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Ind AS Applicability and Compliances Guide - Indian Accounting Standards

Ind AS Applicability and Compliances Guide - Indian Accounting Standards

The business landscape is rapidly changing as new ways of conducting business are emerging. As the business complexities increased, the existing accounting standards lacked provisions to cater to these changes. This gave rise to the Indian Accounting Standards, popularly known as Ind AS. Ind AS are the Indian version of International Financial Reporting Standards (IFRS) which are global standards governing the accounting aspects. This guide covers everything you need to know about Ind AS, Ind AS applicability, and Compliances.

Ind AS Applicability

Ind AS became applicable in a phase-wise manner. Following is the timeline of applicability of Ind AS:

A. For Companies (Other than the Banks, Non-banking Financial Companies, and Insurance Companies)

Phase-I

  1. 1st April 2015 and onwards: Application on a Voluntary basis for all the companies along with comparatives.
  2. 1st April 2016: Mandatory for the following companies:
  • Companies listed or in the process of listing in India or outside India with a net worth equal to or more than Rs. 500 crores
  • Unlisted companies having a net worth equal to or more than Rs. 500 crores
  • Holding, subsidiary, joint venture, and associate of the above companies

Phase-II: From 1st April 2017

  • All the companies that are listed or in the process of listing in India or outside India that are not covered in Phase-I
  • Unlisted companies with a net worth of Rs. 250 crores or above but less than Rs. 500 crores
  • Holding, subsidiary, joint venture, and associate of the above companies

Key Points 

  • Companies that are listed on the SME exchange are not required to apply Ind AS on a mandatory basis
  • Once the company starts to follow Ind AS, whether voluntarily or mandatorily, then it shall follow Ind AS for all the subsequent financial statements even though any of the criteria does not subsequently apply to it.
  • The companies who satisfy the above criteria in an accounting year shall immediately apply the Ind AS in subsequent accounting year with comparatives. The Ind AS shall be applicable on both standalone and consolidated financial statements.
  • The remaining companies not covered above shall continue to apply the existing Accounting Standards as notified in the Companies (Accounting Standards) Rules, 2006.

B. For Scheduled Commercial Banks (Excluding RRBs), Non-Banking Financial Companies, Insurers, and Insurance Companies

1) Non-Banking Financial Companies (NBFCs)

Phase-I: From 1st April 2018:

  • Listed or unlisted NBFCs with a net worth of Rs. 500 crores or more
  • Holding, subsidiary, joint venture, and associate companies of the above companies excluding those that are already covered under the corporate roadmap.

Phase-II: From 1st April 2019

  • NBFCs with a net worth of less than Rs. 500 crores whose equity or debt securities are listed or in the process of listing on the stock exchange in India
  • Unlisted NBFCs with a net worth of Rs. 250 crores or more but less than Rs. 500 crores
  • Holding, subsidiary, joint venture, and associate companies of the above companies excluding those that are already covered under the corporate roadmap.

Key Points

The Ind AS shall be applied on both standalone and consolidated financial statements. Also, NBFCs with a net worth of less than Rs. 250 crores shall not apply Ind AS on a voluntary basis.

2) Scheduled Commercial Banks (Excluding Regional Rural Banks)

Ind AS were required to be implemented by Scheduled Commercial Banks (excluding RRBs) from 1st April 2018. However, vide press release dated 5th April 2018, it was deferred for one year. Subsequently, it was again deferred till further notice vide notification dated 22nd March 2019.

3) Insurance Companies / Insurers

The requirement to implement Ind AS by the insurers and insurance companies has been deferred by the IRDAI till further notice.

List of Ind AS Applicability

Following is the list of Ind AS applicability to the organizations:

Ind AS 101 First time adoption of Indian Accounting Standards
Ind AS 102 Share Based Payment
Ind AS 103 Business Combinations
Ind AS 104 Insurance Contracts
Ind AS 105 Non-Current Assets Held for Sale and Discontinued Operations
Ind AS 106 Exploration for and Evaluation of Mineral Resources
Ind AS 107 Financial Instruments: Disclosures
Ind AS 108 Operating Segments
Ind AS 109 Financial Instruments
Ind AS 110 Consolidated Financial Statements
Ind AS 111 Joint Arrangements
Ind AS 112 Disclosure of Interests in Other Entities
Ind AS 113 Fair Value Measurement
Ind AS 114 Regulatory Deferral Accounts
Ind AS 115 Revenue from Contracts with Customers
Ind AS 116 Leases
Ind AS 1 Presentation of Financial Statements
Ind AS 2 Inventories
Ind AS 7 Statement of Cash Flows
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Ind AS 10 Events occurring after Reporting Period
Ind AS 12 Income Taxes
Ind AS 16 Property, Plant, and Equipment
Ind AS 19 Employee Benefits
Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 24 Related Party Disclosures
Ind AS 27 Separate Financial Statements
Ind AS 28 Investments in Associates
Ind AS 29 Financial Reporting in Hyperinflationary Economies
Ind AS 32 Financial Instruments: Presentation
Ind AS 33 Earnings per Share
Ind AS 34 Interim Financial Reporting
Ind AS 36 Impairment of Assets
Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 38 Intangible Assets
Ind AS 40 Investment Property
Ind AS 41 Agriculture

Ind AS Compliances

1) Once the Ind AS becomes applicable, whether due to voluntary adoption or otherwise, the companies shall adhere to the compliances of Ind AS applicable to them. The financial statements under the Companies Act, 2013 are governed by Schedule III. There are 3 divisions in Schedule III:

  • Division-I: Applicable to companies to whom accounting standards are applicable.
  • Division-II: Applicable to companies to whom Ind AS compliance are applicable
  • Division-III: Applicable to Non-Banking Financial Companies to whom Ind AS are applicable.

2) All the companies (excluding banks, NBFCs and insurance companies) preparing financial statements as per Ind AS shall do so in accordance with the Division-II of Schedule-III (also known as the Ind AS Schedule-III) as well as the Guidance Note on Division-II of Schedule-III of the Companies Act, 2013 (also known as Ind AS Guidance Note). In the case of NBFCs, Division-III shall become applicable.

However, companies referred to in Section 129(1) of the Companies Act, 2013 are not required to comply with the requirements of Ind AS Schedule III. This includes an insurance company, banking company, or company engaged in the generation or supply of electricity for which the form for presentation of financial statements has been specified under any other act that governs such class of companies.

However, in the case of companies engaged in the generation and supply of electricity, the Electricity Act, 2003 has not specified any format for the presentation of Financial Statements. Therefore, Ind AS Schedule-III can be followed by such companies till any other format is being prescribed by the relevant act.

3) The listed companies shall follow the guidelines issued by way of a circular by SEBI that prescribes the format for publishing quarterly, half-yearly, and annual financial results that are guided by the provisions of Ind AS and Ind AS Schedule-III. The companies may make suitable modifications.

4) The components of financial statements prepared in accordance with Ind AS compliance include:

  • Balance Sheet
  • Statement of Profit & Loss
  • Statement of Cash Flows
  • Statement of Changes in Equity
  • Notes

If you have any queries regarding Ind AS applicability and compliances associated with Ind AS, please feel free to contact the ASC Group.

Also Read: Ind AS Exemptions Exceptions Indian Accounting Standard Applicability

 

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