Amid confusion surrounding the progressive implementation of International Financial Reporting Standards from April, 2011, industry body Assocham has suggested that companies should initially be asked to only prepare their consolidated accounts as per the new norms.

Assocham has pointed out that even in the European Union, the transition to International Financial Reporting Standards (IFRS) was gradual, with standalone accounts of individual holding companies and subsidiaries considered for tax purposes, whereas consolidated financial statements were prepared in accordance with IFRS.

"To avoid possible turbulence and maintain the deadline of 2011 for introduction of IFRS, Assocham has suggested its implementation on the lines it was done in the European Union," the chamber said in a statement.

This option, Assocham pointed out, was accepted as adequate for claiming that the European Union has converged with IFRS.

According to the roadmap laid out by the Corporate Affairs Ministry, companies will be required to converge their book-keeping practices with the new norms in a phased manner, beginning with companies that have a net worth of over Rs 1,000 crore.

However, confusion still persists on a number of issues, a major one being the tax implication for companies after
convergence with IFRS. Furthermore, the new Companies Bill is pending finalisation, as is the proposed Direct Taxes Code.

Although the MCA has been stressing that the April, 2011, deadline for convergence will be met as committed at the G-20 international forum, experts feel that companies are not in a position to achieve the target, as a lot of work toward IFRS convergence is still pending.

"The official version of Indian Standards converged to IFRS has already been delayed and, therefore, mindset to appreciate Fair Value accounting has not been developed in industry and investors... and doubts regarding unbiased valuation and also, there is no clarity on taxation of IFRS-based accounts," Assocham said.

Another industry chamber, the Federation of Indian Chambers of Commerce and Industry (Ficci), has also asked the government to delay IFRS implementation beyond April, 2011, saying the deadline is "highly unworkable" and "unfair".

In a petition to the Ministry of Corporate Affairs (MCA), Ficci said the transition should be brought in when companies are better equipped to deal with the proposed new accounting concepts and standards.

Source: http://news.in.msn.com/business/article.aspx?cp-documentid=4831589