Exposure Draft on Covid-19-Related Rent Concessions (Proposed amendment to Ind AS 116, Leases) corresponding to Amendments in IFRS 16 issued by the International Accounting Standards Board (IASB)
The implementation of high quality Indian Accounting Standards (Ind ASs) by Indian Companies is a monumental step in the accounting history of India. The Institute of Chartered Accountants of India (ICAI) believes that Ind AS Framework has enhanced the quality of financial statements of Indian entities and strengthened their competitiveness and comparability. Trinity of high quality financial reporting, sound corporate governance and robust audit mechanism is critical to the success and growth of any economy.
Ind ASs 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. In order to remain converged, and to meet the pace of changing business environment, there is a need for us to actively participate in the IASB’s standard-setting activities.
Recently, the IASB has issued an amendments on Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16, Leases).As a result of the deadly Covid-19 pandemic, there would be many instances of lessors giving rent concessions to lessees as a result of the pandemic. The lessees could find it challenging to assess whether a potentially large volume of covid-19-related rent concessions are lease modifications and, for those that are, to apply the required accounting in IFRS 16, especially in the light of the many challenges lessees face during the pandemic. Further, those challenges arising during the pandemic add to the work undertaken by lessees in implementing the new lessee accounting model in IFRS 16. The amendments to IFRS 16 provides the practical expedient to provide relief to lessees, while enabling lessees to continue providing useful information about their leases to users of financial statements. The amendment aims to address issues affecting the application of IFRS 16 requirements to large volumes of rent concessions granted as a direct consequence of the covid-19 pandemic during 2020. The amendment to IFRS 16 are as follows:
The amendments to IFRS 16 does not specify any change in the requirements for lessors.
The Accounting Standards Board (ASB) noted that Indian entities preparing Ind AS based financial statements could be facing similar challenges and situations like the International scenario. In addition, there is a need to remain converged with IFRS standards. Accordingly, the ASB of ICAI has issued the Exposure Draft of proposed amendments to Ind AS 116, Leases.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 June 10, 2020, and can be accessed at following link: https://www.icai.org/new_post.html?post_id=16570 The comment period on the proposal is kept short to provide timely support to stakeholders at this difficult time.
How to comment:Comments should be submitted using one of the following methods, so as to be received not later than June 10, 2020:
Further clarifications on this Exposure Draft may be sought by e-mail to firstname.lastname@example.org.
Accounting Standards Board