India has opened a new chapter in its accounting reforms initiative by notifying a new set of accounting standards, popularly termed as IND-AS.
Nearly 40 new accounting standards have been notified by the Corporate Affairs Ministry, bringing them in convergence with the globally recognised International Financial Reporting Standards (IFRS).
The Corporate Affairs Ministry has mandated a phased approach for the adoption of IND-AS for companies other than banks, insurers and non-banking finance companies (NBFCs).
In the first phase applicable from accounting period beginning on or after April 1, 2016, all companies having a networth of over Rs 500 crore will be covered.
The second phase applicable from accounting period beginning from April 1, 2017 covers listed companies having a networth of less than Rs 500 crore and unlisted companies having networth greater than Rs 250 crore and less than Rs 500 crore.
Voluntary adoption will be permitted for accounting periods starting on or after April 1,2015.
The Corporate Affairs Ministry has now stipulated that one year comparative will be mandatorily required in IND-AS financial statements.
Sai Venkateshwaran, Partner and Head of Accounting Advisory Services, KPMG in India, said the notification of these IFRS converged standards fills up significant gaps that exist in the current accounting guidance.
"India can now claim to have financial reporting standards that are contemporary and virtually on par with the best global standards. This will in turn improve India's place in global ranking on corporate governance and transparency in financial reporting", Sai told BusinessLine.
Sudhir Soni, a partner with an Indian member firm of EY global, said the announcement of IND-AS is a welcome move and demonstrates the Indian Government's commitment to align with the best practices in international financial reporting.
"There are numerous benefits stemming from IND-AS for India Inc. This will further strengthen the country's ability to attract foreign capital through inbound investments or through access to global capital markets," Soni said.