The apex body for chartered accountants, ICAI, has asked the capital markets regulator to make changes in the listing norms for facilitating Indian companies to adopt international accounting standards.
“The Securities and Exchange Board of India (Sebi) will have to change its listing agreement norms for India Inc to adopt International Financial Reporting System (IFRS),” ICAI Accounting Standard Board Chairman Amarjit Chopra said.
He said there is a difference of approach between Sebi and the National Advisory Committee on Accounting Standards (NACAS) in preparing financial statements according to accounting standards.
While Sebi asks companies to prepare financial statements as per the accounting standards issued by the Indian Institute of Chartered Accountants (ICAI), NACAS is of the view that only government-notified standards should be followed.
NACAS is a body under the Ministry of Corporate Affairs, which studies accounting standards issued by ICAI and sends them to the government for approval. The latest accounting standards issued by ICAI on financial instruments such as derivatives are yet to be notified by the government.
Chopra said ICAI also wants the government to revise the threshold limit of defining a public-interest entity, for which it is mandatory to adopt IFRS.
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Presently, public-interest entities such as banks, insurers, listed companies having a networth of Rs 100 crore or more or which borrow more than Rs 25 crore would only need to report their financial statements as per IFRS, he said.
The changes are required as the government has already said IFRS would be adopted by 2011 and the time left for convergence is too short.
The institute has also formed a group to look into the changes required in the Income Tax Act and the group is expected to submit its report to the government soon. It is also gearing up to revise and review as many standards as possible before April 2010, so that when companies report their financial statements as per IFRS from 2011-12, they should have a compatible previous year’s numbers for comparison.
“We will also change our curriculum so that the students can understand IFRS better. Also starting September, we are going to start a certificate course for which literature has already been prepared,” Chopra added.