The Firm

Show Timings:

Friday: 10.30 pm, Saturday: 11.30 am

Sunday: 9:30am & 11.00pm


Readiness For IFRS

Published on Tue, Jul 15,2014 | 21:13, Updated at Thu, Jul 17 at 19:52Source : 

By: Pankaj Chadha, Partner In A Member Firm Of Ernst & Young Global

Finance minister's budget speech on 10 July 2014 mandated financial reporting using Ind AS ( IFRS equivalent accounting standards) for FY 16-17, permitting also voluntary application from FY 15-16. From the perspective of investors, market regulators and profession regulators this is significant step, an enabler to make Indian corporates truly competitive with their global peers and at the same time enhancing confidence of international investors into Indian businesses.

To provide necessary impetus for successful implementation, few imperatives require careful consideration.

For Profession Regulators- ICAI had made significant efforts in proposing 35 Ind ASs to NACAS that were notified with implementation date notification pending. These standards would require re-evaluation to align these with the current IFRS, reconsideration of carve outs earlier made by assessing relevance of these in current global economic environment, planning for later adoption strategy from the current convergence strategy, training/retraining its members and modifying its curriculum for the students pursuing the course. A careful re-evaluation of continuing professional education ( CPE) program would be required to ensure professionals get knowledge of relevance for effective application.   

For Market Regulators- SEBI has been a strong supporter of IFRS adoption and rightly so for the interest of investors. To ensure that investors and other users of general purpose financial statements understand Ind AS reporting, SEBI shall plan programs to educate domestic investors and other users who have hitherto been exposed to financial reporting under current Indian GAAP having some very significant differences from IFRS. International investors would also need to gain confidence on Ind AS considering it has differences from current IFRS and carve outs thereof.

For Accounting & Auditing Professionals- Whereas many of the accounting & audit professionals have gained experience of IFRS, lot more would be required particularly for such professionals that have limited or no reporting experience either locally or internationally. Illustrations based training/re-training is the need for corporates to invest in. Also, considering the impact Ind AS application would have on business and other processes, investment in tools and enablers is not unwarranted. First time effort for conversion would require careful planning to ensure efficiency and accuracy of transition, which might be compelling in absence thereof.

Finance Minister's speech also alluded on separate consideration by the financial sector ( banks, insurance companies etc) for transition as well as clarifying that tax standards for computation of income would be announced separately. This suggests that Ind AS would be applicable to all classes of companies, both at entity level and at consolidation level, other than those in financial sector. A clear roadmap and detailed guidance on application of Ind AS and announcement of tax accounting standards ( exposed for public comment in 2013-14 by CBDT) would ease the implementation plans of Ind AS for corporates.


Copyright © Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of is prohibited.