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Implementation of IND AS
On 16th February, 2015, Ministry of Corporate Affairs notified the companies (Indian Accounting Standards) Rules, 2015lating down the road map to apply these Accounting standards except banking companies, insurance companies and Non-Banking Financial Companies. Government has also notified application of these accounting standards in above mentioned companies.
FAQ
Common List Of Questioner That Our Customer Ask From Us -Solved !
What are key consideraiton for Indian AS conversion ?
The conversion provides potential opportunities that companies further require to further examine and explore.
Many companies do their business on a globe, being operated on such a global scale which provides financial reports to investors and other interested parties working on similar accounting standards used on those peers may increase the company's comparability with its peer members.
There are various risks associated with this conversion to IND AS which is required to be addressed by the management. The examples of potential risk includes-
1. Failure to communicate the effects and results to the stakeholders, board of directors, audit committee, investor and analysts.
2. To maintain accounting and various reports under multiple accounting framework during the transition period.
3. Retention of key employees.
4. Excessive cost incurred due to ineffective planning, project management.
5. Missed deadlines on the conversion process.
Many companies do their business on a globe, being operated on such a global scale which provides financial reports to investors and other interested parties working on similar accounting standards used on those peers may increase the company's comparability with its peer members.
There are various risks associated with this conversion to IND AS which is required to be addressed by the management. The examples of potential risk includes-
1. Failure to communicate the effects and results to the stakeholders, board of directors, audit committee, investor and analysts.
2. To maintain accounting and various reports under multiple accounting framework during the transition period.
3. Retention of key employees.
4. Excessive cost incurred due to ineffective planning, project management.
5. Missed deadlines on the conversion process.
What are Key areas to be addressed during IND AS conversion ?
1. Product launch and planning activities- decisions on product launch and lanning activities should be done. It includes creating a project management plan to coordinate and monitor the activity.
2. Revision of accounting policies- re assessment policy will be an important element of the entire conversion project because decisions made during this phase will have an impact on the future business result.
3. Developing a format of financial statement in compliance with IND AS- Companies will have to redraft the financial statement to meet the IND AS disclosure requirement.
4. Identify and resolve data capture issues- the increased level and complexity of certain financial disclosure expected under IND AS may require significant project resources to identify and set up processes to collate the data.
2. Revision of accounting policies- re assessment policy will be an important element of the entire conversion project because decisions made during this phase will have an impact on the future business result.
3. Developing a format of financial statement in compliance with IND AS- Companies will have to redraft the financial statement to meet the IND AS disclosure requirement.
4. Identify and resolve data capture issues- the increased level and complexity of certain financial disclosure expected under IND AS may require significant project resources to identify and set up processes to collate the data.
Phases of implementing IND AS ?
1. Voluntary Phase- IND AS is permitted to be adopted from the financial year 2015-16 (beginning from 1st April, 2015)
2. Mandatory Phase 1- Its application is mandatory from the financial year 2016-17 (beginning from 1st April, 2017 for the companies listed or Unlisted companies with net worth of INR 500 crore or more and Holding, subsidiaries, joint ventures and associates of these companies.
2. Mandatory Phase 1- Its application is mandatory from the financial year 2016-17 (beginning from 1st April, 2017 for the companies listed or Unlisted companies with net worth of INR 500 crore or more and Holding, subsidiaries, joint ventures and associates of these companies.
What are Key impact of transitions ?
1. Direct Tax impact- IND AS were primarily introduced to serve the need of the investors and as such it is not suitable for computing the income tax. To address the issue the central government had constituted a committee to draft the income computation and Disclosure standards.
2. Indirect Tax impact- current incidence of indirect tax and its computation is typically not dependent on the treatment in the financial statement. Therefore, application of IND AS may increase the possibility of litigation because its application results into significantly different accounting in many cases.
3. IT Impact- The adoption of IND AS requires change in recognition, measurement and disclosure of many items on the financial statement. Both the information and business system needs to deliver the information to comply with IND AS. accordingly modification to the IT system is not restricted just to IT modules but also includes asset management system, financial instruments and payroll instruments.
4. Internal control impact- it is important to control internal control impact as per companies act, 2013. In most cases transition to IND AS requires significant change in the entity's financial reporting framework.
2. Indirect Tax impact- current incidence of indirect tax and its computation is typically not dependent on the treatment in the financial statement. Therefore, application of IND AS may increase the possibility of litigation because its application results into significantly different accounting in many cases.
3. IT Impact- The adoption of IND AS requires change in recognition, measurement and disclosure of many items on the financial statement. Both the information and business system needs to deliver the information to comply with IND AS. accordingly modification to the IT system is not restricted just to IT modules but also includes asset management system, financial instruments and payroll instruments.
4. Internal control impact- it is important to control internal control impact as per companies act, 2013. In most cases transition to IND AS requires significant change in the entity's financial reporting framework.
