APPLICABILITY Indian Accounting Standard “IND AS”

APPLICABILITY

Indian Accounting Standard

“IND AS”

Short Summary:

In this Flash editorial, the author begins by referring the provisions of Indian Accounting Standards (Ind AS) as Companies (Indian Accounting Standards) Rules, 2015 vide Notification dated February 16, 2015 and the applicability of Ind AS for certain class of companies.

With the beginning of financial year 2016-17, the era of implementation of Ind AS in India has also begun for the companies falling under Phase I of the MCA roadmap for implementation of Ind AS. The MCA has also laid down roadmap for implementation of Ind AS for banks, NBFCs and insurance companies from the financial year 2018-19 onwards. 

This is article. 345 of the series of editorials written by the author on corporate laws {Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

Objective

The objective of this Ind AS is to ensure that an entity’s first Ind AS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that:

(a) is transparent for users and comparable over all periods presented;

(b) provides a suitable starting point for accounting in accordance with Indian Accounting Standards (Ind ASs); and

(c) can be generated at a cost that does not exceed the benefits.

Applicability Chart of Indian Accounting Standards (IND As)

On the basis of applicability of IND As, it has been divided into 3 Categories, i.e.

Phase I - Companies:

For Companies other than: 1. Banks, 2. NBFCs and 3. Insurance

1st April 2015 or thereafter (with Comparatives): Voluntary Basis for any company and its holding, subsidiary, JV or associate company

1st April 2016: Mandatory Basis

S. No.	Date	Financial Year	Listed	Unlisted
1.	01.04.2016	2016-17	Net worth >_ INR 500 crore (Net worth 500 crore or more)	Net worth> _INR 500 crore (Net worth 500 crore or more)
	Parent, Subsidiary, Associate and J. V of Above w.e.f. 01.04.2016
2.	01.04.2017	2017-18	All Listed Companies	Net Worth 250 crore or more but less 500 crore
	Parent, Subsidiary, Associate and J. V of Above w.e.f. 01.04.2017

1.      Whether Company listed on SME required to apply IND AS?

No, Companies listed on SME exchange not required to apply Ind AS

2.      Companies not covered under 1^st Type of Companies, which standards shall follow?

Companies not covered by the above roadmap shall continue to apply existing Accounting Standards notified in Companies (Accounting Standards) Rules, 2006

  

3.      What about Company having net worth less then Rs. 250 Crore?

Company having net worth below 250 crore shall not apply Ind AS.

Phase II - Companies:

Non-Banking Financial Companies (NBFC’s)

S. No.	Date	Financial Year	Listed	Unlisted
1.	01.04.2018	2018-19	Net worth >_ INR 500 crore (Net worth 500 crore or more)	Net worth> _INR 500 crore (Net worth 500 crore or more)
	Holding, Subsidiary, JV and Associate companies of above NBFC other than those already covered under corporate roadmap shall also apply from said date
2.	01.04.2019	2019-20	Net Worth of Less than 500 Crore	Net Worth 250 crore or more but less 500 crore
	Holding, Subsidiary, JV and Associate companies of above NBFC other than those already covered under corporate roadmap shall also apply from said date

4.      IND As shall be applicable on Individual or Consolidated Financial Statement?

Applicable for both Consolidated and individual Financial Statements

5.      What about unlisted NBFC having net worth less then Rs. 250 Crore?

NBFC having net worth below 250 crore shall not apply Ind AS.

                       

Phase III - Companies:

Scheduled Commercial banks (excluding RRB’s) and

Insurers/Insurance companies

From 1st April, 2018:

    1.    Apply to all Scheduled Commercial banks (excluding RRB’s) and Insurers/Insurance companies.

2  2.  Holding, subsidiary, JV and Associates companies of scheduled commercial banks (excluding 

         RRB’s) shall also apply from the said date.

    3.      Applicable for both Consolidated and individual Financial Statements

Important Note: Urban Cooperative banks (UCBs) and Regional Rural banks (RRBs) are not required to apply Ind AS.

   1.     Once IND AS opted by any company for its financial statement can it be revoked?

Once a company starts following the Indian Accounting Standards (Ind AS) either voluntarily or mandatorily on the basis of criteria specified above, it shall be required to follow the Indian Accounting Standards (Ind AS) for all the subsequent financial statements even if any of the criteria specified in this rule does not subsequently apply to it.

             

     2.     If company falls under IND As rules, having its Holding, Subsidiary, JV or Associate Companies, will IND As apply on them, even company not falling in threshold limits?

Holding, Subsidiary, Joint Venture or Associate Companies of companies covered above required to prepare their financial statement as per IND As.

    3.     For calculating Net worth Standalone financial statement shall be considered or consolidated?

Standalone financial statement shall be consider for calculation of Net Worth.

    

    4.     For calculating Net worth Standalone financial statement shall be considered or consolidated?

Standalone financial statement shall be consider for calculation of Net Worth.

     5.     Whether these rules shall apply to Indian incorporated Subsidiary, Associate or Joint Ventures of Foreign Company?

Indian company which is a subsidiary, associate, joint venture and other similar entities of a foreign company shall prepare its financial statements in accordance with the Indian Accounting Standards (Ind AS) either voluntarily or mandatorily if it meets the criteria as specified in sub-rule

   6.     Whether these rules shall apply to overseas incorporate Subsidiary, Associate or Joint Ventures of Indian Company?

Overseas subsidiary, associate, joint venture and other similar entities of an Indian company may prepare its standalone financial statements in accordance with the requirements of the specific jurisdiction

    7.     If company meet first time threshold limit on 31 march 2017, then from which year IND As applicable on that Company?

The companies meeting threshold for the first time as on 31st March, 2017 shall apply Ind AS for the financial year 2017-18 onwards.

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.