[aaykarbhavan] Source Business standard

​ The  Government's  announcement   moving  towards implementation  of  IFRS in  a phased  manner..  Voluntary adoption  of  these standards  from  2015-16  and    thereafter  mandatory adoption.  In  this  connection, MCA should  announce  road map   immediately.   Kindly go  through  the  analysis by SAI VENKATESHWARAN Partner and Head Accounting Advisory Services, KPMG in India    

 

 

MCA must be wary of pitfalls

The government's announcement to adopt new Indian Accounting Standards ( Ind- AS) converged with International Financial Reporting Standards (IFRS) is very welcome. With voluntary adoption slated for 2015- 16, and mandatory adoption the year after, there isn't much time before these standards become applicable and there is a lot of ground to be covered to get there. The timelines for the financial services sector, including banks and insurance companies, will be finalised later. As the ministry of corporate affairs ( MCA) and India Inc prepare for this, they should learn from pitfalls encountered in the implementation effort in 2011 — lack of transition time, lack of clarity on tax, too many carve- outs, etc. There are three aspects that need to be addressed urgently. Implementation road map The MCA should announce the road map immediately, and should implement these standards in a phased manner for listed and other public interest entities, giving companies adequate time for a smooth transition. The time and effort that companies require for transition will vary, depending on the complexity of their business model, group structure, inorganic growth history, financing arrangements. Further, changes may be required in the reporting systems and process, management information system, business and financing arrangements, etc. Update standards and minimise carve- outs MCA should also issue the updated Ind- AS standards at the earliest, as the drafts published in 2011 are outdated as the corresponding IFRSs, including on key areas such as revenue recognition, consolidation, financial instruments, etc, have undergone a significant change. The MCA should also minimise the carve- outs from IFRS to ensure global acceptability of Ind- AS; else the very purpose for this convergence with IFRS would be defeated. Another challenge that the MCA should evaluate closely is the timing of introduction of Ind- AS; while India looks at 2015- 16 for transition, several new IFRS standards are becoming applicable only in 2017 — eg, revenue recognition, financial instruments, etc. So the MCA should consider an early adoption of these IFRS standards rather than having a major revision in a couple of years. Notify tax accounting standards The Central Board of Direct Taxes should notify tax accounting standards at the earliest, as that would delink the calculation of taxable income from accounting income, as both are prepared using different frameworks. Taxation was the most significant concern leading to the pushback to adoption in 2011, as Ind- AS brought in use of fair values without clarity on how it impacts taxable income. In all of the above, time is of essence, and the MCA should act fast. SAI VENKATESHWARAN Partner and Head Accounting Advisory Services, KPMG in India INDIAN ACCOUNTING STANDARDS

​

A.Rengarajan

Company  Secretary

Chennai

93810  11200

​LET  US  SUPPORT  COMPANY  SECRETARY BENEVOLENT  FUND FOR  COMMON  CAUSE.​

__._,_.___

---

Posted by: CS A Rengarajan <csarengarajan@gmail.com>

---

receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.

To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.com

Visit Your Group

• Privacy • Unsubscribe • Terms of Use