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CA Final · Financial Reporting · Financial Instruments: Disclosures

Kaveri Pharma Ltd gives numerical sensitivity tables for interest rate and currency risk in its financial statements. The CFO proposes to omit any narrative on how the risks arise and how they are managed, arguing the numbers are self-explanatory. Which view is consistent with paragraph 32A of Ind AS 107?

Paragraph 32A of Ind AS 107 holds that qualitative disclosures alongside quantitative ones let users link related information and form an overall picture of the nature and extent of risks. Their interaction helps users evaluate risk exposure, so the CFO's omission of narrative is not consistent.

  1. ANarrative is unnecessary if the sensitivity tables are audited
  2. BQualitative disclosures are needed only for risks that have already caused a loss in the year
  3. CQualitative disclosures given in the context of quantitative disclosures help users link related information and form an overall picture of the nature and extent of risksCorrect
  4. DQualitative disclosures replace the quantitative disclosures where the risk is managed through derivatives

Explanation

Paragraph 32A says qualitative disclosures in the context of quantitative disclosures enable users to link related disclosures and form an overall picture of risks. The interaction better enables users to evaluate risk exposure. Omitting narrative, as the CFO proposes, weakens this; the standard does not make qualitative disclosures a substitute for quantitative ones.

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