sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
News Headlines »
 How to use your Form 16
 Which ITR form applies to you for financial year 2017-18?
 Income tax returns filing form-2 released; should you use it? Find out
  Are you planning to file ITR 1 form? here's how to do it Income Tax Return (ITR) filing
 30 LPA-Opening Financial Controller
 ITR form 2 in java release by CBDT for return filing by individuals
 How to file your income tax return using ITR Form-1 Income Tax efiling for AY 2018-19
 Income tax returns (ITR) filing: Have you received I-T dept notice? Safeguard yourself; here is how
 Delayed release of electronic ITR forms may compel CBDT to extend the filing deadline
 Trading volume linked to tax return?
 How to e-verify your income tax return? Here are five ways to do it

The transition to IFRS
January, 03rd 2008

With cross-border transactions to and from India peaking and mergers and acquisitions occurring at frequent intervals, the need to talk the IFRS accounting language is being felt already.

Mohan R. Lavi

There have been developments plenty in the US, not many of which are heart- warming. The total effect of the sub-prime crisis is yet to be quantified with expectations of worse news in 2008. The draconian Sarbanes-Oxley Act, coupled with the need to reconvert accounts into US GAAP, was shying foreign companies away from the US bourses with London becoming a convenient choice.

Alternate standard

The Securities and Exchange Commission (SEC) has decided not to leave things in this state by asking for comments, analysing them and taking a final decision on the acceptance of International Financial Reporting Standards (IFRS) as an alternate accounting standard. Amendments on the acceptance of financial statements prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB) are applicable to financial statements for financial years ending after November 15, 2007 and interim periods within those years contained in filings made after the effective date.

Amendments to General Instruction G of Form 20-F relating to first-time adopters of IFRS are applicable to filings made after the effective date.

Convergence Project

In summary, the Commission is adopting amendments that:

permit foreign private issuers to file financial statements prepared in accordance with IFRS as issued by the IASB without reconciliation to US GAAP;

require that foreign private issuers taking advantage of this option state explicitly and unreservedly in the notes to their financial statements that such financial statements are in compliance with IFRS as issued by the IASB and provide an unqualified auditors report that opines on that compliance;

allow these foreign private issuers also to file financial statements for required interim periods without reconciliation to US GAAP (and without providing disclosure under Article 10 of Regulation S-X) if the interim financial statements fully comply with IAS 34;

extend indefinitely the two-year accommodation contained in General Instruction G of Form 20-F to all first-time adopters of IFRS as issued by the IASB; and

make conforming amendments to Rules 1-02, 3-10 and 4-01 of Regulation S-X, Securities Act Forms F-4 and S-4, and Securities Act Rule 701.

Future standards

The Commission appears to have accepted the fact that IFRS are the standards of the future. Approximately 100 countries now require or allow the use of IFRS and many others are replacing their national standards with IFRS.

One of the most significant aspects of this acceptance is the fact that the Commission is now not expecting a reconciliation of IFRS financial statements to US GAAP, which was a victory for the advocates of IFRS. One of the hurdles that the SEC had to face was that investors used to US GAAP would have difficulty in comprehending complex IFRS statements.

What won the vote easily for the SEC appeared to be the fact that the European Union had little or no difficulty in making the transition to IFRS. Another significant decision which the SEC took was to permit even interim period financial statements to be read in IFRS instead of US GAAP. There could be still areas of difference between the two standards which the convergence project is scrutinising.

State of our nation

India has targeted 2011 as the year for full transition to IFRS. Given the fact that our standards have, by and large, been modelled on the International Accounting Standards IFRS in the previous avatar the transition can happen earlier too.

With prominent standards such as the one on financial instruments yet to come out of the drawing board, it would not take much to amend those standards too to IFRS and release them at the earliest. With cross-border transactions from and to India peaking and mergers and acquisitions by and of Indian companies occurring at frequent intervals, the need to talk accounting in the IFRS language is being felt already. The Task Force appointed by the Institute to study transitioning to IFRS could work towards bringing out their recommendations and getting them implemented early.

(The author is a Hyderabad-based chartered accountant.)
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions