Preparation of Financial Statement

For preparation of Financial Statement, we would have to investigate the following


1. Ind AS 1

2. Schedule III

- DIVISION I - Indian GAAP (IGAAP)

- DIVISION II - Ind AS (Companies)

- DIVISION III - Ind AS (NBFC)

3. Guidance notes on preparation and presentation of Ind AS Financial Statement (issued by ICAI)

Components of an Ind AS Financial Statement


1. Balance sheet

a. Asset

b. Liability

2. Statement of Profit & Loss

a. Revenue

b. Other income

c. Expenses

d. Taxes

e. OCI – Other Comprehensive Income

3. Statement of cash flow statement

4. Statement of change in equity

a. Equity

b. Reserve & Surplus

5. Accounting policies

6. Notes to Account

a. Relating to Balance Sheet

b. Relating to P&L

7. Equity and P&L Reconciliation ( while adopting the Ind AS ).

Key Features of Financial Statements


1. Fair presentation and compliance with Ind AS

a. An explicit and unreserved statement of compliance

b. Cannot rectify inappropriate accounting policies by disclosure

2. Going Concern

a. Ind AS states that it is management’s responsibility to,

i. Assess the entity’s ability

ii. Prepare the FS

iii. Disclose material uncertainties which may affect the going concern concept

3. Accrual Basis of Accounting

4. Materiality and aggregation

5. Offsetting

a. Ind AS 1 requires that an entity should not offset assets and liabilities or income and expenses, unless required or permitted by an Ind AS.

6. Consistency of presentation

a. Presentation and classification of items in FS from one period to the next period unless such there is a significant change in the entity’s operation or for better presentation.

7. Frequency of reporting

a. At least on an annual basis

b. If the period is longer or shorter than one year, disclose, in addition to the period covered by the FS

i. Reason for using longer or shorter period and

ii. The fact that amounts presented in the FS are not entirely comparable

8. Comparative Information

9. Change in accounting policy, retrospective restatement or reclassification

a. Requirement for a third balance sheet

i. Ind AS1 requires an entity to include balance sheet as at the beginning of the preceding period if the reporting entity has applied change in accounting policy, restatement of item in FS and in case of reclassified item in FS

b. An additional balance sheet is required as at the beginning of the preceding period only if the change has a material effect

 
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