IPO DRHP Preparation — CA Financials Role (Ind-AS, Restatement & Auditor Certificate)

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations): Schedule VI — restated financial information required in offer document; 3 years of restated financials; auditor's certificate on restated statements mandatory. Ind-AS (Indian Accounting Standards) — Companies (Indian Accounting Standards) Rules, 2015: applicable to all listed and IPO-bound companies with net worth ≥ Rs. 500 crore (Phase I) or ≥ Rs. 250 crore (Phase II); all other companies mandatorily from FY 2017-18. Ind-AS 101 (First-Time Adoption of Indian Accounting Standards): transition balance sheet, mandatory exceptions, optional exemptions, equity and P&L reconciliation. Ind-AS 19 (Employee Benefits): actuarial valuation for gratuity and leave encashment. Ind-AS 116 (Leases): right-of-use asset and lease liability recognition. Ind-AS 109 (Financial Instruments): fair value measurement of financial assets and liabilities. ICAI Guidance Note on Auditor's Report in IPO: specifies form and content of auditor's certificates in offer documents.

The Draft Red Herring Prospectus (DRHP) filed with SEBI for an Initial Public Offering (IPO) is one of the most demanding financial disclosure documents in Indian capital markets. The Chartered Accountant (statutory auditor of the issuer company) plays a central and legally indispensable role in the preparation of the DRHP, as mandated by Schedule VI of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations).

The CA's primary deliverable for the DRHP is the Restated Financial Information: audited and restated financial statements for the 3 financial years immediately preceding the date of filing (or such shorter period as permitted), prepared in accordance with Ind AS as notified under the Companies (Indian Accounting Standards) Rules, 2015. The restatement exercise requires the CA to adjust historical financial statements to reflect changes in accounting policies, to correct errors identified after the original audit, and to adjust for all other audit qualifications and emphasis of matter paragraphs in prior-year audit reports. The result is a set of restated financial statements — Restated Balance Sheet, Restated Statement of Profit and Loss, Restated Cash Flow Statement, and Restated Statement of Changes in Equity — with accompanying notes explaining each restatement adjustment.

Companies that were reporting under Indian GAAP (AS) prior to the mandatory Ind-AS adoption year must convert their historical financials to Ind-AS for the DRHP. Ind-AS 101 (First-time Adoption of Indian Accounting Standards) governs this conversion — the CA prepares the transition date balance sheet, applies mandatory exceptions and optional exemptions, and reconciles equity and profit/loss from AS to Ind-AS for each restated year. Key differences include fair valuation of investment properties, employee benefit obligations (gratuity, leave encashment under Ind-AS 19), lease accounting (Ind-AS 116 vs AS 19), financial instruments (Ind-AS 109), and deferred tax (Ind-AS 12 vs AS 22).

The statutory auditor issues an Auditor's Certificate on the Restated Financial Statements certifying that they have been examined, that restatements have been made as required by SEBI ICDR Regulations, and that the restated statements present a true and fair view. The CA also issues the Capitalisation Statement (pre- and post-issue), the Tax Shelter Statement, the Auditor's Certificate on Statement of Indebtedness, and the CA Certificate on Working Capital for the offer document.