The ICAI President CA Nihar Jambusaria said that, Accounting Standards issued by the Institute of Chartered Accountants of India ( ICAI ) are applicable to Non-company entities to whom Ind AS are not applicable.
For applicability of Accounting Standards, the ICAI in 2004, prescribed the criteria for classification of entities into level I, Level II and Level III, wherein subsequently minor revisions were made. Level II and Level III non-company entities were classified as Small and Medium sized Entities (SME) to whom certain exemptions/relaxations were provided.
In view of the substantial revisions in the threshold limits for classification of Micro, Small and Medium Enterprises (MSMEs) under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, inflation; and considering that the criteria for classification of Non-company entities was laid down long back, the ICAI has revised the criteria to achieve simplification and ease of doing business by these entities.
The ICAI President also said that, For this purpose, the ICAI has recently issued an Announcement revising the criteria for classification of Non-company entities into four Levels, viz., Level I, Level II, Level III and Level IV which is applicable in respect of accounting periods commencing on or after April 1, 2020. Level IV, Level III and Level II entities are referred to as Micro, Small and Medium size entities (MSMEs).
The Announcement which includes details of exemptions/ relaxations to MSMEs and the guidance on transitioning between levels has been published in the internal pages of this issue for your ready reference.