2 minute read 25 Feb 2021
IPO process readiness

Is your financial information ready for an IPO journey in India?

By Sandip Khetan

EY India Financial Accounting Advisory Services Leader

Keynote speaker. Seasoned accountant. Experienced GAAP consultant.

2 minute read 25 Feb 2021

This easy-to-use reference guide will help companies formulate a holistic and comprehensive roadmap for their IPO readiness.

An Initial Public Offer (IPO) opens new funding avenues for the companies and presents them with an opportunity to raise a substantial amount of money from the capital market. One of the important aspects involved in IPO journey is the preparation of restated financial statements. Restated financial statements are to be prepared as per the SEBI (ICDR) Regulations, 2018 wherein certain adjustments are made, and financial information is presented.

As per the regulations, an issuer company is required to prepare the restated consolidated financial information in accordance with Schedule III to the Companies Act, 2013 for a period of three financials years and stub (interim) period (if applicable) in tabular format. The restated consolidated financial information should be based on audited financial statements and certified by the statutory auditor. Considering the time and challenges involved, the restatement process is one of the most critical milestones for a company preparing for an IPO.

Process of restatement

Scenario I - Restated financial statements under Ind AS

Process of restatement – IPO process

An issuer who is already preparing Ind AS compliant financial statements at the time of filing of DRHP is required to make only restatement adjustments as given in the ICDR regulations.

Scenario II - Transition to Ind AS and restated financial statements

Transition to Ind AS and restated financial statements

SEBI Regulations allows an issuer to file restated financial statement as per Indian GAAP e.g. for banks, insurance companies.

As per SEBI (ICDR) Regulations, 2018, the financial statements are required to be restated for the following areas:

  • Change in accounting policy
  • Prior-period error
  • Non-provisioning, regrouping, other adjustments
  • Audit qualifications
  • Change in estimates

Supporting you in the IPO journey

We are the global leader in the number of companies we advise on going public. This includes advising companies on their readiness plan, corporate governance, financial information, establish tax structures, compensation plans, business processes and controls, and much more. This gives us tremendous perspective for guiding companies through the IPO journey and beyond.

Summary

Restatement of financial information is one of the key requirements for a listing in India. The purpose of this document is to provide an IPO readiness checklist.

About this article

By Sandip Khetan

EY India Financial Accounting Advisory Services Leader

Keynote speaker. Seasoned accountant. Experienced GAAP consultant.