While preparing separate financial statements, a parent is required to determine whether an instrument held by it in a subsidiary, forms part of the ‘investment in a subsidiary’ and should be accounted for under Indian Accounting Standard (Ind AS) 27, Separate Financial Statements or it is a separate financial instrument within the scope of Ind AS 109, Financial Instruments. Assessment of application of standards when an entity holds instruments issued by a subsidiary requires significant judgement as the term ‘investment in a subsidiary’ is not defined in Ind AS 27. Accordingly, in January 2019, the IFRS Interpretations Committee (IFRIC) issued two agenda decisions and considered accounting of investment in a subsidiary in a given scenario. In this edition of Accounting and Auditing Update (AAU), our article covers the outcome of these IFRIC decisions.
The shift in the benchmark interest rates with alternative nearly risk-free interest rates is expected to have a cascading effect beyond contract terms into the operations and financial reporting of many entities. To address some of the pre-replacement issues, in September 2019, the International Accounting Standards Board (IASB) has issued amendments to certain IFRS. The amendments would apply from annual reporting period beginning on or after 1 January 2020. Our article on the topic provide an overview of these amendments.
The revised International Standard on Auditing (ISA) 540, Auditing Accounting Estimates and Related Disclosures is applicable from accounting periods beginning on or after 15 December 2019. In November 2019, the International Auditing and Assurance Standards Board (IAASB) has issued an Audit Client Briefing to make chief financial officers, other senior management responsible for financial statement preparation and staff directly involved in determining accounting estimates aware of matters to consider in preparing for the auditor’s requests pertaining to the revised ISA 540. Our article summarises the key aspects of the IAASB’s Audit Client Briefing.
As is the case each month, we have also included a regular round-up of some recent regulatory updates in India.