In its circular released on July 5, 2016, the Securities
and Exchange Board of India (SEBI) relaxed the norms of reporting quarterly
financials, which will be applicable for companies adopting the new accounting
standards (Ind AS) for the first time from FY17. The norms shall also be
applicable to all companies subsequently adopting Ind AS. That said, these
relaxations are optional and companies may choose to opt out. Further, the
existing format for the presentation of quarterly financial statements will be
continued until 3QFY17, which, in our opinion, is likely to create ambiguity
whether revenues have to be reported as gross of excise (as required under Ind
AS) or as net of excise (as required under the existing format).
Key Highlights:
-
The relaxation has
been spread across two phases: (1) Q1 and Q2FY17 and (2) Q3FY17.
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For Q1 and Q2FY17,
companies have been granted the following relaxations:
(a)
Extension of the timeline for reporting financial statements by one month;
(b)
YoY comparable financials have to be provided (wherein limited review/audit
will not be compulsory); and
(c)
Presentation of yearly financials for FY16 is not mandatory.
-
For Q3FY17,
presentation of financial statement for FY16 is not mandatory. However, if the
company opts to do so, the same is subject to audit/limited review.
-
Further, for Q1FY17,
provision of QoQ comparable financials is not mandatory.
-
The circular also
relaxes the norm for not providing the balance sheet for the year ended FY16
along with Q2FY17. However, it is silent on providing the comparable half
yearly balance sheet with Q2FY17 results. Looking into the kind of relaxations
provided, the same will also be granted subsequently, in our view.
-
Companies currently
have a one-time yearly choice (in line with the listing agreement) in Q1 of
either reporting standalone or consolidated quarterly financials. For
first-time adopters, this option will also be available in Q2 this year.
