KPMG in India is pleased to present Voices on Reporting – a monthly series of knowledge sharing calls to discuss current and emerging issues relating to financial reporting.
In this month’s call, we covered three topics:
(1) Roadmap for IFRS convergence in India
(2) Exposure draft on Ind AS 101, First-time Adoption of Indian Accounting Standards
(3) An overview on the Ind AS convergence process.
The Institute of Chartered Accountants of India (ICAI) had proposed a new roadmap for implementation of Ind AS on 9 April 2014. According to the roadmap, there would be two sets of accounting standards:
- Ind AS
- Existing notified accounting standards (AS).
The ICAI roadmap proposed that the Ind AS would be applied by specified class of companies for preparing consolidated financial statements for financial periods beginning on or after 1 April 2016, along with comparatives for the year ending 31 March 2016. The proposed roadmap was submitted to the Ministry of Corporate Affairs (MCA).
On 10 July 2014, the Finance Minister, presented the Union Budget. In his budget speech, the Finance Minister recognised the need to converge existing notified accounting standards under Indian GAAP with the International Financial Reporting Standards (IFRS). Accordingly, Ind AS are proposed to be made mandatory for Indian companies from the financial year 2016-17. Additionally, the companies can opt to adopt Ind AS voluntarily from financial year 2015-16.
The date of implementation of Ind AS for banks and insurance companies will be notified separately by the respective regulators.
Recently, the Accounting Standards Board (ASB) of the ICAI has issued an exposure draft on Indian Accounting Standard (Ind AS) 101, First-time Adoption of Indian Accounting Standards (ED). The ED would replace Ind AS 101, First-time Adoption of Indian Accounting Standards published by the MCA in February 2011.
The ED contains the transitional requirements applicable to an entity on its first application of Ind AS. An entity adopting Ind AS would not apply the transitional requirements of individual standards or interpretations unless specifically required or permitted to do so under Ind AS 101. The ED provides a suitable starting point for accounting in accordance with Ind AS and sets out the procedures that an entity would follow when it adopts Ind AS for the first time as the basis for preparing its financial statements.
The ED prescribes mandatory exceptions and optional exemptions for first time adopters of Ind AS thereby facilitating a smooth transition to Ind AS. In the absence of these exceptions/exemptions, all the standards forming part of Ind AS would have been required to be applied with retrospective effect thereby posing significant challenges (such as availability of necessary information, impracticability of application of some of these requirements with retrospective effect, etc.) in the process of transition to Ind AS.
In our call, we discussed the key requirements of the ED.
Additionally, an overview on the Ind AS convergence process was also provided. We believe that Ind AS convergence process is more than just an accounting exercise and has far reaching impact on areas other than financial reporting as well.
Click here to access the call recording and presentation.
Our next Voices on Reporting conference call will be held on Thursday, 8 January 2015 between 04:00 – 05:00 PM.