Ind AS is here; but are we ready to implement it practically?

Aman   April 5, 2020

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Ind AS-Introduction

Ind AS are the new set of accounting standards, issued by the Ministry of Corporate Affairs (MCA) in consultation with the National Advisory Committee on Accounting Standards (NACAS) on February 16, 2015. It did this under the supervision and control of the Accounting Standards Board (ASB) of ICAI on February 16, 2015. As of date, there are 39 Ind AS notified by the MCA.

The Ind AS are named and numbered in the same way as the corresponding IFRS.  The application of Ind AS is based on the listing status and net worth of a company.

So, one can question why we found the need of implementing Indian accounting standards?

 

What is the main purpose of implementation?

As we all are familiar with Accounting standards that prevailed and still prevailing for enterprises that are not obliged to follow Ind AS, but accounts prepared based on the accounting standards were not in line with the standards and principles applicable globally (IFRS). Due to this, investors were not able to compare the financial statements of Indian companies with other foreign companies.

But keeping in mind the drastic difference between our accounting standards and the standards prescribed by the International Financial Reporting Standards, Standards prescribed under IFRS are not implemented in their original form but a converged form is proposed known as IndAS.

Moreover, the introduction of Ind AS will bring consistency in the accounting practices and principles followed by companies in India and other companies across the world, leading to enhanced accessibility and acceptability of financial statements by global investors.

 

Applicability of Ind AS

Mandatory requirement: Companies are required to follow Ind AS from the Financial year 2015-2016. For the Financial year 2018-19, following is the limit for companies required to follow Ind AS:

     1. Companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India;

    2.  Unlisted companies having net worth of Rs. 250 crore or more; and

    3. Holding, subsidiary, joint venture or associate companies of companies covered in point (1) and (2) above.

 

Non-Banking Financial Companies (NBFCs)

 

2018-19

1.      NBFCs having net worth of rupees five hundred crore or more;

2.      Holding, subsidiary, joint venture or associate companies of companies covered under point (1) above.

 

2019-20

1.      NBFCs whose equity or debt securities are listed or in the process of listing on any stock exchange in India or outside India and having net worth less than Rs. 500 crore;

2.      NBFCs, that are unlisted companies, having net worth of Rs. 250 crore or more but less than Rs. 500 crore; and

3.      Holding, subsidiary, joint venture or associate companies of companies covered under point (1) and (2) above.

In our upcoming blogs we will cover various phases of implementation of Ind AS as notified by the MCA and after that I will start covering each Ind AS thoroughly including the practical implementation in very simplified manner.

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About Author - Aman

I am Aman Daultani, a Chartered Accountant by profession, co-founder of Tax Ninja, and a passionate blogger.
My core areas include practical application of Ind AS in the preparation of financial statements. I focus on the practical implementation of Ind AS rather than just interpreting the law.
I believe "Knowledge comes from learning and wisdom comes from understanding it practically."

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