Release of Four New IFRSs – The widening GAP with IND-AS
Introduction
1. The International Accounting Standards Board (IASB) issued four new IFRSs viz. IFRS 10, 11, 12 and IFRS 13 on May 12, 2011. Radicalchanges to the preparation and presentation of consolidated financial statements emanate from these newly issued standards. IFRS 10 and IFRS 11 supersede prevailing accounting standards, IFRS 12 is a new disclosure standard and IFRS 13 provides guidance on application of fair value measure that is prescribed by other IFRSs.
The Ministry of Corporate Affairs (MCA) notified 35 Indian Accounting Standards converged with IFRS (IND-AS) on February 25, 2011. This was based on the current version of IFRSs with certain carve outs. The release of the latest set of standards by the IASB has resulted in a scenario where the existing notified Ind-AS’s run the risk of being out of date even before the implementation dates have been notified.Herein below are discussed the salient features of the four new standards, an analysis of existing IFRSs that will be superseded and the issues revolving around the widening gap between core IFRS and notified IND-AS.
The widening gap between IND-AS and core IFRS
3. Herein below is summarized the mapping of the newly issued standards with the existing IFRS that will stand superseded and the corresponding IND-AS issued by the MCA.
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Newly issued IFRS
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Existing IFRS being replaced/ superseded
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IND-AS based on existing IFRS
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IFRS 10 - Consolidated Financial Statements
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l IAS 27 - Consolidated and Separate Financial Statements, and SIC-12 Consolidation—Special Purpose Entities
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l IND-AS 27 – Consolidated and Separate Financial Statements
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IFRS 11 - Joint Arrangements
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l IAS 31 - Interests in Joint Ventures, and SIC-13 - Jointly Controlled Entities—Non-monetary Contributions by Venturers
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l IND-AS 31 – Interests in Joint Ventures
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IFRS 12 - Disclosure of Interests in Other Entities
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n/a
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n/a
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IFRS 13 - Fair Value Measurement
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n/a
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n/a
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Herein below is provided a snapshot of the widening gap between IND-AS and core IFRS in terms of number of standards.(The same does not include carve-outs made in the notified standards). Further, it is pertinent to note here that the IASB and US FASB are working on joint convergence projects and accordingly more IFRS will inevitably be modifiedin the coming months.
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Date
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IFRS (Nos.)
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Notified IND-AS (Nos.)
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Gap
(Nos.) |
IFRS standards not part of IND-AS
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Feb 25, 2011 *
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38
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35
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3
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1. IAS 26 - Accounting and reporting by retirement benefit plans 2. IAS 41 - Agriculture
3. IFRS 9 - Financial instruments
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May 12, 2011 **
|
42
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35
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7
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1. IAS 26 - Accounting and reporting by retirement benefit plans 2. IAS 41 - Agriculture
3. IFRS 9 - Financial instruments
4. IFRS 10 - Consolidated Financial Statements
5. IFRS 11 - Joint Arrangements
6. IFRS 12 - Disclosure of Interests in Other Entities
7. IFRS 13 - Fair Value Measurement
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*Date of notification of IND-AS by MCA
**Issue of new IFRS standards by IASB
Conclusion
4. The Institute of Chartered Accountants of India(ICAI) has come out with the Indian version of IFRS (IND-AS) and the MCA had laid down a roadmap for proposed implementation. Operational and comparability issues that could arise on converging with the current version of notified IND-AS vis-a-vis core IFRS will assume greater proportion if India does not keep pace with developments in the core IFRSs.It is important for the accounting standard setter to articulate a roadmap on how IND-AS will keep pace with the dynamic changes being witnessed in the core IFRS space - in terms of frequency and time-frame. The issue is of Indian standards keeping pace with global standards and incorporating them including the current set of newly issued standards intoIND-AS.It is widely expected that IND-AS could be made applicable only for consolidated financials as is the approach by the early adopter region viz. the European Union. And now with the standard on consolidation itself undergoing an overhaul, it is imperative for ICAI to revise IND-AS to be current with IFRS.
Indian companies that have a global mind-set, appetite for global capital and that aim to have best-of-the-breed global standards to enhance the quality of their balance sheet need the flexibility to communicate financial information in a language that is best understood by the global investor base. The facility of early adoption of the newly issued standards made available by IASB to preparers of financial statements needs to be also provided to Indian entities by the Indian accounting regulators.
*Source: Corporate Professionals Today
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