The Core Group on convergence of Indian Accounting Standards reiterates commitment to converge with IFRSs by 2011
FAVOURS IMPLEMENTATION OF CONVERGED ACCOUNTING STANDARDS IN PHASED MANNER
A meeting of the Core Group constituted by the Ministry of Corporate Affairs for convergence of Indian Accounting Standards with International Financial Reporting Standards ( IFRSs ) from the year 2011 was held on 15th October 2009 under the Chairmanship of Shri R. Bandyopadhyay, Secretary, Ministry of Corporate Affairs. The Group noted that the Ministry of Corporate Affairs had prescribed Companies ( Accounting Standards ) Rules, 2006 in December, 2006 which have already harmonized Indian Accounting Standards with IFRSs substantially in so far as the companies are concerned. For entities other than companies, Accounting Standards issued by ICAI are applicable which are also harmonized with IFRSs substantially. The Group also discussed certain critical areas involved in convergence like ‘fair value versus historical cost’; application of prudential norms, fixation of minimum depreciation rates etc. and expressed the need for addressing them effectively and timely through a consultative and participatory process.
The Core Group is supported by two Sub-Groups set up in July, 2009. Sub-group-I, which is chaired by Shri Y.H. Malegam, Chairman, NACAS and includes concerned Regulators like Reserve Bank of India ( RBI ), Securities and Exchange Board of India ( SEBI ), Insurance Regulatory and Development Authority ( IRDA ), has been set up to identify changes required in various laws, regulations and accounting standards for convergence with IFRS and to prepare a clear roadmap for achieving the same. Sub-Group-II, which is chaired by Shri T.V. Mohandas Pai, Director, Infosys, and includes Chief Financial Officers ( CFOs ) of various companies, has been set up to interact with various stakeholders in order to understand their concerns on the issue of convergence with IFRSs, identify problem areas and ascertain the preparedness of the stakeholders for such convergence.
The Group reviewed the progress made by both the Sub-Groups. Sub-Group-II had completed its deliberations and forwarded its recommendations to Sub-Group I. Sub-Group I would submit its report by the end of this month. The Group decided that on receipt of this report, which would also cover the road map and phasing plan for convergence, the concerned regulators like M/o Finance, RBI, SEBI, IRDA etc would take necessary timely action to address changes in legislative and regulatory frameworks within their jurisdictions. Simultaneously, the Ministry of Corporate Affairs would take up the exercise for amending the Companies Act and Rules made thereunder, after taking inputs from ICAI and NACAS.
The Group was also of the opinion that in view of practical difficulties involved in implementing/ applying the converged Accounting Standards to all companies at one go, it might be appropriate to apply the converged Accounting Standards in a phased manner.
The Group expressed satisfaction at the progress made by the two Sub Groups as well as the initiatives taken by ICAI in respect of training, awareness and other capacity building measures. The Group desired that such initiatives like extensive training & awareness programmes and other capacity building measures for companies, professionals as well as regulators should be continued with increased momentum so that the convergence of Indian Accounting Standards with IFRSs is achieved smoothly and timely. The Group expressed confidence in the approach and process being followed on the matter and reiterated the commitment to converge with IFRSs by 2011.