While the majority of the world has
largely embraced International Financial Reporting Standards
(IFRS), India’s journey to convergence is causing teething
problems.

The Institute of Chartered Accountants of India, a statutory
body that regulates the profession in India and sets accounting
standards, has opted to converge with IFRS issued by the
International Accounting Standards Board from 1 April 2011.

This deadline will apply initially to all listed entities,
including all firms. Other public entities such as banks are
expected to be subject to mandatory IFRS following confirmation
from other Indian regulatory bodies and the national
government.

RSM India managing partner Suresh Surana said convergence to the
global standards will not be a completely alien task as the firm
can leverage on the resources of RSM International to familiarise
staff with IFRS. He added that, although RSM has worked on many
IFRS assignments, the firm still has a long way to go to be ready
for convergence.

Costly exercise

Surana explained the firm is already training staff. “We have
been sending staff to our international counterparts’ RSM
workshops, but this is becoming expensive because people have to
travel outside of India,” he said. “On top of that there is also
accommodation fees, so it can cost anywhere between $3,000 and
$4,000 [per person]. There are courses available in India and these
cost $500 to $700 for a week or two weeks, but then you need to
apply that in practice.”

PS Kumar, a partner at Morison International member firm
Brahmayya & Co, said he expects few problems moving to IFRS. He
explained that the firm prepares the financial reports of some
clients using Indian GAAP and then translates them into IFRS for
international investors.

He added: “Within IFRS there are a few complicated standards,
for example stock options are fairly complicated. We do not have
those issues right now, what we have are simple plain conversion
issues. So that may be a little more difficulty, but eventually we
will have to get used to it.”

Melanie White