The weekly messenger | Edition 37.19

Accounting News

FAQ on Presentation of Dividend and DDT – 17 September 2019

The ICAI has issued a FAQ on ‘Presentation of Dividend and Dividend Distribution Tax’ under Ind AS, wherein it has clarified that the dividend and the Dividend Distribution Tax (DDT) thereon would be presented as follows:

• Dividend - If a financial instrument is classified as debt, the dividend or interest paid thereon is in the nature of interest which is recognised in profit or loss. Dividend or interest paid on a financial instrument which is classified as equity, should be recognised in the Statement of Changes in Equity.
• DDT - Presentation of DDT paid on the dividends should be consistent with the presentation of the transaction that creates those income tax consequences. Therefore, DDT should be recognised in profit or loss, if the dividend/interest itself is recognised in profit or loss. If the dividend is recognized in equity, the presentation of DDT should be consistent with the presentation of dividend, i.e., to be recognized in equity.

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ITFG Clarification Bulletin 21 – 18 September 2019

The Ind AS Technical Facilitation Group (ITFG) of Ind AS (IFRS) Implementation Committee has been constituted to provide clarification on various issues related to applicability and/or implementation of Ind AS under the Companies (Ind AS) Rules, 2015, raised by preparers, users and other stakeholders. Recently, ITFG has issued the twenty first set of clarifications. This bulletin contains clarifications on following significant matters:

• Whether lease which is being extended for one year on year on year basis since 2005 would be treated as short term lease as per Ind AS 116;
• Accounting Treatment of rent equalisation liability created under Ind AS 17 ‘Leases’ on adoption of Ind AS 116 w.e,f. 1 April 2019;
• Accounting Treatment of land acquired on 99 years lease under Ind AS 116;
• Clarification on date of application of Ind AS 116 in respect of leases acquired in the business combination by a first-time adopter of Ind AS;
• Accounting treatment of foreign exchange differences relating to the lease liability

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Auditing News

Extension of time limit of UDIN generation from 15 days to 30 days – One Time Relaxation – 19 September 2019

The ICAI, pursuant to various representations received from Members for inability in generating Unique Document Identification Number (UDIN) due to floods in many parts of the Country and related internet issues, has decided to permit generation of UDIN within 30 days in place of 15 days. The UDIN so generated has to be communicated to ‘Management’ or ‘Those Charged with Governance’ for disseminating it to the stakeholders from their end.This is a one-time relaxation available on the Certificate / Report / Document signed between 20  August 2019 to 31 December 2019.
 
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Effective Date of Validity of Peer Review Certificate – 21 September 2019

The Peer Review Board has issued a clarification on ‘Effective Date of Validity of Peer Review Certificate’, wherein the aforesaid board has clarified that the Peer Review Certificate would be effective from the date of submission of final clean report irrespective of date of Peer Review Board meeting in which it is approved.
 
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Regulatory News

Constitution of the Company Law Committee – 18 September 2019

The government has decided to constitute a Company Law Committee for examining and making recommendations to it on various provisions and issues pertaining to implementation of the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. The terms of reference of the Committee would be as follows:

• Analyse the nature of offenses and submit its recommendations as to whether any of the offenses could be re-categorised as ‘civil wrongs’ along with measures to optimize the compliance requirements under the Companies Act, 2013 and concomitant measures to provide further Ease of Doing Business;
• Examine the feasibility of introducing settlement mechanism, deferred prosecution agreement, etc., within the fold of the Companies Act, 2013;
• Propose measures to further de-clog and improve the functioning of the National Company Law Tribunal (NCLT);
• Suggest measures for removing any bottlenecks in the overall functioning of the statutory bodies like Serious Fraud Investigation Office (SFIO), Investor Education and Protection Fund Authority (IEPFA), National Financial Reporting Authority (NFRA), etc. under the Act etc.

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Updated FAQs related to DIR – 3 KYC – 19 September 2019

The Ministry of Corporate Affairs has issued updated FAQs on DIR – 3 KYC which inter-alia includes:

• Who is required to file DIR – 3 KYC Form;
• Who can file e Form DIR – 3 KYC;
• Who can file KYC through DIR – 3 KYC web-service;
• Dates to be kept in mind to comply with Annual compliance of KYC;
• Which details are required to be filled in the form etc.

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Concurrent Audit System – 18 September 2019

The Reserve Bank of India has issued revised norms for concurrent audit system of banks
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