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Indian Trade Body Urges IFRS Deferral

by Mary Swire,, Hong Kong

31 December 2010

The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to defer the date of implementation of compliance with International Financial Reporting Standards (IFRS) from April 1, 2011 to a date when companies are better equipped to deal with the envisaged new accounting concepts and standards.

In a representation to the Ministry of Corporate Affairs the FICCI described the current deadline as “highly unworkable and unfair”, and pointed out that at the current juncture, global standards themselves are up for revision.

In view of this and the lack of clarity on several issues the FICCI has questioned the practicality for Indian companies to incur substantial IT and manpower training costs to make the change before April. A more rational approach, the chamber says, would be to adopt the final standards as and when announced.

The FICCI says that the Converged Accounting Standards be made available in the public domain not later than June 2011 and that businesses be provided with at least one year’s preparatory time from the date when the harmonized, notified and legislated converged Accounting Standards and other related matters (such as tax changes, the new Companies Bill, financial disclosure requirements, etc) are in place. Without this it says that not only will India be unable to make a smooth or intended transition to a new accounting system, but that such an introduction at this stage would be counterproductive.

The FICCI stressed: “The rationale for immediate implementation of IFRS is that investors in developed economies should understand the financial statements of Indian companies. In actual fact, the largest investors, ie US and Japan are not on IFRS and will adopt IFRS only after 2015. Thus, it is unfair to expect investors in US and Japan to understand IFRS when their own countries have deferred the implementation of IFRS so that their companies and investors do not face undue hardship”.

TAGS: tax | business | India | accounting | international financial reporting standards (IFRS) | financial reporting | standards

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