Deferment of IND AS 115 (equivalent to IFRS 15) has been a debatable issue since the past few months. Let us understand the said deferment in simple terms.
NACAS(National Advisory Committee on Accounting Standard) is a body which advises the Centre on the formulation and laying down of the accounting policy and standards for adoption by companies, has made recommendation to the Government for the postponement for implementation of Ind AS 115. Earlier the proposed date for implementation of Ind AS 115 was April 16. Recommendation is made to defer the implementation by April 18.
Which companies will get affected by Ind AS 115?
According to experts, Ind AS 115 could especially impact the financial statements of companies in the
- information technology,
- telecom,
- automobiles and
- real estate sectors
will have a bearing on several aspects including revenues, expenses, assets, liabilities and equity.
Technology and telecom companies are largely going be impacted with this standard. The new accounting standard on revenue recognition replaces the fragmented set of rules by which companies booked their revenues.
Why IFRS 15 was deferred in the Global market?
The standard was issued on 28th May 2014 and made applicable to the financial statements for period beginning on or after 1st January 2017. Later in July 2015, the effective date was deferred to 1st January 2018 with option of early adoption. The main reason for deferral of IFRS 15 is that IASB was planning to issue an exposure draft of targeted amendments to the standards that will include clarifying some of its requirements and adding illustrative examples to aid implementation.
Why Ind AS 115 is deferred in India?
The Main reason for deferment of Ind AS115 is to make sure that it can comply with the proposed amendment in IFRS 15. In simple terms, if Ind AS 115 is applied from April 16 and further amendments are introduced in IFRS 15, it would be incorporated in Ind AS 115, resulting in higher cost to companies.
Uncertainty of amendments in IFRS 15.
The proposed amendments and clarification are uncertain to br implemented. Hence, when the amendments are introduced in IFRS, it is better to implement an amended Ind AS.
Less cost to companies
Implementation and compliance of a standard brings huge cost to the company. Hence, it is better to directly implement an amended standard.
Time for assessment of impact
Certain Industries which will be affected by this standard have not yet assessed the impact of implication of this standard. Hence, deferment can help them in proper assessment of this standard.
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