Government panel favours accounting convergence in phased manner

The core group on convergence of Indian accounting standards has suggested a phased implementation of the plan in view of the practical difficulties involved in implementing/ applying converged accounting standards to all companies at one go.

The core group constituted by the ministry of corporate affairs, however, reiterated its commitment for convergence of Indian accounting standards with international financial reporting standards (IFRS) by 2011.

A group, headed by R Bandyopadhyay, secretary, ministry of corporate affairs, had prescribed Companies (Accounting Standards) Rules, 2006 in December 2006, which have already harmonised Indian accounting standards with IFRSs substantially in so far as the companies are concerned. For entities other than companies, accounting standards issued by ICAI are applicable which are also harmonised with IFRSs substantially.

The group also discussed certain critical areas involved in convergence like 'fair value versus historical cost'; application of prudential norms, fixation of minimum depreciation rates etc and expressed the need for addressing them effectively and timely through a consultative and participatory process.

The core group is supported by two sub-groups set up in July 2009. Sub-group-I is headed by YH Malegam, chairman of NACAS and includes concerned regulators like the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA). The sub-group has been set up to identify changes required in various laws, regulations and accounting standards for convergence with IFRS and to prepare a clear roadmap for achieving the same.

Sub-group II, chaired by TV Mohandas Pai, director of Infosys and includes chief financial officers (CFOs ) of various companies, has been set up to interact with various stakeholders in order to understand their concerns on the issue of convergence with IFRSs, identify problem areas and ascertain the preparedness of the stakeholders for such convergence.