ICAI has issued Exposure Draft of ‘Accounting Standard 11 (AS-11): Construction Contracts’, which is an upgraded version of ICAI’s existing ‘AS-7: Construction Contracts’ and has been drafted based on ‘Ind AS 11: Construction Contracts’, as part of MCA initiative to align Accounting Standards (AS) with Ind AS. Comments can be submitted latest by 4 Feb. 2019.
As per the Approach Paper for upgradation of existing Accounting Standards to bring them nearer to the Ind AS as finalised by the ICAI, AS on Construction Contracts, and Revenue Recognition, corresponding to Ind AS 11, Construction Contracts, and Ind AS 18, Revenue, respectively have been upgraded and AS corresponding to Ind AS 115 has not been formulated. In this direction, following is the Exposure Draft of the updated Accounting Standard (AS) 11, Construction Contracts, issued by the Accounting Standards Board of the ICAI, for comments. Major differences between draft AS 11 and Ind AS 11 are given in Appendix 1 of draft AS 11. Similarly, major differences between draft AS 11 and AS 7 are given in Appendix 2 of draft AS 11. Comments are most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording.
The objective of this Standard is to prescribe the accounting treatment of revenue and costs associated with construction contracts. Because of the nature of the activity undertaken in construction contracts, the date at which the contract activity is entered into and the date when the activity is completed usually fall into different accounting periods. Therefore, the primary issue in accounting for construction contracts is the allocation of contract revenue and contract costs to the accounting periods in which construction work is performed. This Standard uses the recognition criteria established in the Framework for the Preparation and Presentation of Financial Statements issued by ICAI to determine when contract revenue and contract costs shall be recognised as revenue and expenses in the statement of profit and loss. It also provides practical guidance on the application of these criteria.
How to Comment: Comments can be submitted using one of the following methods so as to receive not later than 4 Feb. 2019:
1. Electronically: Visit the link http://www.icai.org/comments/asb/
2. Email: Comments can be sent at firstname.lastname@example.org
3. Postal: Secretary, Accounting Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi – 110 002
Further clarifications on any aspect of this Exposure Draft may be sought by email to email@example.com