INDIA looks likely to miss its self-imposed deadline of April 1 to implement international financial reporting standards (IFRS), with government officials admitting at an open forum in New Delhi that the timetable could be too tight.
Just six weeks ahead of the deadline, the Indian parliament has yet to amend the Companies Act or authorise secondary legislation authorising IFRS. At a meeting held on Thursday (Feb 17), officials remained officially non-committal about the deadline, but attending accounting experts were agreed it is too late to follow the original IFRS schedule.
“It would be unfair on the part of the government to tell the companies in March that this is applicable from 1st April”, said Harinderjit Singh, a partner at Price Waterhouse India, (part of the international PricewaterhouseCoopers (PWC) network).
After attending the meeting he told Accountancy Age that, “there was a broad consensus on the direction that we are moving in but the [problematic] issue is the timing of bringing the necessary changes”.
The situation may have worsened due to the recent shake-up of leadership at the responsible ministry of corporate affairs. The cabinet minister (Congress’ Murli Deora), his deputy minister, the permanent secretary and assistant are all newly appointed, with Deora being appointed on January 20.
Indian industry too sees no alternative. Subodh Bhargava, a former President of Confederation of Indian Industries, who also attended the session, said: “The new team in the ministry has a sensible and emphatic understanding of various dimensions involved in IFRS adoption and it recognises some of the pitfalls in rushing into it”.
The India crisis comes as the world waits to hear if the US will push ahead with endorsing international standards this. The US and the international standard setter (IASB) have been working a convergence project between between the two sets of standards fro some years. The US has set itself deadline of 2011.
Developments in India have however left many disappointed. Subash Chandra Vasudeva, former chairman of the Accounting Standards Board of the Institute of Chartered Accountants of India (ICAI) had worked for years on making the convergence happen. “It was done at break-neck speed and every month there used to be three to four meetings on the issue”, he said, “all of us are saddened”.
On the other hand some companies might also be feeling relieved. According to a report titled ‘Socio-Economic Impacts of IFRS on Wider Stakeholders in India’, written by the Saïd Business School, the University of Oxford, and submitted to the ICAI earlier this month, the majority of 371 interested parties interviewed, consider the introduction of IFRS costly without corresponding benefits.
A delay could be prolonged. As most Indian companies follow April to March financial years the next date for adoption of the new standards might be April 1, 2012.
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