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CMA Intermediate · Corporate Accounting and Auditing · Presentation of Financial Statements (Ind AS 1)

Under Ind AS 1, an entity concludes that, in extremely rare circumstances, compliance with an Ind AS requirement would be so misleading that it would conflict with the objective of financial statements. The regulatory framework requires or does not prohibit departure. What must the entity do?

The entity must depart from the requirement and disclose that management concludes the statements are true and fair, that it complied with Ind ASs except for the departure, the Ind AS title, nature, reason and treatment adopted, and the financial effect on each item for each period presented.

  1. ADepart from that requirement and make the prescribed disclosures, including the financial effect of the departure on each item for each period presentedCorrect
  2. BComply with the requirement and say nothing, since departures are never allowed under Ind AS
  3. CDepart from the requirement but disclose the effect only for the current period
  4. DDepart from the requirement without naming the Ind AS, to avoid confusing users

Explanation

Where the regulatory framework requires or does not prohibit it, the entity shall depart in the manner set out in the standard. It must disclose management's conclusion of true and fair view, compliance except for the departure, the Ind AS title, nature of the departure, the reason and treatment adopted, and for each period presented the financial effect on each item. Disclosing the effect only for the current period is wrong because each period presented is required.

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