Ind AS / IFRS Audit India & UAE: The Process, Start to Finish
The mechanics of Ind AS / IFRS Audit India & UAE are what clients ask about once they have decided to proceed. The questions below are the ones raised most often in practice; the full scope of the service is on the Ind AS / IFRS Audit India & UAE page.
How does Ind AS 116 / IFRS 16 lease accounting change our balance sheet?
Before Ind AS 116 / IFRS 16, operating leases stayed off the balance sheet — only the rent expense hit the profit and loss statement. Under Ind AS 116 / IFRS 16, almost all leases (with narrow exceptions for short-term and low-value leases) are recognised on the balance sheet as a right-of-use asset and a corresponding lease liability, discounted at the incremental borrowing rate. This increases both assets and liabilities, changes the expense pattern from straight-line rent to depreciation plus interest, and can materially affect EBITDA, debt-equity ratios, and any lending covenants tied to those ratios.
In practice: We recompute the full lease population — not just major leases — because immaterial-seeming leases in aggregate can meaningfully move the balance sheet and covenant ratios. Clients are often surprised at how many contracts (equipment, warehousing, even certain service arrangements) contain an embedded lease under the Ind AS 116 definition.
What is Expected Credit Loss (ECL) under Ind AS 109 / IFRS 9, and how is it different from our old provisioning approach?
The old 'incurred loss' model provisioned for bad debts only once objective evidence of impairment existed — essentially, after the loss event had already happened. Ind AS 109 / IFRS 9 requires a forward-looking Expected Credit Loss model, which estimates probability-weighted future credit losses on receivables and other financial assets from initial recognition, updated for current and forecast economic conditions. For trade receivables, a simplified approach using a provision matrix (based on historical loss rates, adjusted for forward-looking factors) is commonly applied.
In practice: We test the reasonableness of the ECL model's forward-looking adjustments carefully — this is one of the most judgement-heavy areas in an Ind AS/IFRS audit, and it can give rise to audit qualifications when the underlying assumptions are not well evidenced.
Can PNPC audit a UAE entity's financial statements under IFRS?
Yes. IFRS is the primary financial reporting framework used across the UAE, including for UAE Corporate Tax purposes (financial statements prepared in accordance with IFRS, or IFRS for SMEs where eligible, form the basis for taxable income computation under the UAE Corporate Tax Law), for free zone authority filing requirements, and for banking and group consolidation purposes. PNPC's Dubai office prepares and audits IFRS-compliant financial statements for UAE Mainland and Free Zone entities, including UAE subsidiaries of Indian groups and standalone UAE businesses with international stakeholders.
In practice: Where an Indian group has a UAE subsidiary, we coordinate the India-side Ind AS or Indian GAAP audit and the UAE-side IFRS audit as one engagement — the intercompany transactions, transfer pricing position, and consolidation adjustments need to be consistent across both audit files, which is difficult to achieve with two disconnected firms.
How is materiality determined differently in an Ind AS/IFRS audit compared to a standard statutory audit?
The underlying materiality-setting methodology under the Standards on Auditing (SA 320) is the same regardless of the accounting framework — a benchmark (often profit before tax, revenue, or total assets, depending on the entity's nature) with an appropriate percentage applied, adjusted for qualitative factors. What differs in an Ind AS/IFRS engagement, particularly for a group-reporting component, is that the group auditor often prescribes a separate 'component materiality' for the local audit, which is typically lower than what the local team would otherwise have set independently, to ensure aggregation risk across all group components does not exceed group materiality.
In practice: We always confirm whether a group materiality instruction exists before finalising our own risk assessment — auditing to a materiality level that is higher than what the group actually needs creates gaps the group auditor will flag back to us, costing time on both sides.
What happens if our financial statements were previously prepared under Indian GAAP and now need to be restated retrospectively under Ind AS for a specific investor or acquirer?
This is a common request during acquisition due diligence or a fundraising process — a buyer or investor may ask for the target's historical financial statements (typically 2–3 years) to be restated under Ind AS or IFRS for comparability with their own reporting or with industry benchmarks. This is technically a first-time adoption exercise applied retrospectively to closed periods, generally undertaken as an advisory/restatement engagement (sometimes separately from, sometimes alongside, an audit or review opinion on the restated figures, depending on what the requesting party needs).
In practice: We scope this explicitly as either an audited restatement or an unaudited advisory restatement, depending on what the counterparty actually requires — the level of assurance materially changes both the fee and the audit evidence standard applied, and this should be clarified before work begins, not assumed.
Do Ind AS financial statements need to be filed with the MCA in a specific electronic format?
Yes. Companies to which Ind AS applies must file their financial statements with the MCA in XBRL (eXtensible Business Reporting Language) format, tagged to the Ind AS-specific XBRL taxonomy notified by the MCA, as part of the AOC-4 XBRL filing. This is a distinct taxonomy from the one used for companies filing under the earlier Indian GAAP framework, and the tagging exercise itself requires technical familiarity with both the taxonomy and the underlying Ind AS presentation.
In practice: We coordinate the XBRL tagging directly with our audit team rather than handing it off to a third-party XBRL vendor with no visibility into the underlying accounting judgements — tagging errors in complex disclosure notes are a common source of MCA queries.
How does PNPC handle the coordination between our Indian statutory audit and our UAE group entity's IFRS audit?
PNPC's Chennai, Bangalore, Hyderabad, and Dubai offices work as one engagement team for groups with both Indian and UAE entities. Intercompany balances, transfer pricing positions, and consolidation adjustments are reconciled across both audit files by the same coordinating partner, rather than being handled by two disconnected firms that each see only half the group structure. This matters particularly for related party transactions, cross-charge arrangements, and any UAE Corporate Tax or India transfer pricing documentation that must be internally consistent across both jurisdictions.
In practice: Where the India and UAE entities are audited by unrelated firms, related-party transaction values can end up materially inconsistent on each side — a discrepancy that surfaces quickly in any serious investor or tax authority review. Coordinated audit files reduce that risk.
What Standards on Auditing (SAs) apply specifically to Ind AS/IFRS engagements versus a normal statutory audit?
The full suite of Standards on Auditing issued by ICAI (aligned to the International Standards on Auditing) applies to any statutory audit in India, regardless of the accounting framework being audited — SA 200 through SA 810. What changes in an Ind AS/IFRS engagement is the application: SA 540 (Auditing Accounting Estimates) becomes significantly more central given the ECL, impairment, and fair-value judgement areas; SA 600 (Using the Work of Another Auditor) applies when acting as component auditor for a foreign group; SA 720 (Other Information) becomes more relevant where the annual report contains extensive non-financial disclosures alongside Ind AS financial statements.
In practice: We do not treat the auditing standards as different — they are the same SAs — but we apply significantly more audit effort under SA 540 for an Ind AS/IFRS engagement than we would for a straightforward Indian GAAP audit, because the estimates involved are both more numerous and more consequential to the reported figures.
What if our previous auditor issued a qualified opinion on our Ind AS financial statements — can PNPC help resolve the underlying issue?
Yes. A qualified opinion arises either from a material misstatement (e.g. the entity did not apply Ind AS 116 lease capitalisation correctly, or ECL provisioning was judged inadequate) or a scope limitation (the auditor could not obtain sufficient appropriate audit evidence on a specific matter). PNPC can review the basis of the prior qualification, work with management to correct the underlying accounting if the issue was a genuine misapplication of the standard, and — where the issue is resolved — issue an unqualified opinion in the subsequent period, with appropriate disclosure of the prior period's qualification and its resolution.
In practice: We insist on seeing the full basis for a prior qualification, including the predecessor auditor's working papers where accessible, before accepting the engagement — this protects both the client and PNPC from simply inheriting an unresolved dispute.
Where this sits in the wider engagement
Ind AS / IFRS Audit India & UAE rarely arrives on its own. The statutory basis and the current requirements are set out on the Ind AS / IFRS Audit India & UAE service page, and the related services are grouped under Audit Assurance.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Ind AS / IFRS Audit India & UAE we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.