Key highlights on the amendments proposed in Ind AS 16; Ind AS 37; and Ind AS 103

Based on the International Financial Reporting Standards and the Ministry of Corporate Affairs (MCA) has notified Indian Accounting Standards (Ind -AS) which are applicable on certain entities on mandatory basis. As a part of review process and in public interest, the International Accounting Standard Board (IASB) keeps on issuing certain amendments to these standards on timely basis in order to improve its effective implementation. The Ind- ASs are basically harmonized with the principles stated in IFRSs and to keep them aligned with the globally accepted standards, the Accounting Standard Board (ASB) proposes amendments to corresponding Ind ASs which is then kept open for public comments.

In line of above review procedure, certain amendments has been proposed by ASB in three Indian Accounting Standards (Ind ASs); Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets; Ind AS 16 Property, Plant and Equipment; and Ind AS 103 Business Combination including proposal of some annual amendments to Ind AS 109, Ind AS 101, Ind AS 41 as a part of improvement.

Amendments proposed in the draft are highlighted below:-

1.Ind AS 37 Provision, Contingent Liabilities and Contingent Assets – The amendment proposed in the draft relates to specifying the costs that is directly relatable to the fulfillment of a contract which an entity should be determining for the purpose of assessing whether the contract is onerous.

2.Ind AS 16 Property, Plant and Equipment –
The amendment proposed in Ind AS 16 relates to the determination of directly attributable costs of PPE providing non- deduction of proceeds from selling of items produced in test runs while bringing the asset to its present location and condition.

Further, para 20A is added to the Standard proposing recognition of proceeds from sale of those items in the Statement of Profit and Loss. In case, it is not recognized in the statement of profit and loss requirements as stated in newly incorporated para 74A should be complied with.

It also requires the application of principles contained in Ind AS 2 Inventories for measurement of costs and disclosure requirement of the same.

3. Ind AS 103 Business Combination– The draft proposes to replace the reference to the Conceptual Framework and to add an exception to recognition and measurement of identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. Further, the draft also provides a clarification regarding definition of Contingent Liabilities and Contingent Assets.

4. Amendments in terms of Taxation in Fair value measurements, Subsidiary as a first time adopter of application of Indian Accounting Standards, Derecognition of Financial Liabilities in Ind AS 109 are also provided as a part of annual improvement of implementation of Ind AS.

A Separate set of standards proposed on auditing for audit of Small and Less Complex Entities

The Auditing and Assurance Board has issued an exposure draft proposing a set of standards for audit of Small and Less Complex Entities (SLCE). The main rationale behind the proposal is that the principal based Standards on Auditing (SAs) are applicable to all the entities but small and less complex entities do not require that much compliances as stated in the standards in place. Therefore, a need arises to simplify the standards for audit of SLCE.

For Detials refer Link= https://www.icai.org/post/auditing-assurance-standards-board