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Accounting Standards Compliance in Ernakulam: A Comprehensive Overview

Explore the state of compliance with accounting standards in Ernakulam branch, encompassing AS applicability, SMC criteria, AS rules amendments, and specific AS details for a better understanding.

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Accounting Standards Compliance in Ernakulam: A Comprehensive Overview

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  1. Ernakulam Branch of SIRC of ICAI RRC Alleppey Accounting Standards Bigger… Better… Bolder Jomon

  2. Ernakulam Branch of SIRC of ICAI RRC Alleppey The poor state of compliance.. FRRB Findings AS Non-Compliance ( 76%) CA 2013 - Schedule III Non Compliance (18%) CARO - Non Compliance (6%) SAs - Scant Regard ….. Very passive Blr/Chi Bigger… Better… Bolder

  3. Ernakulam Branch of SIRC of ICAI RRC Alleppey Applicability of ASs. The CASR Impact ... From 2006 Emergence of the concept of Small & Medium Companies and non applicability of certain AS’ s to them Bigger… Better… Bolder

  4. Ernakulam Branch of SIRC of ICAI RRC Alleppey SMC • An SMC is a company which meets all the following conditions : • Its equity/debt securities are not listed/ proposed to be • listed in India/abroad. • It is not a Bank, FI or Insurance Company. • Its turnover does not exceed Rs.50 crores in the PY • Its borrowings does not exceed Rs.10 crores at • any time during the PY. • It is not a holding/subsidiary of a non-SMC. Jomon K George

  5. Ernakulam Branch of SIRC of ICAI RRC Alleppey Accounting Standards All ASs will continue to apply as per (AS) Rules 2006. Companies (AS) Amendment Rules 2016. Pl refer chart

  6. Ernakulam Branch of SIRC of ICAI RRC Alleppey The Companies (Accounting Standards) Rules 2006. The Companies (Accounting Standards) Amendment Rules 2016. GSR 364E – 30.03.16 Bigger… Better… Bolder Jomon

  7. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 1 - Disclosure of Accounting Policies Poor disclosures Refer sample notes .. Editable format can be shared. Bigger… Better… Bolder Jomon

  8. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 2 Recognises Absorption Costing only Only FIFO, WAC allowed Allows exclusive method of GST only Bigger… Better… Bolder Jomon

  9. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 2 - Valuations of Inventories Changes in the inclusion of Machinery Spares Now, the use and irregularity is not a factor for treating machinery spares as inventory or fixed asset. If machinery spare meets the definition of PPE as per AS 10 (i.e. used for more than 12 months), then not covered in AS 2. Bigger… Better… Bolder Jomon

  10. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 2 - Valuations of Inventories Changes in classification of Inventory • Raw materials and components • Work-in-progress • Finished goods • Stock-in-trade (in respect of goods acquired for trading) • Stores and spares • Loose tools • Others (specify nature). Bigger… Better… Bolder Jomon

  11. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 4 All paragraphs dealing with Contingencies withdrawn. Bigger… Better… Bolder Jomon

  12. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 4 Change in treatment of dividend declared after balance sheet date but before the date financial statements are approved • Earlier the dividend declared after the balance sheet date but before the approval of financial statement was required to be treated as liability. Now after the amendment no need to treat the same as liability (unless a statute requires otherwise). • However disclosure in the notes is to be given. Bigger… Better… Bolder Jomon

  13. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 10 • Name changed from Fixed Assets to Property, Plant and Equipment • Fresh Guidance to the apply judgment to determine unit of measurement ( Para 9) : Example : ‘unit of measure' can be a 'project' of construction of a manufacturing plant rather than individual assets comprising the project in appropriate cases for the purpose of capitalisation of expenditure incurred during construction period. However disclosure in the notes is to be given. Bigger… Better… Bolder Jomon

  14. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 7 Recognises “Percentage of Completion” method only. AS 8 Withdrawn fully. AS 6 Withdrawn Fully. Bigger… Better… Bolder Jomon

  15. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 10 (Renamed as PPE) Paras dealing with patents, Designs etc. withdrawn Bigger… Better… Bolder Jomon

  16. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 10 Model for subsequent Revaluation • Revaluations should be made with sufficient regularity. The entire class to be revalued and revaluation not on ad hoc basis (earlier permitted by AS 10) • If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is recognised as interest over the period of credit unless such interest is capitalised in accordance with AS 16. Bigger… Better… Bolder Jomon Continue…..

  17. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 11 All FE fluctuation effects to be expensed Bigger… Better… Bolder Jomon

  18. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 13 – Accounting for Investments • Only Cost Model to be applied for Investment Property (Land and building other than related to operations) - (Para 20 & 30) Bigger… Better… Bolder Jomon

  19. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 15 Actuarial valuation mandatory Funding not ….. Value depletion of Plan assets to be provided for Bigger… Better… Bolder Jomon

  20. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 16 Qualifying Assets.. Substantial Period …. Capitalisation - Concept & Methodology….. Expensing Situations ….. Bigger… Better… Bolder Jomon

  21. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 21 – Consolidated Financial Statements Consolidated Financial Statements in the absence of subsidiary company • Amendment in accordance with Companies Act, 2013 which require the consolidation of Associate/ JV even if subsidiary is not there. • Consolidation to be done in accordance with AS 23 : Accounting for Associates in Consolidated Financial Statements & Accounting Standard (AS) 27:Financial Reporting of Interests in Joint Ventures. Bigger… Better… Bolder Jomon

  22. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 22 “Virtual Certainty” clarified Bigger… Better… Bolder Jomon

  23. Ernakulam Branch of SIRC of ICAI RRC Alleppey AS 26 Recognition Criteria Concept… DRE & PE …. Dead. Misc. Expenditure …. Gone Bigger… Better… Bolder Jomon

  24. Ernakulam Branch of SIRC of ICAI RRC Alleppey Provisions, Contingent Liabilities and Contingent Assets Discounting of Provisions permitted in case of decommissioning, restoration etc. • Earlier discounting of provisioning was not permitted. • The discount rate (or rates) should be a pre-tax rate (or rates) that reflect(s) current market assessments of the time value of money and the risks specific to the liability. The discount rate(s) should not reflect risks for which future cash flow estimates have been adjusted. Bigger… Better… Bolder Jomon

  25. Ernakulam Branch of SIRC of ICAI RRC Alleppey Ind. AS – The game is on….. Phased Implementation • The Companies (Ind AS) Rules 2015 notified. • Ind AS 101- 115 & Ind AS 1-41 notified (40 No.s) • Amendment Rules issued in 2016/2017/2018. Bigger… Better… Bolder Jomon

  26. Ernakulam Branch of SIRC of ICAI RRC Alleppey Ind AS – Timelines Phase I Accounting periods beg. on or after 01.04.16 with comparatives • All companies with net worth of 500 Cr or more • Holding/Subsidiary/JV/Associate of above. Bigger… Better… Bolder Jomon

  27. Ernakulam Branch of SIRC of ICAI RRC Alleppey Ind AS – Timelines Phase II Accounting periods beg. on or after 01.04.17 with comparatives • All listed companies • Unlisted companies with net worth of 250 Cr or more • Holding/Subsidiary/JV/Associate of above .. Bigger… Better… Bolder Jomon

  28. Ernakulam Branch of SIRC of ICAI RRC Alleppey Auditing Standards Bigger… Better… Bolder Jomon

  29. Ernakulam Branch of SIRC of ICAI RRC Alleppey History/Evolution • APC set up in 1982 - SAPs • Renamed as AASB in 2002 – AASs • New Preface in 2008 Bigger… Better… Bolder Jomon

  30. Ernakulam Branch of SIRC of ICAI RRC Alleppey New Classification Engagement Standards SQCs SAs SREs SAEs SRSs Bigger… Better… Bolder

  31. Ernakulam Branch of SIRC of ICAI RRC Alleppey Why comply with Standards • to expedite audits effectively in accordance with GAAPs • to utilise resources effectively • to guide, direct and supervise assistants properly • to ensure quality control • to disprove charges of negligence • to face & pass PEER REVIEW Bigger… Better… Bolder Jomon

  32. Ernakulam Branch of SIRC of ICAI RRC Alleppey The Companies Act 2013 - Section 143(9) Every Auditor shall comply with AUDITING STANDARDS Bigger… Better… Bolder Jomon

  33. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards • SA 200 • Overall Objectives of the Independent auditor and the conduct of an audit in accordance with Standards on auditing • SA 210 • Agreeing the Terms of Audit Engagement Bigger… Better… Bolder Jomon

  34. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 220 Quality Control for Audit Work SA 230 Audit Documentation Bigger… Better… Bolder Jomon

  35. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 240 The Auditor’s Responsibilities relating to Fraud in an Audit of Financial Statements SA 250 The auditors responsibilities relating to Laws and Regulations in an Audit of Financial Statements SA 260 Communication with those charged with governance Bigger… Better… Bolder Jomon

  36. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 299 Responsibility of Joint Auditors. SA 300 Planning the audit of Financial Statements SA 315 Identifying & Assessing the Risks of Material misstatement through understanding the entity & its environment Bigger… Better… Bolder Jomon

  37. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 500 Audit Evidence. SA 501 Audit Evidence – Additional considerations for specific items. SA 505 External Confirmations Bigger… Better… Bolder Jomon

  38. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 510 Initial Audit Engagements – Opening Balances SA 520 Analytical Procedures SA 530 Audit Sampling Bigger… Better… Bolder Jomon

  39. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 550 Related Parties SA 560 Subsequent Events SA 580 Written Representations Bigger… Better… Bolder Jomon

  40. Ernakulam Branch of SIRC of ICAI RRC Alleppey Some Practice based Standards SA 700 Forming an opinion and reporting on Fin. Statements SA 705 Modification to the opinion in the Independent Auditors Report SA 706 Emphasis of Matter Paragraphs & Other matter paragraphs in the Independent Auditors Bigger… Better… Bolder Jomon **

  41. Ernakulam Branch of SIRC of ICAI RRC Alleppey Let us …… Let us change • Infrastructure & Technology • People & Processes • Billing & Collection • Financial Planning • Attitude … Attire … Cut down on Social Media • Student friendly… Academic Culture . A Happy Organisation Jomon Bigger… Better… Bolder

  42. Jomon

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