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

Kaveri Pharma Ltd's accountant notes that Ind AS 2 requires a particular treatment for a class of inventory that differs from what the Conceptual Framework's concepts would suggest. The accountant proposes to follow the Conceptual Framework instead. What is the correct position under the Conceptual Framework for Ind AS?

Kaveri Pharma must follow Ind AS 2. The Conceptual Framework is not an Ind AS, and nothing in it overrides any Ind AS or any requirement within an Ind AS, so a specific standard prevails over the Framework's general concepts.

  1. AFollow the Conceptual Framework, because it ranks above Ind AS in the hierarchy
  2. BFollow the Conceptual Framework if the auditor agrees that it gives a fairer view
  3. CFollow Ind AS 2, because nothing in the Conceptual Framework overrides any Ind AS or any requirement in an Ind ASCorrect
  4. DFollow whichever of the two gives the higher profit for the year

Explanation

The Conceptual Framework is not an Ind AS, and nothing in it overrides any Ind AS or any requirement in an Ind AS. The specific standard therefore prevails. Ranking the Framework above the standard, even with auditor consent, contradicts this.

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