Ind AS in the Consumer Business industry has been saved
Ind AS in the Consumer Business industry
The Indian Accounting Standards ("Ind AS") were notified on 16 February 2015 by the Ministry of Corporate Affairs ("MCA"). Ind AS are the Accounting Standards that are converged with IFRS, subject to a few carve out’s/carve in’s. This document aims at throwing light one some of the implications on the consumer business sector.
Ind AS is at par with global reporting standards and accordingly, the accounting principles adopted and the disclosures accompanying financial statements become even more important to investors, as they provide information about the decisions made regarding various accounting judgements made by the management in preparing financial statements. Needless to say, the impact of any fundamental change to an accounting framework has a much wider ramification on the company. Any transaction, from a routine sales transaction to corporate restructuring, needs to be represented in an accounting language. Hence, when that changes, the impact is pervasive.
Beyond the issue of rules versus principles, Ind AS also can pose particular technical accounting challenges to companies in the consumer business industry. While Ind AS prescribes rules for accounting, Income Computation and Disclosure Standards (“ICDS”) have been notified by the Government to be applicable from financial year 16-17 onwards for computing taxable income. ICDS have been notified by the Government as per powers granted under section 145(2) of the Income-tax Act, 1961 (“Act”). The notified ICDS shall supersede the existing accounting standards notified by the CBDT on 25 January 1996 relating to disclosure of accounting policies and disclosure of prior period and extraordinary items and changes in accounting policies.