Assocham suggested implementation of International Financial Reporting Standards (IFRS) on the lines it has been done in the European Union (EU) to avoid financial 'turbulence' and maintain the 2011 deadline.

The chamber said in the European countries, standalone accounts of individual holding companies and subsidiaries were continued for regulatory and tax purposes and only consolidated financial statements were prepared in accordance with IFRS. This option followed by the EU was accepted as adequate.

As per the official explanation, the chamber said Indian Standards converged to IFRS have already been delayed and therefore mindset to appreciate fair value accounting has not been developed in industry and investors in view of illiquid markets, volatility of fair value, inadequate skillset on ascertaining fair value and doubts regarding unbiased valuation and also there is no clarity on taxation of IFRS based accounts.

However, the chamber maintained that the issues which must be addressed before transitioning to IFRS includes clarity on direct and indirect taxes, clarity on Companies Act and impact on other laws and regulations which needs proper examination.

To resolve these matters, imposing the requirement of dual financial statements, one as per IFRS converged standards and another as per the old Indian GAAP will only cause undue hardship to Indian companies with more harm than benefits as the investors especially in the Indian capital markets will only confuse matters, the chamber said.

Source: http://www.indlawnews.com/newsdisplay.aspx?2e927a5f-c24a-48d4-a398-96fa90985543