#IFRS Converged Indian Accounting Standards (#IndAS)

Indian Accounting Standard (#IndAS) has been the buzz word of the year for Financial Reporting Professionals in India. With the Financial Year ended on 31st March, 2017 prescribed class of the companies will present their 1st set of Financial Statements under #IndAS financial reporting framework along with the Comparatives of the preceding year ended 31st March, 2016. This small article containing FAQ’s will provide insight into #IndAS

1) What is Indian Accounting Standard (#IndAS) ?

Indian Accounting Standards (#IndAs) are the International Financial Reporting Standars (#IFRS) converged Accounting Standards. India has decided not to adopt the #IFRS rather to converge the existing accounting standards with #IFRS so that there are no material differences between #IFRS and #IFRS converged Indian Accounting Standard.

2) Is it mandatory to follow #IndAS ? From when #IndAS is applicable ?

The Ministry of Corporate Affairs (#MCA) has issued the Companies (Indian Accounting Standards) Rules, 2015 vide notification dated 15th February, 2015. As per the notification #IndAS shall be implemented on voluntary basis from 1st April, 2015 and mandatory from 1st April, 2016

3)  Which entities are required to follow #IndAS ?

The Companies (Indian Accounting Standards) Rules, 2015 provides roadmap for implementation of #IndAS for the prescribed class of companies other than Banking, NBFC and Insurance Companies. Applicability of #IndAS is phased as under

1st April, 2015 or thereafter : Voluntary basis for all companies.

1st April, 2016 : Phase 1 - Mandatory basis for

a)  All Companies listed / in process of listing on stock exchanges in India or Outside India having networth >= Rs. 500 crores

b)  Unlisted Companies having networth >= Rs. 500 Crores

c)   Holding, Subsidiary, Associate and Joint ventures of the above companies.

1st April, 2017 : Phase 2 - Mandatory basis for

a)  All Companies listed / in process of listing on stock exchanges in India or Outside India which were not covered in Phase 1

b)  Unlisted Companies having networth Rs. 500 Crores > Rs. 250 Crores

c)    Holding, Subsidiary, Associate and Joint ventures of the above companies.

4)  Our Company is not covered in the prescribed class of Companies, still do we need to apply #IndAS ?

Companies not covered by the above prescribed class shall continue to apply existing accounting standards notified in Companies (Accounting Standards) Rules, 2006. However if an entity chooses to implement #IndAS voluntarily, entity shall be required to follow the #IndAS for all the subsequent financial statements.

5) Our company is listed on SME platform of Stock exchanges, should we apply #IndAS ?

Companies listed on SME stock exchanges are not required to apply IndAS, however other conditions are met then application of #IndAS is attracted

The above Rules i.e. Companies (Indian Accounting Standards) Rules, 2015 and Companies (Accounting Standards) Rules, 2006 are amended with the Notification dated 30th March, 2016 with Companies (Indian Accounting Standards) Amendment Rules, 2016 and Companies (Accounting Standards) Rules, 2016 respectively.

It is pertinent to note that The Companies (Indian Accounting Standards) Amendment Rules, 2016 clarifies that banking and insurance companies shall apply the Indian Accounting Standards (#IndAS) as notified by the Reserve Bank of India (RBI) and the Insurance Regulatory Development Authority (IRDA) respectively. These rules have notified the applicability of Ind AS to non-banking financial companies (NBFCs)

Naresh Soneji

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