Exposure Draft of Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS) (Comments to be received by February 29, 2020) - (01-01-2020)
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In India, the ICAI had issued a pronouncement with the title ‘Framework for the Preparation and Presentation of Financial Statements in accordance with Indian Accounting Standards’ (Framework). This Framework is primarily based on the old Conceptual Framework issued by IASB’s predecessor body IASC (in year 1989). In view of the following developments at International level, the Accounting Standards Board (ASB) of ICAI has initiated necessary steps to bring out the Conceptual Framework for financial reporting under Ind AS corresponding to Conceptual Framework for financial reporting issued by IASB in March 2018.
The International Accounting Standards Board (IASB) in March 2018 issued the revised Conceptual Framework for Financial Reporting (Conceptual Framework) replacing the previous version of the Conceptual Framework issued in 2010 which was based on the Framework issued by IASB’s predecessor body IASC in year 1989. The IASB had made significant revision to its conceptual framework in 2010 jointly with US National Standard-setter viz. FASB as part of US GAAP and IFRS Standards Convergence project. In March, 2018, the IASB had fully completed its project in this regard and issued a new Conceptual Framework. The revised Conceptual Framework came into effect for IASB and IFRS Interpretation Committee immediately upon its issuance and for preparers and others it is applicable from January 1, 2020, with earlier application permitted for preparers.
The ASB has formulated the Exposure Draft of Conceptual Framework for Financial Reporting under Ind AS (Conceptual Framework). The draft Conceptual Framework describes the objective of and concepts for general purpose financial reporting. It is a practical tool that helps the standard setters to formulate requirements in Standards based on consistent concepts. It also help preparers to develop consistent accounting policies for areas that are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret Standards. The draft Conceptual Framework is a comprehensive set of concepts for formulating financial reporting standards and financial reporting. It is structured into eight chapters and includes an appendix of defined terms. The draft Conceptual Framework incorporates specific chapters on measurements, presentation and disclosures and derecognition. Another important change brought out is in the area of certain critical definitions, i.e., Asset and Liability and their recognition criteria. Additional clarification has been provided in some areas such as Prudence, Substance over Form, Stewardship and Measurement uncertainty. The draft Conceptual Framework will also result into consequential amendments in certain Ind AS, for references to the Conceptual Framework.
The Exposure Draft of Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS) along with consequential amendments to references to Conceptual Framework in Ind AS is issued for public comments.
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