IFRS Roadmap issued by ICAI

The Council of the ICAI, at its last meeting, held on March 20-22, 2014, has finalised the roadmap.  The revised roadmap recommends Ind AS to be implemented for the preparation of Consolidated Financial Statements of listed companies and unlisted companies having net worth in excess of Rupees 500 crore from the accounting year beginning on or after 1st April, 2016, with previous year comparatives in Ind AS for the year 2015-16.  The stand-alone financial statements will continue to be prepared as per the existing notified Accounting Standards which would be upgraded over a period of time. 

The Ministry of Corporate Affairs (MCA) had earlier notified Ind AS converged with IFRS in 2011, but the Ind AS were not notified, as per the Press Release issued by the MCA, primarily due to tax implications.  Since then the Parliament has passed the new Companies Act, 2013, which is in the process of notification by the MCA.  The new Act has introduced various new provisions, including requirement to prepare Consolidated Financial Statements, which would facilitate implementation of Ind AS converged with IFRS.

The recommendation of the ICAI to implement Ind AS for preparation of only the Consolidated Financial Statements would have the advantage that Ind AS would have no tax implications as well as implications for computation of managerial remuneration and dividend distribution etc., since, for these purposes, the existing notified Accounting Standards would continue to be used as is the practice in almost all countries that have adopted or converged with IFRS.  This approach would enable India also to be become an IFRS-converged country as promised by it as a part of its G-20 commitments.

CA. K Raghu, President ICAI said, “Further, implementation of Ind AS from 1st April, 2016, with previous year Ind AS comparatives for 2015-16, would allow industry ample time to prepare themselves for the Ind AS, with certain subsequent revisions and amendments after 2011, which have been and are being carried out by the ICAI to keep pace with IFRS revisions/amendments. These would be submitted for consideration of the Government for notification as per the provisions of the Act.  It is also felt that the aforesaid time is sufficient to implement Ind AS for all listed companies and unlisted companies having net worth in excess of Rupees 500 crore in one go, instead of implementing Ind AS in phases, as was laid down in the previous roadmap”

 The roadmap also porposes that the previous year comparatives for the year 2015-16 shall be prepared in accordance with Ind AS as against the previous roadmap which required the same to be prepared in accordance with the existing notified Accounting Standards, which was done at that time because the time for implementation of Ind AS was very short.  This proposal would also be another step to make Ind AS convergent with IFRS, as without this, Ind AS would not be considered to be IFRS-converged.  It is felt that for preparation of previous year comparatives also, the time presently proposed is sufficient.

The above roadmap has been submitted to the Ministry of Corporate Affairs for its consideration, which is expected to take decision in the matter shortly.