Skip to content

CA Final · Financial Reporting · Introduction to Indian Accounting Standards

Sagar Foods Ltd, an Ind AS company, prepares its financial statements for the year ended 31 March. Its Ind AS financial statements are being prepared under the Companies Act, 2013. A senior accountant argues that Ind AS 1 may be departed from when a specific Ind AS requirement is considered by management to be less useful than an alternative treatment, as it would give a fairer picture. Which statement best reflects the position under Ind AS framework as notified in India?

Departure from Ind AS to achieve fair presentation is not permitted in India. Ind AS 1 as notified omits the IFRS override for extremely rare circumstances, so compliance with notified standards is required regardless of management's view of usefulness or auditor consent.

  1. ADeparture is permitted whenever management believes the alternative is more useful to users
  2. BDeparture from Ind AS is permitted only if the auditor agrees in writing
  3. CDeparture is permitted only for items below the materiality threshold of 5% of profit
  4. DDeparture from Ind AS requirements to achieve fair presentation is not permitted in the Indian framework, unlike IFRS's extremely rare overrideCorrect

Explanation

Ind AS 1 as carved out for India removes the IFRS 'extremely rare circumstances' override that allows departure from a standard to achieve fair presentation. Indian law requires compliance with notified Ind AS, so management preference or auditor consent cannot justify departure. A 5% materiality rule does not exist as a departure mechanism.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Indian Accounting Standards shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Indian Accounting StandardsFree diagnostic mock

More Introduction to Indian Accounting Standards questions