The weekly messenger | Edition 18.20

Auditing News

ICAI issues publication on Subsequent Events – Key Audit Considerations amid COVID-19 – 23 May 2020

The ICAI has issued a publication on ‘Subsequent Events – Key Audit Considerations amid COVID-19’, which highlight the various key focus areas, which are to be kept in mind by the auditor in the current atmosphere, while undertaking procedures relating to subsequent events as per Standards on Auditing. The publication inter-alia includes:

• What are subsequent events and how should they be reflected in the financial statements;
• How are the auditor’s responsibilities in relation to obtaining sufficient appropriate audit evidence about subsequent events impacted by the COVID-19 pandemic;
• Are audit procedures required, if the events of the COVID-19 pandemic became known to the auditor after the date of auditor’s report;
• How do the results of the auditor’s procedures on subsequent events impact the auditor’s report. 

For more information, click here. 

Regulatory News

Advisory on disclosure of material impact of COVID–19 pandemic on listed entities under Listing Regulations – 20 May 2020

Considering the impact of disruptions being caused by COVID-19, which might result in distortions in the market due to the gaps in information available about the operations of a listed entity, the Securities and Exchange Board of India (SEBI) has issued an advisory, wherein it has encouraged the listed entities to evaluate the impact of the COVID-19 pandemic on their business, performance and financials, both qualitatively and quantitatively, to the extent possible and disclose the same, as per the various provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).
 
The purpose of issuing this advisory is to ensure that all the investors have access to timely, adequate and updated information about the listed entities.
 
For this purpose, the SEBI has also provided an illustrative list of information that listed entities may consider disclosing, subject to the application of materiality.
 
For more information, click here.

Regulatory measures introduced by SEBI to continue in view of ongoing uncertainty – 22 May 2020

In view of the uncertainty observed in the recent past due to concerns relating to COVID-19 pandemic and the resultant fear of economic slowdown, SEBI vide its Press Release dated 20 March 2020 had introduced various regulatory measures for a period of one month w.e.f. 23 March 2020. This date later got extended till 28 May 2020.
Now, in order to ensure orderly trading and settlement, effective risk management, price discovery and maintenance of market integrity, the SEBI has once again decided to further extend the validity of the aforesaid regulatory measures till 25 June 2020.
 
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Statement on Developmental and Regulatory Policies – 22 May 2020

The Reserve Bank of India (RBI) has issued a ‘Statement on Developmental and Regulatory Policies’, which sets out various developmental and regulatory policy measures, in order to improve the functioning of markets and market participants; measures to support exports and imports; efforts to further ease financial stress caused by COVID-19 disruptions by providing relief on debt servicing and improving access to working capital; and steps to ease financial constraints faced by state governments. 

 
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Import of goods and services- Extension of time limits for Settlement of import payment – 22 May 2020

As per the ‘Master Direction on Import of Goods and Services’, remittances against normal imports (excluding import of gold/diamonds and precious stones/ jewellery) should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc.
 
Now, in view of the disruptions being caused by COVID-19, the aforesaid time period has been extended from six months to twelve months from the date of shipment of such imports made on or before 31 July 2020.
 
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COVID-19 – Regulatory Package – 23 May 2020

With reference to the Governor’s Statement dated 22 May 2020, wherein it has been announced that the COVID-19 disruptions has imparted priority to relaxing repayment pressures and improving access to working capital by mitigating the burden of debt servicing, prevent the transmission of financial stress to the real economy, and ensure the continuity of viable businesses and households.
 
In this regard, the RBI has issued detailed instructions.
 
For more information, click here.

COVID-19 Regulatory Package – Review of Resolution Timelines under the Prudential Framework on Resolution of Stressed Assets – 23 May 2020

Considering the continued challenges with respect to the resolution of the stressed assets, the RBI has extended the resolution timelines on stressed assets under the ‘Prudential Framework on Resolution of Stressed Assets’.
 
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Pre-shipment and Post-shipment Export Credit – Extension of Period of Advance – 23 May 2020

Due to COVID-19 pandemic, the exporters have been facing genuine difficulties such as delay / postponement of orders, delay in realisation of bills, etc. In this regard, earlier the RBI had increased the period of realisation and repatriation of the export proceeds to India from nine months to fifteen months from the date of export in respect of exports made upto July 31, 2020.
 
Now, in line with the same, it has been further decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from one year to fifteen months, for disbursements made upto July 31, 2020.
 
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Lower rate of EPF subscription 10% with EPFO notified placing higher liquidity in the hands of employees and employers during COVID -19 pandemic – 19 May 2020

The Central Government has reduced the statutory rate of Employee Provident Fund (EPF) contribution from 12% to 10% for the wage months May, June and July 2020 for all class of establishments covered under the Employees’ Provident Funds and Miscellaneous Provident Act, 1952.
 
However, the aforesaid reduced rate would not be applicable to Central and State Public Sector enterprises, any other establishment owned or controlled by or under control of the Central Government or State Government and PMGKY beneficiaries.
 
For more information, click here.