Ind AS 115: India Inc’s deferment call to be taken up on Sept 3

K. R. Srivats New Delhi | Updated on November 12, 2019 Published on August 30, 2015

National Advisory Panel to consider industry demand for two-year deferment

The National Advisory Committee on Accounting Standard (NACAS) will meet on September 3 to take a call on India Inc’s demand to push back by two years the implementation of a key new revenue standard.

This new revenue standard-- Ind AS 115 will have a bearing on how corporates recognise revenues in their financial statements.

It could especially impact the financial statements of companies in information technology, telecom, automobiles and real estate sectors.

The Modi-led Government is expected to take final view on deferment based on the recommendations of NACAS.

There is a growing debate in India on whether to defer the implementation of Ind AS 115 (IFRS 15 equivalent) until 2018 when IFRS 15 will be mandatorily adopted globally.

NACAS is a body that advises the Centre on the formulation and laying down of the accounting policy and standards for adoption by companies.

Early last week, all the three apex industry chambers—Assocham, FICCI and CII—together represented to NACAS that Ind AS115 be implemented from April 1, 2018 instead of April 1 next year.

This submission is in contrast to the CA Institute’s thinking that the new revenue standard be implemented from April 1, 2016 itself as planned despite the International Accounting Standards Board (IASB) deferring it to 2018.

While deferring implementation of IFRS 15 to January 1, 2018, the IASB has however allowed voluntary adoption of this new revenue recognition standard.


So what should be the right approach for NACAS when it meets on Thursday in the capital on this important issue?

Experts have views both for and against deferment of Ind AS 115.

Vishal Seth, Managing Director, Financial Reporting Advisory, Protiviti India, a global consulting firm, said that it would be prudent for Indian companies to adopt Ind AS 115 now for a number of reasons.

Seth said that transition to IFRS in two stages would require going through the transition twice and will make the task of updating processes and IT systems very onerous and complicated

The incremental effort to adopt IFRS 15 should be relatively less now as compared to the effort and costs that the companies would have to incur if the standard is implemented in two stages (first to IAS 18/IAS11 and relevant IFRICS and then to Ind AS 115 after 2 years), he said.

"As a minimum, I think Indian companies should be given an option to voluntarily adopt Ind AS 115 instead of existing IFRS equivalent standards", Seth told BusinessLine.

Parveen Kumar, Partner, ASA & Associates LLP, a CA firm, said that industry, especially IT, telecom and real estate, feel that enough time is required to understand the complexities of Ind AS 115 and therefore deferment may be a way out.

A facility of early adoption could be permitted, he said.

Ashish Gupta, Partner, Walker, Chandiok & Co LLP, a CA firm, said that representations made by companies on deferring the standard to align with global application are not misplaced.

This is more so when Ind AS are supposed to bring in comparability of financial performance of Indian companies with their global peers.

However, one should consider that Indian companies need superior standards to demonstrate substance of business transactions, he said.

"Should NACAS decide to recommend the deferral and match it to global application, it is important that a framework be laid out for alternative standards, especially for real estate companies quickly", Gupta said .

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Published on August 30, 2015
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