The new revenue standard, Ind AS 115, Revenue Contracts with Customers provides guidance that applies to contracts with customers in all sectors. The standard introduces a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes the current revenue recognition guidance. Accounting for sales contracts in the consumer market and retail sectors is likely to change due to the application of the new revenue recognition standard. In this edition of Accounting and Auditing Update (AAU), we focus on the consumer market and retail sectors’ companies. Our article highlights the significant areas (e.g. determination of performance obligations, variable consideration, contract manufacturing arrangements, etc.) where current guidance in Ind AS is expected to change due to implementation of Ind AS 115.
The International Auditing and Assurance Standards Board (IAASB) has recently released International Standard on Auditing (ISA) 540, its revised standard for the audit of accounting estimates and related disclosures. The new standard addresses changes in the financial reporting framework due to greater use of accounting estimates. The standard recognises that for certain accounting estimates, estimation uncertainty may be low based on their nature, and the complexity and subjectivity involved in making them may also be very low. For such accounting estimates, the risk assessment procedures and further audit procedures would not be expected to be extensive. When estimation uncertainty, complexity or subjectivity are very high, such procedures would be expected to be much more extensive. Our article summarises the key concepts introduced by ISA 540.
The publication also carries an article on educational material on Ind AS 27, Separate Financial Statements issued by the Institute of Chartered Accountants of India (ICAI). The article on this topic highlights the key issues discussed in the educational material along with the related guidance reiterated by ICAI.
Our publication also carries a regular synopsis of some recent regulatory updates.