Indian Accounting Standards (Ind AS) are derived from IFRS Standards issued by the International Accounting Standards Board (IASB). IFRS Standards are globally acceptable high quality financial reporting standards with a dynamic framework that undergoes reforms periodically to keep pace with the evolving business and economic environment. IFRS Standards are being issued/revised by the IASB from time to time. The convergence being a continuous process, the Ind AS need to be issued/revised corresponding to the IFRS Standard in order to remain converged with IFRS. Therefore, whenever any amendments are made or new IFRS/ IFRIC by the IASB, the ICAI also considers amendments with respect to Ind AS as per due process.
The IASB had issued COVID-19-Related Rent Concessions, which amended IFRS 16, Leases, in May 2020. The 2020 amendment permitted lessees, under paragraph 46A of IFRS 16, as a practical expedient, not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and, instead, to account for those rent concessions as if they were not lease modifications. Among other conditions, the 2020 amendment permitted lessees to apply the practical expedient to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. The IASB included this condition to:
(a) provide relief to lessees during the height of the pandemic when they were expected to need it most;
(b) address concerns from users of financial statements about the usefulness of the information that would be provided if the practical expedient were to be applied beyond when it is needed most; and
(c) make the practical expedient easier to apply.
Since Indian entities preparing Ind AS based financial statements were facing similar challenges and situations like the International scenario and to remain converged with IFRS standards, amendments to Ind AS 116, corresponding to aforesaid amendments issued by IASB, as recommended by ICAI and examined and recommended by NFRA, were notified by the MCA on July 24, 2020.
In March 2021 the IASB has issued Covid-19-Related Rent Concessions beyond 30 June 2021 (the 2021 amendment), to extend the availability of the practical expedient in paragraph 46A by one year so that it applies to rent concessions for which any reduction in lease payments affects payments originally due on or before 30 June 2022, provided the other conditions for applying the practical expedient are met. The objective of the proposal is to continue providing lessees with practical relief during the on-going COVID-19 pandemic while enabling them to continue providing useful information about their leases to users of financial statements.
Considering that Indian entities are also likely to continue face similar challenges, the Accounting Standards Board (ASB) of ICAI has issued the Exposure Draft of proposed amendments to Ind AS 116, Leases, for public comments.
The above mentioned Exposure Draft is hosted on the website of the Institute of Chartered Accountants of India (www.icai.org) for public comments with last date as April 17, 2021. The downloadable version of Exposure Draft is available at: https://resource.cdn.icai.org/64350asb51603.pdf
The comment period on the proposal is kept short to expedite the process of considering issuance of this practical relief in time.
How to comment:
Comments should be submitted using one of the following methods, so as to be received not later than April 17, 2021:
||Click on http://www.icai.org/comments/asb/ to submit comment online (Preferred method)
||Comments can be sent to: firstname.lastname@example.org
||Secretary, Accounting Standards Board,
The Institute of Chartered Accountants of India,
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg, New Delhi 110 002
Further clarifications on this Exposure Draft may be sought by e-mail to email@example.com.