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

The ICAI is finalising a new Ind AS and concludes that, to meet the objective of general purpose financial reporting, a particular requirement must depart from an aspect of the Conceptual Framework. Meera, an auditor, asks how such a departure is treated. Which is correct according to the Ind AS Conceptual Framework?

ICAI may sometimes specify Ind AS requirements that depart from aspects of the Conceptual Framework in order to meet the objective of general purpose financial reporting. When it does, it explains the departure in the Appendix to the relevant Ind AS.

  1. AThe departure is not permitted because the Framework prevails over every Ind AS
  2. BThe departure is permitted, and ICAI will explain it in the Appendix to the relevant Ind ASCorrect
  3. CThe departure is permitted, and preparers must disclose it in notes to each entity's financial statements as a non-compliance
  4. DThe departure is permitted only if the Companies Act, 2013 is amended first

Explanation

ICAI may specify requirements that depart from aspects of the Framework to meet the objective of general purpose financial reporting, and it will explain the departure in the Appendix to the relevant Ind AS. The Framework does not prevail over Ind AS, so the first option is wrong. Preparers follow the Ind AS, so there is no non-compliance.

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