Companies

Revenue recognition dilemma: Should India toe the IASB line?

KR Srivats New Delhi | Updated on January 24, 2018 Published on June 14, 2015

CA institute to discuss way forward on June 24-26





Should India rush and embrace new ‘revenue recognition’ concepts that even the developed world is hesitating to implement?

That is the question expected to weigh on the central council of the Institute of Chartered Accountants of India which is meeting on June 24-26.

The review has been dictated by the International Accounting Standards Board (IASB) move to propose a deferral by one year in the implementation of IFRS 15 (from earlier set 2017 to 2018).

“We have asked the Accounting Standards Board of the CA institute to take a call on this matter and come to us with a proposal”, Amarjit Chopra, Chairman, National Advisory Committee on Accounting Standards (NACAS), told BusinessLine.

On its part, the ASB has sent its proposal to the central council, which will on June 24-26 deliberate on the future course of action, sources said.

On the central council’s agenda is the discussion on the proposed adoption of new revenue recognition standard (revenue from contract with customers – Ind AS 115) - which is modelled on the internationally recognised IFRS 15 — from April 1 next year.

This is one among the nearly 40 new accounting standards (IND AS) that the Corporate Affairs Ministry (MCA) notified in February this year, in convergence with the globally recognised international financial reporting standards (IFRS).

Phased roadmap

The MCA had come out with a phased roadmap for implementation of IND AS that would begin from April 1 next year for certain companies. Banks and insurance companies are not covered under this roadmap.

There is every possibility that the Indian policymakers will stick to the current decision of ushering in IND AS 115 with effect from April 1 next year.

“Even earlier, India was ahead of the curve in that it wanted to introduce new revenue recognition concepts ahead of the international community moving to it. Now, just because they (IASB) are looking to defer it doesn’t mean we should also follow suit”, a chartered accountant who preferred anonymity said.

Study the implications

Parveen Kumar, Partner, ASA & Associates LLP, a firm of chartered accountants, had a different take on it.

“When the global community has preferred to postpone implementation of IFRS 15 because of complexities involved in the new approach towards recognising revenue, it will be an over-ambitious thought to have it here in India from 2016”, he said.

Industry and accounting professionals will need to understand the implications as there is significant shift in concept of revenue recognition, Kumar added.







Published on June 14, 2015
null
This article is closed for comments.
Please Email the Editor