Mumbai: In a relief for listed companies, the Securities and Exchange Board of India (Sebi) on Tuesday deferred the timelines for implementation of new accounting standards.Starting financial year 2017 companies were required to transition from the current reporting format for financial results that is based on Generally Accepted Accounting Principles (GAAP) to Indian Accounting
Standards Rules, 2015 or IndAS Rules.The IndAS rules are different from GAAP as they are based on the fair valuation method. In accounting, fair value is a rational estimate of the potential market price of goods, services or assets. It takes into account factors such as acquisition, production and distribution costs.
Indian companies, while getting their house in order to comply with the new norms, were sceptical of meeting the FY2017 deadline set by the ministry of corporate affairs.
In a reprieve to these companies, the capital market regulator has deferred the reporting of June and September quarter results by three months to middle of September and December, respectively.
Relaxation has also been provided by Sebi for reporting comparative results of the previous quarter and for the same period the previous year.
“For the quarter ending 30 June 2016, IndAS-compliant financial results for the corresponding quarter ended 30 June 2015 shall be provided. For the quarter ending 30 September 2016, IndAS-compliant financial results for the corresponding year to date/quarter ended 30 September 2015,” said the Sebi circular.
Sai Venkateshwaran, partner-advisory and India head-accounting advisory services at KPMG in India said that Sebi has considered the challenges that were being faced by the industry.
“This comes as a relief for the Indian companies that were facing challenges in meeting the new accounting requirements in the initial couple of quarters. While some companies were ready to report as per the new format, many were not yet fully prepared,” said Venkateshwaran.
“The circular not only provides additional time for submission of results for June and September quarters, it also clarifies that comparative information need not be audited or reviewed. Further, disclosures of reserves and balance sheet information for March 2016 are other relaxations given by Sebi. We welcome this pragmatic move by Sebi,” said Ashish Gupta, director, Grant Thornton Advisory Pvt. Ltd.
The new accounting standards based on IndAS are closer to the global standards of reporting financial results and rely on segment revenue, segment assets, segment liabilities and segment results.
“IndAS instead of defining a segment has left it on the management to consider segments and reporting has to be done accordingly,” said Keyur Dave, director, Grant Thornton India LLP.
“In the coming times this will give more information in the hands of the investors. A peer-to-peer comparison may also vary depending on what management considers to be a segment,” Dave added.
As per the Sebi circular, banks and insurance companies will not need to comply with the new accounting norms, and follow the prescriptions of their respective regulators, that is the Reserve Bank of India and Insurance Regulatory and Development Authority of India
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