India, Japan sign MoU on IFRS accounting norms

India and Japan have agreed to exchange human resources and technology, among other things, to facilitate each other in adopting International Financial Reporting Standards (IFRS). The Corporate Affairs Ministry and the IFRS Council of Japan have signed a Memorandum of Understanding (MOU) under which the two countries will share each others'' experience on legal and regulatory hurdles arising out of convergence with the IFRS. "We also look forward to establishing cooperation between India and Japan in the field of human resources exchanges, IT, education and XBRL (eXtensible Business Reporting Language) development and so on," Corporate Affairs Secretary R Bandyopadhay said here today.

The MCA, he said, will be signing similar MoUs with countries like Australia, Singapore and Canada. While India is slated to prepare its account books as per the IFRS by 2011, Japan is aiming for large listed companies to converge with the international norms by 2015-16.

The MoU, Bandyopadhay said, can also open doors for Indian chartered accountants to practice their profession in Japan at a later stage. On being asked if IFRS will prevent accounting fraud, he said that although there is no guarantee that business practices will be clean after implementation of the IFRS, it will "bring in more transparency and fairness, as it is the need of the hour".

India was represented by the MCA Secretary and ICAI President Amarjit Chopra, while the Japanese side was led by Noriaki Shimazaki, the Chairman, International Affairs Committee of the IFRS Council.

CFI's interactive workshop on impact of IFRS

Construction Federation of India (CFI) in collaboration with KPMG is organising a half day interactive workshop on 'IFRS : Implications for Indian Infrastructure and Realty Construction firms'. The workshop will be organised on on Wednesday, August 25, 2010 at the Babubhai Chinai Committee Room, IMC, Mumbai. International Financial Reporting Standards (IFRS), a set of accounting standards issued and published by the International Accounting Standards Board (IASB) are fast becoming the global standards for the preparation and presentation of public company financial statements.
By 2011, around 150 countries would have adopted IFRS. India, too, is committed to harmonizing Indian Generally Accepted Accounting Practices (Indian GAAPs) with IFRS in a phased manner starting 2011-12. Transition to IFRS gained momentum in India with the setting up of a Core Group chaired by the Secretary, Ministry of Corporate Affairs with members of RBI, SEBI, IRDA, ICAI, the National Advisory Committee on Accounting Standard (NACAS) and industry representatives.

Concept Paper --- ICAI

Convergence with International Accounting Standards (IASs)/International Financial Reporting Standards (IFRSs) (collectively referred to as IFRSs), issued by the International Accounting Standards Board (IASB) has gained momentum in recent years all over the World. More than 100 countries currently require or permit the use of or have a policy of convergence with IFRSs. Certain other countries have announced their intention to adopt IFRSs from a future date, e.g., Canada from the year 2011, and China from the year 2008. Financial Accounting Standards Board (FASB) of USA and IASB are also working towards the convergence of the US GAAPs and the IFRSs. The Securities & Exchange Commission (SEC) has mooted a proposal to permit filing of IFRS-compliant financial statements without requiring presentation of a reconciliation statement between US GAAPs and IFRSs in near future. In this scenario, India being an important emerging economy in the World, is yet to adopt the IFRSs. Internationally, insofar as cross-border investments are concerned, a non-IFRSs compliant country is perceived as an additional risk factor. Within India also, in recent times, the issue of convergence with IFRSs has been raised time and again at various forums. Recognising the above scenario, the Council of the Institute of Chartered Accountants of India (ICAI), at its 259th meeting, held on May 2-4, 2006, expressed the view that the IFRSs may be adopted in toto at least for listed and large entities, also keeping in view the expected advantages such as saving in cost of capital for Indian entities raising capital abroad, saving in cost for such entities for not preparing separate set of financial statements, expected improvement in the image of Indian industry and the accounting profession in the eyes of the world, and increasing opportunities for Indian professionals abroad. In this context, the Council also noted that in respect of the recently issued Accounting Standards, there are hardly any divergence from the corresponding IFRSs and, accordingly, India is already progressing on the path of full convergence with IFRSs. To consider various issues involved in detail, the Council referred the matter to the Accounting Standards Board. The Accounting Standards Board (ASB), at its 127th meeting, held on August 11, 2006, considered the matter and supported the Council’s view that there would be several advantages of converging with IFRSs. The Board was, however, of the view that there were various implications of converging with IFRSs and that certain issues were required to be addressed such as the conflicting legal and regulatory requirements related to financial statements, the technical preparedness of industry and accounting professionals, economic environment prevailing in the country, etc. The Board was also of the view that convergence with IFRSs would be an important policy decision as it would significantly affect not only the status of accounting discipline in the country but would also affect its economy. The Board was, therefore, of the view that before taking any decision on the matter, it would be useful to develop a Concept Paper which could be discussed with various interest-groups involved including the government, the National Advisory Committee on Accounting Standards, regulators, and industry associations. The Board,accordingly, decided to constitute a Task Force to prepare the Concept Paper onConvergence with IFRSs with the objective of exploring:

(i) the approach for achieving convergence with IFRSs, and(ii) laying down a road map for achieving convergence with IFRSs with a view to make India IFRS-compliant.