CCH Ind AS Practices Demystified By CA Santosh Maller
CCH Ind AS Practices Demystified By CA Santosh Maller
Need for the book
With effect from 1 April 2016, Indian Accounting Standards (Ind AS), is new accounting norm for listed and unlisted companies with net worth in excess of Rs 500 crore (phase I). As per some estimates, approximately 370 companies/groups, covered in phase I of Ind AS roadmap, have applied Ind AS in financial year 2016-17. With effect from financial years beginning from 1 April 2017, remaining listed companies and those with net worth in excess of Rs. 250 crores (phase I) would be applying Ind AS.
Further, on 28 March, 2018, the Ministry of Corporate Affairs (MCA) issued Companies (Indian Accounting Standards) Amendment Rules, 2018 which amended the Ind AS standards and issued new Ind AS standards. These amendments and new standards are effective from financial year beginning from 1 April, 2018. The new/ revised Ind AS standards/ appendices include: Ind AS 115 Revenue from Contracts with Customers including consequential amendments to other Ind AS standards; Appendix B, Foreign Currency Transactions and Advance Consideration to Ind AS 21 The Effects of Changes in Foreign Exchange Rates; and amendments to a few other standards.
Ind AS transition had significant impact on, not only, the financial results of many of these companies, but has also caused far reaching consequential business impact. Many companies reported a change in their key financial ratios, such as earnings per share, price-earnings ratio, return on capital employed and gross margin ratio. The new requirements under Ind AS with regards to classification of debt and equity caused changes, such as net worth, debt–equity ratio and interest coverage ratios. Companies were initially spooked by the uncertainties around tax consequences of the Ind AS, which have been largely put to rest by the Financial Act, 2017. In many cases, there have been significant regulatory issues, such as control assessment under Ind AS being different from that under regulations such as the Companies Act, IRDA, SEBI takeover code, etc.
Ind AS also contains several areas involving application of significant management judgments and many aspects of financial reporting are estimates. It is pertinent to examine the Ind AS application and implementation issues. Therefore, it would be fitting for these Ind AS phase II companies to leverage on the learning and experiences of bigger phase I companies.
Towards this end, this book attempts to provide insights on how notable companies and early adopters of Ind AS have transitioned to Ind AS.
This book is intended to help the companies to identify Ind AS requirements that are relevant to then and evaluate various accounting policy choice available under Ind AS. For those in the process of preparing their annual Ind AS financial statements, the disclosure-related issues would be useful to benchmark with the Ind AS/IFRS disclosures of major companies.
About the book
The book is structured in four parts mentioned as below:
Recent Development: A separate section “Recent Development” extensively covers the recent updates including: the summarized requirements of changes introduced in Companies (Indian Accounting Standards) Amendment Rules, 2018 issued by the MCA on 28 March, 2018; recent Ind AS interpretative guidance issued by the ICAI, and FAQs on MAT for Ind AS compliant companies issued by the Central Board of Direct Tax.
Part I – It covers Ind AS summaries that provide snapshots of key aspects of all Ind AS standards in an easy to understand, concise and simplified manner.
Part II – This part deals with key practical issues arising under Ind AS along with, perhaps, more importantly, the real-life instances of the issue amongst leading Indian and international companies. The endeavor is to explain complex requirements, including financial instruments and business combinations, in a lucid manner with simple examples and journal entries, followed by extracts from financial statements/results of companies demonstrating their experiences on dealing with the issue, along with the Author’s view.
Ind AS contains extensive presentation and disclosure requirements. Part II includes a separate chapter dedicated to Ind AS presentation and disclosure requirements along with the extracts from real-life Ind AS financial statements/results of leading Indian companies as also from IFRS financial statements of major international companies.
The Finance Act, 2017 rationalised the tax provisions under section 115JB of the Income Tax Act, 1969, ie, MAT for Ind AS companies. One separate chapter dedicated for understanding these provisions. All the subsequent clarifications on MAT released by the CBDT have been covered in the Recent Development section in the starting of the book.
Part III (Appendices): includes a case study of a hypothetical company, which provides the transition journal entries and the illustrative first Ind AS financial statements for FY 2016-17 and subsequent financial statements for FY 2017-18. Part III also includes pertinent circulars, notifications, schedules and other key pronouncements related to Ind AS from various regulators.
About the Author
CA Santosh Maller
Author is a Chartered Accountant, having secured rank in CA exams, with about 16 years of extensive experience in accounting, audit and assurance fields. He has working experience with diverse companies, including multinational companies for IFRS & Ind AS GAAP conversion engagements, in India and overseas, in manufacturing, trading, telecom, real estate and shipping and logistics. He has been part of IFRS desk/ accounting technical professional practice group of a big audit firm for over 8 years. He had a working experience in London, during which he was closely associated with the IFRS standard-setting projects of the International Accounting Standards Board.
The author, is an alumnus of the Indian School of Business, Hyderabad, has been serving as a special invitee for Ind-AS on the ICAI’s, Accounting Standards Board and has been part of many study groups of the ICAI. He has authored several media articles on accounting and valuation and has been an eminent speaker on financial reporting and corporate governance, having conducted technical trainings.