The government said on Wednesday that the process of converging Indian accounting standards with those used globally would continue. The move would help Indian Companies in tapping international Markets with reduced cost of compliance.
According to an official statement, the government has already notified 28 accounting standards for Indian corporates and would assess more standards for notification.
"The government would examine further accounting standards to be followed by Companies on the basis of the standards proposed by Institute of Charted Accountants of India ( ICAI), subject to the recommendations of National Advisory Committee Of Accounting Standards (NACAS) thereon, for notification in accordance with the procedure laid down under the Companies Act, 1956," it said. In the process, the approach of convergence with International Financial Reporting Standards (IFRS) would be continued so that the financial information disclosed by Indian Companies compares well with that disclosed by non-Indian Companies in compliance with IFRS, it added.
The development assumes significance as Indian Companies listed on European stock exchanges will have to comply with both IFRS and Indian accounting standards (IAS) from next year, in case the two set of standards are not converging.
Time till 2011 would be given for IAS to converge with IFRS, in case India makes a declaration that the two standards are synchronising.
Recently, ICAI president Ved Jain had said the European Commission wanted India to make a declaration by June 30 this year that IAS are converging with IFRS. He said of the 38 IAS, 7 have absolutely converged with IFRS, while work is going on for upgrading the remaining 31 standards.
The change in the accounting standards would be advantageous for the shareholders and stakeholders as it would allow the users of financial statements to re-evaluate the operations. Further, the costs of information on the financial statements would be available to its users on a timely basis.