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March 21, 2014

India to pass IFRS convergence after election

The government elected in the forthcoming Indian general election will make the final decision on the country’s convergence with IFRS issued by the International Accounting Standards Board.

The Institute of Chartered Accountants of India (ICAI) president K Raghu told The Accountant India is "ready for convergence" after the ICAI has conducted "a robust standard-setting process" in the past few years to develop its IFRS-converged Indian Accounting Standards (Ind AS).

Any decision on the adoption will, however, be taken after the Indian general election, which is scheduled in nine phases between April and May as more than 814m people are called to the polls.

"We are ready with the new standards. We are just waiting for the government to announce the day. We have elections coming up. The new government would ask us for our feedback as accounting regulators and then it will take a final decision on the recommendations we give," Raghu said.

Raghu said the new Companies Act, which will come into effect from 1 April, represents the right sign to start the convergence process in India. He noted, though, that ICAI supports converged standards, rather than adoption of IFRS. In that respect, Ind AS have certain adjustments to reflect the country’s peculiarities.

"We don’t have a ‘big-bang’ approach to IFRS. India is a peculiar, big country with lots of corporates. It would be a huge impact if we went for full adoption," he said.

Asked about the recent developments in the US, which put on hold IFRS convergence projects with US GAAP on standards such as accounting for insurance contracts, Raghu said ICAI doesn’t want to be isolated, but rather aligned with the rest of the world.

Expansion plansRaghu, who was elected ICAI president in February, said one of his priorities is to continue the institute’s efforts to support the Indian accountancy profession abroad.

"We have 16,000 members working in various countries, and 22 chapters around the world to serve the interest of these professionals. In our agenda is to help more young professionals to go overseas," Raghu said.

In particular, the ICAI has strong links with the countries of the Gulf region. According to Raghu, the institute has 10,000 members based in that region, with more than one thousand just in Dubai.

Raghu, who was interviewed for The Accountant’s forthcoming annual World Survey, identified as a global trend the need for professional accountants to be "dynamic in their knowledge" in order to adjust and meet industry demands.

Raghu added that while IFRS is expanding globally, he believed there is a huge shortage of IFRS professionals, seeing this as an opportunity for ICAI young members to specialise on IFRS consulting services.

Another trend observed by Raghu is the transformation of financial reporting, including the developments made last year in sustainability reporting and integrated reporting.

"With a lot of foreign direct investments coming in, developing countries are keen to follow the pattern of reporting in other countries so that they are able to attract foreign capital," Raghu added.

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