India will stick to its earlier announced deadline for convergence with the International Financial Reporting Standards (IFRS) by April 2011, a top Government official has said. “Let me make it very clear that India is a signatory to accept IFRS.By accept, I mean convergence to IFRS by April 2011 and not adoption. We stand by that. There is no reason to change that date or extend the time,” Mr R. Bandyopadhyay, Secretary, Ministry of Corporate Affairs, said at ‘IFRS Summit 2009? organised by the Confederation of Indian Industry (CII) here recently.
While pointing out that standard setting was an evolutionary process even at the level of International Accounting Standards Board (IASB), Mr Bandyopadhyay said that India will converge with those accounting standards as it prevails at the time of transition. “If certain things are changing at IASB, it does not mean we will immediately jump into this. We are converging and do that on our own suitability,” he said. The entire exercise of convergence would have to be in the interest of the country and also that of the growth of the corporate sector, the MCA official said.
As regards the companies that should do the convergence first, he said that listed companies should go ahead with early adoption of IFRS if they feel that this would help their business and give them more credibility in the foreign markets. “SEBI is asking for early convergence. The listed companies can come forward in the first instance. Then other bigger companies should follow. ICAI and NACAS are looking into this. The Government is waiting for their final reports. We will take a view after final reports come to us,” Mr Bandyopadhyay said. He also asked industry to submit views on the kind of legislative changes that need to be undertaken for smooth transition to IFRS. India Inc has also been asked to submit views on whether the IASB developed document of “IFRS for SMEs” should be entirely accepted by India.
Mr Jamil Khatri, Executive Director, KPMG, highlighted the absence of clarity between IFRS and taxation aspect in the Indian context. There is need to consider the taxation impact of one time IFRS adjustments in the opening balance sheet, he said. “For example, mark to market provision on derivatives. Whatever accounting changes are going to happen, which of these changes should flow through from tax deductibility perspective and which are the changes that require any special provision in direct taxes code as a disallowable or non- taxable item until realisation. This question has not been addressed,” Mr Khatri said.