Voice on Reporting: August 2015

Voice on Reporting: August 2015

In this month’s call, we covered the salient features of Indian Accounting Standard (Ind AS) 28, Investment in Associates and Joint Ventures, Ind AS 111, Joint Arrangements and Ind AS 112, Disclosure of Interests in Other Entities along with key differences with AS 23, Accounting for Investment in Associates in Consolidated Financial Statements and AS 27, Financial Reporting of Interests in Joint Ventures.

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In this month’s call, we covered the salient features of Indian Accounting Standard (Ind AS) 28, Investment in Associates and Joint Ventures, Ind AS 111, Joint Arrangements and Ind AS 112, Disclosure of Interests in Other Entities along with key differences with AS 23, Accounting for Investment in Associates in Consolidated Financial Statements and AS 27, Financial Reporting of Interests in Joint Ventures.

We also covered the proposals published by the International Accounting Standards Board (IASB) relating to IFRS 15, Revenue from Contracts with Customers for public consultation with respect to the following topics:
 

  • Identifying performance obligations
  • Principal vs agent considerations
  • Licencing, and
  • Transitional relief

In this call, we provided an overview of the key clarifications proposed by the IASB.

Background
 
Ind AS 28 prescribes the accounting for investments in associates and set out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.  Ind AS 111 establishes principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (i.e. joint arrangements).

Ind AS 112 requires an entity to disclose information that enables users of its financial statements to evaluate:
 

  • the nature of, and risks associated with, its interests in other entities, and
  • the effects of those interests on its financial position, financial performance and cash flows

In this call, we examined the key requirements of the Ind AS 28, Ind AS 111 and Ind AS 112 along with the key differences from current Indian GAAP.

In May 2014, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), jointly issued a new revenue standard - IFRS 15, Revenue from Contracts with Customers, and Topic 606, Revenue from Contracts with Customers.  After issuing the standard, the IASB and the FASB formed the Transition Resource Group (TRG) for revenue recognition to support the implementation of the standard. One of the objectives of the TRG is to inform the IASB and the FASB about any
implementation issues which would help the Boards (IASB and FASB) determine what, if any, action should be undertaken to address those issues.

The TRG has met five times and discussed about 73 issues.  Additionally, many stakeholders represented that the new revenue standard has far reaching impacts and that additional time is required to develop accounting policies, update information technology systems, and change processes and internal controls. Accordingly, on 22 July 2015, the IASB confirmed a one year deferral of the effective date of IFRS 15. This decision is consistent with that of the FASB’s decision on 9 July 2015 for a one year deferral of the new revenue standard.

On 30 July 2015, the IASB published proposed clarifications to IFRS 15 for public consultation with respect to the following topics:

  • Identifying performance obligations
  • Principal vs agent considerations
  • Licencing, and
  • Transitional relief

The IASB expects these to be the only amendments to the IFRS 15 before entities are required to apply the new standard. The IASB’s comment deadline is 28 October 2015.

In this call, we provided an overview of the key clarifications proposed by the IASB.

Downloads: 

Slide deck - August 2015 (PDF, 634 KB)

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