Under the Environment Protection (End-of-Life Vehicles) Rules, 2025, companies are required to recognise provisions for
Extended Producer Responsibility (EPR) obligations arising from historical vehicle sales. Since these obligations exist independently of future operations, they satisfy the criteria for present obligations under
Ind AS 37. The authorities discussed below clarify that failure to recognise this cumulative provision when the rules became effective constitutes a
prior period error under
Ind AS 8, and not a change in accounting policy or accounting estimate. Consequently, entities are required to correct such omission through
retrospective restatement, unless a reliable estimate could not initially be made due to the absence of available pricing mechanisms.
INTRODUCTION
Ind AS 8,
Accounting Policies, Changes in Accounting Estimates and Errors, prescribes the accounting treatment and disclosure requirements relating to changes in accounting policies, changes in accounting estimates and the correction of prior period errors. While these concepts are often interlinked in practice, the accounting consequences arising from each are significantly different.
A change in accounting estimate is recognised prospectively, whereas a prior period error requires retrospective restatement. Accordingly, determining the corr
