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CA Final · Financial Reporting · Conceptual Framework for Financial Reporting under Indian Accounting Standards (Ind AS)

Himalaya Pharma Ltd follows a requirement in a particular Ind AS that departs from an aspect of the Conceptual Framework. The CFO asks where, under the Conceptual Framework, ICAI would explain such a departure. What is the correct position?

ICAI may sometimes specify requirements that depart from aspects of the Conceptual Framework to meet the objective of general purpose financial reporting. When it does so, it explains the departure in the Appendix to the relevant Ind AS.

  1. AICAI will explain the departure in the Appendix to the relevant Ind ASCorrect
  2. BThe departure is not permitted, because ICAI must always follow the Conceptual Framework in every Ind AS
  3. CICAI will explain the departure in the notes to each entity's financial statements
  4. DICAI will not explain it, because the Conceptual Framework automatically prevails over the Ind AS

Explanation

To meet the objective of general purpose financial reporting, ICAI may sometimes specify requirements that depart from aspects of the Conceptual Framework. If it does, it explains the departure in the Appendix to the relevant Ind AS. The Conceptual Framework does not prevail over an Ind AS, so the claim that it automatically prevails is wrong.

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