Extensively using carve-outs, which is creating subsidiaries and then going in for IPOs, and exemptions have been hobbling the IFRS-compliant new Indian Accounting Standards (Ind-AS), which kicked in from April 1, 2016. It helped that Sebi, the stock market regulator, allowed reporting standalone financial results instead of consolidated results.
Around 1,000-odd companies with net worth of Rs 500 crore or above were covered in the first phase of Ind-AS implementation. Comprising 40 accounting standards, this entailed changes in the financial reporting framework. Revenue recognition, taxes and financial instruments were seen as the key impact areas to watch out for.
“The full impact of Ind-AS on financial performance, as well as on the financial position of corporate India, will be visible only when one gets the consolidated accounts for the full year with all the relevant disclosures,” said Sai Venkateshwaran, partner and head, accounting advisory services, KPMG.
Tax experts point out the impact of MAT on companies reporting under Ind-AS is still an open issue. There are also unresolved questions relating to distribution of dividend. This at a time when a large batch of unlisted companies – with net worth of Rs 250 crore or more – are set to join the transition bandwagon from April 1, 2017. Corporate India will have to keep a more close watch on its financial numbers by end of current fiscal.
Business Standard New Delhi,26th December 2016