The auditor’s report - the principal communication from the auditor to users of audited financial statements - has undergone a significant change around the world. A more informative auditor’s report is the most visible change in auditing in more than 50 years. New auditor’s report including communication of key audit matters in the auditor’s report is effective in India for audits of financial statements for the periods beginning on or after 1 April 2018. In this edition of the Accounting and Auditing Update (AAU), we have included an article which illustrates sector-wise areas that could be potential key audit matters.
Ind AS 115, Revenue from Contracts with Customers changes the core principle that requires companies to evaluate their transactions in a new way. Continuing with our sector series on impact of Ind AS 115, we cover the transport, logistics and leisure sector. Our article highlights the key areas where more judgement and estimation would be required with the help of practical examples.
Banks may advance loans with prepayment clauses. Ind AS 109, Financial Instruments provides guidance on classification of financial assets as at amortised cost, Fair Value Through Other Comprehensive Income (FVOCI) and Fair Value Through Profit and Loss (FVTPL). If certain criteria are met, such financial assets could be classified at amortised cost or FVOCI. In case those criteria are not met, then financial assets would be classified at FVTPL. An article on this topic demonstrates the assessment and classification of financial assets with prepayment features with the help of an illustrative.
Our publication also carries a regular synopsis of some recent regulatory updates in India and internationally.