Final report on new accounting norms likely within 15 days

NEW DELHI: The Nation­al Advi­so­ry Com­mit­tee on Account­ing Stan­dards (NACAS) is set to sub­mit its final report on new account­ing stan­dards to the gov­ern­ment with­in 15 days, paving the way for Indi­an com­pa­nies to vol­un­tar­i­ly adopt the Inter­na­tion­al Finan­cial Report­ing Stan­dards or IFRS from April next year.

The report will spec­i­fy cer­tain carve­outs or excep­tions since India is only con­verg­ing with IFRS and not adopt­ing the norms entire­ly. NACAS is also iron­ing out dif­fer­ences between the def­i­n­i­tion spec­i­fied in the account­ing stan­dards and the Com­pa­nies Act includ­ing the def­i­n­i­tion of relat­ed par­ty trans­ac­tion, the sec­tion which is also being con­sid­ered by the cor­po­rate affairs min­istry for amendment.

“We are in the final stages of prepar­ing the report. We will finalise it in the next two meet­ings and sub­mit it to the gov­ern­ment for imple­men­ta­tion in first week of Decem­ber. There will be cer­tain carve­outs as we are only adopt­ing IFRS, not mov­ing to it com­plete­ly,” NACAS chair­per­son Amar­jit Chopra told ET. 

As announced by finance min­is­ter Arun Jait­ley in his bud­get speech in July, the adop­tion of new Indi­an Account­ing Stan­dards (Ind-AS), con­verged with IFRS, by domes­tic com­pa­nies is sched­uled to start from 2015–16 and will be manda­to­ry from 2016–17. NACAS is also work­ing towards clear­ing sev­er­al account­ing stan­dards rec­om­mend­ed by the Char­tered Accoun­tants Insti­tute includ­ing the one on finan­cial instru­ments, which address­es the issue of recog­ni­tion of loan loss­es that banks and finan­cial insti­tu­tions in devel­oped coun­tries faced dur­ing the 2008 glob­al finan­cial cri­sis, besides fair val­ue mea­sure­ment and employ­ee benefits.

“The new stan­dards are like­ly to increase glob­al accep­tance of finan­cial state­ments of Indi­an com­pa­nies. The gov­ern­ment should keep the carve­outs to the bare min­i­mum to ensure that there is glob­al accept­abil­i­ty for finan­cial state­ments pre­pared,” said Sai Venkatesh­waran, head of account­ing advi­so­ry ser­vices at finan­cial ser­vices firm KPMG in India. Banks and insur­ance com­pa­nies are expect­ed to have a sep­a­rate set of Ind-AS.

The cor­po­rate ser­vices min­istry, which is imple­ment­ing the com­pa­nies law, had in Sep­tem­ber recon­sti­tut­ed NACAS to advise the cen­tral gov­ern­ment on the for­mu­la­tion of account­ing poli­cies and account­ing stan­dards. The body will be in place till the Nation­al Finan­cial Report­ing Author­i­ty (NFRA), pro­posed under the Com­pa­nies Act 2013, is set up.