Last updated: 02 April 2021
The Institute of Chartered Accountants of India, in its 400th meeting held on March 18-19, 2021 has announced that the scheme for applicability of Accounting Standards to Noncompany entities shall come into effect in respect of accounting periods commencing on or after April 1, 2020. Read the official announcement below: Announcement The Council, at its 400th meeting, held on March 18-19, 2021, considered the matter relating to applicability of Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI), to Non-company entities (Enterprises). The scheme for applicability of Accounting Standards to Noncompany entities shall come into effect in respect of accounting periods commencing on or after April 1,2020.
Criteria for classification of Non-company entities for applicability of
Accounting Standards
1. For the purpose of applicability of Accounting Standards, Non-company entities are classified into four categories, viz., Level I, Level II, Level III and Level IV.
Level I entities are large size entities, Level II entities are medium size entities, Level III entities are small size entities and Level IV entities are micro entities. Level IV, Level III and Level II entities are referred to as Micro, Small and Medium size entities (MSMEs). The criteria for classification of Noncompany entities into different levels are given in Annexure 1.
The terms ‘Small and Medium Enterprise’ and ‘SME’ used in Accounting Standards shall be read as ‘Micro, Small and Medium size entity’ and ‘MSME’ respectively.
2. Level I entities are required to comply in full with all the Accounting Standards.
3. Certain exemptions/relaxations have been provided to Level II, Level III and Level IV Non-company entities. Applicability of Accounting Standards and exemptions/relaxations to such entities are given in Annexure 2.
4. This Announcement supersedes the earlier Announcement of the ICAI on ‘Harmonisation of various differences between the Accounting Standards issued by the ICAI and the Accounting Standards notified by the Central Government’ issued in February 2008, to the extent it prescribes the criteria for classification of Non-company entities (Non-corporate entities) and applicability of Accounting Standards to non-company entities, and the Announcement ‘Revision in the criteria for classifying Level II non-corporate entities’ issued in January 2013.
5. This Announcement is not relevant for Non-company entities who may be required to follow Ind AS as per relevant regulatory requirements applicable to such entities.
6. The changes arising from this Announcement will be incorporated in the Accounting Standards while publishing the updated Compendium of Accounting Standards.
To view / download the complete announcement, find the enclosed file
Attached File : 40_19895_64269asb51535.pdf
As an expert in accounting standards and practices, I have a deep understanding of the nuances within the field. My knowledge extends beyond basic concepts, and I am well-versed in the latest developments. Let me break down the key concepts and implications of the announcement made by The Institute of Chartered Accountants of India (ICAI) during its 400th meeting on March 18-19, 2021.
1. Scheme for Applicability of Accounting Standards:
- The announcement states that the scheme for applicability of Accounting Standards to Non-company entities will be effective for accounting periods commencing on or after April 1, 2020.
2. Classification of Non-company Entities:
- Non-company entities are classified into four categories: Level I, Level II, Level III, and Level IV.
- Level I entities are large size entities.
- Level II entities are medium size entities.
- Level III entities are small size entities.
- Level IV entities are micro entities, and collectively, Level IV, Level III, and Level II entities are referred to as Micro, Small, and Medium size entities (MSMEs).
- The criteria for this classification are detailed in Annexure 1.
3. Applicability of Accounting Standards:
- Level I entities are required to comply in full with all Accounting Standards.
- Level II, Level III, and Level IV entities (MSMEs) are granted certain exemptions/relaxations, as outlined in Annexure 2.
4. Changes from Previous Announcements:
- The current announcement supersedes the earlier ICAI announcement on the harmonization of differences between Accounting Standards issued by ICAI and those notified by the Central Government in February 2008.
- It also supersedes the announcement on the revision of criteria for classifying Level II non-corporate entities issued in January 2013.
5. Terminology Clarification:
- The terms 'Small and Medium Enterprise' (SME) in Accounting Standards are now to be read as 'Micro, Small and Medium size entity' (MSME).
6. Ind AS Requirements:
- The announcement is not relevant for Non-company entities that are required to follow Ind AS (Indian Accounting Standards) as per regulatory requirements applicable to such entities.
7. Incorporation of Changes:
- The changes arising from this announcement will be incorporated in the Accounting Standards when publishing the updated Compendium of Accounting Standards.
To access the complete announcement and further details, you can view or download the enclosed file named "40_19895_64269asb51535.pdf." This document likely provides additional specifics and insights into the scheme and its implications for various entities.
