As per the road-map announced by Ministry of Corporate
Affairs (MCA) in March 2010, the Indian Accounting Standards (Ind AS) converged
with International Financial Reporting Standards (IFRS) were to be applied to
specified class of companies in phases beginning with the financial year 1
April 2011. Audit observed that MCA could not notify the date of implementation
of Ind AS as per its notified road-map. Slippages in the implementation of Ind
AS were discussed in Chapter 4 of Audit Report No. 2 of 2014.
in pursuance of the Budget Statement of the Finance Minister in February 2014,
MCA after consultations with various stakeholders and
regulators, issued a press note on 2 January 2015 wherein a revised Road map
for implementation of Ind AS converged with IFRS was laid down for companies
other than Banking Companies, Insurance Companies and Non-Banking Finance
Companies (NBFC). The Ind AS shall be applicable to the companies as follows:
voluntary basis for financial statements for accounting periods
beginning on or after 1 April 2015, with the comparatives for the periods
ending 31 March, 2015 or thereafter;
On mandatory basis for the accounting periods
beginning on or after 1 April 2016, with comparatives for the periods ending 31
March 2016, or thereafter, for the companies specified below:
whose equity and/or debt securities are listed or are in the process of listing
on any stock exchange in India or outside India and having net worth of Rs. 500
crore or more.
(b) Companies other than those
covered in (ii) (a) above, having net worth of Rs. 500 crore or more.
(c) Holding, subsidiary, joint
venture or associate companies of companies covered under (ii) (a) and (ii) (b)
On mandatory basis for the accounting periods beginning
on or after 1 April 2017, with comparatives for the periods ending 31 March,
2017, or thereafter, for the companies specified below:
Companies whose equity and/or debt securities are listed
or are in the process of being listed on any stock exchange in India or outside
India and having net worth of less than Rs. 500 crore
(b) Companies other than those
covered in paragraph (ii) and paragraph (iii)(a) above that is
unlisted companies having net worth of Rs. 250
crore or more but less than Rs. 500
Holding, subsidiary, joint venture or associate
companies of companies covered under paragraph (iii) (a) and (iii) (b) above.
However, companies whose securities are listed or in the
process of listing on SME exchanges shall not be required to apply Ind AS. Such
companies shall continue to comply with the existing Accounting Standards
unless they choose otherwise.
(iv) Once a company opts to
follow the Ind AS, it shall be required to follow the Ind AS for all the
subsequent financial statements.
Companies not covered by the above roadmap shall
continue to apply existing Accounting Standards prescribed in Annexure to the
Companies (Accounting Standards) Rules, 2006.
of Ind AS
Companies Act, 2013 specified that the financial
statements shall comply with accounting standards notified by Central
Government and shall be in form or forms as may be provided for class or
classes of companies. This would facilitate implementation of Ind AS in phases.
Accordingly, MCA vide its notification dated 16 February 2015 notified the
Companies (Indian Accounting Standards) Rules 2015 specifying 39 Ind AS to be
implemented as per the above road-map. The Ind AS have been formulated by MCA
in consultation with National Advisory Committee on Accounting Standards
As Ind AS are essentially based on the concept of fair
value measurement of assets and liabilities, corresponding standards under the
Income Tax Act are essential to ensure smooth and harmonised transition. Draft
Income Computation and Disclosure Standards released by Ministry of Finance in
this regard in January 2015 are under finalisation.
and Insurance Companies have been kept out of the proposed road map for
transition to Ind AS in view of the specific needs and concerns of these two
Issues such as cost of compliance, capacity building,
managing two sets of standards (one for entities that seek transition and the
other for those which do not) and the impact of exceptions or ‘carve outs’ on
the achievement of objectives of convergence would need to be addressed through
a well-coordinated mechanism among MCA, DPE and ICAI.