APPLICABILITY Indian Accounting Standard IND AS

APPLICABILITY Indian Accounting Standard IND AS

Short Summary:

In this Flash editorial, the author begins by referring the provisions of Indian Accounting Standards (Ind AS) as Companies (Indian Accounting Standards) Rules, 2015 vide Notification dated February 16, 2015 and the applicability of Ind AS for certain class of companies.

With the beginning of financial year 2016-17, the era of implementation of Ind AS in India has also begun for the companies falling under Phase I of the MCA roadmap for implementation of Ind AS. The MCA has also laid down roadmap for implementation of Ind AS for banks, NBFCs and insurance companies from the financial year 2018-19 onwards.

This is article. 345 of the series of editorials written by the author on corporate laws {Including Companies Act, 2013, SEBI, RBI Regulations,IBC, LLP Act, 2008 etc.}.

Objective

The objective of this Ind AS is to ensure that an entitys first Ind AS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that:

(a) is transparent for users and comparable over all periods presented;

(b) provides a suitable starting point for accounting in accordance with Indian Accounting Standards (Ind ASs); and

(c) can be generated at a cost that does not exceed the benefits.

Applicability Chart of Indian Accounting Standards (IND As)

On the basis of applicability of IND As, it has been divided into 3 Categories, i.e.

Phase I - Companies:

For Companies other than: 1. Banks, 2. NBFCs and 3. Insurance

1st April 2015or thereafter (with Comparatives):Voluntary Basisfor any company and its holding, subsidiary, JV or associate company

1st April 2016:Mandatory Basis

S. No.	Date	Financial Year	Listed	Unlisted
1.	01.04.2016	2016-17	Net worth >_ INR 500 crore (Net worth 500 crore or more)	Net worth> _INR 500 crore (Net worth 500 crore or more)
	Parent, Subsidiary, Associate and J. V of Above w.e.f. 01.04.2016
2.	01.04.2017	2017-18	All Listed Companies	Net Worth 250 crore or more but less 500 crore
	Parent, Subsidiary, Associate and J. V of Above w.e.f. 01.04.2017

1. Whether Company listed on SME required to apply IND AS

No, Companies listed on SME exchange not required to apply Ind AS

2. Companies not covered under 1^stType of Companies, which standards shall follow

Companies not covered by the above roadmap shall continue to apply existing Accounting Standards notified in Companies (Accounting Standards) Rules, 2006

Important Note : Once Ind AS are applicable, wherever adopted voluntarily or mandatory, an entity shall be required to follow the Ind AS for all the subsequent Financial Statements.

3. What about Company having net worth less then Rs. 250 Crore

Company having net worth below 250 crore shall not apply Ind AS.

Phase II - Companies:

Non-Banking Financial Companies (NBFCs)

S. No.	Date	Financial Year	Listed	Unlisted
1.	01.04.2018	2017-18	Net worth >_ INR 500 crore (Net worth 500 crore or more)	Net worth> _INR 500 crore (Net worth 500 crore or more)
	Holding, Subsidiary, JV and Associate companies of above NBFC other than those already covered under corporate roadmap shall also apply from said date
2.	01.04.2019	2018-19	Net Worth of Less than 500 Crore	Net Worth 250 crore or more but less 500 crore
	Holding, Subsidiary, JV and Associate companies of above NBFC other than those already covered under corporate roadmap shall also apply from said date

4. IND As shall be applicable on Individual or Consolidated Financial Statement

Applicable for both Consolidated and individual Financial Statements

5. What about NBFC having net worth less then Rs. 250 Crore

NBFC having net worth below 250 crore shall not apply Ind AS.

Phase III - Companies:

Scheduled Commercial banks (excluding RRBs) and

Insurers/Insurance companies

From 1st April, 2018:

1. Apply to all Scheduled Commercial banks (excluding RRBs) and Insurers/Insurance companies.
2. Holding, subsidiary, JV and Associates companies of scheduled commercial banks (excluding RRBs) shall also apply from the said date.
3. Applicable for both Consolidated and individual Financial Statements

Important Note: Urban Cooperative banks (UCBs) and Regional Rural banks (RRBs) are not required to apply Ind AS.

1. Once IND AS opted by any company for its financial statement can it be revoked

Once a company starts following the Indian Accounting Standards (Ind AS) either voluntarily or mandatorily on the basis of criteria specified above, it shall be required to follow the Indian Accounting Standards (Ind AS) for all the subsequent financial statements even if any of the criteria specified in this rule does not subsequently apply to it.

2. If company falls under IND As rules, having its Holding, Subsidiary, JV or Associate Companies, will IND As apply on them, even company not falling in threshold limits

Holding, Subsidiary, Joint Venture or Associate Companies of companies covered above required to prepare their financial statement as per IND As.

3. For calculating Net worth Standalone financial statement shall be considered or consolidated

Standalone financial statement shall be consider for calculation of Net Worth.

4. For calculating Net worth Standalone financial statement shall be considered or consolidated

Standalone financial statement shall be consider for calculation of Net Worth.

5. Whether these rules shall apply to Indian incorporated Subsidiary, Associate or Joint Ventures of Foreign Company

Indian company which is a subsidiary, associate, joint venture and other similar entities of a foreign company shall prepare its financial statements in accordance with the Indian Accounting Standards (Ind AS) either voluntarily or mandatorily if it meets the criteria as specified in sub-rule

6. Whether these rules shall apply to overseas incorporate Subsidiary, Associate or Joint Ventures of Indian Company

Overseas subsidiary, associate, joint venture and other similar entities of an Indian company may prepare its standalone financial statements in accordance with the requirements of the specific jurisdiction

7. If company meet first time threshold limit on 31 march 2017, then from which year IND As applicable on that Company

The companies meeting threshold for the first time as on 31st March, 2017 shall apply Ind AS for the financial year 2017-18 onwards.

Disclaimer:The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

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About the Author: CS Divesh Goyal is Associate Member of Institute of Companies Secretaries of India having good experience in legal and secretarial matters. He is member of research Committee of ICSI constituted in the year 2015 and Member of Task Force Committee of ICSI. He was member of Research Committee of NIRC-ICSI for the year 2015 and Member of editorial Board of NIRC-ICSI. He is young and energetic Practicing Company Secretary with a zeal to dig deep into the nuances of Corporate Laws. Being a researcher at heart, he has done rigorous research and has written various articles on Companies Act, 2013 to keep at pace with the latest changes and critically analyze the implications of various provisions of the new Act.