To provide a clearer picture on companies’ financial position, the apex body of chartered accountants, Institute of Chartered Accountants of India (ICAI) has suggested changes with respect to presentation of financial statements and comparative numbers.

The ICAI, which is in process of bringing Indian Accounting Standards (Ind AS) norms in line with International Financial Reporting Standards (IFRS), has highlighted the amendments in an exposure draft and sought public comments on the same by February 17.

As per the proposed norms for financial statements, an entity has to provide a third balance sheet or opening balance sheet only when it changes its accounting policies, makes retrospective restatements or makes reclassifications as well in cases where the changes have had a material effect on the balance sheet.

Going by the suggestions, an entity should provide additional comparative information on the notes related to financial statements. “The additional comparative period does not need to contain a complete set of financial statements,” it added.

A complete set of financial statements comprise a balance sheet as at the end of the period, a statement of profit and loss for the period, a statement of cash flows for the period, comparative information in respect of the preceding period, among others.

In relation to presentation of financial instruments, ICAI has suggested that income tax related to distributions to equity holders are accounted for in accordance with Ind AS for Income Tax.

Moreover, ICAI has suggested changes with respect to disclosure of total assets and liabilities for a particular reportable segment under the norms for interim financial reporting.

Interim financial reports in addition to disclosures of significant events and transactions also comprise information on certain segments, among others.

Further, ICAI has proposed that major spare parts and servicing equipment meet the definition of property, plant and equipment. They are not to be classified as inventory.

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