The Hindu Business Line : ‘Regulatory endorsement needed for global financial reporting standards’

New Delhi, March 26 As Indian accounting standards look set to converge with International Financial Reporting Standards (IFRS) from April 1, 2011, KPMG India is keen to assist Indian companies to adopt IFRS in its bid to tap convergence-related opportunities in the country.

Towards this end, the professional services firm has started to sensitise the chief financial officers (CFOs) of Indian companies about the key areas of impact that IFRS adoption would have on their financial statements.

“IFRS convergence was a big thing in Europe where 7000 companies moved to IFRS. One thing our Europe experience told us is that because companies did not have in house experience and expertise, the reliance on external advisors and auditors was significant. We see that replicating itself in India,” Mr Jamil Khatri, Executive Director and Head-US GAAP and IFRS services told Business Line here.

He, however, felt that Indian companies were unlikely to outsource the entire activity of adoption of IFRS to consulting firms such as KPMG. It is more likely that the project would be handled in a partnership model involving team members from both the company as well as the professional services firm.

Mr Khatri said that the National Advisory Council on Accounting Standards (NACAS), which gets mandate on accounting standards from company law, should endorse the adoption of IFRS. The efforts of the Institute of Chartered Accountants (ICAI) in this direction would alone not be enough, he noted.

“There is need for regulatory endorsement of the ICAI’s announced plan to converge with IFRS from April 1, 2011. In India, accounting standards are still sort of required to be approved by the Government. One thing is how regulators like RBI react to it and how quickly do they endorse it. Our understanding is that regulators have in-principle endorsed it, but unless they in form endorse it, the momentum would still not be as much as one would like it to be,” he said.

KPMG is creating awareness about IFRS among corporate India by holding events in cities such as Mumbai, Delhi and Bangalore. With IFRS being used by more than 100 countries and number of national standards proposed to be converged with IFRS, indications are that the accounting languages of the world may finally converge to IFRS.

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