In a workshop the western region ICAI explained the need of IFRS for educating professionals and bringing them at par with the rest of the world regarding reporting standards as India is preparing to launch its IFRS in the year 2011.
With Increase Indian business operations in the global market, uniform accounting standards would iron out the limitations, said Ashok Thakkar of Baroda Branch of the western council, ICAI. International Financial Reporting Standard (IFRS) is a set of uniform accounting standards with the same application across the globe and it will augment international business and make international business operations easy. In a workshop, the western region Institute of Chartered Accountants of India (ICAI) explained the need of IFRS for educating professionals and bringing them at par with the rest of the world regarding reporting standards as India is preparing to launch its IFRS in the year 2011.
Thakkar Chairman of the Vadodara Branch of the western council, ICAI said that, IFRS is common accounting standard and China has already implemented IFRS while European companies has experienced a similar grueling process from 2003 to 2005 of developing international reporting standards. After more than 100 countries, from Armenia to Zimbabwe, either adopted it or is in the process of doing so. The announcement of IFRS adoption in India is a momentous step taken by ICAI. However, this is just the beginning and the actual benefits come with bigger challenges.
Companies beginning to scope their IFRS conversions are often surprised by the volume of disclosures, and how different they are from their local GAAP. Changing the mindset would be a big task since the general belief persists that the existing Indian GAAP is similar to IFRSs. In India, the difference is in the application rigour compared to the European companies or rest of the world.
The Indian GAAP recognises revenues when all significant risks and rewards of ownership are transferred or on a percentage of completion basis with no specific guidelines while the IFRS would recognise revenue when all significant risks and rewards of ownership are transferred.
Rakesh Agarwal of Pricewatercoopers Pvt Ltd said, "The introduction of IFRS represents a fundamental change in financial reporting. It is not something that can be handled in a few weeks prior to adoption. Planning for it, generating the necessary awareness, educating stakeholders and managing the required changes will take considerable management commitment and time to achieve a successful transition. IFRS brings groups and collective working to achieve profits, bring about fair value in the business. Outsourcing becoming important IFRS will give leverage to Indian companies to understand international accounting."
This awareness workshop programme was meant for chartered accountants. A detailed curriculum is likely to be introduced for CA students after the Indian government implements IFRS in April 2011 said Thakkar.