MCA charts roadmap for implementation of new Accounting Standards

MCA charts roadmap for implementation of new Accounting Standards

The IndAS once applied will converge accounting procedures in India with the IFRS standards

The Ministry of Corporate Affairs (MCA) released a revised roadmap for implementation of Indian Accounting Standards for companies other than banks, insurers and non-banking finance companies. 

 

The IndAS standards as the Indian Accounting Standards are known, shall be applicable on a voluntary basis for financial statements for accounting periods beginning on or after 1 April 2015, the MCA said in a release on Friday, 2 January.

 

The IndAS standards will become mandatory for the said class of companies for accounting periods beginning 1 April 2016, for companies whose debt or equity is listed anywhere, or has a net worth of Rs500 crore or more.

 

Other companies with net worth above Rs500 crore are also to be included, and this will also be applicable to holdings, subsidiaries, JVs and associate companies with net worth of or above Rs500 crore.

 

The MCA release also said that the IndAS would be applicable to, "On mandatory basis for the accounting periods beginning on or after April 1, 2017, with comparatives for the periods ending 31st March, 2017, or thereafter, for the companies specified: (a) 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 Rs500 crore. (b)Companies other than those covered in paragraph (ii) and paragraph (iii)(a) above that is unlisted companies having net worth of Rs250 crore or more but less than rupees Rs500 crore."

 

Sai Venkateshwaran, Partner and Head – Accounting Advisory Services, KPMG India said, “The adoption of these IFRS converged standards will also go a long way in enhancing the transparency in and quality of financial reporting by Indian corporates, as Ind-AS is expected to fill the many gaps in Indian GAAP, and will also aid as one of the measures to take India up in the governance and transparency rankings globally.”

 

The MCA specified what kind of companies the IndAS would be mandatory for. However, Venkateshwaran explained that, “while the revised roadmap applies to companies other than banking companies, insurance companies and NBFCs, it may become applicable indirectly to such entities as well, if they are a subsidiary, joint-venture of associate company of an entity otherwise covered under the roadmap. Accordingly, such entities may need to adopt the Ind-AS standards at least for the purpose of consolidation by the parent or investor company.”