IND-AS

5 Things to know about the Indian Accounting Standards (IND-AS)

1• Ind-AS, based on the principles of

“substance over form” and “fair valuation”, differs materially from IGAAP, which is focused on “legal form” and “conservatism”.

• Ind-AS will bring a more contemporary presentation of financials. However, it is likely to adversely impact the operating metrics of India Inc. in the near term.

Phase 1

2 Road map for implementation of Ind-AS

India Inc. will adopt IFRS-converged financials (Ind-AS) in a phased manner over FY17-20, with over 350 companies from the BSE500 migrating from FY17.

Phase 1• Year of adoption FY17• Comparative year FY16• Companies with net

worth > = INR5b

Phase 2• Year of adoption

FY18• Comparative year

FY17• Companies listed or

in the process of being listed.

Phase 3• Year of adoption

FY19• Comparative year

FY18• All Scheduled Banks

& Insurance companies

• NBFC Companies with Networth >= INR5b

Phase 4• Year of adoption FY20• Comparative year

FY19• (i) Listed / in process

of being listed - All NBFCs

• (ii) Unlisted - Networth more than INR2.5b but less thanINR5.0b

Transition and first time adoption of Ind-AS 3

Transitioning to Ind-AS will be a mammoth task, as it will require companies to (a) Prepare an opening balance sheet using Ind-AS principles, (b) Prepare a comparative financial statement using Ind-AS, and (c) Give adequate disclosures on reconciliation of profit and net worth on first time

adoption

Implications for sectors 4

As India Inc. transitions to Ind-AS, it is likely to witness many changes in financial reporting. We have classified the impact in three categories (high, medium and low) based on the FY15 financials reported by the respective companies.

5

Key

Chal

leng

es

Varying levels of corporate preparedness,

High dependence on management estimates, which may vary and lead

to incomparable financials within peers,

Impact of financial covenants on loans availed,

Lack of expertise on fair valuation,

Gains/losses on exchange fluctuations relating to intra-group

transactions

While India Inc. is set to migrate to the new regime, our discussions with various experts suggest that challenges remain on.

Click here to read the detailed report:

http://goo.gl/MQmlOhIND-AS

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