CA Final · Financial Reporting · Financial Instruments: Disclosures
Narmada Infra Ltd discloses numerical sensitivity tables for credit, liquidity and market risk but gives no narrative on how management views or manages those risks. A reviewer cites paragraph 32A of Ind AS 107. What is the main weakness identified by that paragraph?
Paragraph 32A of Ind AS 107 says qualitative disclosures given in the context of quantitative ones let users link related disclosures and form an overall picture of the nature and extent of risks. Providing only numbers without narrative weakens users' ability to evaluate the entity's exposure.
- AQualitative disclosures in the context of quantitative disclosures are missing, so users cannot link related disclosures to form an overall picture of risk exposureCorrect
- BSensitivity tables must be replaced by narrative, because quantitative data is optional
- CRisk disclosures should be given only in the director's report and not the financial statements
- DQualitative disclosures are required only for credit risk
Explanation
Paragraph 32A says that providing qualitative disclosures in the context of quantitative disclosures enables users to link related disclosures and form an overall picture of the nature and extent of risks. The interaction of the two helps users evaluate exposure. Option B is wrong because it makes quantitative data optional, which the paragraph does not say.
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