ROADMAP TO IND AS

- Once a company starts following Ind AS, it cannot prepare another set of financial
statements in accordance with 2006 AS (Indian GAAP)
- Financial companies are not allowed to ealy adapt Ind AS voluntarily (even if
parent/subsidiary fall under Ind AS)
- In such a scenario, the NBFC will prepare its standalone financials as per Indian GAAP
standards.
- Further if the NBFC is a parent company, where its subsidiaries fall under the Ind AS
regulations, then such subsidiaries must also provide their financial data as per
Indian GAAP Standards for the purpose of consolidation
- On the other hand if the NBFC is a subsidiary to a parent company falling under Ind
AS limits, such NBFC will have to provide its financial data as per Ind AS standards for
the purpose of consolidation
- To summarise, the subsidiary in each case, whether NBFC or non-financial company,
will have to maintain its accounts as per both Ind AS and Indian GAAP standards till
the time the Ind AS becomes applicable to the NBFC.
- A insurance company needs to provide Ind AS compliant financial statements data to
its parent/investor/venture.

- Law overrides Ind AS when Ind AS is not in conformity with the law
- Ind AS are intended to be applied only on material items
- To check applicability criterion, follow these steps
o Net worth as on 31st March 2014
o If It falls under any of the phases based on net worth criterion, it will
compulsorily have to follow Ind AS even if its net worth reduced below the
criteria level
o Further, if the company falls under listing/relationship criteria, then it can
discontinue applying Ind AS if such criteria is no longer applicable before the
date from which such applicability would be mandatory.
For eg, if net worth is less than Rs.250 crores of a listed company as on 31 st
March 2014, and the company gets delisted before 31 st March 2016 ( its
mandatory applicable date would be from 1st April, 2017) it can discontinue
following Ind AS.
o In any other scenario, a company is not allowed to discontinue following Ind
AS once any of the criterion becomes applicable to it.
- For applicability of holding, subsidiary, associates and joint ventures, definitions
outlined in Ind AS must be followed. This covers both, direct as well as indirect
subsidiaries.
- In case of a partnership firm controlled by a company following Ind AS, the
partnership firm will prepare its SFS as per applicable accounting standards (not Ind
AS) but will also maintain its accounts as per Ind AS standards to enable the parent
company to prepare CFS as per Ind AS standards.
 - In case a subsidiary falls under

A Ind AS applicability, another subsidiary of its

parent company is not applicable to Ind AS
mandatorily but will have to provide group
XYZ B C reporting as per Ind AS information to
facilitate preparation of CFS by the parent
For eg, in this case if XYZ falls under Ind AS applicability, “A” also falls under Ind AS
due to relationship criterion but Company “B” and “C” will not have to mandatorily
prepare financials as per Ind AS, although they can voluntarily do so for the purpose
of ease of consolidation of financials

- Ind AS does not differentiate between charitable and non-charitable companies

- Net worth
= Paid up share capital
+ All reserves created out of profits
+ Securities premium account
+ Debit/credit of PL account
– Accumulated losses
– Deferred expenditure
– Miscellaneous expenses not written off

Clarifications:
1. Capital reserve in the nature of promoter’s contribution is a capital
contribution by promoters. (as per ITFG only for the purpose of applicability
of Ind AS, not under other provisions of Companies Act, 2013)
2. Government grants in the nature of promoter's contribution are recognised
in shareholders' funds. To be included

- Consider that an NBFC is subsidiary of non-financial sector Indian parent whose

shares are listed outside India. The parent needs to file IFRS financial statements for
foreign listing purposes. In the IFRS financial statements, the parent has not adopted
IFRS 9 Financial Instruments early. In this case, the NBFC will need to maintain three
set of books of account and prepare three financial statements/ reporting package:
1. Indian GAAP financial statements for the NBFC's own statutory reporting
2. IFRS group reporting package to facilitate preparation of IFRS CFS by the parent
for foreign listing purposes. In this package, financial instruments will be
accounted for in accordance with IAS 39 Financial Instruments: Recognition and
Measurement.
3. Ind AS group reporting package to facilitate preparation of Ind AS CFS by the
parent. In this package, financial instruments will be accounted for in accordance
with Ind AS 109 Financial Instruments (corresponding to IFRS 9).
Since these three sets of the financial statements/ package will present significantly
different numbers for the same entity, the NBFC may also need to give appropriate
reconciliations/ explanatory notes to avoid confusion to the stakeholders.