Mumbai: With less than a fortnight left for formal adoption of Indian Accounting Standards, over half of the companies aren't ready for the transition, says a PwC survey.
The audit and tax consulting firm believes that the level of preparedness for Ind AS adoption goes beyond financial reporting, requiring significant organisational changes.
"More than 50 per cent of the respondents are yet to plan or commence implementing changes at an organisational level.
"Also, 39 per cent of them are yet to start or plan for the impact assessment of Ind AS adoption," says a PwC quoting the findings from a February 2016 survey among 100 companies across industry sectors and size.
About 63 per cent of them are covered under mandatory phase I adoption of Ind AS.
Known as Ind AS, new accounting and reporting standards that are in line with global practices, will kick in from April 1 in a phased manner.
Nearly half (45 percent) believe management approach for identification of segments will have a major impact on disclosures.
Sumit Seth, a partner at Price Waterhouse & Co, the accounting arm of PwC India, advices companies to follow a step-by-step approach to Ind AS.
"Since the impact of Ind AS adoption cascades beyond accounting resulting in several organisational changes impacting direct and indirect taxes, contractual arrangements with customers, suppliers, lenders, and incentive policies including timely communication with various stakeholders, companies will have to follow a step-by-step approach to ensure a smooth transition," he said.
Three-fourths of the respondents expect they will have to report additional non-Gaap financial measures once they switch to Ind AS, says the survey, adding that even though the impact of adopting Ind AS will vary from company to company and from across the sectors, better planning will enable firms to address some implementation challenges in advance.
As per the survey, 45 per cent believe that management approach for identification of segments will have a significant impact on the disclosures made by them.
According to PwC, financial services, retail and consumer companies as well as pharma and life sciences will be the most impacted sectors once the transition takes place.