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The Accounting Standards Board has issued an Exposure Draft of amendments in Ind AS 117, Insurance Contracts corresponding to IASB’s amendments in IFRS 17, Insurance Contracts on initial application of IFRS 17 and IFRS 9, Financial Instruments – Comparative Information – (Amendments to IFRS 17)

The draft amendments add a transition option relating to comparative information about financial assets presented where an entity first applies Ind AS 117 and Ind AS 109 at the same time. Amendments have also been proposed to make the classification overlay available to entities that have applied Ind AS 109 before they apply Ind AS 117. For these entities, the classification overlay has been prescribed for the application of paragraph C29 of Ind AS 117 and can be applied only to financial assets derecognised in the comparative period.

These amendments are proposed to be made effective on initial application of Ind AS 117 2.

ICAI has invited comments on the ED up to 10 March 2022

  1. Currently, Ind AS 117 is proposed to be made effective from 1 April 2023

To access the text of ICAI ED, please click here

Action points for auditors

  • Ind AS 117 is proposed to be made effective from 1 April 2023, thus the year of transition would be 1 April 2022. This gives management and the auditors limited time for compliance. The application of Ind AS 117 and Ind AS 109 requires application of judgement, and the impact on entities may be significant and pervasive. Therefore, auditors would need to understand the potential impact of Ind AS 117 early in order to comprehend the risk of material misstatement that could arise. Auditors should also ensure regular discussions with the audit committees or management in a decision-making position, and design an appropriate audit approach.
  • Auditors should watch this space, as the final amendments will be issued by the Ministry of Corporate Affairs (MCA) based on recommendations received from finance and audit professionals.

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