## Trade Receivables: Schedule III Disclosure Requirements

### Correct Ageing Schedule Structure

Schedule III (Division I) requires trade receivables ageing based on outstanding period from due date, split into:

Note: MSME vs. Others split is not required for trade receivables (it is required for trade payables).

### Required Categories

Each ageing bucket must be sub-divided by:

```

├─ Undisputed – Considered Good

├─ Undisputed – Considered Doubtful

├─ Disputed – Considered Good

└─ Disputed – Considered Doubtful

```

### Additional Classification Required

Trade receivables must also be sub-classified as:

Allowance for bad and doubtful debts must be disclosed separately under the relevant heads.

### Related Party Disclosure

Debts due from:

Directors or other officers of the company (severally or jointly with others)
Firms or private companies in which any director is a partner, director, or member

must be separately stated.

### Common Errors to Flag in Audit

1. Using MSME/Others split (applicable to payables, not receivables)

2. Using annual ageing buckets (correct format uses 6-month buckets starting from <6 months)

3. Omitting the undisputed/disputed × good/doubtful matrix

4. Not disclosing allowances for doubtful debts separately

5. Not disclosing debts due from directors/officers/related entities

Worked example

### Example 1

Tisa Industries Private Limited – Disclosure Review:

Errors identified in company's trade receivables disclosure:

1. MSME/Others split used → Wrong; this is the format for trade payables, not receivables.

2. Aging buckets used: <1yr, 1–2yr, 2–3yr, >3yr → Wrong; correct format starts with <6 months, then 6m–1yr.

3. No undisputed/disputed × good/doubtful matrix → Missing required categorisation.

4. No secured/unsecured/doubtful sub-classification → Missing.

5. Allowance for doubtful debts not shown separately → Missing.

6. Director/officer debts not separately disclosed → Missing.

Correct action: Revise the note entirely using the Schedule III Division I format with 6-month buckets and the 4-category dispute/quality matrix.

⚠️ Common exam mistakes

Using the trade payables ageing format (MSME/Others split) for trade receivables — these are different disclosures
Using annual ageing buckets — Schedule III requires the first bucket to be 'less than 6 months' for trade receivables
Omitting the undisputed-good / undisputed-doubtful / disputed-good / disputed-doubtful matrix
Not separately disclosing the allowance for bad and doubtful debts
Not separately stating debts due from directors, officers, or their related entities

Reference: Note 6 – Trade Receivables: Sub-classification and Ageing Schedule requirements — Schedule III, Division I to the Companies Act, 2013

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Trade Receivables Disclosure – Schedule III Compliance

Worked example