Guidelines on Accounting with respect to Indian Accounting Standards (IND AS)

Last updated: 09 February 2022

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The Securities and Exchange Board of India (SEBI) has issued new guidelines for mutual funds regarding Indian Accounting Standards (IND AS). Effective from April 1, 2023, all mutual fund schemes must prepare their financial statements and accounts in accordance with IND AS. This includes specific requirements for opening balance sheets, historical per-unit statistics, and the format of financial statements. The circular also clarifies the treatment of brokerage and transaction costs.

Securities and Exchange Board of India CIRCULAR SEBI/HO/IMD-II/DOF8/P/CIR/2022/12 February 04, 2022 All Mutual Funds (MFs)/ Asset Management Companies (AMCs)/ Trustee Companies/ Boards of Trustees of Mutual Funds/ Association of Mutual Funds in India (AMFI) Sir / Madam, Subjec

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FAQ :

Mutual fund schemes must prepare their financial statements and accounts in accordance with IND AS with effect from April 01, 2023.

Yes, for the first two years of adopting IND AS, mutual fund schemes may not be mandatorily required to restate previous years' published historical per-unit statistics as per IND AS. However, they must label the old information and disclose the nature of adjustments needed for IND AS compliance.

Brokerage and transaction costs for execution are to be charged to schemes up to 12 bps for cash market transactions and 5 bps for derivatives transactions. Any costs exceeding these limits may be charged to the scheme within the maximum Total Expense Ratio (TER).

Mutual fund schemes shall prepare the opening balance sheet as on the date of transition and the comparatives as per the requirements of IND AS.

The Financial Statements of the Mutual Fund Schemes shall be prepared in the Formats given at Annexure-A of the circular.