IFRS Convergence With Indian Accounting Standards

A Conceptual View of Convergence of Accounting Standards with IFRS

1. A Conceptual Paper IFRS Convergence With Indian Accounting Standards Nithin Venugopal Research Scholar P.G & Research Dept. Of Commerce St.Thomas College Kozhencherry

2. A set of international accounting standards stating how a particular type of transaction and other events should be reported in financial statements. These are issued by International Accounting Standards Board (IASB) What exactly is IFRS?

3. IFRS is often confused with International Accounting Standards (IAS) which are older standards that have been replaced by IFRS. IAS were issued from 1973 till 2000. IFRS v/s. IAS

4. A single set of accounting standards would enable internationally to standardize training & assure better quality on a global screen. It would be beneficial to regulators as the complexity associated with needing to understand various reporting regimes would be reduced. Why Convergence to IFRS?

5. To Investors To Industries To Accounting Professionals Improves inter unit/inter firm comparisons easy Acceptance of financial statements globally Benefits of Convergence.

6. Convergence of Ind. AS with IFRS will not be difficult because we are following good standards of accounting. Every corporate has to take necessary step in understanding the new standards, training the staff to equip with the new ones The cost involved in convergence largely depends on the size & nature of the company Transition & Cost of Convergence

7. PHASE DATE COVERAGE Phase I Opening B/S as at 1 st April , 2011 Companies which are part of NSE Index – Nifty 50 Companies which are part of BSE Sensex – BSE 30 Companies whose shares or other securities are listed on a stock exchange outside India. Companies, whether listed or not, having net worth of more than Rs.1000 Crores. Phase II Opening B/S as at 1 st April , 2013 * Companies not covered in Phase I and having net worth exceeding Rs.500 Crores . Phase III Opening B/S as at 1 st April , 2014 * Listed Companies not covered in earlier phases * If the financial year of a company commences at a date other than 1 st April, it shall prepare its opening balance sheet at the commencement of the immediately following financial year.

8. Due to the introduction of new Companies Act, 2013 the roadmap for convergence above has been trashed and the MCA is likely to notify all the sections of new Act within 1 month period for facilitating the convergence. As per the new roadmap India will adopt IFRS from FY15 onwards in phased manner where Cos with t/o of 1000crs & above to adopt IFRS from April 2015 and those Cos with t/o between 500cr & 1000cr by April 2016. Phases of Convergence

9. And the introduction of new Act will bring forth a new entity called NFRA (National Financial Reporting Authority) set up u/s 132 of Companies Act, 2013 replacing NACAS (National Advisory Committee for Accounting Standards) established u/s 210A of Companies Act, 1956. NFRA will be the competent authority henceforth for pronouncing and amending AS. Phases of Convergence (... contd )

10. Challenges ahead for Convergence Any change brought to existing system will have to go through new challenges and convergence with IFRS is no exception Training of accounting professionals to adapt to new changes Changes to be made in accounting software & IT Systems Issue related to different legal & regulatory requirement.