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.
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 1st 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.
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