KPMG in India is pleased to present Voices on Reporting – a monthly series of knowledge sharing calls to discuss current and emerging issues relating to financial reporting.
In this month’s call, we covered the key aspects of the following topics:
- The Ministry of Corporate Affairs’ (MCA) press release on 2 January 2015 relating to the Ind AS implementation roadmap
- Revised drafts of 12 Income Computation and Disclosure Standards (ICDS) issued by the Ministry of Finance (MoF) on 8 January 2015
- Exposure draft on the Guidance Note on Accounting for Derivative Contracts issued by the Institute of Chartered Accountants of India (ICAI).
Ind AS implementation roadmap
On 2 January 2015, the Ministry of Corporate Affairs (MCA) issued a press release announcing a revised roadmap for implementation of Indian Accounting Standards (Ind AS), converged with International Financial Reporting Standards (IFRS). This roadmap is applicable to companies other than banking companies, insurance companies and non-banking finance companies.
This roadmap was developed after consultations with various stakeholders and regulators. It comes as a follow up to the announcement by the Finance Minister in his budget speech that Ind AS will be made mandatory from the financial year 2016-2017.
The revised roadmap elaborates on the voluntary and mandatory application of the Ind AS to certain specified companies.
In our call, we provided an overview of the revised roadmap along with some of the implementation challenges that are still to be addressed.
Revised drafts of ICDS
Currently, the Income Tax Act, 1961 (the Act) notifies two accounting standards – one relating to disclosure of accounting policies and disclosure of prior period and extraordinary items and the other on changes in accounting policies.
In December 2010, the Central Board of Direct Taxes (CBDT) constituted a Committee to harmonise the accounting standards issued by the Institute of Chartered Accountants of India with the provisions of the Act and also to suggest amendments to the Act necessitated by transition to the Indian Accounting Standards (Ind AS).
In August 2012, the Committee after deliberations issued 14 draft accounting standards to be applicable in computation of ‘profits and gains of business or profession’ or ‘income from other sources’ for taxpayers following mercantile system. These accounting standards are now termed as ICDS.
After release of the draft ICDS (2012) by the CBDT, concerns were raised by various stakeholders since it had significant differences with generally accepted accounting principles. In order to address some of these concerns, the Ministry of Finance (MOF) on 8 January 2015 issued revised drafts of 12 ICDS (2015). These revised drafts are open for comments for a period of 30 days.
In our call we provided an overview of the key new proposals exposed by the Ministry of Finance.
Exposure draft on Guidance Note on Accounting for Derivative Contracts
Recently, the ICAI has issued an exposure draft on the Guidance Note on Accounting for Derivative Contracts. The exposure draft is open for public comment till 21 January 2015 and proposes certain important changes to how derivatives are currently accounted for in practice in India.
In our call, we provided a background on the need for this guidance note and its key features.
Click here to access the call recording and presentation.
Our next Voices on Reporting call will be held on 18 February 2014, 04:00-05:00 PM.