The International Accounting Standards Board (IASB) is hopeful that India would in the next five-six years achieve “full convergence” with International Financial Reporting Standards (IFRS).
IFRS, a set of globally accepted standards issued by IASB, are designed as a common global language for business affairs so that company accounts are comparable across international boundaries.
Appreciating the leadership shown by NACAS and the CA Institute in bringing India forward in accounting, Hans Hoogervorst, Chairman, IASB, said that adoption of Ind-AS ( Indian Accounting Standards) — if not fully IFRS — is a huge step forward and has been done in a transparent way.
“There is lot of progress (towards full convergence). There are also lot of issues, but they are transparent. The glass is much more than half full”, Hoogervorst said at an ICAI- IFRS Foundation Trustees joint stakeholders’ meet in the Capital.
Only seven carve-outs
Hoogervorst also said that another reason for optimism that India would fully converge in coming years is that there are only seven carve-outs, basically deviations between Indian accounting standards and IFRS.
From April 1 this year, India has implemented a new framework of accounting standards (Ind-AS) that seeks to converge with IFRS and not fully adopt them. For banks, Ind-AS implementation will begin from April 1, 2018.
Leasing, revenue recognition, foreign currency convertible bonds, current vs non current liabilities, bargain purchases are among the areas where India has deviated from IFRS.
“It’s crystal clear to us where there are differences between IFRS and Ind AS.That is helpful as we can talk to each other about it and see how we can iron them out in the future”, Hoogervorst said.
Amarjit Chopra, Chairman of National Advisory Committee on Accounting Standards ( NACAS), highlighted that India has been setting accounting standards since 1978 and that carve outs undertaken for convergence with IFRS were discussed and very well explained.
“Over the years, we know that those carve outs will have to be taken care of. We may have to get into a situation where there will be no carve outs. That will be welcome in next five years, who knows… we may be in a situation to say that we have virtually adopted IFRS. For that we have to get the help of regulators”, Chopra said.
Chopra, who as CA Institute President in 2010-11, played a key role in development of Ind-AS, said that industry has now wholeheartedly accepted Ind-AS implementation (from April 1, 2016) and that’s remarkable development.
“In the next one year, we should be able to further upgrade the standards,” he added.
Chopra said that RBI was not going to retract from the earlier announced April 1, 2018 date for implementation of Ind-AS among banks.