Govt: Notify new accounting norms for IFRS by the end of this year
November, 23rd 2010
The government on Tuesday said it will notify the new accounting norms in sync with international practice IFRS for India Inc by the end of this year, and ensured that the April, 2011 deadline will not be missed.
Speaking at an Assocham conference on International Financial Reporting Standards (IFRS), Corporate Affairs Secretary R Bandyopadhayay said the accounting standards are almost ready and all issues, including the tax implications for the convergence, will also be resolved.
"By the end of December, we will notify the converged accounting norms...all issues are almost resolved and we are confident that by the next fiscal, that is April, 2011, Indian companies will prepare their accounts books as per the IFRS," Bandyopadhayay said.
The taxation committee of Institute of Chartered Accountants of India (ICAI), which is helping the government with preparing the IFRS convergence, is almost ready with the recommendations, said Corporate Affairs Joint Secretary Renuka Kumar.
Another issue that needs a re-look is projecting value of an asset in account books. While some are in favour of arriving at the value in terms of historical cost, others believe in the fair value concept.
In accounting, fair value is defined as an estimate of the potential market price of a good or service, taking into consideration factors like acquisition, production and distribution costs and replacement costs.
However, the historical cost does not consider these factors and instead, is calculated at the initial value.
Soon after the issues are resolved, the National Advisory Committee on Accounting Standards (NACAS), the final recommending body for IFRS, will notify all the 37 standards.
In the ongoing winter session of Parliament, the government is also expected to come out with an amendment to the Companies Act, 1956 to pave way for the convergence of the Indian accounting norms with the IFRS.
According to the roadmap laid out by the Ministry of Corporate Affairs , companies with a networth of over Rs 1,000 crore, will have to prepare their account books as per the IFRS from April, 2011.
Further, while scheduled commercial banks and urban cooperative banks will adopt it from April 1, 2013, all insurance companies will convert their opening balance sheets with IFRS from April, 2012.
Listed large non-banking finance companies (NBFCs) will converge their opening books of accounts with IFRS norms from April 1, 2013.