ACCA (The Association of Chartered Certified Accountants) asserts in a new report called “Changing the I in IGAAP – Perspectives in India’s transition to IFRS”, that Indian businesses need to be better prepared to meet the introduction of IFRS (International Financial reporting Standards) in 2011.
Sir David Tweedie, Chairman of the International Accounting Standards Board commends the report in its foreword, which he says “continues ACCA’s long-standing support for global standards, and will provide a useful aid to Indian companies as they implement IFRS.”
Feedback given to ACCA during a series of round tables held in the late summer of 2009 in Delhi, Mumbai and Pune, showed that there was a lack of focus in the Indian business community about conversion to IFRS from Indian Generally Accepted Accounting Principles (IGAAP).
The roundtables were organised by the research wing of Get Through Guides (GTG). Vandana Saxena Poria, CEO of GTG said: “The purpose behind the roundtables was to speak to those who have been through the process of moving to IFRS and those who are embarking on it, to share knowledge and look for ways to make the process easier for the thousands of companies in India who will move to meet the 2011 deadline.’
Aziz Tayyebi, Global Financial Reporting Officer at ACCA, chaired the roundtables and says: “With 2011 rapidly approaching, Indian companies and financial professionals are faced with a major change in financial reporting. Experience from other countries has shown that not only can financial statements be impacted significantly by the transition to IFRS, but that this change process needs to be well planned to ensure costs and resources are not strained.”
Aziz Tayyebi continues: “Indian companies have already embraced globalisation, as evident in the prominent role they play in the international outsourcing and information technology sectors. It was heartening to hear from participants that Indian organisations will not only embrace IFRS, but will flourish through increased global trade and the creation of new knowledge-based business opportunities which will flow from IFRS.”
However, ACCA warns that there are hurdles ahead as successful progress towards IFRS depends on a number of factors, from having the right number of staff to ensuring IT systems are in place to capture and analyse data relevant to IFRS. It is also crucial that business managers are made aware of how IFRS will affect their decision making, and that there is high level buy-in to the IFRS strategy.
Aziz Tayyebi concludes: “Education and training of staff is essential to successful implementation of IFRS. A key challenge is to ensure companies, auditors, regulators and the investment community are appropriately skilled to apply and interpret IFRS. We found during our round table discussions that the majority of businesses were yet to embark on a full scale training programme for relevant staff. The perceived lack of focus is one of the main challenges facing Indian businesses. Without this focus, achieving a successful and worthwhile conversion could prove troublesome. It is vital that a clear and detailed roadmap to convergence is announced by government and regulatory bodies to bring confidence to the overall convergence project.”