The weekly messenger | Edition 15.17

Accounting News

ITFG Bulletin 5 Revised – 17 April 2017

Indian Accounting Standards (Ind AS) Transition Facilitation Group (ITFG) has recently revised its fifth bulletin issued in October 2016 last year with respect to the following topics:

• Issue No. 4 which relates to the adjustment in the carrying amount of fixed assets as per the previous generally accepted accounting principles (GAAP) to reflect accounting treatment of capitalized processing fees on loan taken as per Ind AS 109.
• Issue No. 5 which relates to the adjustment in the carrying amount of fixed assets as per previous GAAP to reflect accounting treatment of the government grant as per Ind AS 20.
• Issue no. 2 which relates to the treatment of security deposit has been withdrawn.

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FAQ on treatment of Securities Premium Account under Ind AS on date of transition – 17 April 2017

Accounting Standard Board of the Institute of Chartered Accountants of India (ICAI) has issued a Frequently Asked Question (FAQ), providing clarification wrt the retrospective accounting adjustments to be done in the books under Ind AS on transition date regarding Securities Premium Account which had earlier been utilized to provide for the debenture redemption premium payable and writing off debenture issue expenses.

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ED of the GN on Division II Ind AS Schedule III to the Companies Act, 2013 – 21 April 2017

ICAI has issued an Exposure Draft (ED) on the Guidance Note (GN) on Division II Ind AS Schedule III to the Companies Act, 2013. The objective of this GN is to provide guidance in the preparation and presentation of Financial Statements in accordance with various aspects of Ind AS Schedule III, for companies adopting Ind AS.

Comments are to be received by 30 April 2017.

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IASB proposes minor amendments to IFRS 9 to aid implementation – 21 April 2017

International Accounting Standards Boards (IASB) has issued an ED proposing amendments to International Financial Reporting Standard (IFRS) 9 in order to enable companies to measure at amortized cost, certain pre-payable financial assets with so-called negative compensation.

Comments are to be received by 24 May 2017.

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Auditing News

Proposed International Standard on Auditing 540 (Revised) – 20 April 2017

International Auditing and Assurance Standards Board has issued an ED on Proposed International Standard on Auditing 540 (Revised), “Auditing Accounting Estimates and Related Disclosures”. The proposed standard includes:

• enhanced requirements for risk assessment procedures;
• the auditor’s work effort in responding to the assessed risks of material misstatement to support this evaluation;
• highlights that the auditor’s identification and assessment of the risks of material misstatement for accounting estimates, and the auditor’s responses to those assessed risks, are affected by complexity, the need for the use of judgment by management, and estimation uncertainty etc.  

Public Comments are to be received by 1 August 2017.

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ASB addresses auditor reporting on ERISA plan financial statements – 20 April 2017

The American Institute of Public Certified Accountants (AICPA) Auditing Standard Board (ASB) has issued a proposal for creation of a new auditing standard for auditors reporting on audits of the financial statements of Employee Benefit Plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). The purpose of issuing this proposal is to help the auditors in better understanding of their responsibilities with respect to these audits and to provide financial statement users with more information about auditors' responsibilities, particularly in limited-scope audits.

Comments are to be received by 21 August 2017.

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Regulatory News

Guidelines on compliance with AS 11 by banks – 18 April 2017

Reserve Bank of India (RBI) has issued guidelines on compliance with Accounting Standard (AS) 11 by banks, whereby it has clarified that the repatriation of accumulated profits shall not be considered as disposal or partial disposal of interest in non-integral foreign operations as per AS-11. Accordingly, banks shall not recognize the proportionate exchange gains or losses held in the foreign currency translation reserve on repatriation of profits from overseas operations in the profit & loss account.

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Banks’ Investment in units of REITs and InvITs – 18 April 2017

RBI has allowed banks to participate in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) within the overall ceiling of 20 percent of their net worth permitted for direct investments in shares, convertible bonds/ debentures etc. subject to certain conditions.

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FAQs on Companies Act, 2013 – 20 April 2017 – 20 April 2017

In order to facilitate the understanding and interpretation of certain provisions of the Companies Act, 2013, ICAI has issued FAQs on Companies Act, 2013.
The FAQs, inter-alia, address questions on following topics:

• Incorporation and allied matters
• Directors
• Accounts
• Audit and auditors
• Deposits
• Dividend
• Board Related Matters
• Corporate Social Responsibility etc.

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FAQs on The Insolvency and Bankruptcy Code, 2016 – 20 April 2017

In order to facilitate the understanding of the provisions of the Insolvency and Bankruptcy Code, 2016 and its regulations, ICAI has issued FAQs wrt  the same.
The FAQs, inter-alia, address questions on following topics:

• Insolvency Resolution and Liquidation of Corporate persons;
• Insolvency Resolution and Bankruptcy for Individuals and Firms;
• Regulation of Insolvency Professionals, Agencies and Information Utilities etc.

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Clarification regarding online generation of Challans for offline payment cases – 20 April 2017

As per Investor Education and Protection Fund (IEPF) (Accounting, Audit, Transfer and Refund) Rules, 2016 and as a prerequisite of e-form IEPF – 1, the Companies are required to transfer the amounts to IEPF through challans generated on MCA 21 portal. However, it has been noticed that certain companies which have transferred money to such fund were also not been able to file IEPF -1.

So, in order to facilitate the same, MCA has issued a clarification wrt online generation of Challans for the purpose of filing of e-form IEPF-1in which it has suggested a two-step process for the same.

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