The weekly messenger | Edition 33.18

Accounting News

FASB Improves Accounting Guidance for Insurance Companies that Issue Long-Duration Contracts – 15 August 2018

The Financial Accounting Standards Board (FASB) has issued an Accounting Standard Update (ASU) which aims to improve the financial reporting for insurance companies that issue long-duration contracts, such as life insurance, disability income, long-term care, and annuities. The new ASU:

• Requires updated assumptions for liability measurement;
• Standardizes the liability discount rate;
• Provides greater consistency in measurement of market risk benefits;
• Simplifies amortization of deferred acquisition costs;
• Requires enhanced disclosures.

For public companies which follow calendar year, these changes will be effective in 2021 whereas for all other calendar year companies, these changes will be effective in 2022. However, early adoption of these changes is permitted.

For more information, click here.

Clarification on Press Release (Implementation of Ind AS 115, Revenue from Contracts with Customers in context of Real Estate Sector) – 16 August 2018

The Institute of Chartered accountants of India (ICAI) had issued a press release on ‘Implementation of Ind AS 115 ‘Revenue from Contracts with Customers’’ wherein it clarified that Indian Accounting Standard (Ind AS) 115 also permits recognition of revenue using Percentage of Completion Method (POCM) and has explicit and specific requirements to recognise revenue, where performance obligation is satisfied over a period of time. Now, with respect to that press release, the ICAI has issued a further clarification, wherein it has clarified that the recognition of revenue as the construction progresses is possible based on careful evaluation for each contract as to rights and obligations of the parties to the contract and having regard to applicable laws and regulations (including legal jurisprudence in India) while arriving at a conclusion on the criteria listed out in paragraph 35 ‘Performance Obligations satisfied over time’ and related application guidance of the Standard.

For more information, click here.

Educational Material on Ind AS 115, Revenue from Contracts with Customers - 17 August 2018

The ICAI has issued an Educational Material on Ind AS 115 ‘Revenue from Contracts with Customers’ wherein it has addressed all the relevant aspects envisaged in the Standard by way of brief summary of the Standard and Frequently Asked Questions (FAQs) which are being/expected to be encountered while implementing the Standard. The basic objective of issuing this publication is to provide guidance for implementing the aforesaid standard effectively by explaining the principles enunciated in the Standard with the help of examples. The Educational material inter-alia includes:

• Ind AS 115 – Summary;
• FAQs;
• Difference between Ind AS 115 and IFRS 15;
• Difference between Ind AS 115 and AS 9 and AS 7.

 For more information, click here.

Regulatory News

The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 – 17 August 2018

The Insolvency and Bankruptcy Code, 2016 has been further amended by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 due to which the certain sections have undergone changes and certain new sections have been added. These sections inter-alia includes:

• Amendment of section 3 ‘Definitions’;
• Amendment of section 7 ‘Initiation of corporate insolvency resolution process by financial creditor’;
• Amendment of section 8 ‘Insolvency resolution by operational creditor’;
• Amendment of section 9 ‘Application for initiation of corporate insolvency resolution process by operational creditor’;
• Amendment of section 10 ‘Initiation of corporate insolvency resolution process by corporate applicant’; 
• Insertion of new section 12A ‘Withdrawal of application admitted under section 7,9 or 10;
• Insertion of new section 25A ‘Rights and duties of authorised representative of financial creditors’ etc.

This Act shall be deemed to have come into force w.e.f. 6 June 2018.

For more information, click here. 

Amendments to Revised Form No. 3CD – 17 August 2018

The Central Board of Direct Taxes (CBDT) had recently amended the Form 3CD w.e.f. 20 August 2018 pursuant to which it has received various representations w.r.t. the deferment of the reporting requirements of proposed clause 30C (pertaining to General Anti – Avoidance Rules (GAAR) {Impermissible Avoidance Arrangements- As mentioned in Form 3CD}) and proposed clause 44 (pertaining to Goods and Services Tax (GST)).

After examining the aforesaid matters, the CBDT has finally issued a clarification wherein it has clarified that the proposed clause 30C and proposed Clause 44 of the Form 3CD shall be kept in abeyance till 31 March 2019. Thismeans that the tax auditors would not be required to report on the aforesaid clause in their Tax Audit Reports which would be furnished on or after 20 August 2018 but before 1 April 2019.

For more information, click here.

Customs (Finalisation of Provisional Assessment) Regulations 2018 – 14 August 2018

 The Central Board of Indirect Taxes and Customs has issued the Customs (Finalisation of Provisional Assessment) Regulations, 2018 which shall be applicable to the provisional assessments which would be ordered on or after the enforcements of these regulations. The said regulations inter-alia includes:

• Definitions;
• Applicability;
• Time-limit and manner for submission of documents or information for the purpose of finalisation of provisional assessment;
• Time-limit for finalisation of provisional assessment;
• Manner of finalisation of provisional assessment; and
• Penalty.

These regulations shall come into force on the date of their publication in the official gazette i.e. 14 August 2018.

For more information,click here.