The audit and tax consulting firm believes that the level of preparedness for Ind AS adoption goes beyond financial reporting, requiring significant organisational changes.
"More than 50% of the respondents are yet to plan or commence implementing changes at an organisational level," it said.
"Also, 39% of them are yet to start or plan for the impact assessment of Ind AS adoption," says PwC, quoting the findings from a February 2016 survey among 100 companies across industry sectors and size.
About 63% of them are covered under mandatory phase-I adoption of Ind AS.
Known as Ind AS, new accounting and reporting standards that are in line with global practices, will kick in from April 1 in a phased manner.
Nearly half (45%) believe management approach for identification of segments will have a major impact on disclosures.
Sumit Seth, a partner at Price Waterhouse & Co, the accounting arm of PwC India, advices companies to follow a step-by-step approach to Ind AS.
"Since the impact of Ind AS adoption cascades beyond accounting, resulting in several organisational changes impacting direct and indirect taxes, contractual arrangements with customers, suppliers, lenders, and incentive policies, including timely communication with various stakeholders, companies will have to follow a step-by-step approach to ensure a smooth transition," he said.
Three-fourths of the respondents expect that they will have to report additional non-Gaap financial measures once they switch to Ind AS, says the survey, adding that even though the impact of adopting Ind AS will vary from company to company and from across the sectors, better planning will enable firms to address some implementation challenges in advance.
According to the survey, 45% believe that management approach for identification of segments will have a significant impact on the disclosures made by them.
According to PwC, financial services, retail and consumer companies as well as pharma and life sciences will be the most impacted sectors once the transition takes place.
While at present, under the Indian Gaap, segmental information is based on the business and geographical reporting, under the Ind AS, segmental information has to be disclosed on the same basis as to how the chief operating decision-makers evaluate financial information for allocating resources and taking stock of performance.
This is important as investors will now see a change in the way segment information is reported using management approach.
Taxation is another area which is expected to have a major impact under the Ind AS, PwC said, adding that under this too, the financial services, retail and consumer and technology sectors will be the three most impacted sectors.
Unlike Indian Gaap accounting, income tax is another area there will be major impact as higher use of fair value accounting can potentially increase the minimum alternate tax liabilities for companies, as under Ind AS, unrealised gains on various financial instruments like investments and derivatives will get recognised in the income statement.
Also, under Indian Gaap, deferred tax assets on carry forward losses are not recognised due to a very high recognition threshold but under the Ind AS, since the threshold is lower there will be higher deferred tax assets, resulting in a positive impact on net income and networth.
The survey also says the new accounting norms are likely to lead to a significant impact on reported revenue across sectors due to the emphasis on multiple element accounting resulting in deferral of some revenue.
Also incentives or consideration paid to customers will get deducted from revenue under Ind AS, instead of recording the same as expense under the Indian Gaap.
On the positives, some items like Excise duty may be included in gross revenue but accounting for service concessions involving infra PPPs will be very different.
Three-fourths of respondents also expect that Ind AS may lead to additional non-Gaap measures.
Also, principles-based consolidation guidance may lead to consolidation of additional entities, especially SPVs and structured entities.