International Financial Reporting Standards - IFRS
IFRS reporting comes to India in 2011. Are you ready? We are...
With less than -309 days to go before large companies start preparing their first financial statements under accounting standards that are converged with International Financial Reporting Standards (IFRS), Grant Thornton is committed to keeping you informed and helping you get ready for this change.
IFRSs are increasingly being viewed as the single set of accounting standards for global capital market participants. Today over one hundred countries have already transitioned to IFRS. It is still too early to tell whether non-profits, private companies and governmental entities will eventually adopt IFRS. However, it is clear that IFRS will play an increasing role in the global business community.
At Grant Thornton, we track the developments of IFRS globally and how India gears up for its transition. It is our endeavour to provide you insights on emerging trends, concerns on transition to IFRS and its implementation.
IFRS reporting in India - Proposed Timelines
The Ministry of Corporate Affairs (MCA) issued a press release on January 22, 2010 on the much awaited roadmap on India’s convergence to IFRS. As per this roadmap, there will be two separate sets of Accounting Standards under Section 211(3C) of the Companies Act, 1956. The first set would comprise Indian Accounting Standards which are converged with the IFRSs (‘Converged Standards’) and will be applicable to the specified class of companies. The second set would comprise existing Indian Accounting Standards and will be applicable to other companies, including Small and Medium Companies (SMCs). The Converged Standards would apply in a Phased manner as indicated below:
| Phase | Companies covered | Opening balance sheet | First financial statements |
|---|---|---|---|
| Phase I |
|
1 April; 2011 | 31 March 2012 |
| Phase II | Listed & Unlisted Companies with networth in excess of Rs 500 Crores but not exceeding Rs. 1000 Crores. | 1 April; 2013 | 31 March 2014 |
| Phase III | Listed entities with networth of Rs 500 Crores or less | 1 April; 2014 | 31 March 2015 |
| Unlisted Companies with net worth lesser than Rs 500 Crores and Small and Medium sized Companies are exempt | |||
Prepare for change
Convergence with IFRS has strategic implications and will require harmonization of internal and external reporting. Business plans, earnings estimates and management remuneration plans that have reported earnings as the basis will require revisiting as these are expected to undergo change due to the impact of IFRS convergence. Managing investor and market expectations will also be of paramount importance for the management and would form a critical component of the convergence process.
The key to successfully managing this change is by preparing for it. It is important that companies plan the transition process and anticipate issues that your business will face on using the IFRS converged standards.
Grant Thornton member firms both in India and other parts of the world have significant experience of having worked with companies implementing IFRS. We understand the key challenges faced by companies and help overcoming them. Grant Thornton has also published The Road to IFRS in India, which discusses key issues in implementing IFRS 1, the standard on first time adoption of IFRS.
Our IFRS team in India has significant experience from a large number of IFRS engagements executed over the past years. Our team has prepared the groundwork and is ready to help assess your needs and manage the adoption process. Contact us to assist you in your journey towards adoption of IFRS.
Watch this page for the road ahead towards the adoption of IFRS in India.