Indian companies are not yet ready for transition to Indian Accounting Standard (Ind AS) for financial reporting.
A recent study by consulting firm KPMG among 100 listed and unlisted companies showed that the entities have not started working on Ind AS transition just yet.
Ind AS will first apply to companies with a net worth equal to or exceeding Rs 500 crore beginning April 1, 2016. Significantly, this will also require comparative Ind AS information for the period April 1, 2015 to March 31, 2016. Listed companies as well as others having a net worth equal to or exceeding Rs 250 crore will follow April 1, 2017 onwards.
From April 2015, companies impacted in the first phase will have to take a closer look at the details of the 39 new Ind AS currently notified. Ind AS will also apply to subsidiaries, joint ventures, associates as well as holding companies of the entities covered by the roadmap.
According to Sai Venkateshwaran, Partner and Head of Accounting Advisory Services (AAS), KPMG in India, India Inc was aware that the transition needed meeting the key challenges, both from an accounting perspective as well as organisation-wide issues, including technology changes, training, impact on business arrangements and structures and stakeholder communications.
“However, this awareness hasn't translated into action with most of India Inc still behind the curve in carrying out an impact assessment specific to their organisations,” he observed.
The survey report, prepared in association with Assocham, noted that the Union Ministry of Corporate Affairs was firm about the timeline and was unlikely that there will be any rollback from the implementation calendar.
Close to half the survey respondents believed that carve-outs from IFRS diminish the acceptability of Ind AS standards and almost two-thirds of the respondents felt they should be given the option to voluntarily adopt full International Financial Reporting Standards (IFRS) instead of Ind AS.
India has decided to converge towards IFRS through Ind AS and not adopt it straight away.