms of redemption or conversion;

(c) the earliest dates on which the debentures may be redeemed or the company or holder thereof has power to convert them into shares;

(d) particulars of any redeemed debentures where the company has power to re-issue;

(e) if any sinking fund exists.

(C) Where any of the company's debentures are held by a nominee of or a trustee for, the company, the amount thereof, calculated on the same basis as the total amount standing in the balance-sheet in respect of the debentures of that class shall, unless and until the debentures so held are re-issued or cancelled, be shown as deduction from total.]

(D) Long-term loans shall be classified as secured and unsecured, and under each class shall be shown separately::-

(i)   loans from banking companies and other financial institutions;

(ii)  loans from subsidiary companies, controlled firms, managed modarabas and other associated undertakings;

(iii) loans from directors (including chief executive), managing agents and employees of the company;

(iv) other loans;

(E) There shall be stated in respect of each loan:-

(a) the rate of interest;

(b) instalments or period in which the loan has to be repaid;

(c) where any of the long-term loans and secured otherwise than by the operation of law on any assets of the company the fact the loans are so secured, together with a statement of the assets upon which they are secured and where more then one class of liabilities is so secured, their relative priorities with respect to payment of interest or profit and redemption;

(d) any other material terms.

LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEAST

9. The aggregate amount of liabilities related to assets subject to finance shall be shown either as the total of the minimum lease payment or as the net present value of the liabilities, disclosing in summary from:-

(a) the interest rates used as the discounting factor;

(b) amount of future payments and the periods in which they will become due;

(c) purchase options or terms of escalation;

(d) financial restrictions imposed, if any;

(e) any other material terms.]

DEFERRED LIABILITIES

10. (A) Liabilities as are under recognised accounting principles appropriately classified as deferred shall be shown distinguished as:-

(a)  for taxation;

(b) for pension, gratuity and other staff benefit schemes;

(c) other deferred liabilities showing separately (material items).

(B) Where any of the deferred liabilities are secured otherwise than by the operation of law on any assets of the company, the fact that the liabilities are so secured, together with a statement of the assets, upon which they are secured, and where more than one class of liabilities is so secured, their relative priorities with respect to payment of interest or profit and redemption.

(C) Where any deferred liability it represented by accumulations which are required by the Ordinance or any other law to be invested in any specific manner or kept in a special deposit or account, the same shall be shown separately indicating the model in which it is invested, deposited or kept.

(D) Where any liability has not been fully provided for, the extent to which it has not been provided for together with the reasons thereof (showing separately the portion relating to the financial year) shall be disclosed.

LONG-TERM DEPOSITS

11. The aggregate amount of deposits classified according to nature and repayment period shall be shown alongwith rate of interest payable thereon and other material terms. Such deposits shall be classified as:-

(a) from customers;

(b) from employees;

(c) from others.

CURRENT LIABILITIES

12. (A) Current liabilities shall mean liabilities due and payable (other than liabilities the payment on which may, at the company's option, be postponed) within twelve months from the date of the balance-sheet, together with such other liabilities as are under recognised accounting principles appropriately so classified.

(B) Current liabilities and provisions shall, so far as they are appropriate to the company's business, be classified under the following sub-heads::-

(i)  short-term loans, distinguishing between secured and unsecured and between loans taken from:-

(a) banking companies and other financial institutions;

(b) subsidiary companies, controlled firms, managed modarabas and other associated undertakings;

(c) directors (including chief executive) and managing agents; and

(d) others;

(ii) current portion of long-term liabilities;

(ii-a) short-term running finance utilized under mark-up arrangement, distinguishing between secured and unsecured together with a statement of the assets upon which it is secured, the extent of the facility available, the rate of mark-up and the period within which the mark-up or repurchase price is to be repaid];

(ii-b) current portion of the aggregate amount of liabilities related to the assets subject to finance lease;]

(iii)  deposits stating separately those repayment on demand and others alongwith rate of interest payable thereon, if any;

(iv) creditors;

(v)  accrued liabilities;

(vi) bills payable;

(vii) advance payments and unexpired discounts for the portion for which value is still to be given, if any;

(viii) interest accrued on secured loans;

(ix) interest accrued on unsecured loans;

(x) profit, return or mark-up accrued or proposed on each class of redeemable capital.

(xi) other liabilities, if any (to be specified), e.g., unclaimed dividend, unpaid dividend;

(xii) provision for taxation, showing separately excise duties, customs duties, sales tax, income tax, etc.;

(xiii) proposed dividend; and

(xiv) other provisions and accruals for contingencies (to be specified, if material).

(C) Where any short term loans or any other liabilities of the company are secured otherwise than by the operation of law on any assets of the company, the fact that the liabilities are so secured shall be stated, together with a statement of the assets upon which they are secured, and where more than one class of liabilities is so secured, their relative priorities with respect to payment of interest or profit and redemption.

13. No liability shall be shown in the balance-sheet or the notes thereto at a value less than the amount at which it is repayable (unless the quantum of repayment is at the option of the company) at the date of the balance-sheet or, if it is not then repayable, at the amount at which it will first become so repayable thereafter, less, where appropriate, a reasonable deduction for discount until that date.

CONTINGENCIES AND COMMITMENTS

14. There shall be added a foot-note to the balance-sheet, showing separately:-

(i) arrears of fixed cumulative dividends on preference shares together with the period for which the dividends are in arrears. If there is more than one class of preference shares, the gross amount to dividends, in arrears on each such class shall be stated separately;

(ii) aggregate amount of any guarantees given by the company on behalf of the chief executive, directors, managing agents or other employees of the company or any of them (severally or jointly with any other person), subsidiaries, associated undertakings managed modarabas or only other person shall be stated separately, if material and where practicable, the general nature of the guarantee;

(iii) except where the amount o the contingent loss has been accrued in the financial statements or the possibility of a loss is remote, following information regarding the existence of contingent loss:

(a) the nature of contingency; 

(b) the uncertain factors that may affect the future outcome;

(c) an estimate of the amount of loss or the range of amount of loss or a statement that such an estimate cannot be made.

Similar information regarding the existence of a contingent gain shall be provided if it is probable that the gain will be realised; 

(iv)  where practicable the aggregate amount or estimated amount, if it is material, of contracts for capital expenditure, so far as not provided for;

(v) other sums for which the company is contingenly liable; and

(vi) any other commitment, if the amount is material, indicating the general nature of the commitment.

PART III

REQUIREMENTS AS TO PROFIT AND LOSS ACCOUNT

1. The profit and loss account shall be so made out as to disclose clearly the operating results of the company during the financial year covered by the account and shall show, arranged under the most convenient heads, the gross income and the gross expenditure of the company during the financial year disclosing every material feature and in particular the following::-

(A) (i) the turnover and showing as deduction therefrom:-

(a) commission paid to sole selling agent;

(b) commission paid to other selling agents; and

(c) brokerage and discount on sales;

(ii) income from investment, showing separately income from each associated undertaking and from other investments;

(iii) income from modaraba certificates; 

(iv) income arising from redeemable capital showing separately the income from each class of such capital];

(v) income by way of interest on loans and advances and other interest; 

(vi)  profit on sale of investments; 

(vii) profit on sale of fixed assets; 

(viii) income arising from unusual items; 

(ix) income arising from prior period items; and 

(x) other income, showing separately every material item and the nature of each such item. 

(B) (i) The value of the stock-in-trade, including raw materials and components, work in progress and finished products, as the commencement and as at the end of the financial year; and 

(ii)  purchase of raw materials and components and finished products; or 

(iii) instead of the information in (B) (i) and (ii) above, cost of raw materials and components consumed and cost of purchased finished goods sold.

(C) expenditure on:- 

(i) stores and spare parts consumed; 

(ii) fuel and power; 

(iii) salaries and wages including bonus, contribution to provident and other funds and expenses on staff welfare; 

(iv) rent, municipal rates and provincial and local taxes; 

(v) insurance; 

(vi) repairs and maintenance; and 

(vii) patents, copyrights, trade marks, designs, royalties and technical assistance; 

(D) The aggregate amount of auditors' remuneration. Whether fees, expenses or otherwise, for service rendered as auditors or in any other capacity showing separately the remuneration for services rendered as auditors and the remuneration for services rendered in any other capacity and stating the nature of such other services. In the case of joint auditors, the aforesaid information shall be shown separately for such of the joint auditors. 

(E) Other expenses, showing separately every material item and the nature of each such item. In the case of donations where any director or his spouse has interest in the donee, the names of such directors, their interest in the donee and the names and addresses of all donees shall be disclosed. 

(F) (i) The amount provided for depreciation, renewals, or diminution in the value of fixed assets; 

(ii)  if such provision is not made by means of a charge for depreciation, the method adopted for making such provision shall be disclosed; 

(iii) where such provision is made by means of charge for depreciation, the value of the assets and the additions or depletions thereto, the depreciation methods and the depreciation rates used for fixed assets under each sub-head of paragraph 2 (A) of Part II of this Schedule shall be disclosed;

(iv) where no such provision has been made, the reasons for not making it and the amount of depreciation which should have been provided and the quantum of arrears of depreciation, if any, shall be disclosed; 

(G) 5(i) the share of profit of holders of redeemable capital distinguishing the amount paid and that payable in respect of each class of such capital.

(ii) the amount of interest on borrowings, showing separately the amount of interest on the company's debentures, on other long-term loans and on short-terms loan and showing by way of a note the amount of interest on borrowings from the associated undertakings, directors (including chief executive) and the managing agent, if any; 

(iii) loss or provision for loss on redeemable capital showing separately the extent of loss or provision therefor in respect of each class of such capital; 

(iv) loss on sale of investments; 

(v) loss on sales of fixed assets; 

(vi) debts written off as irrecoverable distinguishing between trade and other debts; 

(vii) provisions for doubtful or bad debts distinguishing between trade and other debts; 

(viii) provision for diminution in value of investments; 

(ix)  loss or expenses arising from unusual items and provisions therefor; 

(x)   loss or expenses arising from prior period items and provisions therefor; 

(xi)  provision for losses of subsidiaries, controlled firms and associated undertakings: Where loss is actually incurred the extent of loss in the case of each subsidiary company, controlled firm and associated undertaking shall be disclosed by way of a note; 

(xii) (a) provision for taxation on income, capital gains and other tax or taxes, showing separately the provision for liability in respect of the profit, of the financial year and the provision for liability deferred due to timing differences and distinguishing, where applicable, between the provision for Pakistan taxation and the provision for taxation elsewhere; 

(b)  provision for deferred liability for taxation on income for the financial year may exclude the tax effects of certain timing differences when there is reasonable evidence that these timing differences will not reverse for some considerable period (at least three years) ahead. There should also be no indication that after this period these timing differences are likely to reverse; 

(c)  where provision for taxation in respect of the profits of the period is reduced by the writing back of a part of the whole or the provision for deferred liability made in previous periods the amount written back shall be shown as deduction from the gross charge for taxation; and 

(xiii) other provisions for meeting specific liabilities, contingencies or commitments (material items to be shown separately).

(H) (i) the amount set aside or proposed to be set aside as reserves, showing separately the respective amounts in respect of each item of reserve;

(ii)  the amount of the dividend proposed.

2. The profit and loss arising from "hedge" and "forward" contracts, trading in "futures" and "badla (contango and backwardation)" and other transactions of a similar nature, carried forward or completed by "meeting the difference" and not resulting in actual purchase or sale of stock-in-trade shall not be deducted from or added to the cost of items (B) (ii) and (iii) in paragraph 1 of this Part, and shall be shown separately in the profit and loss account.

3. There shall be stated by way of a note the respective amounts included in item (G) (iv) and (v) of paragraph 1 of this Part for (a) debts due by the directors, chief executive, managing agents and executives of the company and any of them severally or jointly with any other person, (b) debts due by associated undertakings.

4. The following shall be stated by way of a note: 

(a) the aggregate amount charged in the financial statements in respect of the directors, chief executive, managing agents and executives by the company as fees, remuneration, allowances, commission perquisites or benefits or in any other form or manner and for any services rendered, and shall give full particulars of such aggregate amounts, separately for the directors, chief executive, managing agents, and executives together with the number of such directors and executives, under appropriate heads such as:-

(a)   fees;

(b)   managerial remuneration; 

(c)   remuneration or commission based on net profit or turnover; 

(d)   reimbursable expenses which are in the nature of a perquisite or benefit; 

(e)   pension gratuities, company's contribution to provident, superannuation and other staff funds, compensation for loss of office and in connection with retirement from office;

(f)   commission indicating the nature thereof and the basis on which such commission is payable;

(g)   other perquisites and benefits in cash or in kind stating their nature and, where practicable, their approximate money values; and

(h)   the amounts, if material, by which any items shown above are affected by any change in an accounting policy.

The amounts paid to each individual referred to in this clause shall not be shown separately.

(ii)  in the case of sale of fixed assets otherwise than through a regular auction, made to chief executive or a director or managing agent or an executive or a shareholder holding not less than ten per cent of the voting shares of the company or any associated undertaking, irrespective of the value of the assets and in case of any other person, if the book value of the asset or assets, exceeds in aggregate five thousand rupees, particulars of the assets and in aggregate (a) cost or valuation, as the case may be, (b) the book value, and (c) the sale price and the mode of disposal (e.g. by tender or negotiation) and the particulars of the purchaser.

5. The following information shall be disclosed in respect of transactions with associated undertaking showing separately the aggregate amounts of:-

(i)   purchases from and sales to of goods and services; 

(ii)  brokerage or discount or commission together with the nature and the basis on which such brokerage discount or commission is payable; 

(iii) interest indicating the nature thereof; and 

(iv)  any other transaction indicating the nature of every material item. 

6. A company need not show the amount set aside as provisions other than those relating to the depreciation, renewals or diminution in value of assets, if, on application made by it, it has been allowed by the Authority to do so on being satisfied that the disclosure of such information would be prejudicial to the interests of the company, but shall so frame or mark the heading covering the amount of such provision as to indicate that it has been so allowed by the Authority. 

7. The profit and loss account shall be so drawn up as to disclose separately the manufacturing, trade and operating results. In the case of manufacturing concern, the cost of goods manufactured shall also be shown. Where an undertaking has more than one line of business the working results of each such line of business should be separately given provided the turnover of such line of business exceeds twenty per cent of the total turnover of the company. Value of items exported during the financial year shall also be shown provided such value exceeds twenty per cent of the total turnover of the company.