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

Sundaram Textiles Ltd is dealing with a transaction for which no Ind AS specifically applies. The CFO proposes to rely on the Conceptual Framework for Financial Reporting under Ind AS (Conceptual Framework) to develop an accounting policy. Which statement about the status of the Conceptual Framework is correct?

The Conceptual Framework is not an Ind AS, and nothing in it overrides any Ind AS or any requirement within an Ind AS. It can help preparers develop consistent accounting policies where no Ind AS applies, but it never takes precedence over a specific standard.

  1. AIt is an Ind AS and overrides any Ind AS where the two conflict
  2. BIt is not an Ind AS, and nothing in it overrides any Ind AS or any requirement in an Ind ASCorrect
  3. CIt overrides an Ind AS only where the Ind AS gives a choice of accounting policy
  4. DIt applies only to the ICAI when formulating standards and is of no use to preparers

Explanation

The Conceptual Framework states that it is not an Ind AS and that nothing in it overrides any Ind AS or any requirement in an Ind AS. It also assists preparers in developing consistent accounting policies when no Ind AS applies to a transaction. Option A reverses the position, and option D ignores the preparer-assistance purpose.

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