In the ever-evolving world of accounting, staying abreast of the latest updates to Indian Accounting
Standards (IND AS) is essential for auditors and financial professionals. These updates, issued by the
Institute of Chartered Accountants of India (ICAI), aim to align Indian accounting practices with global standards and enhance financial reporting transparency. In this blog, we will explore the significance of IND AS updates and their implications for auditors and preparers of financial statements.
1. IND AS 116: Leases – Streamlining Lease Accounting:
IND AS 116, aligned with IFRS 16, brought significant changes to lease accounting. It replaced the
distinction between operating and finance leases for lessees and introduced the concept of right-of-use assets and lease liabilities on balance sheets. Auditors need to assess compliance with IND AS 116,
including the identification of lease contracts, measurement of lease assets and liabilities, and proper
disclosure of lease-related information.
2. IND AS 115: Revenue from Contracts with Customers – A New Revenue Recognition Framework:
IND AS 115 aligns with IFRS 15 and provides a comprehensive framework for revenue recognition. It
emphasizes the five-step model, requiring entities to identify performance obligations, determine
transaction price, and allocate revenue accordingly. Auditors must assess the adoption and
implementation of IND AS 115, ensuring the accuracy of revenue recognition policies and the adequacy of related disclosures.
3. Amendments to IND AS 101: First-time Adoption:
The amendments to IND AS 101 provide additional guidance and transitional provisions for entities
adopting IND AS for the first time. Auditors should be familiar with these amendments, as they address exemptions, recognition and measurement of financial assets and liabilities, and impairment
requirements. Thorough understanding of these provisions is crucial to ensure correct application during audits.
4. Amendments to IND AS 116: COVID-19 Rent Concessions:
In response to the COVID-19 pandemic, amendments to IND AS 116 offer lessees practical expedients
when accounting for rent concessions. Auditors need to assess whether lessees have appropriately
accounted for COVID-19-related rent concessions, considering the options provided under the
amendments and ensuring proper disclosure in financial statements.
Conclusion:
Keeping pace with IND AS updates is vital for auditors and financial professionals to ensure compliance with evolving accounting standards. IND AS 116 and IND AS 115 have brought substantial changes to lease accounting and revenue recognition, respectively. Amendments to IND AS 101 and IND AS 116 address specific transitional and COVID-19-related challenges. Auditors must remain well-informed, assess compliance, and evaluate the impact of these updates on financial statements and disclosures.
