Too fast pace of accounting reforms: Are we ready?

Started pursuing Chartered Accountancy course in 2011, the initial few days of preparation for CA IPCC, introduced with the Revised Schedule VI newly notified under the Companies Act 1956. Having just learned the name and numbers of accounting standards as a commerce stream student, it was quite difficult to digest so much of theoretical text of the few Accounting Standards applicable at the Interlevel and after that Revised Schedule, VI had taken it to the level even just as a student.

While applying these Accounting Standards knowledge base during the initial training period, I observed how we follow a checklist to make ensure the concerned entities have made the proper compliance or not and wherever required to guide the client to take corrective action.

Today we are in 2019, last few years specially post introduction of Companies Act 2013, we have across huge accounting changes as well as the presentation of financial statements. During this period we have observed major accounting and financial reporting reforms in the form of Schedule III of the Companies Act 2013, Implementation of Indian Accounting Standards (IND AS), Introduction of Revised Schedule III, simultaneous applicability of Income Tax Computation and Disclosure Standards (ICDS), Revision in provisions of existing Accounting Standards (IGAAP) and Now amendments to Indian Accounting Standards (IND AS) notified just four years back.

We knew about the biggest taxation reform made in the history of independent India being Implementation of Goods and Services Tax eliminating most of the existing of Indirect taxes in 2017, that somehow implemented with various practical problems which are still being faced by the Registered Vendors till date though gradually people have started being used to it.

Whether the picture is the same in case of financial reporting reforms in the practical scenario with this too fast pace of regular changes being made in the language of the law is a tough question.

Being in discussion with more than fifty professionals including Chartered Accountants as well as Company Secretaries, I observed that professional still face issues in differentiating AS (IGAAP), Ind AS and IFRS leaving the contents of Standards and the provisional changes totally apart.

Above all, too fast revision in the paragraphs of Standards by the MCA as well as ICAI has necessitated the need to increase the awareness for such changes to ensure compliances to the changes made. Its quite difficult at this moment for any professional to answer even the number of applicable Accounting Standards/ IND AS / Interpretations (SIC/IFRIC internationally).

The situation is even more difficult under the IGAAP scenario wherein the Institute js constantly updating the provisions of IND AS in the existing accounting standards itself which somehow raise a question in the find of every professional that "If AS will continue, why we shall read and refer two different sets of standards".

Ind AS were introduced in India after certain numbers of Carve In and Carve-Outs with changes being made in the provisions of IFRS so that the same can be adopted in the Indian Economic Scenario. Ind AS being more judgemental in practical application allowed different users to interpret and apply those provisions in more than one way wherever no concrete decision could have been taken. Even after such Carve In and Carve-Outs, regular amendments are being made in the provisions of notified IND ASs in the last couple of years which even does not come to the notice of professionals.

The first question that comes to every mind by all this stuff is whether we are going to achieve our purpose to Implementation of Ind AS, the vision to have a common accounting language and making it more user friendly or is it leading to more confusion wherein two Companies with similar business or are similar in any other way are following two separate standards based on the applicability.

I hope similar views must have been made by professionals who have worked on Accounting Standards regularly though these views are strictly personal and would be happy to received comments/suggestions on the same.