Assurance Gazette – May 2024 Edition

Welcome to the May 2024 edition of the Assurance Gazette! We are excited to bring you valuable insights into the amendments in Ind AS 1 and Block chain technology & its impact on Auditing. This Gazette offers valuable insights into the Impact of the amendment and provides you with an understanding of how to identify material accounting policies along with transformative potential of Block chain technology, addressing the opportunities and challenges it presents for the future of the profession. In this edition, we also present the Expert Advisory Committee’s opinion on the accounting treatment of additional capitalization resulting from arbitration awards and pre-project expenses awaiting fund approval within the framework of Indian Accounting Standards (Ind AS). We are committed to keeping you informed about the latest developments in the accounting and auditing world. We strive to present complex information in a clear and accessible manner, empowering you to make informed decisions. We encourage you to share your feedback and suggestions on topics you’d like us to explore in future editions. Your input is invaluable in helping us tailor our content to meet your evolving needs. 

Material Accounting Policy: 

Introduction: 

On March 31, 2023, the Ministry of Corporate Affairs (MCA) notified amendments to Indian Accounting Standard (Ind AS) 1, “Presentation of Financial Statements”. The landscape of accounting policy disclosures is undergoing a significant transformation with the introduction of the Companies (Indian Accounting Standards) Amendment Rules, 2023. These amendments, effective for annual periods beginning on or after April 1, 2023, introduce a crucial shift in focus from disclosing “significant” accounting policies to disclosing “material” accounting policy information. This change aligns Indian Accounting Standards (Ind AS) with International Accounting Standards (IAS) and aims to enhance the usefulness of financial statements for users. 

Material Accounting Policy: 

The revised Ind AS 1 introduces the concept of materiality specifically within the context of accounting policy disclosures. As per the amendment in Ind AS 1 “Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements.”  

Accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. Hence, entity-specific information about accounting policies would likely to be made in the financial statements.