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IndAS: How Prepared Is India Inc?

Published on Thu, Jan 08,2015 | 13:51, Updated at Thu, Jan 08 at 13:51Source : Moneycontrol.com 

As the MCA rang in the New Year by announcing the roadmap for implementation of Indian Accounting Standards (Ind AS) in a phased manner starting with 1 April 2016, Grant Thornton conducted a survey on the readiness of India Inc. for the adoption of the new accounting norms converged with International Financial Reporting Standards (IFRS). The survey finds that only 22% of the respondents have an operational plan for transition to Ind AS from current accounting standards. Furthermore, even lesser number of respondents (13%) have initiated the impact assessment process.

The survey shows that while a whopping 65% of the respondents strongly believe Ind AS will open up avenues for accessing capital in international markets, a majority of them do not consider voluntary adoption a feasible option with only 36% of the respondents expressing their intent to do so.

When asked about the challenges in the implementation of Ind AS, most of the respondents (61%) believe that the process of transition to Ind AS shall be completed within a year’s time. However, 84% of the respondents also think that the cost of transition is sizeable. Ironically, not many have factored in such costs in their budgets (86%). Further, a majority of the respondents (52%) consider lack of knowledge of their financial reporting staff as a significant bottleneck in implementation of the new accounting standards.

On the IT front, which plays a big role in today’s accounting environment, a reasonable proportion (44%) of people are aware of the changes required to IT systems, while even fewer (33%) have IT systems capable of dual reporting.

On a broader note, the responses demonstrate a clear absence of active planning on part of most of the corporates in preparing for this change.

The survey reveals that 55% of the respondents have just got a basic level of understanding of Ind AS and a vast majority (68%) will either loop in external experts to meet the desired objectives or have not yet evaluated on in-house expertise vs. external support.

As per our survey, a majority of the organisations are likely to be impacted by certain key accounting changes brought in by Ind AS from the erstwhile Indian GAAP. As evidenced by the responses, corporates feel that fair valuation related accounting impact will consume substantial time of financial reporting teams.

Attached is the Grant Thornton survey on India Inc’s IndAS preparedness.

Attachments : IND-AS survey - 8-1-15.pdf
 
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