CMA Intermediate · Corporate Accounting and Auditing · Conceptual Framework
Following a revision of the Conceptual Framework by the ICAI, a company argues that its measurement basis for an asset must change immediately because the revised framework prefers a different basis. Which response is correct?
The company is wrong. Revisions of the Conceptual Framework do not automatically change Ind ASs, and amending a standard needs the ICAI's due process. Since the framework also overrides no Ind AS, the measurement requirements in the existing standard continue to apply.
- ACorrect, because revisions of the framework automatically change the Ind ASs
- BCorrect, because the framework overrides Ind AS wherever it is more recent
- CIncorrect, because any amendment to an Ind AS requires the ICAI to go through its due process for amending that Ind ASCorrect
- DIncorrect, because the framework can be revised only by the company's auditors
Explanation
Paragraph SP1.4 says revisions of the Conceptual Framework will not automatically lead to changes to the Ind ASs, and any decision to amend an Ind AS requires the ICAI to follow its due process. Paragraph SP1.2 adds that the framework does not override any Ind AS. The company must keep following the measurement requirements in the Ind AS until it is amended.
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