INDIA TO CONVERGE WITH IFRS BUT NOT TO ADOPT IT

‘India to converge with IFRS but not adopt it’


Indications are that the country would retain the right to remain sensitive to local conditions. .


Our Bureau

New Delhi, Aug. 2


India will go in for convergence with the International Financial Reporting Standards (IFRS) in an organised manner though it will not “adopt” this numero-uno accounting framework, a top Government official said here today.

Indications are that the country would retain the right to remain sensitive to local conditions. Currently, India does not follow IFRS, but its national GAAP (Generally Accepted Accounting Principles) is inspired by IFRS. More than 100 countries require or permit IFRS.
IFRS, which is principles-based, has now been required or permitted in more than 100 countries across the world. The application of IFRS requires increased use of fair value for measurement of assets and liabilities.

“The issue of full convergence with IFRS is closely followed by Ministry of Corporate Affairs (MCA). We are however distinguishing between full convergence and outright adoption. Yes we are doing it (converging) but we will not adopt. Because the moment you adopt IFRS, it is not question of adopting as it is today. It is a question of accepting any changes which would come. This is something that is not acceptable to us,” Mr Anurag Goel, Secretary, MCA, told at a seminar organised by PHD Chamber of Commerce and Industry (PHDCCI).‘Full convergence’
Mr Goel highlighted that “full convergence” was not a simple job and that there were hurdles and impediments in achieving it.

The MCA official said there was a need to ensure that the process of convergence took into account consistency with the legal and regulatory requirements. This complex task of convergence called for partnership among all stakeholders, Mr Goel noted.

While stressing the need to frame and revise laws in consultation with National Advisory Committee on Accounting Standards (NACAS), Mr Goel said company managements should be educated about the importance of impending transition.

In the light of the impending convergence with IFRS, Mr Goel urged various regulators – RBI, SEBI and IRDA – to develop their respective regulatory requirements for preparation and disclosure of financial statements of the entities regulated by them.