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 received.
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.