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India's move on convergence a welcome news [Khaleej Times (United Arab Emirates)](Khaleej Times (United Arab Emirates) Via Acquire Media NewsEdge) The recent announcement that India is on track towards adopting the International Financial Reporting Standards (IFRS) is a welcome news, as it will help the country to attract foreign investment. In his first budget speech as India's Minister of Finance, Arun Jaitley, called for mandatory adoption of Indian Accounting Standards (Ind AS) converged with IFRS by financial year 2016-2017. The announcement brings closer to completion the process of convergence of the two standards, which started in 2010. As finance professionals, we hail this positive step. However, the roll out should be in phases to address various challenges the convergence may face. Financial comparison The adoption would mean that we move to 'fair value based accounting'. In other words, the gain or losses would directly impact the bottom line of businesses, but it would greatly improve financial comparison with other global companies. Finance professionals the world over have in the recent past upped their campaign by calling for respective governmental decisions on IFRS convergence, especially for countries that are still lagging behind. Here in the UAE, IFRS are required by the listing rules of Nasdaq Dubai and are also commonly used by companies listed on the Dubai Financial Market, however, some financial institutions use Financial Accounting Standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). In December 2012, the Dubai Financial Services authority (DFSA) asked companies that applied AAOIFI standards to comply with IFRS. As a partner with advisory firm Crowe Horwath UAE, my remit is on matters relating to IFRS, particularly on issues such as interpretation, disclosures and practical applications. Thus we continue to work with various governmental and private entities to ensure that all companies apply IFRS in their financial reports. Key economic powers In India, the convergence of the country's accounting standards (Ind AS) with IFRS would bring the financial reporting practices of India's corporates at par with the global standards, which have already been widely adopted by more than one hundred countries. It is saddening to note that some key economic powers including Japan and the US have yet to fully adopt IFRS standards. When these big economies eventually commit to using IFRS, the complexity in the accounting profession would highly decrease, considering these days businesses have become global. Moreover, some countries continue to carp that the standards are inconsistent and ambiguous, saying that the International Federation of Accountants (IFAC) needs to work closely with big economies like US and Japan and involve them in the process of decision making to increase the chances of them adopting IFRS. In my opinion, the gap in the local standards and IFRS has to narrow at the least, to reduce any complexities. The writer is a managing partner at Crowe Horwath UAE, and one of the UAE's top experts on matters relating to IFRS. Views expressed byhim are his own and do not reflect the newspaper's policy. (c) 2014 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |