Chennai - As Indian Industry is set to converge from the Indian Accounting Standards to International Financial Reporting Standards (IFRS) from April 2011, industry captains were optimistic that the convergence would help Indian corporates to compete globally at the Summit on IFRS organized by Confederation of Indian Industry (CII) here today.

Mr T N Manoharan, Chairman, CII National Committee on Accounting Standards and Past President, ICAI, in his address said that indian industry would adapt IFRS with considerabale changes, based on Indian conditions. Convergence to IFRS would provide opportunity to industries to raise funds outside India, attract foreign investment and also help in maintaining the transparency levels, he said.

Indian companies need to have a level playing along with international companies since Ind-AS, the Indian IFRS equivalent, does not allow multiple approaches of financial reporting, which is possible in IFRS, said Mr Dolphy D’Souza, IFRS Leader – India, Ernst & Young Pvt Ltd.

Mr D’Souza said that there were two chief distinctions between Ind-AS and IFRS. Companies adopting IFRS approach had three choices of reporting gains and losses as per IS-19 Standard viz., recognizing gains and losses fully in the Profit & Loss Account, recognizing gains and losses in the reserve account and the corridor approach, where gains and losses are not recognized up to a certain corridor level, but recognized beyond the limit.

The Ind-AS however adopted only one approach, of recognizing actual gains and losses fully, eliminating the benefits of multiple choices approach, he said.

There were two key issues for corporate houses that were adopting IFRS standards¸ he said. One was the issue where corporate entities wanted to represent Forex gains and losses in long term accounts deferred over a period of time, since forex rates have been volatile resulting in spikes in P&L account.

The other related to real estate accounts, where companies wanted to report based on the percentage of completion method prevalent in India now, as against completed contract method as mandated by IFRS, he further said.

Mr V Sankar, CFO, Hinduja Foundries Ltd, speaking on the industry experience in adopting IFRS said that early and steady approach to adopting IFRS was important since the effort required for transition from Indian GAAP to IFRS was often underestimated. “A late start often results in escalation of costs. Several companies are now only starting to explore benefits of IFRS implementation,” he said.

Mr K Sridharan, Chairman, Task Force on GST & DTC, CII Southern Region & CFO, Ashok Leyland Ltd and Mr S Chandramohan, Convenor, Economic Affairs & Taxation Panel, CII Tamil Nadu & CFO,Tractors & Farm Equipment Ltd participated at a panel discussion highlighting industry perspectives in adapting to IFRS.

Source:http://www.cii.in/PressreleasesDetail.aspx?enc=12/otMk+PalYZ0UWlpZeuVhyRewybeH1VR2y0ThZnV5c12sFnZmut8nmMBNFie9Aeh885L1OE1/7pC06I3h1SEZO5hTWsReIRnbPiFmispcp7TrMUBwMPkbB5SsY+hVG//bjl9+nd3QdFoOumuDelg==

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