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The Financial Reporting Review Board (FRRB) of ICAI performs an assessment of general-purpose financial statements of different entities to ensure adherence to generally accepted accounting principles (GAAP), compliance with auditor’s reporting obligations, and compliance with disclosure requirements set by regulatory bodies, laws, and applicable regulations. The FRRB was established as a proactive mechanism to enhance financial reporting and auditing practices.
The Board has released a Study on Compliance with Financial Reporting Requirements that highlight instances of typical non-compliance or mistakes found in Ind AS financial statements. This article will examine some of the main non-compliances and errors identified by the FRRB concerning Ind AS 27, Separate financial statements, highlighting issues relating to investments. These findings will serve as a benchmark to verify whether entities have followed Ind AS guidelines when preparing their yearly financial statements.
I. Inappropriate Reporting: A company has not disclosed the place of incorporation and the proportion of ownership interest for investments in subsidiaries and joint ventures under notes to the financial statements.
II. Relevant Provisions: Para 17(b) of Ind AS 27, Separate Financial Statements, a company is required to disclose in its separate financial statement a list of significant investments in subsidiaries, joint ventures, and associates, including (i) the name of those investees; (ii) the principal place of business (and country of incorporation, if different) of those investees (iii) its proportion of the ownership interest (and its proportion of the voting rights, if different) held in those investees.
III. FRRB Observations: The Company should have disclosed the place of incorporation and the proportion of ownership interest in respect of investments in subsidiaries and joint ventures.
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