 "Indrajit Pathak")
Though about seven months are left for mandatory implementation for select companies, the fact that five months have already passed for preparation of comparative financial statements for the previous year, not only under existing accounting standards but also under Ind AS (which will have to pass through auditors), makes the situation somewhat worrying. A major change is reporting, predominantly under fair value, as opposed to historical costs, being followed for ages.
The areas corporate India is still grappling with include:
- The format for presentation of balance sheet and statement of profit & loss (schedule III of the new companies Act) is not strictly aligned with requirements of Ind-AS. More, confusion prevails on whether disclosure requirements in the schedule for items such as CIF (cost insurance and freight)/FOB (free on board) value of imports/exports, consumption of raw materials and stores segregated into imported and indigenous, etc, will remain valid for consolidated financial statements, too.
- The adoption of Ind-AS 109 (corresponding to IFRS 109) on financial instruments ahead of other countries is riddled with many problems, especially for entities with large subsidiaries outside India, currently reporting under US GAAP or IFRS.
- The Securities and Exchange Board of India's stand on quarterly reporting and disclosure of consolidated financial statements isn't clear yet, as the current requirement is limited to standalone financial statements and that, too, with minimal disclosure.
- Indian revenue authorities are averse to embracing fair value accounting, as reflected in introduction of the Income Computation and Disclosure Standard by the income tax department, leading to significant additional activities with associated complexities.
Indrajit Pathak
President (corporate accounts), Hindalco Industries
