Ind as applicability

A Presentation on Applicability of Ind AS to Indian Companies.

1. 2021
IND AS Applicability
CA DR. Prithvi Ranjan Parhi
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2. Sec 133 : Companies Act,2013
Central Government to Prescribe Accounting Standards.
TheCentralGovernmentmayprescribethestandardsofaccountingorany
addendumthereto,
asrecommendedbytheInstituteofCharteredAccountantsofIndia,
constitutedundersection3oftheCharteredAccountantsAct,1949,
inconsultationwithandafterexaminationoftherecommendationsmadeby
theNationalFinancialReportingAuthority.
ProvidedthatuntiltheNationalFinancialReportingAuthorityisconstitutedundersection132oftheCompaniesAct,2013(18of2013),the
CentralGovernmentmayprescribethestandardsofaccountingoranyaddendumthereto,asrecommendedbytheInstituteofChartered
AccountantsofIndia,constitutedundersection3oftheCharteredAccountantsAct,1949(38of1949),inconsultationwithandafter
examinationoftherecommendationsmadebyNationalAdvisoryCommitteeonAccountingStandardsConstitutedundersection210Aof
theCompaniesAct,1956".
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3. Sec 469 : Companies Act,2013
Power of Central Government to Make Rules
•(1)TheCentralGovernmentmay,bynotification,makerulesforcarryingouttheprovisionsofthisAct.
•(2)Withoutprejudicetothegeneralityoftheprovisionsofsub-section(1),theCentralGovernmentmaymakerulesfor
alloranyofthematterswhichbythisActarerequiredtobe,ormaybe,prescribedorinrespectofwhichprovisionisto
beormaybemadebyrules.
•(3)Anyrulemadeundersub-section(1)mayprovidethatacontraventionthereofshallbepunishablewithfinewhich
mayextendtofivethousandrupeesandwherethecontraventionisacontinuingone,withafurtherfinewhichmay
extendtofivehundredrupeesforeverydayafterthefirstduringwhichsuchcontraventioncontinues.
•(4)EveryrulemadeunderthissectionandeveryregulationmadebySecuritiesandExchangeBoardunderthisAct,shall
belaid,assoonasmaybeafteritismade,beforeeachHouseofParliament,whileitisinsession,foratotalperiodof
thirtydayswhichmaybecomprisedinonesessionorintwoormoresuccessivesessions,andif,beforetheexpiryofthe
sessionimmediatelyfollowingthesessionorthesuccessivesessionsaforesaid,bothHousesagreeinmakingany
modificationintheruleorregulationorbothHousesagreethattheruleorregulationshouldnotbemade,theruleor
regulationshallthereafterhaveeffectonlyinsuchmodifiedformorbeofnoeffect,asthecasemaybe;so,however,that
anysuchmodificationorannulmentshallbewithoutprejudicetothevalidityofanythingpreviouslydoneunderthatrule
orregulation.
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4. Companies (Indian Accounting Standards) Rules, 2015.
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5. Companies (Indian Accounting Standards) Rules, 2015.
•1.Shorttitleandcommencement.-
•(1)TheserulesmaybecalledtheCompanies(IndianAccounting
Standards)Rules,2015.
•(2)Theyshallcomeintoforceonthe1stdayofApril,2015
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6. 2.Definitions.
(1)Intheserules,unlessthecontextotherwiserequires,-
•(a)“AccountingStandards”meansthestandardsofaccounting,oranyaddendumtheretofor
companiesorclassofcompaniesasspecifiedinrule3;
•(b)“Act”meanstheCompaniesAct,2013(18of2013);
•(c)“Annexure”inrelationtotheserulesmeanstheAnnexurecontainingtheIndianAccounting
Standards(IndAS)appendedtotheserules;
•(d)“entity”meansacompanyasdefinedinclause(20)ofsection2oftheAct;
•(e)“financialstatements”meansfinancialstatementsasdefinedinclause(40)ofsection2of
theAct;
•(f)“networth”shallhavethemeaningassignedtoitinclause(57)ofsection2oftheAct.
(2)Wordsandexpressionsusedhereinandnotdefinedintheserulesbutdefinedin
theActshallhavethesamemeaningrespectivelyassignedtothemintheAct.
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7. Section 2(57)
“Networth”means
theaggregatevalueof
•thepaid-upsharecapitaland
•allreservescreatedoutoftheprofits,
afterdeductingtheaggregatevalueof
•theaccumulatedlosses,
•deferredexpenditureand
•miscellaneousexpenditurenotwrittenoff,aspertheauditedbalancesheet,
butdoesnotincludereservescreated
-outofrevaluationofassets,write-backofdepreciationandamalgamation;
© CA Dr. Prithvi Ranjan Parhi

8. Section 2(64)
“Paid-upsharecapital”or“sharecapitalpaid-up”meanssuchaggregate
amountofmoneycreditedaspaid-upasisequivalenttotheamount
receivedaspaid-upinrespectofsharesissuedand
alsoincludesanyamountcreditedaspaid-upinrespectofsharesofthe
company,
butdoesnotincludeanyotheramountreceivedinrespectofsuchshares,
bywhatevernamecalled;
© CA Dr. Prithvi Ranjan Parhi

9. Section 2(81)
“Securities”meansthesecuritiesasdefinedinclause(h)ofsection2ofthe
SecuritiesContracts(Regulation)Act,1956(42of1956);
© CA Dr. Prithvi Ranjan Parhi

10. Securities
•“securities”include—
•shares,scrips,stocks,bonds,debentures,
debenturestockorothermarketablesecuritiesof
alikenatureinorofanyincorporatedcompany
orotherbodycorporate;
© CA Dr. Prithvi Ranjan Parhi

11. 3.Applicability of Accounting Standards. –
•(1)TheaccountingstandardsasspecifiedintheAnnexuretotheserulesto
becalledtheIndianAccountingStandards(IndAS)shallbetheaccounting
standardsapplicabletoclassesofcompaniesspecifiedinrule4.
•(2)TheAccountingstandardsasspecifiedinAnnexuretotheCompanies
(AccountingStandards)Rules,2006shallbetheAccountingStandards
applicabletothecompaniesotherthantheclassesofcompaniesspecified
inrule4.
•(3)AcompanywhichfollowstheIndianAccountingStandards(IndAS)
specifiedinAnnexuretotheserulesinaccordancewiththeprovisionsofrule
4shallfollowsuchstandardsonly.
•(4)AcompanywhichfollowstheaccountingstandardsspecifiedinAnnexure
totheCompanies(AccountingStandards)Rules,2006shallcomplywith
suchstandardsonlyandnottheStandardsspecifiedinAnnexuretothese
rules.
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12. 4. Obligation to comply with Indian Accounting Standards
(Ind AS).-
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13. Obligation to Comply
(1)TheCompaniesandtheirauditorsshallcomplywiththeIndianAccountingStandardsIndAS)
specifiedinAnnexuretotheserulesinpreparationoftheirFinancialstatementsandauditrespectively,
inthefollowingmanner,namely:-
(i)anycompanyanditsholding,subsidiary,jointventureorassociatecompanymaycomplywiththe
IndianAccountingStandards(IndAS)forfinancialstatementsforaccountingperiodsbeginningonor
after1stApril,2015,withthecomparativesfortheperiodsendingon31stMarch,2015,orthereafter;
(ii)thefollowingcompaniesshallcomplywiththeIndianAccountingStandards(IndAS)forthe
accountingperiodsbeginningonorafter1stApril,2016,withthecomparativesfortheperiodsending
on31stMarch,2016,orthereafter,namely:-
(a)companieswhoseequityordebtsecuritiesarelistedorareintheprocessofbeinglistedonanystockexchange
inIndiaoroutsideIndiaandhavingNetworthofrupeesfivehundredcroreormore;
(b)companiesotherthanthosecoveredbysub-clause(a)ofclause(ii)ofsub-rule(1)andhavingnetworthof
rupeesfivehundredcroreormore;
(c)holding,subsidiary,jointventureorassociatecompaniesofcompaniescoveredbysub-clause(a)ofclause(ii)of
sub-rule(1)andsub-clause(b)Ofclause(ii)ofsub-rule(1)asthecasemaybe;and
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14. Obligation to Comply
(iii)thefollowingcompaniesshallcomplywiththeIndianAccountingStandards(IndAS)fortheaccountingperiods
beginningonorafter1stApril,2017,withthecomparativesfortheperiodspendingon31stMarch,2017,or
thereafter,namely:-
(a)companieswhoseequityordebtsecuritiesarelistedorareintheprocessofbeinglistedonanystock
exchangeinIndiaoroutsideIndiaandhavingnetworthoflessthanrupeesfivehundredcrore;
(b)companiesotherthanthosecoveredinclause(ii)ofsub-rule(1)andsub-clause(a)ofclause(iii)ofsub-
rule(1),thatis,unlistedcompanieshavingnetworthofrupeestwohundredandfiftycroreormorebutless
thanrupeesfivehundredcrore.
(c)holding,subsidiary,jointventureorassociatecompaniesofcompaniescoveredundersub-clause(a)of
clause(iii)ofsub-rule(1)andsub-clause(b)ofclause(iii)ofsub-rule(1),asthecasemaybe:
Providedthatnothinginthissub-rule,exceptclause(i),shallapplytocompanieswhosesecuritiesarelistedorare
intheprocessofbeinglistedonSMEexchangeasreferredtoinChapterXBorontheInstitutionalTrading
PlatformwithoutinitialpublicofferinginaccordancewiththeprovisionsofChapterXCoftheSecuritiesand
ExchangeBoardofIndia(IssueofCapitalandDisclosureRequirements)Regulations,2009.
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15. Obligation to Comply : NBFC
(iv)Notwithstandingtherequirementofclauses(i)to(iii),Non-BankingFinancialCompanies(NBFCs)
shallcomplywiththeIndianAccountingStandards(IndASs)inpreparationoftheirfinancialstatements
andauditrespectively,inthefollowingmanner,namely:-
•(a)ThefollowingNBFCsshallcomplywiththeIndianAccountingStandards(IndAS)foraccounting
periodsbeginningonorafterthe1stApril,2018,withcomparativesfortheperiodsendingon31st
March,2018,orthereafter—
•(A)NBFCshavingnetworthofrupeesfivehundredcroreormore;
•(B)holding,subsidiary,jointventureorassociatecompaniesofcompaniescoveredunderitem(A),otherthan
thosealreadycoveredunderclauses(i),(ii)and(iii)ofsub-rule(1)ofrule4.
•(b)ThefollowingNBFCsshallcomplywiththeIndianAccountingStandards(IndAS)foraccounting
periodsbeginningonorafterthe1stApril,2019,withcomparativesfortheperiodsendingon
31stMarch,2019,orthereafter—
•(A)NBFCswhoseequityordebtsecuritiesarelistedorintheprocessoflistingonanystockexchangeinIndiaor
outsideIndiaandhavingnetworthlessthanrupeesfivehundredcrore;
•(B)NBFCs,thatareunlistedcompanies,havingnetworthofrupeestwo-hundredandfiftycroreormorebutless
thanrupeesfivehundredcrore;and
•(C)holding,subsidiary,jointventureorassociatecompaniesofcompaniescoveredunderitem(A)oritem(B)of
sub-clause(b),otherthanthosealreadycoveredinclauses(i),(ii)and(iii)ofsub-rule(1)oritem(B)ofsub-clause
(a)ofclause(iv).
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16. Explanation for NBFC Consolidation
•Explanation.-Forthepurposesofclause(iv),ifinagroupofCompanies,some
entitiesapplyAccountingStandardsspecifiedintheAnnexuretotheCompanies
(AccountingStandards)Rules,2006andothersapplyaccountingstandardsas
specifiedintheAnnexuretotheserules,insuchcases,forthepurposeofindividual
financialstatements,theentitiesshouldapplyrespectivestandardsapplicableto
them.Forpreparationofconsolidatedfinancialstatements,thefollowingconditions
aretobefollowed,namely:-
•(i)whereanNBFCisaparent(atultimateleveloratintermediatelevel),andprepares
consolidatedfinancialstatementsasperAccountingStandardsspecifiedintheAnnexuretothe
Companies(AccountingStandards)Rules,2006,anditssubsidiaries,associatesandjoint
ventures,ifcoveredbyclause(i),(ii)and(iii)ofsub-rule(1)hastoprovidetherelevant
financialstatementdatainaccordancewiththeaccountingpoliciesfollowedbytheparent
companyforconsolidationpurposes(untiltheNBFCiscoveredunderclause(iv)ofsub-rule
(1);
•(ii)whereaparentisacompanycoveredunderclause(i),(ii)and(iii)ofsub-rule(1)andhas
anNBFCsubsidiary,associateorajointventure,theparenthastoprepareIndAS-compliant
consolidatedfinancialstatementsandtheNBFCsubsidiary,associateandajointventurehas
toprovidetherelevantfinancialstatementdatainaccordancewiththeaccountingpolicies
followedbytheparentcompanyforconsolidationpurposes(untiltheNBFCiscoveredunder
clause(iv)ofsub-rule(1).
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17. Obligation to Comply : Banks
•(v)Notwithstandingclauses(i)to(iv),theholding,subsidiary,
jointventureorassociatecompaniesofScheduledcommercial
banks(excludingRRBs)wouldberequiredtoprepareIndAS
basedfinancialstatementsforaccountingperiodsbeginning
from1stApril,2018onwards,withcomparativesforthe
periodsending31stMarch,2018orthereafter:
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18. Explanations
Explanation1.
•SMEExchangeshallhavethesamemeaningasassignedtoitin
ChapterXBoftheSecuritiesandExchangeBoardofIndia(Issueof
CapitalandDisclosureRequirements)Regulations,2009.
Explanation2.–
“Comparatives”shallmeancomparativefiguresforthepreceding
accountingperiod.
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19. Commencement of Application
(2)Forthepurposesofcalculationofnetworthofcompaniesunder
c
[clause(i),(ii)and(iii)ofsub-rule(1)],the
followingprinciplesshallapply,namely:-
(a)thenetworthshallbecalculatedinaccordancewiththestand-alonefinancialstatementsofthecompanyason
31stMarch,2014orthefirstauditedfinancialstatementsforaccountingperiodwhichendsafterthatdate;
(b)forcompanieswhicharenotinexistenceon31stMarch,2014oranexistingcompanyfallingunderanyof
thresholdsspecifiedin[clause(i),(ii)and(iii)ofsub-rule(1)]forthefirsttimeafter31stMarch,2014,thenetworth
shallbecalculatedonthebasisofthefirstauditedfinancialstatementsendingafterthatdateinrespectofwhichit
meetsthethresholdsspecifiedin[clause(i),(ii)and(iii)ofsub-rule(1)].
Explanation.-Forthepurposesofsub-clause(b),thecompaniesmeetingthespecifiedthresholdsgivenin[clause
(i),(ii)and(iii)ofsub-rule(1)]forthefirsttimeattheendofanaccountingyearshallapplyIndianAccounting
Standards(IndAS)fromtheimmediatenextaccountingyearinthemannerspecifiedin[clause(i),(ii)and(iii)of
sub-rule(1)].
Illustration.-
(i)Thecompaniesmeetingthresholdforthefirsttimeason31stMarch,2017shallapplyIndASforthefinancialyear
2017-18onwards.
(ii)Thecompaniesmeetingthresholdforthefirsttimeason31stMarch,2018shallapplyIndASforthefinancialyear
2018-19onwardsandsoon.
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20. Commencement of Application
•(2A)ForthepurposesofcalculationofnetworthofNon-BankingFinancialCompaniescoveredunderclause
(iv)ofsub-rule(1),thefollowingprinciplesshallapply,namely:-
•(a)thenetworthshallbecalculatedinaccordancewiththestand-alonefinancialstatementsoftheNBFCsas
on31stMarch,2016orthefirstauditedfinancialstatementsforaccountingperiodwhichendsafterthatdate;
•(b)forNBFCswhicharenotinexistenceon31stMarch,2016oranexistingNBFCfallingfirsttime,after31st
March,2016,thenetworthshallbecalculatedonthebasisofthefirstauditedstand-alonefinancialstatements
endingafterthatdate,inrespectofwhichitmeetsthethresholds.
•Explanation.-
•Forthepurposesofsub-clause(b),theNBFCsmeetingthespecifiedthresholdsgiveninsubclause(b)of
clause(iv)ofsub-rule(1)forthefirsttimeattheendofanaccountingyearshallapplyIndianAccounting
Standards(IndASs)fromtheimmediatenextaccountingyearinthemannerspecifiedinsubclause(b)of
clause(iv)ofsub-rule(1).
Illustration–
•(i)TheNBFCsmeetingthresholdforthefirsttimeason31stMarch,2019shallapplyIndASforthefinancial
year2019-20onwards.
•(ii)TheNBFCsmeetingthresholdforthefirsttimeason31stMarch,2020shallapplyIndASforthefinancial
year2020-21onwardsandsoon.
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21. Application
•(3)StandardsinAnnexuretotheserulesoncerequired
tobecompliedwithinaccordancewiththeserules,
shallapplytoboth
•stand-alonefinancialstatementsand
•consolidatedfinancialstatements.
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22. Ind AS Effective on End Date
•(4)CompaniestowhichIndianAccountingStandards(IndAS)are
applicableasspecifiedintheserulesshallpreparetheirfirstsetof
financialstatementsinaccordancewiththeIndianAccountingStandards
(IndAS)effectiveattheendofitsfirstIndianAccountingStandards(Ind
AS)reportingperiod.
Explanation.-
•Fortheremovalofdoubts,itisherebyclarifiedthatthecompanies
preparingfinancialstatementsapplyingtheIndianAccountingStandards
(IndAS)fortheaccountingperiodbeginningon1stApril,2016[or
1stApril,2018,asthecasemaybe]shallapplytheIndianAccounting
Standards(IndAS)effectiveforthefinancialyearendingon31stMarch,
2017[or31stMarch,2019,asthecasemaybe].
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23. Subsidiary, Associate, Joint Venture
(5)Overseassubsidiary,associate,jointventureandothersimilarentitiesof
anIndiancompanymayprepareitsstandalonefinancialstatementsin
accordancewiththerequirementsofthespecificjurisdiction:
ProvidedthatsuchIndiancompanyshallprepareitsconsolidatedfinancial
statementsinaccordancewiththeIndianAccountingStandards(IndAS)ifit
meetsthecriteriaasspecifiedinsub-rule(1).
(6)Indiancompanywhichisasubsidiary,associate,jointventureandother
similarentitiesofaforeigncompanyshallprepareitsfinancialstatementsin
accordancewiththeIndianAccountingStandards(IndAS)ifitmeetsthe
criteriaasspecifiedinsub-rule(1).
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24. Consistent Application
(7)AnycompanyoptingtoapplytheIndianAccountingStandards(IndAS)
voluntarilyasspecifiedinsub-rule(1)foritsfinancialstatementsshallprepare
itsfinancialstatementsaspertheIndianAccountingStandards(IndAS)
consistently.
(8)OncetheIndianAccountingStandards(IndAS)areappliedvoluntarily,it
shallbeirrevocableandsuchcompaniesshallnotberequiredtoprepare
anothersetoffinancialstatementsinaccordancewithAccountingStandards
specifiedinAnnexuretoCompanies(AccountingStandards)Rules,2006.
(9)OnceacompanystartsfollowingtheIndianAccountingStandards(IndAS)
onthebasisofcriteriaspecifiedinsub-rule(1),itshallberequiredtofollow
theIndianAccountingStandards(IndAS)forallthesubsequentfinancial
statementsevenifanyofthecriteriaspecifiedinthisruledoesnot
subsequentlyapplytoit.
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25. Thanks
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