Momentum for a global GAAP
International Financial Reporting Standards (IFRS) is gaining momentum throughout the world as a single, consistent accounting framework and is positioned to become the predominent GAAP in the near future. More than 100 countries have moved to, or base their local standards on IFRS. In 2005, UK, the rest of Europe and Australia moved to IFRS. In 2007, China moved to IFRS.
Brazil is expected to move in 2010, and Canada in 2011. In the US, the SEC has laid down the roadmap for conversion to IFRS starting 2014, 2015 or 2016, depending on the size of the issuer.
Indian Accounting Standards have not kept pace with changes in IFRS. There are significant differences between IFRS and I-GAAP, because Indian standards remain sensitive to local conditions, including the legal and economic environment.
Recognizing the significance of having full convergence with IFRS, the ICAI has decided to adopt a ‘big bang’ approach and fully converge with IFRS issued by IASB, from accounting periods commencing on or after 1 April 2011 subject to regulatory approvals. The Ministry of Corporate Affairs has also announced its commitment to convergence to IFRS by 2011.
IFRS in India would cover the following public interest entities in its first wave.
- Listed companies
- Banks, insurance companies, mutual funds, and financial institutions
- Turnover in preceding year > INR 1 billion
- Borrowing in preceding year > INR 250 million
- Holding or subsidiary of the above
Benefits to Clients
Beyond the legal requirement to comply, corporates in India perceive that converting to IFRS would help in enhancing their reputation and relationships with the financial community. Other benefits include,
- Increased consistency between internal and external reporting
- Comparability with international competitors
- Increased access to international markets
- Improvement in risk rating
- Group-wide harmonization
- Improvement in planning and forecasting
- Support for management
Services
Ernst & Young India provides the following IFRS related services
- Audit of IFRS Financial Statements
- IFRS Diagnostics
- Full Conversion
- IFRS Review
Team
EY India has a large, well-trained IFRS team led by Dolphy D'souza Partner, and IFRS Leader who is considered an authority on Indian as well as International reporting standards
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