The Institute of Chartered Accountants of India (ICAI) way back in 2006, initiated the process of moving towards the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) with a view to enhance acceptability and transparency of the financial information communicated by the Indian corporate in their financial statements. Prior to 2015, the Companies (Accounting Standards) Rules 2006 was applicable. Thereafter, the Government of India in consultation with the ICAI decided to converge and not to adopt IFRS issued by the IASB. However, certain rules are in pari matria to IFRS as per the circumstances applicable to Indian economy. Basically, it is an established uniform standard which have to be complied with to ensure that financial statements are prepared in accordance with generally accepted accounting standards. These standards are mandatory on the dates specified either in the respective document or by notification issued by the Council of the ICAI.
Prior to coming into force of Companies (Indian Accounting Standards) Rules, 2015, IndAS was not applicable to NBFC, insurance company however, vide notification dated 16th Feb 2015 IndAS is now applicable to such companies.
On 2 January 2015, the Press Information Bureau, Government of India, Ministry of Corporate Affairs (MCA) issued a note outlining the various phases in which Indian Accounting Standards converged with IFRS (Ind AS) is proposed to be implemented in India, for Companies other than Banking Companies, Insurance Companies and NBFCs.
While announcing the Ind AS implementation in his 2014 Budget speech, Finance Minister Arun Jaitley also said that the standards for the computation of tax would be notified separately.
Transition IFRS methodology
PwC has developed a flexible and time-efficient methodology called Rapid-GAAP methodology. Rapid-GAAP enables an efficient and effective transition to IFRS/Ind AS with minimum required changes. This is relevant for all companies for whom Ind AS implementation is mandatory and other companies directly intending to have Ind AS set of financial statements.
Transition IFRS methodology
Through 16 years of successful conversions across Europe, Asia and the US, PwC has developed and honed a leading practice methodology called Transition IFRS. This can serve as a basis for you to consider in developing an approach to your own unique conversion process, positioning you to address your specific needs, especially in implementation of Ind AS.
Features of the Transition IFRS methodology
- Implemented by a broad network of experienced conversion specialists
- Considers the broader impact on the business, such as accounting policies, people, financial reporting, tax and other business processes and systems, stakeholder management, statutory reporting and communications
- Used by more than 1,300 companies
- Scalable and responsive to the unique complexities of each client’s business
- Establishes clear objectives with the client in the planning stage
- Applies a phased approach to IFRS/Ind AS conversions
- Supplemented by deep business process and technical accounting and systems skills