With just three months remaining for roll out of the Indian Accounting Standards (IAS) converged with International Financial Reporting Standard (IFRS), companies in India as well as their subsidiaries will find it difficult to voluntarily adopt the practice, a research firm said Saturday.
"It seems quite unlikely that many companies would be able to take the benefit of the voluntary early adoption that's permitted for financial years beginning April 1, 2015, for which the transition date would be April 1, 2014 for comparative purposes, KPMG India's partner and head of accounting advisory services Sai Venkateshwaran said in a statement.
According to Venkateshwaran, clarity on tax implications is necessary for the transition.
"Going by the budget announcement, it is expected that the government will also notify tax accounting standards in time for this transition, to address the tax implications," he said.
The revised roadmap for implementation of IAS together with IFRS (Ind-AS) was announced recently by union Finance Minister Arun Jaitley. It makes compulsory adoption of the Ind-AS for both listed and unlisted companies with a net worth exceeding Rs.500 crore from the 2016 fiscal. However, the BFSI and NBFC sector together with firms in the process of listing are exempted.
"The adoption of these IFRS converged standards will also go a long way in enhancing the transparency in and quality of financial reporting by Indian corporates, as Ind-AS is expected to fill the many gaps in Indian GAAP, Venkateshwaran said.
Ind-AS will bring in homogeneity in financial reporting for a group firm as a single set of procedures needs to be followed across its reporting structure, he said.
