The implementation of high quality Indian Accounting Standards (Ind ASs) by Indian Companies is a monumental step in the accounting history of India. The Institute of Chartered Accountants of India (ICAI) believes that Ind AS Framework has enhanced the quality of financial statements of Indian entities and strengthened their competitiveness and comparability. Trinity of high quality financial reporting, sound corporate governance and robust audit mechanism is critical to the success and growth of any economy.
Ind ASs are derived from IFRS Standards issued by the International Accounting Standards Board (IASB). IFRS Standards are globally acceptable high quality financial reporting standards with a dynamic framework that undergoes reforms periodically to keep pace with the evolving business and economic environment. In order to remain converged, and to meet the pace of changing business environment, there is a need for us to actively participate in the IASB’s standard-setting activities.
Recently, the IASB has issued an Exposure Draft
As a result of the deadly Covid-19 pandemic, many lessors around the world have provided, or are expected to provide, rent concessions to lessees, as a relief. Such rent concessions are particularly prevalent for leases of retail property and, in some cases, are encouraged or required by governments or jurisdictional authorities. The Exposure Draft proposes an amendment to IFRS 16 to provide lessees with practical relief during the covid-19 pandemic while enabling them to continue providing useful information about their leases to users of financial statements.
Any complexity arising as a result of the Covid-19 pandemic adds to the work being undertaken in implementing the new lessee accounting model in IFRS 16. Therefore, the proposed amendment aims to address issues affecting the application of IFRS 16 requirements to large volumes of rent concessions granted as a direct consequence of the covid-19 pandemic during 2020. The proposed amendment:
- permits lessees, as a practical expedient, not to assess whether particular Covid-19-related rent concessions are lease modifications. Instead, lessees that apply the practical expedient would account for those rent concessions as if they were not lease modifications.
- requires lessees that apply the practical expedient to disclose that fact.
The Exposure Draft proposes no change for lessors.
The Accounting Standards Board (ASB) of ICAI with the aim to provide an opportunity to the various stakeholders in India to raise their concerns at the initial International Standard-setting stage itself, invites comments on the Exposure Draft issued by the IASB. In addition to the specific questions asked in the Exposure Draft, stakeholders are requested to respond to the below question with regard to the relevance of the proposals of the ED in Indian context:
Additional Question: It is important to note that proposed amendments are applicable for Covid 19 related rent concession only, from annual reporting periods beginning on or after 1 June 2020, thereby restricting its applicability for a very short period. In view of this, stakeholders are requested to state that whether in Indian context, Ind AS 116, Leases, shall be revised or not based on the final amendments to be issued by the IASB.
To provide timely support to stakeholders at this difficult time, the comment period on the proposal is short. The above mentioned Exposure Draft is hosted on the website of the Institute of Chartered Accountants of India (www.icai.org) for public comments with last date as May 05, 2020, and can be accessed at following link on the knowledge sharing page of Accounting Standards Board of ICAI:
How to comment
Comments should be submitted using one of the following methods, so as to be received not later than May 05, 2020.
|1.Electronically:||Visit at the following link (Preferred method):|
|2.Email:||Comments can be sent to: [email protected]|
Source: The ICAI