The Institute of Chartered Accountants of India (ICAI) could support the adoption of international financial reporting standards (IFRS) in the future, depending on how successful current convergence plans are.
Speaking at the IFRS Regional Policy Forum in New Delhi, ICAI president Ragu said "To begin with we should set the convergence mode and test the financial reporting standards on various corporate. India could look at adopting international accounting standards IFRS in the long term based on how the converged norms work out."
This may take some time, he warned, as "India is a diverse and fast growing economy, lot of issues have to be looked at before we look at adoption of IFRS."
International Accounting Standards Board chairman Hans Hoogervost also spoke at the forum and said that full adoption of IFRS would greatly strengthen the appeal of the Indian capital market to foreign investors.
New Companies Act
Separately, the ICAI set out a number of concerns it had over the Companies Act 2013, which passed in 2013 following decades of attempts.
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The Act aims to fundamentally reform and modernise India’s profession in an number of ways, including the introduction of mandatory corporate social responsability spending and the prohibition of a number of services provided by auditors.
One such concern is that the Act prohibits a number of services which are permitted by the ICAI for the auditor to perform, such as certain management items.
The ICAI was also concerned on the cap on the number of audits an auditor can undertake, and the rule that auditors are to report on whether a company has adequate financial controls in place, saying this would be expensive for small companies.
The ICAI also took issue with the constitution of the National Financial Reporting Authority (NFRA), which it said required a "lot of deliberations and discussions."
The NFRA’s introduction has been contentious in the past, due to some of its powers, such as its ability to set standards and take disciplinary actions, are similar to those held by the ICAI.
Despite these concerns, the ICAI described the Companies Act 2013 as a "significant milestone," and that it showed the world India was committed to best practice.