Industry gearing up for IFRS accounting standards?

Kolkata, Nov 28 : In line with the Global trend, the Institute of Chartered Accountants of India (ICAI), Saturday proposed a plan for convergence with International Financial Reporting Standards (IFRS) for certain defined entities (listed entities, banks and insurance entities and certain other large-sized entities) with effect from accounting period commencing on or after April 1, 2011

Large-sized entities are defined as entities with turnover in excess of Rs.1 billion or borrowing in excess of Rs.250 million. For other small and medium sized entities (SME), the ICAI has proposed the application of the proposed International Financial Reporting Standards for SMEs.

In this regard, Confederation of Indian Industry (CII), in collaboration with Ministry of Corporate Affairs, Government of India, National Foundation for Corporate Governance organized a Seminar on 'International Financial Reporting Standards: Are We Prepared?' in Kolkata.

Dolphy D' Souza, Partner, Ernst and Young attempted to clarify the developments that have been taking place in relation to the implementation of IFRS in India.

He emphasized on the necessity of a definite roadmap from the Ministry of Corporate Affairs on IFRS as according to him, the biggest issue of the hour is a definite form of a roadmap and basic information on how it will be implemented and on which companies it will be implemented.

He mentioned that the implementation of IFRS by 2011 will call for lots of amendments in the present Company's Act. According to him, some key changes which may take place in the present Company's Act are related to depreciation, changes in securities premium account, presentation of financial statements, business combinations and restructuring and consolidation of subsidiaries, associates and joint ventures.

Mohit Baijal, Nominated Representative on behalf of Ministry of Corporate Affairs , said a roadmap to the final implementation of IFRS will be in place very soon.

He also informed that the two Sub Groups of the Core Committee of the Ministry of Corporate Affairs, one of the regulators and another of the CFOs, are trying to identify the problem areas of convergence to this new system and more or less a phased out approach is under consideration.

Earlier, Dipankar Chatterjee, Past President, CII (Eastern Region) said that while convergence is desirable and would be facilitated by the fact that historically Indian Standards have been based on principles as against rules, given the nature of accounting and peculiarities of the Indian economic environment, implementation of convergence has its own set of challenges.