Prabhakar Kalavacherla’s
appointment as the first Indian member of the International
Accounting Standards Board was closely followed by the confirmation
the board will be enlarged to facilitate wider geographic reach.
Nicola Maher talks to him about his expectations for his four-year
term.

Prabhakar Kalavacherla describes his career as simplistic compared
to many of his new colleagues on the International Accounting
Standards Board (IASB).

“Some of them served in accounting, some of them as regulators,
some of them work in the industry and things like that. For me, for
the large part I have been a practising accountant,” he
explains.

Kalavacherla was named as a new IASB member in September last
year and assumed the role this year.

He was born in India and began his career there, but has since
worked in a range of locations around the world.

Immediately prior to assuming the IASB role Kalavacherla was an
audit partner at KPMG US, based in San Francisco and specialising
in technology and biotechnology.

Kalavacherla’s admission to the board coincides with a decision
by the International Accounting Standards Committee Foundation’s
trustees to change the composition of the IASB. The board will
expand from 14 to 16 members by 2012, with criteria added to ensure
geographical diversity.

“I’m an Indian passport holder but I’m a US green card holder… I
leave it to the trustees to decide where I come from,” he says.

Kalavacherla started his career working in India for small
accounting firms as an accountant.

He cites as a major career highlight the opportunity to work and
live in several countries across the globe including Italy,
Ireland, France, India and the US.

Top priorities

Kalavacherla believes the current issue of fair value accounting
is a priority for everyone, including the IASB, but he warns the
board should not lose its focus on bringing more developing
countries onto IFRS.

“I think the long term issues is that the board should go back
to its business of focusing on what needs to be done to get a
common set of standards across all nations,” he says.

“We have learnt that the emerging economies suffer as much as
the developing nations in terms of the current stock market, the
fair value mess. Thinking that emerging markets are a beast by
themselves might not be accurate so the sooner they join onto the
international accounting standards [the better],” he explains.

One main challenge for the IASB will be ensuring that when IFRS
is implemented, it is done so with no carve outs or changes.

“If you and I have to speak the same language, can we ever get
to the same accent? I think that challenge is going to remain
forever but of course [the question] is ‘how [could] you minimise
it?’ I think that is what [the IASB] needs to focus on,”
Kalavacherla explains.

Technology forte

Kalavacherla specialises in the non-financial sector. Technology
is his forte and this will be his main focus for his four-year term
on the IASB. His ideal focus would be to work specifically on the
revenue, and debt and equity standards.

“That would be quite a bit of an achievement,” he says.

The revenue recognition standard is still in the preliminary
stages of development, with a discussion paper still open for
public comment.

The new standard will replace the existing standards on revenue
recognition, IAS 11 Construction Contracts and IAS 18 Revenue,
creating a single revenue recognition model that can be applied
consistently across a range of industries and geographical
regions.

The debt and equity work in progress includes an exposure draft
published by the IASB in December, which proposes amendments to
IFRS 7 Financial Instruments: Disclosures, which would require
entities to provide additional disclosures on all investments in
debt instruments, other than those classified in the fair value
through profit or loss category.

There is also a project to simplify IAS 32 Financial
Instruments: Presentation, which is still in its early stages.
Proposed amendments to IAS 32 would require entities to classify
certain types of financial instruments as equity.

Kalavacherla has also previously worked on buyer tax and says he
would like to focus on income taxes and issues of that nature
during his term.

The IASB’s current income tax project is working to reduce the
differences between IAS 12 Income Taxes and the US standard, 109
Accounting for Income Taxes, and related US GAAP.

The final standard is due to be issued next year.

Looking to the future

In the light of the current challenges, Kalavacherla insists it
is important to focus on the business at hand.

“My view is just to buckle down, get to the business and not get
too side tracked with the present issues while there are already
enough minds being applied,” he says.

He points to the importance of the IASB remaining on schedule to
complete a number of major projects before a raft of new countries
adopt or converge with IFRS between 2011 and 2012.

“Many countries are going onto IFRS and we don’t want them to
have two transitions. We need to make them get on to the highway of
IFRS without any bumps.

“Those should be the focus and hopefully my contribution is to
focus on those issues,” he says.