Common Non-Compliances on
Ind AS in the General Purpose Financial Statements as observed by
Financial Reporting Review Board (FRRB)
The Institute of Chartered Accountants of India
Observations related to
Balance Sheet
Financial Reporting Review Board (FRRB)
Property, Plant And Equipment
Case:
The accounting policy on Property, Plant and Equipment of a company states that the subsequent expenditure related to an item of PPE is added to its carrying value, only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
Requirements:
Paragraph 7 & 13 of Ind AS 16
Observation:
As per paragraph 13 of Ind AS 16, the subsequent expenditure would be recognized in the carrying amount of PPE when that cost / expense would meet the recognition criteria i.e., cost can be measured reliably and it is probable that the future benefits will flow to the company.
Accordingly, capitalisation of subsequent expenditure on the basis of ‘’increase of future benefits from the existing asset beyond previously assessed standard of performance’’ is not in line with the requirement of Ind AS 16.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Property, Plant And Equipment
Case:
All the project related expenses incurred prior to the date of commercial operations capitalized and shown under Capital Work in Progress.
Requirement:
Paragraph 20 of Ind AS 16
Observation:
Capitalization of expenses that were incurred up to the date of commercial operations, is not in line with Ind AS 16, as recognition of costs in the carrying amount of PPE ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Borrowing Costs
Case:
The accounting policy on borrowing costs states as follows:
Borrowing costs incurred for constructed assets were capitalised up to the date the asset is ready for its intended use.
Requirement:
Paragraph 8 of Ind AS 23
Observation:
Every constructed asset may not be a qualifying asset, and therefore, borrowing cost incurred on every constructed asset may not be permitted to be capitalized unless it is a qualifying asset as per Ind AS 23.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Investment Property
Case:
No depreciation was charged on investment property during the year.
Requirements:
Paragraph 79 of Ind AS 40
Observation:
Investment property is measured at cost less accumulated depreciation and any accumulated impairment losses. Non charging depreciation may affect the true and fair view of the Statement of Profit and Loss, since the net profit would be overstated to that extent.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Goodwill - Impairment
Case:
The company has disclosed goodwill in the financial statements, however, there is no disclosure regarding impairment testing for goodwill.
Requirements:
Paragraph 48 of Ind AS 38 and Paragraphs 9 and 10 of Ind AS 36
Observation:
Internally generated goodwill shall not be recognized as per Paragraph 48 of Ind AS 38. For goodwill acquired in a business combination, it should be tested for impairment annually irrespective of whether there is any indication of impairment.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Financial Instruments : Presentation
Case:
Investment in equity shares of other companies have been disclosed under Inventories.
Requirements:
Paragraph 11 of Ind AS 32
Observation:
Investment in equity shares of other companies falls under the definition of financial assets and should be classified as Financial Assets and accounted accordingly.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Financial instruments : Presentation
Case:
In the notes to the accounts of a company, the interest accrued has been disclosed under ‘Non-financial Assets’.
Requirements:
Paragraph 11 of Ind AS 32
Observation:
As per definition of Financial Assets given under paragraph 11 of Ind AS 32, interest accrued is in nature of financial asset, and hence, should be shown under the head of Financial Assets.
Accordingly, classification of interest accrued under non- financial assets is not in line with the requirements of Ind AS 32.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Separate Financial Statements
Case:
Investment in subsidiaries disclosed in the financial statements. However, no accounting policy has been given for its recognition and measurement.
Requirements:
Paragraph 10 of Ind AS 27
Observation:
As per paragraph 10 of Ind AS 27, the company has a choice to have cost or fair value as per Ind AS 109, as the accounting policy for recognition & measurement of its investments in subsidiaries. However, in the given case, the company has not disclosed the accounting policy for recognition & measurement of its investment in subsidiaries as per Ind AS 27.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Investment in Subsidiaries and Joint Ventures
Case:
There are investments in subsidiaries and joint ventures in the financial statements. However, no disclosure has been given in the notes to accounts for the same.
Requirements:
Paragraph 17 (b) of Ind AS 27
Observation:
The place of incorporation and the proportion of ownership interest in respect of investments in subsidiaries and joint ventures are required to be disclosed.
Accordingly, the requirement of Ind AS 27 has not been complied with.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Equity Investments �
Case:
Equity investments designated at FVOCI has been derecognized during the year. However, no disclosure has been given in the notes to accounts for the same.
Requirements:
Paragraph 11B of Ind AS 107
Observation:
The reasons for de-recognition, fair value of investments at the date of de-recognition and cumulative gains and loss on disposal are required to be disclosed.
Accordingly, there is a non-compliance of Ind AS 107.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Prepaid Expenses�
Case:
In the annual report of a company, prepaid expenses have been disclosed under ‘Other Financial Assets’.
Requirements:
Paragraph 11 of Ind AS 32 read with paragraph 8.1.12 of Guidance Note on Division II
Observation:
Prepaid expenses does not give a contractual right to receive cash or other financial assets, rather it is a right to receive services. Accordingly, the prepaid expenses are not financial assets in terms of Ind AS 32 and should have been disclosed as ‘Other Current Assets’ as per the guidance provided under paragraph 8.1.12 of Guidance Note on Division II – Ind AS Schedule III to the Companies Act, 2013.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Inventories�
Case:
The accounting policy on Inventory was stated as follows:
“Inventories are valued at the lower of cost and fair value “
Requirements:
Paragraph 6 of Ind AS 2: Inventories gives definition of Net Realisable Value (NRV) & para 9 of Ind AS 113: Fair Value Measurement defines fair value
Observation:
Inventories are to be valued at the lower of the cost or net realizable values and not the fair value, and therefore, the stated policy on inventory valuation is not in line with the requirements of Ind AS 2.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Inventories�
Case:
Work in progress disclosed under the head Other Current Assets.
Requirements:
Paragraph 6 and 8 of Ind AS 2
Observation:
Assets in the process of production for sale should be treated as inventories and disclosed under inventories, instead of disclosing it under Other Current Assets.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Cash and Cash Equivalent �
Case:
Fixed deposits held as margin money or security against guarantees, letter of credits and other commitments have been classified as Cash and Cash Equivalent.
Requirements:
Paragraph 6 of Ind AS 7
Observation:
As per definition of Cash Equivalents, fixed deposits held with banks as margin money are not cash and cash equivalents, and therefore, cannot be classified as such in the financial statements.
Accordingly, there is a non-compliance of Ind AS 7.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Assets Held for Sale�
Case:
Land and building has been classified as ‘assets held for sale’. However, no disclosure has been given in the notes to accounts for the same.
Requirements:
Paragraph 41 (b) of Ind AS 105
Observation:
Disclosures regarding description of the facts and circumstances, leading to the expected sale and expected manner and timing of that disposal should be given.
Accordingly, there is a non-compliance of Ind AS 105.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Liabilities�
Case:
Loans repayable on demand have been disclosed under Non-Current liabilities.
Requirements:
Paragraph 69 of Ind AS 1
Observation:
Loans repayable on demand should be classified under Current Liabilities.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Observations related to
Equity
Financial Reporting Review Board (FRRB)
�Statement of Changes in Equity�
Case:
The Ind AS based financial statements of a company includes Balance Sheet, Statement of Profit and Loss, Statement of Cash Flows and Other Explanatory Notes along with Significant Accounting Policies.
Requirements:
Paragraph 10 of Ind AS 1
Observation:
The company has not presented the Statement of Changes in Equity in the financial statements. The Statement of Changes in Equity is also an integral part of Ind AS financial statements and should be prepared and presented along with other components of the financial statements.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Observations related to
Statement of Profit and Loss
Financial Reporting Review Board (FRRB)
�Disclosure of Revenue Recognition�
Case:
From the notes to financial statements, it was noted that a disclosure regarding timing of recognising revenue over a period of time has been given.
Requirements:
Paragraph 124 of Ind AS 115
Observation:
If the performance obligations are satisfied over time, then the methods used to recognize revenue, i.e. output method or input method should also be disclosed along with how the followed method provides a faithful depiction of the transfer of goods or services.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Disclosure of Revenue Recognition�
Case:
The accounting policy on revenue recognition states that it is measured based on transaction price, which is fair value of the consideration received or receivable, net of discounts, returns and applicable taxes…
Requirements:
Paragraph 126AA of Ind AS 115
Observation:
The company has not provided the reconciliation of revenue recognised in the Statement of Profit and Loss with the contracted price showing separately the nature and amount of each such adjustment i.e., discounts, returns etc.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Disclosure of Contract Balances�
Case:
Notes to financial statements shows that the company had contract liabilities. It was also noted that there is a significant change in the balance of contract liability compared to previous year.
Requirements:
Paragraphs 116 and 118 of Ind AS 115
Observation:
The company has not provided the required disclosures or explanations regarding these significant changes in contract liability balances during the reporting period, including both qualitative and quantitative information as required by Ind AS 115.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Recognition of Income from Royalty�
Case:
The accounting policy on royalty income states that it is recognized by the company as per the terms of the agreement between the parties.
Requirements:
Paragraphs 58 read with B63 of Ind AS 115
Observation:
The royalty income should be accounted for on the basis of “sales based” or “usage based” royalty that is promised in exchange for license of intellectual property.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Netting off Interest Income and Interest Expense�
Case:
Interest income is shown net of interest expenses in the Statement of Profit and Loss.
Requirements:
Paragraphs 32 & 82 (b) of Ind AS 1
Observation:
Netting off finance income with finance expense is not in line with the requirement of paragraph 32 of Ind AS 1. In fact, finance cost is to be shown as separate line item in the Statement of Profit and Loss as per Para 82(b) of Ind AS 1.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Income Tax relating to OCI items�
Case:
Statement of Profit and Loss of one of the Company read as follows:
Particulars 20XX-XX 20XX-XX
B. Items that will not be reclassified to Profit / Loss XX XX
Requirements:
Paragraph 96 of Ind AS 1 read with paragraph 61A of Ind AS 12
Observation:
In the Statement of Profit and Loss, income tax relating to OCI portion which relates to re-measurement of defined benefits plans has not been disclosed.
The tax impact on the same should have been disclosed in OCI as per the requirements of paragraph 61A of Ind AS 12, which states that current tax and deferred tax relating to items that are recognized in OCI shall be recognized in other comprehensive income.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Presentation of item related to OCI�
Case:
The Company has disclosed “Equity Instruments at Fair Value through Other Comprehensive Income” under the head “Items that will be reclassified to Statement of Profit or Loss”.
Requirements:
Paragraph 4.1.4 of Ind AS 109 read with Note 6A of General Instruction for preparation of Statement of Profit and Loss
Observation:
The Equity instruments measured at FVTOCI are required to be shown under the head “Items that will not be reclassified to Profit or Loss” in Other Comprehensive Income.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Prior Period Errors�
Case:
Prior period expenses disclosed under Note on ‘Other Expenses’.
Requirements:
Paragraph 42 and 49 of Ind AS 8
Observation:
The prior period items should be adjusted either by restating the comparative amounts for the period in which error occurred or restating the opening balances of assets, liabilities and equity for the earliest prior period presented.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Employee Benefits�
Case:
Under the accounting policy for defined contribution plans, it is, interalia, stated that the Company has an obligation to make good the shortfall, if any.
Requirements:
Paragraph 8 of Ind AS 19
Observation:
In defined contribution plans, employer’s liability to the employee is limited to the amount of contribution & has no further obligation to pay beyond agreed contribution.
Accordingly, the accounting policy for defined contribution plan is not appropriate.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Employee Benefits�
Case:
Note on Employee Benefits states that provision for gratuity was made in respect of every employee who has completed at least five years of service as 15 days salary for every year completed year of service.
Requirements:
Paragraph 72 and 135 of Ind AS 19
Observation:
Provision was made only for the employees who have completed five years, however, the liability has arisen when the employee has started providing the services. Accordingly, the provision for gratuity has not been made correctly.
Further, the disclosures regarding gratuity has not been provided in the Notes to Accounts, as required by Paragraph 135 of Ind AS 19.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Effects of Changes in Foreign Exchange Rates �
Case:
The exchange difference on monetary items related to foreign operations are initially recognized in OCI and reclassified from equity to Statement of Profit and Loss on repayment of monetary items.
Requirements:
Paragraph 32 of Ind AS 21
Observation:
Reclassification from equity to Statement of Profit and Loss should have been made on disposal of net investment instead of repayment of the monetary items.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Earning Per Share�
Case:
The weighted average number of shares issued during the year was used to calculate EPS, and total comprehensive income was considered for this calculation.
Requirements:
Paragraph 10, 19, 70(a) & (b) of Ind AS 33
Observation:
Profit attributable to ordinary equity holders and weighted average number of ordinary shares outstanding during the period should be considered for calculating EPS.
Additionally, disclosures related to the amounts used as the numerators for calculating basic and diluted EPS, as well as the weighted average number of ordinary shares used as the denominators in calculating both basic and diluted EPS, as required under paragraphs 70(a) and 70(b) of Ind AS 33, were not provided by the company.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Share Based Payments�
Case:
The accounting policy regarding share-based payments states that the Company follows the intrinsic value method to account for its Employee Stock Appreciation Rights (SARs).
Requirements:
Paragraphs 10 and 30 of Ind AS 102
Observation:
The intrinsic value method should not be followed for recognition of employee stock appreciation rights. Instead, cash settled as well as equity settled share-based payment should be measured at fair value as required by Ind AS 102.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Bargain Purchase�
Case:
ABC Ltd acquired a 95% equity stake in XYZ Ltd, making XYZ Ltd its subsidiary. Additionally, ABC Ltd received Rs YY lakhs for the completion of the acquisition, which was shown as an exceptional item in the Statement of Profit and Loss.
Requirements:
Paragraph 34 of Ind AS 103
Observation:
It was observed that the nature of said exceptional item is not clear. It was viewed that in business combination, receiving money on acquiring shares, indicates that it is in the nature of bargain purchase. As per paragraph 34 of Ind AS 103, such gain should have been recognized in other comprehensive income on the acquisition date and should be accumulated in equity as capital reserve. However, the company has recognised the gain on acquisition of shares under Statement of Profit and Loss, which has resulted into overstatement of profit.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Provision for Loss Allowance�
Case:
Note on ‘Trade Receivable’ reads as follows:
Particulars As at March 31st,20XX As at March 31st,20XX As at March 31st,20XX
UNSECURED
Trade Receivables – Considered Good XX XX XX
Trade Receivables – Considered Doubtful XX XX XX
Receivables from Related Parties - Considered Good XX XX XX
Requirements:
Paragraph 5.5.1 of Ind AS 109
Observation:
The company did not create a provision for loss allowance, despite having doubtful receivables, in accordance with Ind AS 109.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Observations related to
Statement of Cash Flows
Financial Reporting Review Board (FRRB)
�Statement of Cash Flows�
Case:
Cash paid to purchase the Property, Plant and Equipment has been disclosed as “capital expenditure”, under the head Cash Flow from Investing Activities.
Requirements:
Paragraph 16 of Ind AS 7
Observation:
Such outflow should be reported using the proper description of the line item viz. ‘acquisition of property, plant and equipment’ rather than as ‘capital expenditure’.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Statement of Cash Flows�
Case:
An item pertaining to OCI has been adjusted as ‘Non-Cash Item’ while determining Cash Flows from Operating Activities.
Requirements:
Paragraph 20 of Ind AS 7
Observation:
While determining the net Cash Flow from Operating Activities, profit before tax has been taken and therefore, the items pertaining to OCI should not be adjusted.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Leases�
Case:
Note on Leases states that the amount recognized in Statement of Profit and Loss, includes interest on lease liabilities, which indicates that the ‘’total cash payment of lease liabilities’’ as disclosed in Statement of cash flows (under financing activities) also includes interest on lease liabilities.
Requirements:
Paragraph 50 of Ind AS 116
Observation:
The Standard requires to present cash payment for the interest portion of lease liability separately under the financing activities of the Statement of Cash Flows.
Non-Compliance related to Ind AS
Financial Reporting Review Board
�Cash Flows arising from Cash and Non-Cash Changes�
Case:
The Statement of Cash Flows disclosed the proceeds from long term borrowings as well as repayment of long-term borrowing (under financing activities) during the year.
Requirements:
Paragraph 44A of Ind AS 7
Observation:
The changes in liabilities arising from financing activities, including changes arising from cash flows and non-cash changes have not been disclosed.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Observations related to
Other Disclosures Under �Notes To Accounts
Financial Reporting Review Board (FRRB)
�Basis of Preparation of Financial Statements �
Case:
Under basis of preparation, it was stated that “Financial Statements have been prepared on historical cost basis, except certain financial liabilities which are measured at fair value”.
Requirements:
Paragraph 7 of Ind AS 1
Observation:
In the financial statements, all the financial liabilities have been measured at amortised cost. There are certain financial assets viz. equity instruments and mutual funds which have been measured at fair value.
Accordingly, the given statement under basis of preparation is not correct.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Non-disclosure of Accounting Policies
Case:
Many companies are not disclosing the accounting policy adopted for recognition and measurement of Property, Plant and Equipment, Revenue Recognition, Depreciation, Intangible Assets and Employee Benefits.
Requirements:
Paragraph 117 of Ind AS 1
Observation:
Accounting policies are crucial to the understanding of the financial statement, and therefore, should have been disclosed by the companies.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Incomplete Accounting Policies
Case:
From the financial statements of certain companies, it was noted that companies disclose the accounting policies, however, those policies are not complete accounting policies.
Requirements:
Paragraph 117 of Ind AS 1
Observation:
It was noted from the financial statements of a company that the company has disclosed the accounting policy on Foreign Currencies. However, detailed policy for the accounting of Foreign Currency Transactions has not been given. For eg. IND AS 21 on foreign currencies requires the company to identify and disclose its functional currency and presentation currency and how it accounts for foreign currency transactions and how it translates its foreign operations at the end of the year. However, the same has not been convered under the accounting policy on foreign currency transactions.
Accordingly, it was viewed that the requirements of Ind AS 1 have not been complied with.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Non-disclosure of Accounting Policies
Case:
Following note was given in financial statement of an entity:
It was further noted that the auditor has given Emphasis of Matter on the same that the mining operation was suspended since last more than 12 months.
Contd…..
Non-Compliance related to Ind AS
Financial Reporting Review Board
Non-disclosure of Accounting Policies
Requirements:
Paragraph 117 of Ind AS 1/ Ind AS 38 / Ind AS 105
Observation:
It was noted from the Note as well as Auditor’s Report that the company’s mining operation at the given state was suspended. However, no accounting policy was given for impairment or discontinued operation. It was viewed that in absence of accounting policy, it is difficult to assess the correct situation. Hence, the management is required to make judgment and give proper disclosure whether it is discontinued operation of major component of an entity as per IND AS 105 or there is indication about the impairment of assets as per IND AS 38.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Accounting Policy on Research and Development Expenditure
Case:
The accounting policy on Research and Development states as follows:
Research and Development expenditure is charged to revenue under the natural heads of account in the year in which it is incurred. Research and Development expenditure on Property, Plant and Equipment is treated in the same way as expenditure on other Property, Plant and Equipment.
Requirements:
Paragraph 54 & 57 of Ind AS 38
Observation:
Expenditures on research phase should be recognised as an expense immediately and expenditure on development phase should be recognised as an asset, if the recognition criteria given in paragraph 57 of Ind AS 38 are satisfied.
Accordingly, the given accounting policy on Research and Development is not appropriate.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Disclosure regarding Going Concern
Case:
In one of the note, it was stated that the entire net worth of the Company has been substantially eroded and also there was no material business activity during the year.
Further, Note on Capital Management in the financial statements reads as under:
The Company manages its capital to ensure that it will continue as going concern while maximising the return to stakeholders. ...
Requirements:
Paragraph 25 of Ind AS 1
Observation:
Although there existed material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. However, the Company has not made the relevant disclosures as per the requirements of paragraph 25 of Ind AS 1.
Accordingly, it was viewed that the requirement of Ind AS 1 has not been complied with.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Reconciliation - Indian GAAP Vs Ind AS
Case:
In the entity’s first Ind AS financial statements, the Statement of Ind AS Adjustments showing Reconciliation of IGAAP vs Ind AS has not been given anywhere in the notes to the accounts.
Requirements:
Paragraph 23 read with 24 and 25 of Ind AS 101
Observation:
A statement showing Reconciliation of IGAAP vs Ind AS should have been disclosed along with explanatory notes as to how transition from previous GAAP to Ind AS, affected the reported financial statements by providing reconciliation of equity, total comprehensive income and recognition/reversal of impairment losses if any. This shall give sufficient detail to enable users to understand the material adjustments to the Balance Sheet and Statement of Profit and Loss.
Accordingly, it was viewed that the requirement of Ind AS 101 has not been complied with.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Ind AS not yet Effective
Case:
From the financial statements of certain companies, it was noted that the disclosure has not been given for the Ind AS that has been issued but is not yet effective.
Requirements:
Paragraph 30 of Ind AS 8
Observation:
As per paragraph 30 of Ind AS 8, when the entity has not applied a new standard that has been issued but is not yet effective, the entity is required to disclose that fact and the possible impact of application of the new Ind AS. However, the same has not been disclosed anywhere in the Notes to Accounts.
Accordingly, the requirement of Ind AS 8 has not been complied with.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Related Party Disclosure
Case:
From the Note on Borrowings, it was noted that certain loans were taken from the holding company during the year.
Requirements:
Paragraph 18 of Ind AS 24
Observation:
While making disclosures of related party transactions although, certain transactions with holding company have been disclosed, but no disclosure has been made regarding amount borrowed from it during the year.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Related Party Disclosure
Case:
Exceptional Items include waiver of interest receivable from a related party. No disclosure was given under related party disclosures in this regard.
Requirements:
Paragraph 18 (d) of Ind AS 24
Observation:
The waiver of interest receivable is considered as a bad debt, and since it involves a related party, disclosure of the same should have been given under Related Party Disclosures.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Operating Segments
Case:
Under accounting policy on segment reporting, the company had identified business segment as primary segment.
Requirements:
Paragraph 11 of Ind AS 108
Observation:
Classifying business segments as the primary segment was required under AS 17 (IGAAP). However, under Ind AS 108, the company is required to identify operating segments and report information accordingly.
Non-Compliance related to Ind AS
Financial Reporting Review Board
Operating Segments
Case:
Note on Segment Reporting reads as follows:
The Company’s business activity falls within a single reporting segment, hence, the disclosure requirement of Ind AS 108, Operating Segment is not applicable. Further, the Company does not meet the quantitative threshold as mentioned in Ind AS 108, and hence, separate disclosure is not required.
Requirements:
Paragraph 13 read with 5 and 31 of Ind AS 108
Observation:
The quantitative threshold as mentioned in Para 13 of Ind AS 108 is not the only criteria, rather three characteristics as described in paragraph 5 of Ind AS 108 should be considered to identify operating segments. Additionally, if the business activity falls within a single reportable segment, disclosures as per Para 31 of Ind AS 108 should be made.
Non-Compliance related to Ind AS
Financial Reporting Review Board
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Financial Reporting Review Board
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