India Inc has its way,IFRS put off

Ministry notifies 35 standards to update Indian accounting norms in line with IFRS.

The government today postponed the convergence of Indian accounting standards with the international standards,thanks to the relentless lobbying by corporates,and unresolved taxation issues.

The government wanted to converge with the International Financial Reporting Standards (IFRS) from April 1,2011 in a phased manner. However,corporates had been lobbying hard to defer the implementation,arguing that they were not prepared for such a convergence right now.

In fact,industry body Ficci had written a letter to the ministry of corporate affairs (MCA) advocating that IFRS implementation should be postponed as the industry needed more time to prepare.

Story continues below this ad

Also,it argued,that even countries like the US and Japan had not adopted the international standards as they were still studying the ramifications of the move.

It would be ensured that the implementation of the converged standards in a phased manner is smooth for the stakeholders. The date of implementation of the IFRS will be notified by the ministry at a later date, the finance ministry said in a statement.

The ministry today notified 35 accounting standards with a view to update Indian accounting norms in line with IFRS.

With todays move,companies would now get more time to adjust to the new accounting standards,which deal with preparation of accounts,valuation of financial assets,recognition of income and expenditure,among others.

Story continues below this ad

The IFRS implementation are initially expected to cause some upheaval in companies finances as the standards call for projecting assets on mark-to-market basis or the real value. Various sectors,including banking and real estate would be hit majorly in the initial years of implementation,according to experts.

However,all Indian companies listed overseas or doing business on foreign land currently prepare financial statements as per the international standards.

The ministry in a statement said that the decision for deferring the implementation has been taken because several issues,including tax related are yet to be resolved by concerned departments.

The new date for implementation will be decided after the Union Budget 2011-12 is announced on February 28.

Story continues below this ad

As per the road map laid out by the MCA earlier,companies will have to prepare their accounts as per the new norm in a phased manner,beginning with companies that have a networth of over Rs 1,000 crore from April 1,2011.

While scheduled commercial banks and urban cooperative banks will adopt IFRS from April 1,2013,all insurance companies will convert their opening balance sheets with IFRS from April,2012. Large,listed non-banking finance companies (NBFCs),will converge their opening books of accounts with IFRS norms from April 1,2013.

Convergence with the global norms are a part of Indias commitment on the G-20 forum were India agreed to have a consistent and uniform financial reporting system for good corporate governance.