Although with the development of 35 IND AS and announcement of revised Schedule VI, India has taken much awaited steps in the right direction, there is lot more to go. We need to come at the global platform in the matter of Presentation of our financial statements. But the progress in this regard has been very slow indeed. Till date, we do not know the formal date of adoption of IND AS. Interestingly, the date of implementation of revised Schedule VI has been set with some flexibilities inbuilt for the adoption of Ind AS. New Schedule VI has quite a lot of changes as compared to the older one.

But whatever changes has been done are in consonance with the non-converged accounting standards. Converged accounting standards which are waiting for the approval have obviously not been taken into account. Earlier the official site of MCA said that the new schedule VI would be implemented from the financial year 2010-11, itself but later it was changed vide notification dated February 28, 2010 and has been made applicable from the financial year 2011-12. These changes dilutethe seriousness amongst the corporates to implement the changes. Regulators should take into account the difficulties that may arise in the implementation of the changes before announcing a change. Once an announcement has been made, there should be no looking back.

Little relevance

In the scenario where Companies Bill 2009 is waiting to become an Act and IND AS are in the queue to be approved, coming out with revised Schedule VI has little or no relevance. Ideally, New Companies Act, IFRS or Ind As for that matter, and the new Schedule VI should have been implemented simultaneously.

Not only this, the government vide its notification dated May 11, 2011 has extended the applicability of the transition provision of AS 11. This is another example of our weak regulatory system. It gives the message that we modify our rules according to the current circumstances. Foreign exchange fluctuations will keep on happening, but if we keep on changing our rules and regulations in sync with market fluctuations, the credibility of our financial statements would become questionable.

Why Ind AS?

Another point to be pondered upon is the usefulness of adopting Ind AS, and not IFRS as it is. We wanted to move towards IFRS so that the presentation of our financial statements reaches the global platform and the financial statements of our companies be accepted by international stock exchanges. As of now, the companies going global are required to prepare another set of financial statements for the purpose. If our financial statements prepared as per IND AS are not accepted globally, entire exercise will not give us the desired fruits. We are in the process of changing Indian GAAPS to be in line with the international rules and regulations. This transition process has to be strict and well-planned so that the changes are implemented smoothly.

(The author is Assistant Professor, Finance, IMT Ghaziabad).

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