'No immediate plan to develop global accounting standard for extractive industries'

K. R. Srivats New Delhi | Updated on January 16, 2018 Published on October 15, 2016

The International Accounting Standards Board (IASB) has no immediate plans to develop a global accounting standard around “extractive industries”, its Chairman Hans Hoogervorst has said

“Don’t expect any standard (on extractive industries) from us very soon. It’s a difficult job but definitely this is in our attention span”, Hoogervorst said at an ICAI-IFRS Foundation Trustees Joint Stakeholders’ event in the Capital.

Extractive industries processes involve the extraction of raw materials from the earth to be used by consumers. It basically consists of any operation that removes metals, mineral and aggregates from the earth. Examples of extractive processes include oil and gas extraction, mining, dredging and quarrying.

Noting that “extractive industries” have emerged as a significant industry worldwide, especially in emerging Asia, Hoogervorst said extractive industry standards are in the pipeline of the research agenda of IASB. He also said IASB does not have enough resources to take up several areas of work at the same time.

“It could take at least five more years before some progress is achieved in this area (extractive industries)”, Hoogervorst said.

He also admitted that extractive industries in different parts of the world had adopted varying accounting practices, which made it difficult for investors to compare financial performances.

Before taking up any subject for framing of a global accounting standard, IASB puts the issue through its research agenda.

Hoogervorst was responding to a query raised by former CA Institute President Manoj Fadnis, who wanted to know the status of IASB’s plan on framing an international accounting standard on extractive industries.

Fadnis highlighted that “extractive industries” were seeing much activity in India. “If we can have a standard from IASB soon, it could help us align our accounting standard with it right from the beginning rather than later on, sorting out variances”, Fadnis said.

Meanwhile, Hoogervorst lauded the National Advisory Committee on Accounting Standards (NACAS) and the CA Institute for showing leadership in bringing India forward in accounting.

“Adoption of Ind AS-if not fully IFRS is a huge step forward. This has been done in a transparent manner. It's now crystal clear to us where the differences are between IFRS and IND AS”, Hoogervorst said.

Published on October 15, 2016
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