The National Advisory Committee on Accounting Standard (NACAS) on Thursday decided to recommend deferral of implementation of a key new revenue standard-Ind AS 115.

However, the recommendation to the Corporate Affairs Ministry (MCA) on the new revenue standard may not come with any specific date, sources said.

The ball now is in the MCA’s court as it will have to take a final call on the new implementation date for Ind AS 115.

India Inc had already pitched for a two-year deferral of implementation date of Ind AS 115, which was earlier scheduled to be implemented from April 1, 2016.

While NACAS has decided to recommend deferral of Ind AS 115 without specifying a new implementation date, it is also unlikely to suggest providing of voluntary adoption of this new standard.

Welcome move Reacting to the latest development, Parveen Kumar, an IFRS expert and Partner, ASA & Associates LLP, said that it was good that NACAS was recommending deferment of Ind AS 115.

“Indian corporate will now have breathing space and enough time to understand impact of change over to new provisions on revenue recognition,” he said.

Sumit Seth, Partner- Price Waterhouse & Co, said that deferral of the Revenue Standard Ind AS 115 in India follows the path chosen by the International Accounting Standards Board and Financial Accounting Standards Board to defer the corresponding global standards beginning 2018.

This will provide Indian companies with time to evaluate the new requirements and complexities under the standard, particularly in the areas of identification of multiple performance obligations in a bundled arrangement, gross versus net presentation of revenue and arrangements involving licensing of Intellectual Property, Seth said.

This will momentarily relieve companies from making consequential changes to the internal controls, processes and IT systems which they would have had to otherwise make almost immediately, he added.

At the same time, an option to adopt the Ind AS standard early similar to the IASB’s decision would have been welcomed by those companies not preferring to make accounting changes twice.

It also needs to be seen as to what will be the new effective date of the standard, especially since Phase II companies will adopt Ind AS beginning April 1, 2017.

Related Topics
comment COMMENT NOW