Mr. Mackintosh (IASB Vice-Chairman) was formerly Chairman of the U.K Accounting Standards Board (ASB). In November 2000, he was appointed Chief Accountant of the Australian Securities and Investment Commission and following that was appointed as Manager: Financial Management, South Asia at the World Bank.
Mr. Mackintosh has played an active role in standard-setting since 1983. He was a member, and later Deputy Chairman, of the Australian Accounting Standards Board. Ian also has substantial public sector experience, having chaired both the Australian Public Sector Accounting Standards Board and the IFAC Public Sector Committee.
Hi, Mr. Mackintosh, I welcome you on behalf of CAclubindia.com
What are the primary issues, which need to be addressed to adopt IFRS for Indian Companies? And how are you collaborating with ICAI in this regard?
Yes, we have been working with the Indian Accounting Standards (IAS) Board in the Indian institute. They are trying to converge with IFRS and in that process, they are looking at each standard and saying that whether they think that it is suitable for Indian circumstances. Now, the aim is to have as few differences as possible. We call them “caveats”. We have been working with them to reduce the caveats and we think we have reduced them to about 5 major caveats. So, that’s good progress and we will continue working with them on those caveats, may be in some circumstances, we can change something, may be in some circumstances, they can change something, let’s see!! But, I think we will go ahead in the inter with about 5 caveats. Now, that means that they are not on IFRS, they are nearly on IFRS but they are not completely on IFRS and you can’t claim that you are on IFRS and need to be completely on IFRS. So, that’s the situation.
Considering the plethora of laws and reporting structure in India, do you think India can adopt IFRS in its entirety?
We have heard and we would support that perhaps that would allow people to voluntarily, fully adopt IFRS, so that’s also being discussed as we understand it! But, that would be a good way forward, because really there are a number of Indian - particularly larger Indian companies that are already using full IFRS. So, it would be good for them to be able to continue and it would be good for other companies to be able to adopt full IFRS because it would help a step more in the system, to give the country on to full IFRS in total. So, we will keep working with them, they are very good & experienced on board. Indian standards are very close to IFRS anyway at the moment, so with some persistence will get through full IFRS.
Yes, I mean, I understand that the labour system is quite complicated. The other point, of course, is that India is a very big country, with lots of different circumstances. So, that makes things more difficult but it’s not impossible and we see another country adopts IFRS info and for instance, Europe has adopted IFRS in full and they are very diverse continent and have a lot of people, so the one thing I suppose that should be given consideration and is being given consideration, I think, with all the companies in India have to use IFRS. So, may be for the smaller companies, for instance, we have the SME standard, may be they could look at the adoption of the SME standard which is much simpler for the smaller companies. But, that’s upto the standard setter in the Indian Government, at the end of the day.
International Accounting Standards Board (IASB)
In your opinion why there is a delay in adopting IFRS by India?
Well, they had a go ahead in 2011 but that didn’t go so well. I am not sure of the reasons at that stage but since this new government made its announcements in the budget in July, the progress is being very rapid. I mean the Accounting Standards Boards can finish the considerations this week or next week and the government is going to have its pardon place by March, so as I understand it. So actually, this time, they are going very rapidly.
How will Indian Companies benefit with IFRS at the world stage?
The companies that are in the international market, it gives them credibility. The financial reports would be understood and trusted in the international financial market and that should alternately lead to reduced cost of capital. I mean, if they produce accounts at the moment in Indian accounting standards (IAS), people overseas don’t understand, what Indian Accounting Standards (IAS) are or how are they applied or what the differences are. So, when we are on full IFRS, people do understand, they trust the results, they trust the balance sheet and it raises the credibility of the countries.
What would be your message to Indian Chartered Accountants?
Now, the second advantage- I understand your new Prime Minister is very keen to raise the credibility of India as a whole, particularly in relation to questions of governance and that sort of thing, the adoption of IFRS across atleast in all the major companies in India would help in that regard too and people would look, I think, at India in a slightly different light and perhaps be more understanding about what’s going on in India.
Keep up your good work, keep working with us; you know that we have done a lot of very good work in a very short time. Let’s keep working on this project together and I would be very hopeful over a period of time, we would get India on the full IFRS..
I once again thank you IAN for taking time out of your schedule and speaking to us. Hope to see you again!
Thanks you Praveen & CAclubindia. I would be there in February, so see you then!!