Bar & Bench will bring you the latest regulatory and policy updates from different ministries and regulatory authorities. In this edition of the Bar & Bench Regulatory Updates, we analyse the amended Accounting Standards..MCA amends Accounting Standards.The Ministry of Corporate Affairs (“MCA”) had, earlier in 2015, notified the Companies (Accounting Standards) Rules, 2015 (“2015 Rules”). The 2015 Rules introduced the Indian Accounting Standards (“Indian AS”) which were benchmarked to the International Financial Reporting Standards. As per the 2015 Rules, only a certain class of companies is required to comply with the Indian AS, which is based on the listing status and net worth of a company..From 1 April 2016 onwards, the Indian AS would be mandatorily applicable on certain class of companies, including but not limited to companies with a net worth of Rs.500 crore or more. Companies not covered under the 2015 Rules shall continue to apply the Indian Generally Accepted Accounting Principles (“Indian GAAP”) as provided for under the Companies (Accounting Standards) Rules 2006 (“2006 Rules”)..“There are several implementation challenges such as understanding and interpretation of Indian AS financial statements by stakeholders. An enhanced degree of sophisticated judgment will be required for quantifying the impact on financial statements,” said Siddharth Talwar, partner at Grant Thornton..On 30 March 2016, MCA made amendments to both the 2015 Rules and 2006 Rules by the way of changes introduced in the way financial information is to be prepared and presented under the Indian AS as well as the Indian GAAP respectively. Pursuant to the amendment to the 2015 Rules, the MCA has now, inter alia, included Non-Banking Financial Companies (“NBFCs”) as an additional class of companies, which needs to comply with the Indian AS..As per the said amendment, while NBFCs having net worth of Rs.500 crore or more must comply with the Indian AS for accounting period beginning on or after 1 April 2018, listed NBFCs having net worth less than 500 crore and unlisted NBFCs having net worth between 250 crore – 500 crore may comply for the accounting period beginning on or after 1 April 2019..Moreover, banking and insurance companies were earlier not required to prepare their financial statements in compliance with the Indian AS. However, banking and insurance companies shall henceforth apply Indian AS for preparation of their financial statements as notified by the Reserve Bank of India and Insurance Regulatory Development Authority respectively..About Indian AS implementation, Sai Venkateshwaran, Partner and Head of Accounting Advisory Services at KPMG said it would “improve the quality and transparency of financial reporting by Indian companies”..In order to align the provisions of Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (“SEBI Regulations”) with the Indian AS, SEBI issued a circular on 31 March 2016. As per the SEBI Regulations, any company proposing to get listed on a stock exchange is required to disclose its financial information for the immediately preceding five financial years. SEBI has provided a roadmap for such companies with respect to the accounting standards to be followed for each of these five years. The circular is to apply to all companies which:.Are required to disclose their financial information in accordance with the Indian AS and;Will be filing their offer documents on or after 1 April 2016..As per the 2015 Rules, certain classes of companies need to comply with the Indian AS Rules for the FY 2017-18. For such companies, the timeline with respect to filing of offer documents would be followed with a time lag of one year.
Bar & Bench will bring you the latest regulatory and policy updates from different ministries and regulatory authorities. In this edition of the Bar & Bench Regulatory Updates, we analyse the amended Accounting Standards..MCA amends Accounting Standards.The Ministry of Corporate Affairs (“MCA”) had, earlier in 2015, notified the Companies (Accounting Standards) Rules, 2015 (“2015 Rules”). The 2015 Rules introduced the Indian Accounting Standards (“Indian AS”) which were benchmarked to the International Financial Reporting Standards. As per the 2015 Rules, only a certain class of companies is required to comply with the Indian AS, which is based on the listing status and net worth of a company..From 1 April 2016 onwards, the Indian AS would be mandatorily applicable on certain class of companies, including but not limited to companies with a net worth of Rs.500 crore or more. Companies not covered under the 2015 Rules shall continue to apply the Indian Generally Accepted Accounting Principles (“Indian GAAP”) as provided for under the Companies (Accounting Standards) Rules 2006 (“2006 Rules”)..“There are several implementation challenges such as understanding and interpretation of Indian AS financial statements by stakeholders. An enhanced degree of sophisticated judgment will be required for quantifying the impact on financial statements,” said Siddharth Talwar, partner at Grant Thornton..On 30 March 2016, MCA made amendments to both the 2015 Rules and 2006 Rules by the way of changes introduced in the way financial information is to be prepared and presented under the Indian AS as well as the Indian GAAP respectively. Pursuant to the amendment to the 2015 Rules, the MCA has now, inter alia, included Non-Banking Financial Companies (“NBFCs”) as an additional class of companies, which needs to comply with the Indian AS..As per the said amendment, while NBFCs having net worth of Rs.500 crore or more must comply with the Indian AS for accounting period beginning on or after 1 April 2018, listed NBFCs having net worth less than 500 crore and unlisted NBFCs having net worth between 250 crore – 500 crore may comply for the accounting period beginning on or after 1 April 2019..Moreover, banking and insurance companies were earlier not required to prepare their financial statements in compliance with the Indian AS. However, banking and insurance companies shall henceforth apply Indian AS for preparation of their financial statements as notified by the Reserve Bank of India and Insurance Regulatory Development Authority respectively..About Indian AS implementation, Sai Venkateshwaran, Partner and Head of Accounting Advisory Services at KPMG said it would “improve the quality and transparency of financial reporting by Indian companies”..In order to align the provisions of Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (“SEBI Regulations”) with the Indian AS, SEBI issued a circular on 31 March 2016. As per the SEBI Regulations, any company proposing to get listed on a stock exchange is required to disclose its financial information for the immediately preceding five financial years. SEBI has provided a roadmap for such companies with respect to the accounting standards to be followed for each of these five years. The circular is to apply to all companies which:.Are required to disclose their financial information in accordance with the Indian AS and;Will be filing their offer documents on or after 1 April 2016..As per the 2015 Rules, certain classes of companies need to comply with the Indian AS Rules for the FY 2017-18. For such companies, the timeline with respect to filing of offer documents would be followed with a time lag of one year.