unmodified IFRS option in India

26 May 2011: Call for unmodified IFRS option in India

IASB Board Member, Mr. Prabhakar Kalavacherla (PK), has called for India to consider allowing Indian companies the option of using full IFRS in financial statements. In a speech given in his personal capacity at an 'IFRS Summit 2011' conference organised by Confederation of Indian Industry (CII), Mr. Kalavacherla noted the IASB strongly encourages outright adoption of IFRSs, as against convergence. He stated "there is quite a degree of surprise in many international settings, including at the IASB, about India's approach to convergence with IFRS". As noted in our earlier story, the Indian Ministry of Corporate Affairs (MCA) has issued 35 Indian Accounting Standards (Ind AS), which are based on IFRSs, but include some changes ('carve-outs') which are noted in the appendix to each standard. Some of the carve-outs may prevent an entity following Ind AS from making an explicit and unreserved statement of compliance with IFRSs. The MCA has not yet notified the start date for the application of Ind-AS. An extract from the speech follows: Have these carve outs being discussed in a manner so that international community can benefit from... deliberations and perhaps change international standards? Why does India not present the basis of conclusions for its standards to argue its reasons for divergence with international standards? Does the outreach and feedback by the various stakeholders in India validate the divergence? How is the investor focus and interest kept in mind, and what is their participation? ... So, to sum it up, I have two suggestions: Give Indian companies the option of full IFRS while keeping the carve outs. Let the market decide what is correct. In five years, India can revisit the issue and see what should be done Let [India] get more actively involved in the global standard setting and for that CII needs to be more active.