Ministry of Corporate Affairs
Convergence of Indian Accounting Standards with International Financial Reporting Standards – Achieving convergence in a phased manner with effect from 1st April, 2011
As a part of the G-20 commitment made in September, 2009, India which is a Member Country, inter-alia, agreed on redoubling the efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011.
2. India has consciously taken the policy decision of ‘convergence’ (and not ‘adoption’) of Indian Accounting Standards with IFRS which would allow it to consider local economic conditions and environment while preparing converged accounting standards, thus duly and adequately safeguarding the interests of Indian companies/enterprises. The convergence with IFRS would not only provide reliable and comparable financial information to investors globally but also lower compliance costs for Indian Companies since the need for restatement of accounts would be obviated.
3. The process of convergence of domestic Indian Accounting Standards with IFRS started in MCA with constitution of Core Group in July, 2009 under the Chairmanship of Secretary, MCA to prepare a roadmap for convergence with representatives from Regulatory Bodies (SEBI, RBI, IRDA, PFRDA, C&AG), Ministry of Finance (CBDT), ICAI, Chambers & Industry Bodies and experts. The Core Group is supported by two sub-groups (Sub-Group I, which is the Technical Group and Sub-Group II, which is the CFOs Group) headed by Shri Y. H. Malegam, Chairman, NACAS and Shri Mohandas Pai, Director, Infosys respectively. The Technical Group (Sub-Group-I) has representations from MCA, SEBI, RBI, ICAI and Experts from leading Audit Firms. The CFOs Group (Sub-Group-II) consists of CFOs of major companies/corporations/bodies from different sectors like ICICI, Birla Group, Wipro, Bharti, Tata Steel, Varun Shipping, Indian Banks Association, Jubiliant Organosis, SBI, ONGC, BHEL, LIC, Reliance Industries Ltd, TV18 India, Dr Reddy’s Laboratories etc.
4. The Core Group and Sub-Groups met on a number of times and after having detailed interactions with all stakeholders including industry chambers, CFOs of companies and other experts etc recommended that the convergence should be achieved in phased manner, as per roadmaps suggested by them, so that the international commitment made before G-20 is implemented with least inconvenience to corporates. Details about Roadmaps and clarifications issued thereto have been disseminated through Press Releases issued by the Ministry from time to time. These Press Releases are available on the Ministry’s website at www.mca.gov.in.
5. The converged accounting standards and revised Schedule VI and Schedule XIV have been finalized by National Advisory Committee on Accounting Standards (NACAS) and recommended to the Government for notification. These would be notified by the Ministry soon. Such standards and schedules were earlier placed by ICAI on its website for inviting public comments and these comments were duly examined by ICAI. NACAS has also considered suitably the stakeholders’ concerns while finalizing such standards/schedules.
6. The suggestion received from the stakeholders that ‘the notional gains arising out of convergence process, if any, should be disclosed under ‘Other Comprehensive Income’ in the revised format of Schedule VI’ has been taken up and discussed with the M/o Finance. This suggestion has been viewed favorably by M/o Finance.
7. As per the Roadmaps mentioned in para 4, the first phase of convergence is applicable for following companies:-
(i) Companies which are part of NSE – Nifty 50
(ii) companies which are part of BSE – Sensex 30
(iii) companies whose shares or other securities are listed on stock exchanges outside India
(iv) companies, whether listed or not, which have a net worth in excess of Rs.1,000 crores.
8. Continuing with the consultative approach being followed by the Government for achieving convergence, it has been decided to get the feedback from the companies which would be converged in the 1st phase, which are less than 300 in number, on the convergence roadmap and issues involved therein. Suggestions on issues related to convergence process, along with supporting justification may be addressed by 20th December 2010 to Shri E. Selvaraj, Director (I&I), Ministry of Corporate Affairs, 5 th Floor, A wing, Shastri Bhavan, New Delhi. The suggestions/comments may also be sent through email at [email protected] . The suggestions may be forwarded in the following format.
Name of the Company/Body/Person:-
Mobile Phone Number/e-mail address:-
Comments as under:-