MCA’s amended Accounting Standards Rules, 2016 & their Applicability

Amended Companies (Accounting Standards) Rules notified by MCA

The Ministry of Corporate Affairs (MCA) has notified Companies Accounting Standards (AS) Amendment Rules, 2016 vide Notification dt 30th March 2016, which are applicable from the financial year 2016-17.

a) MCA Notifies “Companies (Accounting Standards) Amendment Rules, 2016” [30th March 2016]

The Ministry of Corporate Affairs (MCA) has notified Companies (Accounting Standards) Amendment Rules, 2016 vide Notification dt 30th March 2016, to omit Accounting Standard 6 on Depreciation Accounting and to amend/ substitute the following Accounting Standards:

List of Amended / Substituted Accounting Standards

Accounting Standards (AS) 2 Valuation of Inventories
Accounting Standards (AS) 4 Contingencies and events Ocurring after Balance Sheet Date
Accounting Standards (AS) 10 Property, Plant and Equipment
Accounting Standards (AS) 13 Accounting for Investments
Accounting Standards (AS) 14 Accounting for Amalgamation
Accounting Standards (AS) 21 Consolidated Financial Statements
Accounting Standards (AS) 29 Provisions, Contingent Liabilities and Contingent Assets

The amended Rules shall come into force on the date of their publication in the Official Gazette, i.e. 30th March 2016. To download pdf copy of the said MCA Notification or to view further details on the amended Companies Accounting Standards Rules 2016, please refer the link below:

MCA Notification dt 30th March 2016 on Companies (AS) Amendment Rules, 2016

b) ICAI’s opinion on Date of Applicability of MCA’s Amended Accounting Standards [26th April, 2016]

1. The Ministry of Corporate Affairs, Government of India, vide Notification No. G.S.R. 739(E), dated 7th December, 2006, notified Companies (Accounting Standards) Rules 2006, in the Official Gazette Rule 1, sub-rule (2), provided that the said Rules “shall come into force on the date of their publication in the Official Gazette”. Rule 3, sub-rule (2), of the said Rules provided that the Accounting Standards viz., AS 1 to AS 7 and AS 9 to AS 29, prescribed therein “shall come into effect in respect of accounting periods commencing on or after the publication of these Accounting Standards.”

2. Ministry of Corporate Affairs, vide its Notification No. G.S.R. 364 (E) dated 30th March, 2016, has issued Companies (Accounting Standards) Amendment Rules 2016, amending AS 2, AS 4, AS 13, AS 21 and AS 29; and replacing the existing AS 6 and AS 10 with revised AS 10. While sub-rule (2) of Rule 1 of the aforesaid Amendment Rules provides that these Rules shall come into force on the date of their publication, these Rules do not specify in respect of which accounting periods the amended Accounting Standards shall come into effect. It is noted that Rule 3, sub-rule (2), of the 2006 Rules, the relevant extract of which is reproduced in paragraph 1 above, has not been amended by the said Amendment Rules. In view of this, many stakeholders have approached the Institute of Chartered Accountants of India, to seek guidance on the applicability of the amended Accounting Standards particularly in the case of listed companies who prepared their financial results of preceding quarters based on the unamended Accounting Standards.

3. With a view to have consistent approach by companies on the applicability of the Accounting Standards as amended by the Companies (Accounting Standards) Amendment Rules, amended Accounting Standards should be followed for accounting periods commencing on or after the date of publication of the notification in the Official Gazette.

ICAI Clarification dt 26 April, 2016- Applicability of Amended Companies Accounting Standard Rules 2016

c) MCA Clarification on Date of Applicability of MCA’s Amended Accounting Standards [MCA General Circular 04/2016 dt. 27th April, 2016]

Stakeholders have sought clarifications from MCA with regard to the accounting period for which the accounts would need to be prepared using the Accounting Standards, as amended through the Companies (Accounting Standards) Amendment Rules, 2016.

The matter has been examined by the MCA and it has been clarified that the amended Accounting Standards should be used for preparation of accounts for accounting periods commencing on or after the date of notification, i.e. 30th March, 2016. So effectively, the amended accounting standards are applicable from Financial Year 2016-17 onwards. To view or download pdf copy of the said Clarification, please refer the link below:

MCA General Circular 04/2016 dt. 27 April, 2016- Clarification on Effective Date/ Applicability

d) MCA’s Exposure Draft of Companies (Accounting Standards) Amendment Rules 2016 [16 Feb. 2016]

The MCA had issued Notice dt. 16th Feb 2016, inviting comments/ suggestions on the draft “Companies (Accounting Standards) Amendment Rules, 2016” latest by 1st March, 2016. To view or download pdf copy of the said Rules, please refer the link below:

MCA Draft Companies (Accounting Standards) Amendment Rules, 2016

2 Comments

  1. kaushik May 17, 2016
    • Aakash Porwal Jul 4, 2016

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