The weekly messenger | Edition 35.18
This newsletter is a weekly compilation of accounting, auditing and related regulatory news from different accounting and regulatory bodies in India and overseas.
Accounting News
FASB improves the Effectiveness of Disclosures in Notes to Financial Statements – 28 August 2018
The Financial Accounting Standard Board (FASB) has issued two changes to the FASB’s Conceptual Framework and two Accounting Standard Updates (ASUs) that aim to improve the effectiveness of disclosures in notes to financial statements which inter-alia includes:
- Insertion of a new chapter in the Conceptual Framework on disclosures which explains what information the Board should consider including in notes to financial statements and also addresses the Board’s considerations specific to interim reporting disclosure requirements;
- An update to an existing chapter of the Conceptual Framework for its definition of materiality;
- ASU to improve disclosure requirements on
- Fair Value Measurement;
- Defined Benefit Plan.
For more information, click here
FASB Improves the Accounting for Costs of Implementing a Cloud Computing Service Arrangement - 29 August 2018
The FASB has issued an ASU in order to reduce the complexity for the accounting for costs of implementing a cloud computing service arrangement. The ASU has aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).
In case of calendar – year public companies, these changes would be effective for annual periods, including interim periods within those annual periods, in 2020. For all other calendar-year companies and organizations, these changes would be effective for annual periods in 2021, and interim periods in 2022.
For more information, click here.
Auditing News
ICAI modifies the guidelines w.r.t. reckoning of the “specified number of tax audit assignments” under Chapter VI of the Council Guidelines – 23 August 2018
The Institute of Chartered Accountants of India (ICAI) vide its 368th meeting held in August, 2017 had decided to exclude the audit conducted under section 44ADA of the Income-tax Act, 1961 for the purpose of reckoning the “specified number of tax audit assignments” under Chapter VI of the Council Guidelines as section 44ADA of the Income-tax Act, 1961 also contains special provision for computing profits and gains of profession on presumptive basis.
Now, the ICAI has modified the Chapter VI of the Council Guidelines to the extent of the aforesaid change. Accordingly, as per the current scenario, audits conducted under Section 44AD, 44ADA and 44AE of the Income - tax Act, 1961 shall not be taken into account for the purpose of reckoning the “specified number of tax audit assignments”.
For more information, click here.
Implementation Guide to SA 610 (Revised) ‘Using the work of Internal Auditors’ – 23 August 2018
The Auditing and Assurance Standards Board of the ICAI, in order to assist the auditors in practical implementation of the Standard on Auditing (SA) 610 (Revised) ‘Using the work of internal auditors’ in real life audit situations has issued an Implementation Guide with respect to the same. The Implementation Guide has been written in a “Question Answer” format which contains frequently asked questions (FAQs) with respect to the standard and the response to those FAQs.
For more information, click here.
Clarification on applicability of Notifications w.r.t. SBNs disclosure issued by MCA for the FY ending on 31 March 2018 – 1 September 2018
The Ministry of Corporate Affairs (MCA) vide its Notification dated 30 March 2017 had amended the Schedule III of Companies Act, 2013 for disclosure of Specified Banking Notes (SBNs) wherein the Companies were asked to disclose for the transactions done in SBNs during the period 8 November 2016 to 30 December 2016 in their Notes to Accounts. Consequently, the MCA had also modified the format of the Audit Reports, whereby the auditors were required to provide a relevant note w.r.t the aforesaid transactions.
Now, the Corporate Laws & Corporate Governance Committee of the ICAI, has provided a clarification on the above mentioned matter, wherein, it has clarified that since, the aforesaid disclosure requirement was event specific, therefore, the same was relevant for Financial Year (FY) 2016-17 only. Accordingly, the disclosure requirement relating to SBNs, both in Notes to Account as well as Audit Report are not applicable for the FY 2017-18 & subsequent years; however, consequent disclosures may be made in the Financial Statements/Audit Reports.
For more information, click here.
Regulatory News
Report to review offences under the Companies Act, 2013 – 28 August 2018
The Central Government (CG) had constituted a Committee to review offences under the Companies Act, 2013 which has recently issued a report wherein, the Committee has made an objective assessment of the existing regulatory framework under the Companies Act, 2013 and has also made recommendations in order to achieve a marked improvement in corporate compliance.
For more information, click here.
Income-tax (9th Amendment), Rules, 2018 – 30 August 2018
The CG has amended the Income Tax Rules, 1962 with the Income Tax (9th Amendment) Rules, 2018 wherein it has made the following modifications:
- In clause (b) (ii) of existing Rule 11U ‘Meaning of expressions used in determination of fair market value’, the meaning of the term ‘balance sheet’ has been amended;
- A new Rule 11UAB ‘Determination of fair market value for inventory’ for the purpose of the Section 28(via) of the Income Tax Act has been inserted.
These rules shall come into force w.e.f. 1 April 2019 and shall apply in relation to assessment year 2019-20 and subsequent years.
For more information, click here.
Further GST Updates
The Central Board of Indirect Taxes and Customs has issued certain updates w.r.t. Goods and Services Tax (GST) whose links are as follows:
- For Union Territory GST (Amendment) Act, 2018, click here;
- For GST (Compensation to States) Amendment Act, 2018, click here;
- For Integrated GST (Amendment) Act, 2018, click here; and
- For Central GST (Amendment) Act, 2018, click here