The Institute of Chartered Accountants of India on 28th September 2021 has submitted to National Financial Reporting Authority (NFRA) an Approach Paper for revision of existing Accounting Standards of Companies that are not required to follow Indian Accounting Standards (Ind ASs).
NFRA has recommended to the ICAI that a Regulatory Impact Assessment be conducted of this revision proposal, duly including all the standard features of such a process, and, in particular, to take action as follows:
- The Approach Paper should be developed in a transparent manner after extensive nation-wide consultation with the primary stakeholders i.e., the Preparers – MSMCs (Micro, Small and Medium-size Companies) and Auditors – MSMPs (Micro, Small and Medium-size Practitioners). ICAI is requested to send NFRA the analysis of the public comments on the Approach Paper if the ICAI had performed any such public consultation in the past.
- Comprehensive study and research should be undertaken on the costs to the Preparers of compliance with these Revised ASs and their technical resource capacity, which should be evaluated against the likely benefits to all the stakeholders of AS Companies.
- ICAI should reconsider the Structure, Form and Contents of Revised ASs for AS Companies and align the same to the nature, size and complexity of the ASs, to their commercial needs, business size, capacity to comply with the prescribed standards, and relevance to their primary users.
NFRA noted that most of the companies to which these proposed revised standards will apply are private limited companies. They would be mostly owned by small families, sometimes along with a small circle of friends and relatives. Therefore, public interest in the General Purpose Financial Statements of these companies would most likely be minimal. There are a number of revised standards that are very large and complex and may not be relevant and useful to the limited users of GPFSs of these Companies.
