New Delhi: Global accounting firms have welcomed the Government decision to upgrade the Indian accounting norms to international practice IFRS from April 2011, saying a phased implementation would help India Inc graduate to the new norms without much difficulties.
Welcoming the decision to implement the IFRS in a phased manner, KPMG India accounting services head Jamil Khatri said, "companies will have sufficient time to converge with the new accounting norms. From phase one, lessons would be drawn."
"A year and a quarter is good enough time (for adopting the IFRS). It is high time that the industry gears up for its adoption," said Ernst & Young national leader-IFRS services
The Government had on Friday announced that all large companies with over Rs 1,000 crore networth will have to comply with the IFRS by April 1, 2011.
Though it is clear that the standards would be implemented in three phases--2011, 2013, 2014—PricewaterhouseCoopers India (PwC) associate director Rahul Chattopadhaya said more clarity is needed for preparing company results as per the new norms.
More than 100 countries have adopted the IFRS norms so far. The new norms are expected to increase acceptability of domestic companies in the international financial markets.
For updating the Indian accounting norms to the IFRS levels, changes would have to made in the Companies Act, the Banking Regulation Act, Sebi Regulations/Guidelines and the Listing Agreement, Irda Regulations and also in direct and indirect taxes.
"We (industry) have to wait for the amendments in the Companies Act for clarity. It would be preferable if we stay closer to the IFRS norms given out by the Indian Accounting Standard Board (IASB) so as to help companies adopt new standards without much difficulty," Chattopadhaya pointed out.
According to the schedule announced, companies which are part of the Sensex or Nifty, or those listed on foreign stock exchanges, or with a networth of over Rs 1,000 crore will have to adopt the IFRS by April 1, 2011.
Companies having a networth of Rs 500-1,000 crore would have to adopt this from April 1, 2013, while listed firms with a networth of under Rs 500 crore would follow this system from 2014, the statement said.
Small & medium and unlisted firms, however, have been exempted from switching over to the international norms.
"It is a good decision on the part of the Government to let large companies converge first, because they have the wherewithal to bear the compliance cost… the two-year gap is good enough," KPMG's Khatri said.
Convergence of all the accounting standards would be completed by accounting regulator ICAI by the end of March 2010, and National Advisory Committee on Accounting Standard would submit its recommendations to the Ministry by April 30.
First Published: Sunday, January 24, 2010, 15:09