Updates from ICAI
In June 2022, the Institute of Chartered Accountants of India (ICAI) had issued a Technical Guide on financial statements for non-corporate entities. However, Limited Liability Partnerships (LLPs) are not within the scope of the Technical Guide on financial statements for non-corporate entities. Thus, on 1 July 2022, ICAI issued a Technical Guide on financial statements of the Limited Liability Partnerships (LLPs) (Technical Guide). The objective of the Technical Guide is to provide guidance on the applicability of the Accounting Standards (AS) to the LLPs and to prescribe formats for the preparation of the financial statements for LLPs.
Meaning of an LLPAn LLP is a body corporate formed and incorporated under the Limited Liability Partnership Act, 2008 (LLP Act). It is a corporate business form which gives the benefits of limited liability of a company and the flexibility of a partnership. Since an LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’, it is called a hybrid of a company and a partnership.
Applicability of the Technical GuideThis Technical Guide is recommended for the purpose of preparation of financial statements of the LLPs. However, the non-company entities which follow Ind AS are not required to follow this Technical Guide.
Key considerationsThe criteria for entities to be classified as Level I, II, III and IV has been provided in Annexure I of the Technical Guide and applicability of AS and exemptions/relaxations to entities from applicability of certain AS have been given in Annexure 21.
To access the text of the Technical Guide for LLPs, please click here
Action points for auditors
An interim financial report is a complete or condensed set of financial statements for an interim period which is shorter than a full financial year. Ind AS 34, Interim Financial Reporting prescribes the minimum content of an interim financial report and also specifies the applicable recognition and measurement principles.
On 4 July 2022, ICAI released the Educational Material on Ind AS 34 (Educational Material). The Educational Material provides guidance in the form of Frequently Asked Questions (FAQs) on the practical issues that the preparers of the financial statements face while preparing condensed interim financial reports. Some of the key matters discussed in the Educational Material include:
To access the text of the Educational Material, please click here
Action points for auditors