ICAI Releases Report on Liquidation Accounting Standards
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- 2 Min Read
- By Taxmann
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- Last Updated on 11 February, 2026
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Liquidation accounting applies at one of the most critical phases in an entity’s lifecycle, where financial reporting outcomes have a direct and material impact on creditors, investors, and other stakeholders. In such circumstances, conventional going-concern assumptions no longer apply, necessitating a distinct accounting approach.
Recognising this need, the Research Committee of the Institute of Chartered Accountants of India (ICAI) has issued a comprehensive report providing practical guidance on accounting in non-going concern situations.
1. Scope and Objective of the Report
The report is designed to:
- Assist professionals in understanding liquidation and non-going concern accounting
- Bridge gaps in practice where explicit standards may not provide detailed operational guidance
- Support consistent and transparent financial reporting during insolvency and liquidation proceedings
2. Integration of Global Practices and Indian Framework
The guidance integrates:
- Global best practices in liquidation accounting
- Relevant Ind AS considerations, including measurement and presentation issues
- The Indian insolvency and liquidation framework, ensuring alignment with domestic legal and regulatory requirements
This integrated approach helps practitioners apply accounting principles in a manner that is both technically sound and contextually appropriate.
3. Practical Illustrations and Transition Guidance
To aid implementation, the report includes:
- Illustrative examples covering key accounting treatments in non-going concern scenarios
- Transition guidance to assist entities moving from a going-concern basis to a liquidation basis of accounting
- Clarification of common judgement areas faced during insolvency proceedings
4. Compliance Checklist and Professional Utility
The report also provides a compliance checklist, enabling professionals to:
- Systematically verify adherence to applicable accounting requirements
- Ensure completeness and consistency in liquidation financial statements
- Reduce the risk of omissions or misapplication of principles
5. Relevance for Insolvency and Liquidation Professionals
The guidance serves as a valuable reference for:
- Insolvency Professionals and Liquidators
- Chartered Accountants involved in insolvency assignments
- Auditors, advisors, and other stakeholders engaged in non-going concern reporting
6. Key Takeaway
The ICAI Research Committee’s report strengthens the accounting framework for liquidation and insolvency scenarios by combining conceptual clarity with practical application. It enhances transparency, comparability, and reliability of financial reporting at a stage where stakeholder reliance on financial information is at its highest.
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