International Financial Reporting Standards will be mandatory for financial statements from April 2011.
With the commencement of the next financial year, the Indian Accounting Standards are all set to go global by converging with the International Financial Reporting Standards (IFRS). While it will enable Indian firms to access and understand the balance sheets of firms in the international markets, many chartered accountants (CA) in Pune feel that the country may not be ready for the transition.
According to the CAs, for an economy to make the transition, an enormous amount of training is required, not just for the CAs but for a vast group of people likely to be affected by the new accounting norms.
Dolphy DSouza, national leader, IFRS, is of the view that only big accounting firms like KPMC and a few others have the expertise in IFRS as of now. While Indian Institute of Chartered Accountants (ICAI) is training CAs, we need to train audit committee members, regulators, financial analysts, board members and even the investors for them to understand the market.
With the IFRS, the real estate sector will also see massive changes in accounting norms. While revenue recognition now takes place simultaneously with the construction of a project, with IFRS, it can be done only after an entire project is completed. Even mergers and acquisitions norms will undergo a sea change, said DSouza.
Many feel that the present course by ICAI need to be more of a hands on programme rather than remaining restricted to theoretical concepts.
Ramesh Lakshman, a practising CA, cites that the language in which the standards has been written is extremely complicated to grasp.
G Ramaswamy, vice president, ICAI, said, ICAI has 100-hour course running in six cities to train chartered accountants and a few short term courses in the form of workshops. We need a batch of 30 for a course. While Pune has already had two workshops, soon we may also have the course in the city.
IFRS will be mandatory in India for financial statements from April 1, 2011 as per notifications by ICAI and Reserve Bank of India. The changes will be implemented in phases with the first phase including companies listed with BSE and NSE, companies whose shares or other securities are listed on a stock exchange outside India, companies, whether listed or not, having net worth of more than INR1,000 crore.