India should customise its Accounting Standards as per its prevailing legal environment: Chairman, NACAS

Only 22% of companies have an operational plan for transition to Ind AS - Survey

We should converge to the New Accounting Standards, which suits Indian legal environment and standards, and must not copy the west blindly, emphasised Mr Amarjit Chopra, Chairman, National Advisory Committee on Accounting Standards (NACAS) at a workshop on 'Adoption of Indian Accounting Standards (Ind AS) - Key impacts and challenges' organised by Confederation of Indian Industry (CII) in association with Grant Thornton.

This workshop was organised to help businesses prepare better for implementation of the new accounting standards. With almost an year to go before the first set of Ind AS compliant financial results will be reported by corporates, it is essential for finance professionals across sectors to upgrade their knowledge and sharpen their skills on the new accounting framework.

Mr Chopra further shared that Indian banking and financial system was largely left untouched by the global financial crisis in 2007, because prudential norms were followed which were not dependent on the IFRS accounting system.

He strongly advocated for following prudential norms and cautioned against relying totally on the valuation model.

At the beginning of the year, the Ministry of Corporate Affairs (MCA) announced the roadmap for the implementation of Indian Accounting Standards (Ind AS) in a phased manner, starting 1 April 2016. A survey by Grant Thornton on the readiness of India Inc. for the adoption of the new accounting norms converged with International Financial Reporting Standards (IFRS) revealed that only 22% of the respondents have an operational plan for transition to Ind AS from current accounting standards. Furthermore, even lesser number of respondents (13%) had initiated the impact assessment process.

With global corporate integration enabling exponential growth for Indian companies, it has become pertinent for Indian companies to embrace financial reporting in an internationally accepted framework. MCA's notification of Ind AS is a welcome move for the Corporate India, however, it brings a set of challenges with itself and we need to assist India Inc. in this conversion. This workshop is a step in this direction and we hope that it helps the CFOs and the finance professionals in understanding and implementing the new framework well, said Mr Shreekant Somany, Chairman, CII Northern Region & CMD, Somany Ceramics Ltd.

Mr Vishesh Chandiok, Chairman, CII NR Committee on Economic Affairs & Taxation & National Managing Partner, Grant Thornton India LLP said that The new Ind AS will help India Inc. raise capital from more sources and do so cheaper than before, in the long term. However, in our experience, transition will be extremely challenging for companies, service providers and regulators as IFRS brings with it much more judgment. Ironically there will be a lot more grey than black and white, as Ind AS is principles based and not rules based. Companies will do well to immediately conduct a benchmarking study so that they have time to plan on how to minimise the impact on key financial ratios and operating parameters.

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