Financial Reporting Closure 2020-21: Amendments pronounced in GAAP and their implications
The process of financial reporting for the period 2020-21 can perhaps be described as the most challenging in recent reporting history. Preparers of financial statements and information have been under stress with respect to the appropriate application of GAAP to ensure accurate financial reporting for the year 2020-21. This period has been characterized by challenges to the going concern assumption, extraordinary accounting items, revenue recognition complications, postponement to capitalization of expenses, etc. These challenges were not unique only to financial reporting in India. Accounting regulators like the International Accounting Standards Board (IASB) have introduced some amendments which facilitate financial reporting in this difficult reporting period. Ministry of Corporate Affairs (MCA) announced corresponding amendments in the form of Companies (Indian Accounting Standards) Amendment Rules, 20201 to ensure that Indian accounting stays in line with International Financial Reporting Standards (IFRS).
We have identified three areas critical to the financial reporting process that have been impacted by the pandemic followed by regulatory pronouncements and amendments. In this series, we shall provide refreshers, updates and suggest the way forward to manage these key aspects to provide support and add value to the financial reporting closure process.
In this article, we shall discuss the amendments made in: