New Delhi: Moving a step closer to its commitment of implementing International Financial Reporting standards (IFRS) by April 2011, the ministry of corporate affairs, or MCA, on Friday notified 35 accounting standards, also known as Ind-AS.
These are new accounting standards convergent with IFRS or very close to the corresponding IFRS standard.
“The ministry has notified 35 accounting standards which have covered most areas where Indian accounting standards were required to be in line with IFRS,” said D.K. Mittal, secretary, MCA. He, however, did not give a date by which the new norms will be implemented.
IFRS experts say this is a step forward. “The Ind-ASes notified are on expected lines with around 70-75% of convergence levels with IFRS. With time, these deviations will also get sorted out,” said Jamil Khatri, executive director and head of accounting advisory services at audit and consulting firm KPMG in India.
MCA had announced a three-phase convergence schedule last year. In the first phase, listed firms, including those on overseas exchanges, and those with a net worth of Rs 1,000 crore, are to adopt IFRS standards in April 2011.
The second phase will comprise companies with a net worth of Rs 500-1,000 crore, which will move to IFRS starting April 2013. Listed companies having a net worth of Rs 500 crore or less will converge in April 2014.
Since MCA has not given a schedule of implementation along with the notification, IFRS may become effective for annual reports of 2011-12, Khatri said. “But that’s also good news as it will give companies some cushion to prepare their P&L (profit and loss) accounts accordingly.”
“The extra time given to companies will also help resolve tax issues before the standards are implemented,” said Dolphy D’Souza, partner, Ernst and Young, India.
According to the original commitment, companies covered under the first phase had to adopt IFRS in the first quarter of 2011-12.
IFRS has been created by the International Accounting Standard Board (IASB), an independent, privately funded standards body based in London.
Aligning with IFRS norms will help Indian companies raise cheaper capital overseas, besides making foreign listings and setting up subsidiaries and joint ventures abroad less cumbersome.