India’s state-owned companies should join the country’s businesses in adopting IFRS to increase their competitiveness in the global market, the government’s Standing Conference of Public Enterprises (SCOPE) has advised.
SCOPE director general UD Choubey told The Accountant Indian public sector enterprises are "well prepared" to adopt the IFRS-converged Indian Accounting Standards (Ind AS).
He explained: "Presently, central public sector enterprises are following Indian Accounting Standards in line with approved set procedures of respective Companies and General Finance Rules [issued by the Ministry of Finance]. Obviously, there may be some variance from company to company."
In his first budget speech on 10 July this year, India’s finance minister Arun Jaitley described the need for IFRS convergence in the country as an "urgent". He called for mandatory adoption of Ind AS by financial year 2016-2017 and voluntary adoption from as early as the next financial year 2015-2016.
According to Choubey, the minister’s announcement reflects the convergence introduced by the "post-liberalisation and open economic policy" of the Indian government. He added: "Indian public sector enterprises are well prepared to adopt the same."
The process of convergence with IFRS started in 2010. At that time the Indian government had initially agreed on the adoption of converged standards by 2011, but the transition period was subsequently postponed.
In 2011, the Indian Ministry of Corporate Affairs issued 35 Ind AS converged with IFRS but didn’t announced implementation dates. Ind AS are based on IFRS but include some changes which are noted in the appendix to each standard.
Talking to The Accountant on March this year, the Institute of Chartered Accountants of India (ICAI) president K Raghu said: "ICAI supports converged standards, rather than adoption of IFRS. In that respect, Ind AS have certain adjustments to reflect the country’s peculiarities. India is a peculiar, big country with lots of corporates. It would be a huge impact if we went for full adoption."
Raghu welcomed the MoF’s announcement and said: "ICAI has always propagated the need to converge with IFRS at the earliest to bring the financial reporting practices of the Indian corporates at par with the global standards which are used in more than one hundred countries."
This would also enable India to fulfil its G-20 commitments in this regard, he continued.