Guidelines on Accounting with respect to Indian Accounting Standards (IND AS)
Summary
SEBI mandates that Mutual Fund schemes prepare financial statements in accordance with Indian Accounting Standards (IND AS) effective from April 1, 2023. The circular specifies requirements for opening balance sheets and provides exemptions from restating historical per-unit statistics for the first two years of adoption. Additionally, it modifies provisions regarding the expensing of brokerage and transaction costs to align with IND AS. This section details the specific line items and classifications required for Notes to the Balance Sheet and Revenue Account of a mutual fund. It mandates the disclosure of assets, liabilities, income, and expenses across sixteen distinct notes with comparative figures for current and previous reporting periods. The text includes specific instructions for sub-classifying investments and disclosing security details for borrowings. This section details specific financial notes regarding fair value changes, investment losses, and other expenses for the current and previous reporting periods. It establishes mandatory disclosure requirements under Indian Accounting Standards (IND AS) for revenue recognition, valuation policies, and defaulting securities
Text
Mutual Fund Schemes shall prepare the opening balance sheet as on date of transition and the comparatives as per the requirements of IND AS.
Mutual Fund schemes may not be mandatorily required to restate the previous years published perspective historical per unit statistics as per requirement of IND AS for the first two years from first time adoption of IND AS.
Label the previous Generally Accepted Accounting Principles (GAAP) information prominently as not being prepared in accordance with IND AS.
Disclose the nature of the adjustments that would be required to make it comply with IND AS. Mutual Funds schemes need not quantify those adjustments.
The Financial Statements of the Mutual Fund Schemes shall be prepared in the Formats given at Annexure-A.
Brokerage and transaction cost incurred for the purpose of execution shall be charged to the schemes as provided under Regulation 52 (6A) (a) upto 12 bps and 5 bps for cash market transactions and derivatives transactions respectively.
Any payment towards brokerage & transaction costs, over and above the said 12 bps and 5 bps for cash market transactions and derivatives transactions respectively may be charged to the Scheme within the maximum limit of Total Expense Ratio (TER) as prescribed under Regulation 52 of the SEBI (Mutual Finds) Regulations, 1996.
The provisions of this Circular shall be effective from April 01, 2023.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of regulations 77 of SEBI (Mutual Funds) Regulations, 1996.
Figures as at the end of current reporting period and end of the previous reporting period for Reverse repurchase transactions / Triparty Repo (TREPs) etc., Cash on Hand, and Total.
Figures for Balances with banks in current account, Deposits with scheduled banks (ASBA deposits, Margin deposits etc.), Others (to be specified), and Total.
Disclosure of Stock Futures/ Options, Index Futures/ Options, Commodity Futures/Options, Interest Rate Futures/ Swaps, Currency Futures, Others (to be specified), and Total.
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Source: SecMarx — Guidelines on Accounting with respect to Indian Accounting Standards (IND AS). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.