Finally the wait is over. Indian Accounting Standards converged with IFRS are here. After issuing the revised roadmap for implementing Ind AS in January 2015, the Ministry of Corporate Affairs (MCA) has come up with the phase wise adoption of Ind AS, India’s Accounting Standards converged with IFRS. India has chosen the path of IFRS convergence and not adoption. The MCA has issued a notification dated 16 February 2015 announcing the Companies (Indian Accounting Standards) Rules, 2015 for the applicability of Ind AS. A total of 39 Ind AS has been notified. Now let’s look into the various aspects of Ind AS one by one.
The application of Ind AS is based on the listing status and net worth of a Company. Also these standards will be applied to various threshold companies in phased out manner. The below table summarises the various phase of application –
|1||Companies having Net worth of greater than or equal to INR 500 crore.||1 April 2016|
|2||Listed Companies and companies having Net worth of greater than or equal to INR 250 crore.||1 April 2017|
– Companies covered under phase 1 will also require comparative Ind AS information for the period 1 April 2015 to 31 March 2016. So the companies under this phase have already started their Ind AS conversion planning and activities.
It is important to note that the Ind AS will also apply to subsidiaries, joint ventures, associates and holding companies of the entities covered in various phases. Companies not covered by the new Ind AS rules can voluntarily adopt Ind AS. Once adopted, they cannot switch back.
The following Companies are exempted from applying Ind AS –
The notification has clarified number of open points, few are stated below –
As stated earlier, India has chosen the path of IFRS conversion and not adoption. Therefore, there are few differences between Ind AS and IFRS. These are known as carve outs. These carve outs are there keeping in mind Indian economic environment and reporting requirements. A few are stated below –
Implementing Ind AS is likely to impact key performance metrics. Ind AS implementation can have wide range of impact on Company’s processes, systems, controls, financials, income taxes and agreements. The Companies need to carefully examine and evaluate the Ind AS transition provision and accounting policy elections. Indian Inc. now needs to get ready to embrace this transformation.
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