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Voices on Reporting - Special session: Impact of Ind AS 115 and IFRS 16 on healthcare sector
Voices on Reporting - Special session: Impact of Ind AS
Healthcare sector encompasses various elements of health and wellness. Broadly, some of the individually-identifiable elements include: hospitals (specialty-focussed or multi-discipline), diagnostic centres (hospital-based centres, diagnostic chains or stand-alone centres), medical equipment (manufacture or lease), health insurance and wellness chains. Companies in the healthcare landscape, generally, cater to at least one of these elements.
Introduction
Healthcare sector encompasses various elements of health and wellness. Broadly, some of the individually-identifiable elements include: hospitals (specialty-focussed or multi-discipline), diagnostic centres (hospital-based centres, diagnostic chains or stand-alone centres), medical equipment (manufacture or lease), health insurance and wellness chains. Companies in the healthcare landscape, generally, cater to at least one of these elements.
In the healthcare sector, revenue recognition and lease accounting are some of the key areas where current guidance under Ind AS is expected to change due to implementation of new standards.
- Ind AS 115, Revenue from Contracts with Customers: Revenue is a crucial financial performance indicator for companies and the new standard is expected to have pervasive impact due to the addition of significant new concepts on recognition, measurement and disclosure of revenue. Therefore, companies in the healthcare sector would need to evaluate the impact of Ind AS 115 on revenue accounting of multiple arrangements and timing of revenue recognition.
- IFRS 16, Leases: The new standard on leases has been made applicable from 1 January 2019 internationally. In India, a converged standard (i.e. Ind AS 116, Leases) is expected to be applicable from 1 April 2019. The new standard prescribes a single lease accounting model which will bring most leases on-balance sheet, recognising new assets and liabilities by a lessee. The new standard is likely to pose multiple challenges from an accounting perspective in the healthcare sector.
In this session, we discussed the key implementation issues of Ind AS 115 and IFRS 16 for healthcare sector.
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