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(3)  The profit and loss statement and capital employed statement mentioned under 

Regulation 4(1) of this regulation prepared on the basis of the Historical cost 

Accounting shall be reconciled with the Annual Financial Statement of the 

service provider prepared under Section 211 of the Companies Act, 1956. The 

reconciliation statements shall be prepared in Proformae J and K of Schedule III. 

(4)  The service providers shall prepare financial reports mentioned in regulation 

4(1) on the basis of replacement cost accounting, by  

(i) 

following financial capital maintenance methodology; 

(ii) 

limiting cost adjustment to the fixed assets; 

(iii)  ignoring replacement cost adjustment for assets having life of less 

than 3 years; 

(iv)  taking cost of modern equivalent asset when existing asset is not 

available due to change in technology. Whenever, old asset is 

replaced by modern equivalent asset, change in operational 

expenditure as a result of such replacement shall also be accounted 

for; and 

(v)  clearly indicating holding gain or loss, supplementary depreciation 

and change in the operational cost due to replacement of old asset by 

modern equivalent asset.  

5.  Periodicity of submission of report   (1) The service providers shall submit 

audited reports based on the historical cost accounting every year within six 

months of the end of accounting year to the Authority. 

 (2) The service provider shall also submit reports based on the replacement cost 

accounting every second year within six months of the end of accounting year to 

the Authority. 

(3) The reporting period shall be same as followed by the company for preparation 

of the annual financial accounts under sub section (4) of section 210 of the 

Companies Act, 1956.  

Provided that, if reporting period exceeds fifteen calendar months, the accounting 

separation statements shall be divided into 12 months and the balance period. 

6.  Audit   (1) Every service provider, to which these regulations apply, shall appoint 

an auditor who is qualified for appointment as an auditor under section 224 or 

233 B of The Companies Act, 1956. 

(2) The auditor shall audit the reports so prepared. 

(3) The auditor in his report shall express an opinion as to whether the reports 

have been properly drawn in accordance with the regulation and he has received 

all information and explanation necessary for the purpose of audit. 

7.  Confidentiality   The Authority shall ensure the confidentiality of the financial 

information submitted under various provisions of the Regulation.