Analysing Ind explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A review of Ind AS financial statements is mostly a check that each line sits where the standard says it must, is measured as the standard says, and is explained in the notes. Most findings are not exotic. They are classification, measurement at initial recognition, netting and missing disclosures, and they can be found with a short, repeatable set of questions.
Ind AS 1 requires a true and fair view, an explicit statement of compliance with Ind AS, and says a wrong accounting policy cannot be cured by disclosure (paragraphs 15, 16 and 18). A reviewer checks current or non-current classification (paragraphs 56 and 69 to 75A), no offsetting unless an Ind AS allows it (paragraph 32), comparatives (paragraph 38), separate disclosure of material items (paragraph 97), material accounting policy information (paragraph 117) and sources of estimation uncertainty (paragraph 125).
Ind AS as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015). This article also reflects the current and non-current classification paragraphs of Ind AS 1 (69(d), 72A, 72B and 75A) as amended by Notification No. G.S.R. 549(E) dated 13 August 2025 and printed in that compendium; under paragraph 139U, paragraph 74 as described here gives way, for annual reporting periods beginning on or after 1 April 2026, to a paragraph 74 under which the liability is current even if the lender agrees after the period not to demand payment. Other amendments notified after 1 April 2025 are not reflected in this article; check mca.gov.in before applying it to a later period.
What the paragraphs require
| Paragraph | Requirement | What it means in practice |
|---|---|---|
| Ind AS 1, 15 to 17 | True and fair view; compliance with Ind AS presumed to achieve it; explicit statement of compliance | The compliance statement must be true of every standard |
| 18 | Inappropriate policies cannot be rectified by disclosure or notes | Fix the number, not the note |
| 32, 33 | No offsetting unless an Ind AS requires or permits it; valuation allowances are not offsetting | Gross presentation of assets and liabilities |
| 34 | Revenue is the consideration the entity expects to be entitled to | Amounts collected for others are not revenue |
| 38, 38A | Comparative information for all amounts, minimum two of each statement | Each note has two periods |
| 56 | Deferred tax is never classified as current | A fixed non-current line |
| 69 to 75A | Liability current if due within twelve months or no right to defer for twelve months | Rights at the reporting date decide |
| 74 | Breach of a material covenant making the loan payable on demand: not current if the lender agreed, after the period and before approval, not to demand payment | A carve-out in the Indian text; Ind AS 107 disclosure for each breach |
| 97, 98 | Separate disclosure of material items of income and expense, such as inventory write-downs | Not buried in a total |
| 117, 122, 125 | Material accounting policy information, significant judgements, and key estimation uncertainty | No template boilerplate |
The review sequence
Start with the notes' compliance statement, then walk the balance sheet in order: classification, measurement at initial recognition of financial items (for example loans and deposits carrying no interest, covered in our Ind AS 109 guide), and netting. Then the statement of profit and loss: revenue as principal or agent, material items shown separately. Then the notes: policies, judgements and estimates, and comparatives. For ratios the company must disclose, see our post on analytical ratios under Schedule III.
A second reader finds more in a draft than the preparer does. Our MIS reporting team can run this review each quarter, so that the year-end draft arrives clean.
Worked review
The entity and all figures in this example are invented for illustration. Amounts are in ₹ lakh and rates are assumed, for arithmetic only.
Tawi Engineering Limited has produced a draft balance sheet at 31 March 2026, set out below, with eight planted errors.
Draft balance sheet.
| Line | ₹ lakh |
|---|---|
| Property, plant and equipment and other non-current assets | 600.00 |
| Security deposits | 50.00 |
| Inventory | 200.00 |
| Trade receivables | 135.00 |
| Cash and bank (net of an overdraft) | 15.00 |
| Total assets | 1,000.00 |
| Equity | 400.00 |
| Non-current: term loan | 120.00 |
| Non-current: other | 80.00 |
| Current: trade payables | 250.00 |
| Current: deferred tax liability | 35.00 |
| Current: other | 115.00 |
| Total equity and liabilities | 1,000.00 |
The eight errors.
| # | What the draft does | Paragraph | Correction |
|---|---|---|---|
| 1 | The term loan of ₹120.00 lakh, whose financial covenant was breached on the reporting date and is payable on demand, is non-current. The lender has not agreed to waive, either before the end of the period or before approval of the statements | Ind AS 1, 69(d), 72A, 74, 75 | Current. The carve-out in paragraph 74 needs the lender's agreement after the period and before approval; paragraph 75 needs a grace period of at least twelve months agreed by the end of the period. Neither exists. Disclose each breach under Ind AS 107 |
| 2 | A refundable security deposit of ₹50.00 lakh, paid on 31 March 2026 for premises, carrying no interest and repayable in three years, is at face value | Ind AS 109, 5.1.1, B5.1.1; Ind AS 116, 24(b); Ind AS 1, 18 | Measure at present value: 50.00 x 0.7722 = ₹38.61 lakh at an assumed 9 per cent. The difference of ₹11.39 lakh is a lease payment made in advance, added to the right-of-use asset and depreciated over the lease term |
| 3 | Sales of ₹300.00 lakh of goods supplied by another maker are shown gross with cost of ₹270.00 lakh; the entity only arranges the sale | Ind AS 1, 34; Ind AS 115, B34, B36 | As agent, show only the fee of ₹30.00 lakh. Revenue and cost both fall by 270.00 |
| 4 | A deferred tax liability of ₹35.00 lakh is a current liability | Ind AS 1, 56 | Non-current |
| 5 | A bank overdraft of ₹40.00 lakh at one bank is set against a balance of ₹55.00 lakh at another | Ind AS 1, 32, 33 | Show cash and bank of 55.00 and an overdraft of 40.00 as current borrowings |
| 6 | An inventory write-down of ₹18.00 lakh to net realisable value is folded into cost of materials | Ind AS 1, 97, 98(a) | Disclose the nature and amount separately |
| 7 | The notes for provisions and borrowings show current-year figures only | Ind AS 1, 38, 38A | Add the preceding-year column |
| 8 | The notes carry template policy wording for policies the company does not use, and no information on the assumptions behind a litigation provision | Ind AS 1, 117, 122, 125 | Keep only material policy information; disclose the assumptions and carrying amount for items with a significant risk of adjustment next year |
Corrected balance sheet. The advance lease payment of ₹11.39 lakh joins the right-of-use asset, a non-current asset.
| Line | Draft | Correction | Corrected |
|---|---|---|---|
| Property, plant and equipment and other | 600.00 | 600.00 | |
| Security deposits (non-current) | 50.00 | (11.39) | 38.61 |
| Right-of-use asset (advance lease payment) | 11.39 | 11.39 | |
| Non-current assets | 650.00 | 650.00 | |
| Inventory | 200.00 | 200.00 | |
| Trade receivables | 135.00 | 135.00 | |
| Cash and bank | 15.00 | 40.00 | 55.00 |
| Current assets | 350.00 | 390.00 | |
| Total assets | 1,000.00 | 40.00 | 1,040.00 |
| Equity | 400.00 | 400.00 | |
| Non-current liabilities (200.00 - 120.00 + 35.00) | 200.00 | 115.00 | |
| Trade payables | 250.00 | 250.00 | |
| Overdraft | 40.00 | 40.00 | |
| Term loan, current | 120.00 | 120.00 | |
| Other current | 115.00 | 115.00 | |
| Current liabilities | 400.00 | 525.00 | |
| Total equity and liabilities | 1,000.00 | 40.00 | 1,040.00 |
Check: assets 650.00 + 390.00 = 1,040.00; equity and liabilities 400.00 + 115.00 + 525.00 = 1,040.00. The deposit and the right-of-use addition still add to ₹50.00 lakh (38.61 + 11.39). The current liabilities move by +120.00 - 35.00 + 40.00 = +125.00 (400.00 to 525.00). The current ratio falls from 350.00 ÷ 400.00 = 0.88 to 390.00 ÷ 525.00 = 0.74, which shows why classification errors matter to lenders and analysts.
Entries for corrections 2 and 3:
| Particulars | Debit (₹ lakh) | Credit (₹ lakh) |
|---|---|---|
| Right-of-use asset | 11.39 | |
| To Security deposits | 11.39 | |
| Revenue from operations | 270.00 | |
| To Cost of goods sold | 270.00 |
Presentation and disclosure
Schedule III Division II sets the line items and the notes; our posts above cover those. A reviewer should hold the worked review against the standard's own words and the current notified text, as consulted on the date of the statements. For the standard in outline see the Ind AS 1 post. The revenue treatment in error 3 follows the guide on variable consideration and principal versus agent.
Common mistakes
- Treating the covenant carve-out as automatic without the lender's agreement before approval (paragraph 74).
- Describing statements as compliant while one policy departs from an Ind AS (paragraph 16).
- Using notes to excuse a wrong measurement (paragraph 18).
- Netting balances because both are with banks (paragraph 32).
- Copying accounting policy text from a template (paragraph 117).
Need help with reviewing financial statements?
An independent pre-audit read finds the classification and disclosure issues while there is still time to fix them. Our MIS reporting team can set up a standing review checklist and a quarter-end pack for your finance team.
Key takeaways
- Compliance with Ind AS must be complete before it is stated.
- Disclosure cannot cure a wrong policy.
- Deferred tax is never current; current classification turns on rights at the reporting date.
- No offsetting without an Ind AS permission.
- Material items, policies and estimation uncertainty each need their own disclosure.
Read next
- Analytical ratios under Schedule III: eleven ratios and the 25 per cent rule
- Minimum requirements under Ind AS Schedule III: adding line items
- Revenue under Ind AS 115: the five-step model
- Classification and measurement of financial assets under Ind AS 109
Disclaimer: Based on the Indian Accounting Standards as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015) and, where named, the ITFG clarification bulletins of ICAI, as consulted on 4 October 2026. The worked example uses invented figures. Amendments notified after 1 April 2025 should be checked on mca.gov.in. This article is general information, not legal advice; check the official text before acting.