The weekly messenger | Edition 12.20

Accounting News

ICAI creates a separate section on ‘Accounting Guidance of ICAI and IASB due to COVID-19’ – 10 April 2020
 
Since, the outbreak of COVID-19 in India, the Institute of Chartered Accountants of India (ICAI) has been issuing various updates, focussing both on accounting as well as auditing aspects. Recently, the ICAI has created a dedicated section on its website by the name of ‘COVID-19 Accounting Guidance of ICAI and IASB’, which includes the following guidance:

• ICAI Accounting and Auditing Advisory (March 2020);
• Addendum to the aforesaid Advisory;
• Accounting for COVID-19 related rent concessions applying IFRS 16, Leases, issued by the International Accounting Standards Board (IASB);
• Accounting for expected credit losses applying IFRS 9, Financial Instruments in the light of current uncertainty resulting from the COVID-19 pandemic, issued by IASB.

For more information, click here.
 
IASB proposes further amendments to IFRS Standards in response to interest rate benchmark reform – 9 April 2020
 
The IASB has issued an exposure draft on ‘Interest Rate Benchmark Reform – Phase 2’, which proposes amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. The proposed amendments aim to address issues affecting financial statements when changes are made to contractual cash flows and hedging relationships as a result of the reform.
 
Comments are to be provided by 25 May 2020
 
For more information, click here.

Application of IFRS 16 in the light of the COVID-19 uncertainty – 10 April 2020
 
The IASB has also issued a document, thereby providing answers to the questions regarding the application of IFRS 16 Leases to rent concessions granted as a result of COVID-19 pandemic. The aforesaid document has been prepared for educational purposes, which highlights the requirements within IFRS 16 and other IFRS standards that are relevant for companies considering how to account for rent concessions granted as a result of the COVID-19 pandemic.
 
However, the said document does not change, remove or add to the requirements in the IFRS standards.              
 
For more information, click here.
 
FASB Issues Staff Q&A Document on Accounting for Leases during COVID-19 pandemic – 10 April 2020
 
The Financial Accounting Standards Board (FASB) has issued a Question-and-Answer (Q&A) document, in order to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of the COVID-19 pandemic, which inter-alia includes:

• Are lease concessions related to the effects of the COVID-19 pandemic required to be accounted for in accordance with the lease modification guidance in Topic 842 and Topic 840?
• Is an entity precluded from accounting for lease concessions related to the effects of the COVID-19 pandemic by applying the lease modification guidance in Topic 842 and Topic 840?
• Should an entity provide disclosures about lease concessions related to the effects of the COVID-19 pandemic?

For more information, click here. 

Regulatory News

Clarification on passing of ordinary and special resolutions by companies under the Companies Act,2013 and rules made thereunder on account of the threat posed by COVID-19 – 8 April 2020
 
The Ministry of Corporate Affairs (MCA) has issued a Circular, thereby providing clarification with respect to passing of Ordinary Resolution and Special Resolution by companies under the Companies Act, 2013 and rules made thereunder. In the said Circular, the MCA has clarified that companies can take all decisions of urgent nature, requiring the approval of members, through the mechanism of postal ballot or e-voting in accordance with the provisions of the Companies Act, 2013 without holding a general meeting, which requires physical presence of members at a common venue. However, this clarification will not be applicable for those items of ordinary business or business, where any person has a right to be heard.
 
Furthermore, the aforesaid Circular also prescribes certain procedures to be adopted by the companies over and above the other requirements of the Companies Act 2013 and the rules made thereunder, in case, they consider that holding of an extra ordinary general meeting (EGM) is unavoidable on or before 30 June 2020.
 
For more information, click here.
 
COVID-19 related FAQs on CSR – 10 April 2020
 
The MCA had earlier clarified that spending of Corporate Social Responsibility (CSR) funds for CoVID-19 would be considered as an eligible CSR activity as per the Companies Act 2013.
 
Now, the MCA has released a set of frequently asked questions (FAQs) with respect to the same, which inter-alia includes:

• Whether contribution made to ‘PM CARES Fund’/‘Chief Minister’s Relief Funds’ or State Relief Fund for COVID-19’ shall qualify as CSR expenditure;
• Whether contribution to State Disaster Management Authority shall qualify as CSR expenditure;
• Whether spending of CSR funds for COVID-19 related activities shall qualify as CSR expenditure;
• Whether payment of ex-gratia to temporary/casual/daily wage workers shall qualify as CSR expenditure.

For more information, click here.
 
IRDAI asks insurers to reschedule term loans – 8 April 2020
 
The Insurance Regulatory and Development Authority of India (IRDAI), considering the cashflow problems, being faced by the borrowers due to COVID-19, has directed all the insurers to reschedule the term loans by granting a moratorium period of 3 months with respect to the payment of instalments falling due between 1 March 2020 to 31 May 2020.
 
For more information, click here.
 
Government Grants exemption from Basic Custom duty & Health Cess on import of Ventilators, PPE, COVID Test Kits & Face & Surgical Masks – 9 April 2020
 
Considering the immediate requirement of ventilators and other items, due to the outbreak of COVID-19, the Central Government has granted exemption from Basic Customs Duty and Health cess, on the import of the following goods, with immediate effect:

• Ventilators
• Face masks, surgical Masks,
• Personal protection equipment (PPE)
• COVID-19 test kits
• Inputs for manufacture of the above items

The exemption with respect to the basic customs duty shall be available up to the 30 September 2020.
 
For more information, click here.

Relaxation in Compliance requirements - COVID-19 – 7 April 2020
 
In view of the prevailing COVID-19 pandemic and ongoing lock-down, the Bombay Stock Exchange (BSE) has extended the due dates for submission of the below mentioned reports:
 

However, the due date for submission of the quarterly report on incidence of cyber-attacks and threats shall however remain unchanged i.e. 15 days after the end of the quarter.
 
For more information, click here.

Cyber Security Advisory during COVID-19 Lock-Down – 9 April 2020
 
In view of the increasing cyber-attacks, the BSE has issued an advisory wherein it has advised all Market Infrastructure Institutions (MIIs), Market Intermediaries, Mutual Funds and other Securities and Exchange Board of India (SEBI) regulated entities to strictly adhere to ‘Cyber Security Guidelines’ issued by SEBI and follow best practices and certain prescribed recommendations and other advisories – guidelines issued by Indian Computer Emergency Response Team (CERT-In) (https://www.cert-in.org.in) and National Critical Information Infrastructure Protection Centre (NCIIPC) (https://nciipc.gov.in).
 
For more information, click here.