New Delhi: India’s apex accounting standards body is convinced that 80 hours is all it will take for the country’s accountants to learn the nuances of an international standard that could soon become the way the world writes its books.
In September, the Institute of Chartered Accountants of India (ICAI) will launch a course targeted at chartered accountants, or CAs, that will allow them to follow the International Financial Reporting Standards, or IFRS. ICAI has decided that Indian Accounting Standards (IAS), currently followed by companies here, will converge with IFRS by April 2011.
ON COURSE (PDF)
The course will help CAs enable companies to start maintaining their books according to IFRS.
“The course structure and testing modules are ready for an 80-hour certificate course. CAs will get the flexibility of attending training classes over the weekends and completing the course over three-four months’ time so that their work is not affected,” said Ved Jain, president, ICAI.
While the mandatory convergence will happen by 2011, this will happen only at ICAI’s level; the government and regulatory bodies overseeing the financial sector here are yet to commit to IFRS either through legislation or guidelines to companies. Several Indian companies, however, are expected to adopt these standards because of their universal acceptance. Some Indian companies already present their accounts according to US Generally Accepted Accounting Practice or, US GAAP, standards because they are listed on American exchanges.
At the last count, around 105 countries had converged with IFRS. Experts say this number will exceed 150 by 2011 and that IFRS will replace the standards of individual countries such as IAS, US-GAAP or Australian-GAAP.
IFRS has been created by the International Accounting Standard Board, or IASB, an independent, privately funded accounting standards body based in London.
India’s first taste of IFRS will come in 2009 when companies can move to this voluntarily, said Jain, and ICAI’s course will help the early adapters among CAs. He added that this would also improve the global employment prospects of Indian CAs.
Those Indian CAs seeking to practice in other countries, however, will still need to be certified by the local accounting body.
Indian Accounting Standards differ from IFRS in six-seven significant ways, especially in areas related to mergers and acquisitions, financial instruments such as derivatives, environmental issues such as carbon credits, and rules related to depreciation and foreign exchange transactions. IFRS also includes standards on biological assets that IAS doesn’t factor in.
According to Dolphy D’Souza, partner at audit and consulting firm, Ernst and Young India Pvt. Ltd, the 80-hour course is a good starting point.
“There are over 10,000 Indian companies, including banks and financial institutions, which will adopt IFRS by 2011. In fact, I feel students undergoing chartered accountancy courses now and in future should also have a specialized paper in IFRS as that is going to be the future accounting norms.”
Ernst and Young India is an early adapter in understanding the nuances of IFRS, D’Souza claimed, and it sent employees to train in the European Union when it adopted IFRS in 2005. “We are looking at an opportunity to help train manpower in various companies for adopting IFRS.”
D’Souza said ICAI needs to go beyond just introducing a course for CAs and should lobby with the ministry of corporate affairs, of which ICAI is a part, to bring about the necessary amendment in the Companies Act, 1956, to make IFRS mandatory, besides lobbying with the income-tax department, central banker Reserve Bank of India, insurance regulator Insurance Development Regulatory Authority, and stock market regulator Securities and Exchange Board of India to bring about changes in their regulations which will allow smooth adoption of IFRS.
“I feel ICAI is going a bit slow on these fronts,” said D’Souza.
Jain said ICAI is serious and doing everything to enable convergence of Indian Standards with IFRS.