India has decided to go for convergence route. Accounting Standard Board (ASB) of ICAI has already issued exposure drafts on all of the converged standards (Indian standards equivalent to IAS/IFRS). Once these Standards are approved by the Council of ICAI these will be sent to NACAS. On approval from NACAS, the same will need to be notified in the Gazette. Looking at the stringent timelines for roadmap of IFRS implementation in India, this process needs to be completed at the earliest.
Whether the converged standards will be called as IFRS??
No. The proposed name for converged standards in India is Ind-AS. The financial statements prepared under these standards will be called as Ind-AS financial statements.
What would happen to the existing set of accounting standards??
The existing set of Indian accounting standards will continue to be in force. These accounting standards will be applicable to those entities which are not required to migrate to Indian equivalent of IFRS (Ind-AS).
What is the time schedule for IFRS implementation in India??
The time schedule for compliance with the notified accounting standards which are convergent with IFRS (Ind-AS) and consequently preparing their opening balance sheet in compliance with the converged standards (Ind-AS) is as under:
For Companies other than Insurance, banking & NBFCs
· Companies which are part of NSE – Nifty 50
· Companies which are part of BSE – Sensex 30
· Companies whose shares or other securities are listed on stock exchanges outside India
· Companies, whether listed or not, which have a net worth in excess of Rs. 1,000 crores.
1st April, 2011
The companies, whether listed or not, having a net worth exceeding Rs. 500 crores but not exceeding Rs. 1,000 crores
1st April, 2013
Listed companies which have a net worth of Rs. 500 crores or less
1st April, 2014
For Insurance Companies, banking companies & NBFCs
Class of Companies
1st April, 2012
· All scheduled commercial banks and those urban co-operative banks (UCBs) which have a net worth in excess of Rs. 300 crores
· Urban co-operative banks which have a net worth in excess of
1st April, 2013
1st April, 2014
Non-Banking Financial companies
(a) Companies which are part of NSE – Nifty 50
(b) Companies which are part of BSE – Sensex 30
(c) Companies, whether listed or not, which have a net worth in excess of Rs. 1,000 crores.
All listed NBFCs and those unlisted NBFCs which do not fall in the above categories and which have a net worth in excess of
1st April, 2013
1st April 2014
Whether in the first year comparatives need to be given??
Companies covered in Phase I will prepare their financial statements for 2011-12 in accordance with the first set of Accounting Standards (i.e. the converged Accounting Standards) but will show previous years’ figures as per the financial statements for 2010-11, i.e., as per non-converged accounting standards.
However, the Companies will have an option to add an additional column to indicate what these figures could have been if the first set of Accounting Standards (i.e., converged accounting standards) had been applied in that previous year.
Whether companies covered in 2nd/3rd phase for application of the Ind-AS (i.e., the converged Accounting Standards) can voluntarily opt to apply the same w.e.f. accounting year beginning on 1-4-2011
Such Companies will have an option for application of the first set of accounting standards (i.e., the converged Accounting Standards) only for the financial year commencing on 1st April, 2011 or thereafter.
What is the cut off date for determining whether the companies fulfill the criteria for applicability for converged accounting standards (Ind-AS)
For testing the applicability for phase I, the date for determination of the criteria is the Balance Sheet as at 31st March, 2009 or the first Balance Sheet prepared thereafter when the accounting year ends on another date.
The cut-off date on which the aforesaid criteria shall be applied in order to determine the companies falling in each of the aforesaid four categories of companies will be the Balance Sheet as at 31st March, 2009 or the first Balance Sheet prepared thereafter when the accounting year ends on another date.
Computation of Net Worth:
The net worth will be calculated as under:
(+) Reserves excluding Revaluation Reserve
(-) Miscellaneous Expenditure
(-) Debit Balance of the Profit and Loss Account.
Further, it may be noted here that the criteria is to be applied to each company’s standalone accounts and not the consolidated accounts.
If the parent is covered in a particular phase, whether the subsidiaries, joint ventures or associates of parent would also be covered in the same phase??
The companies covered in a particular phase having subsidiaries, joint ventures or associates not covered in those phase/phases will prepare their consolidated financial statements according to Ind-AS (i.e., the converged Accounting Standards).
When one or more companies in a group fall in a phase other than the phase applicable to the parent company, they will continue to prepare standalone accounts according to the phase applicable to them but the parent will need to make amendments/adjustments to these accounts for the purposes of consolidation as per converged accounting standards. However, such subsidiaries, joint ventures or associate companies have the option for early adoption of converged accounting standards.
Once a company gets covered in the specified class of companies in any one of the phases and converts its opening Balance Sheet as per the specified date in accordance with Ind-AS, whether it would have to continue to follow the same set of accounting standards in the future as well even if it no longer satisfies the specified criteria
Yes, once a company starts following the Ind-AS (i.e. the converged Accounting Standards) on the basis of the eligibility criteria, it will be required to follow such Accounting standards for all the subsequent financial statements even if any of the eligibility criteria does not subsequently apply to it.
Is it permissible to adopt IFRS rather than Ind-AS
In case the notified converged accounting standards (Ind-AS) are not fully consistent with the IAS/IFRS, as issued by the IASB, it is presumed that Indian companies will continue to follow the Ind-AS (i.e., converged accounting standards) as notified by the Government of India and not the IFRS as issued by IASB.