The Committee of European Securities Regulators (CESR) is set to
submit its final advice to the European Commission in early
November on allowing Indian issuers to use Indian GAAP when
accessing EU markets.
In its proposing release, the securities regulator said it was
appropriate to grant the same two-year transitional period to India
it had offered other third-country issuers who were also preparing
their annual and half-yearly financial statements in accordance
with a GAAP that is converging to IFRS.
CESR’s comment period ended on 24 October with no comments
The committee recommended the equivalence of US GAAP and
Japanese GAAP to IFRS for use on EU markets in March this year but
suggested postponing recognition of Chinese GAAP. Canadian GAAP and
South Korean GAAP were recommended in May and Russian GAAP’s
equivalence to IFRS has yet to be considered.
If the European Commission grants the third-party issuer status,
it will allow Indian companies listed on European Stock Exchanges
to prepare their financial statements in Indian GAAP and reconcile
them with IFRS. This could reduce their costs of converting
financial statements prepared as per Indian GAAP into IFRS.
As part of the review process, CESR said that the convergence
programme in India was comprehensive and it had no reason to doubt
that the Institute of Chartered Accountants of India (ICAI) and the
Indian Government would be in a position to achieve their
objectives by the proposed convergence date in 2011.
ICAI president Ved Jain said the institute was working to make
IFRS-equivalent Indian accounting standards public by the end of
2008 or early 2009. He said this would encourage the government and
regulators to amend relevant laws and regulations to make them
consistent with IFRS as soon as possible. It would also encourage
companies to prepare themselves for adopting IFRS.