The weekly messenger | Edition 01.19

Accounting News

EBA publishes results of first post – implementation impact assessment of IFRS 9 - 20 December 2018

The European Banking Authority (EBA), basis the first application date of IFRS 9 ‘Financial Instruments’ i.e. 1 January 2018 in the European Union is scrutinising the effective implementation of the aforesaid standard by EU institutions/banks and its impact as initially observed and has also issued a report providing its preliminary observations on the first stages of implementation. However, a deeper analysis is still ongoing.
 
For more information, click here.
 

ED of AS 37, Provisions, Contingent Assets and Contingent Liabilities and AS 1, Presentation of Financial Statements - 29 December 2018

The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI), as an initiative to upgrade the existing Accounting Standards (AS) and to bring them nearer to the Indian Accounting Standard (Ind AS) has been issuing the Exposure Drafts (EDs) of various ASs, basis their corresponding Ind ASs. Recently, the ASB has issued the ED of AS 37, ‘Provisions, Contingent Assets and Contingent Liabilities’ and AS 1, ‘Presentation of Financial Statements’ which would be applicable to non-Ind AS compliant companies having net worth of less than 250 crore including non-company entities.
 
Comments are to be provided by 28 January 2019 (for AS 37) and 31 January 2019 (for AS 1) respectively.
 
For ED of AS 37, click here;
For ED of AS 1, click here. 

Auditing News

ICAI defers the applicability of UDIN – 27 December 2018

In the month of July 2018, the Professional Development Committee of the ICAI after considering the instances of mala fide practices, wherein the financial statements and other documents are being certified/attested by third persons in lieu of the CA members had come up with the concept of Unique Document Identification Number (UDIN) which was made recommendatory w.e.f. 1 July 2018. Thereafter, in September 2018, the ICAI had again issued an announcement, thereby stating that the use of the UDIN would become mandatory w.e.f. 1 January 2019.
 
Now, ICAI has issued a further announcement, wherein it has informed that for the implementation of UDIN, it has engaged Tata Consultancy Services (TCS). Therefore, ICAI considering the fact that TCS would require around 30 more days for data migration, has decided to mandate UDIN w.e.f 1 February 2019, as against the earlier announced date of 1 January 2019. 
 
For more information, click here. 

Regulatory News

Filing of Security Interest relating to Immovable (other than equitable mortgage), Movable and Intangible Assets in CERSAI - 27 December 2018

The Reserve Bank of India (RBI) has advised banks/ financial institutions (FI) to register the transactions relating to securitisation and reconstruction of financial asset and those relating to mortgage by deposit of title deeds with Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI). The Government of India has subsequently issued a Gazette Notification dated 22 January 2016 for filing of the certain types of security interest on the CERSAI portal. Now, it has been observed that the extent of registration on the CERSAI portal is very low, both for current and subsisting records.
 
Therefore, Banks/FIs are advised to complete filing the charges pertaining to subsisting transactions by March 31, 2019. Banks/FIs are also advised to file the current charges relating to all transactions with CERSAI on an ongoing basis.
 
For more information, click here.

Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), FALLCR against credit disbursed to NBFCs and HFCs - 28 December 2018

The RBI vide its circular dated 19 October 2018 has permitted the banks to reckon government securities as Level 1 High-Quality Liquid Assets (HQLA) under Facility to Avail Liquidity Coverage Ratio (FALLCR) within mandatory Statutory Liquidity Ratio (SLR) requirement up to 0.5 per cent of the bank’s Net Demand and Time Liabilities (NDTL) in respect of their incremental lending to Non - Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) after 19 October 2018 up to 31 December 2018. Also, the single borrower limit for NBFCs (not financing infrastructure) has been increased from 10 per cent to 15 per cent of capital funds till 31 December 2018.
 
Now, in order to further facilitate banks to lend to NBFCs and HFCs as provided above, the RBI has decided to extend the abovementioned facilities up to 31 March 2019.
 
For more information, click here.

The Ministry of Commerce and Industry has released a Press note, wherein it seeks to amend the Consolidated Foreign Direct Investment (FDI) Policy issued on 28 August 2017 in relation to FDIs in the e-commerce sector. The changes provided in the aforesaid press note are considered to be material and it appears that such changes would significantly impacts the structure and business models of various e-commerce marketplaces which are owned by entities with FDIs.
 
The decision as provided in the aforesaid press note will take effect from 01 February 2019.
 
For more information, click here.