The document discusses India's convergence with IFRS and the opportunities it provides for chartered accountants in India. It outlines the ICAI and MCA's phased roadmaps for Indian companies, insurance companies, banks, and non-banking financial companies to converge with IFRS. It also discusses ICAI's initiatives to formulate converged standards and provide education/training on IFRS implementation.

1. Convergence with IFRS –
Opportunities for CA’s
CA. K.Raghu
Central Council Member
Member - Accounting
Standards Board

2. Convergence with IFRSs: Need of
the Hour!!!
• IFRSs are increasingly being recognised as Global Financial Reporting
Standards
• >122 countries , such as countries of European Union, Australia, New
Zealand and Russia currently require/permit use of or have policy of
convergence with IFRSs
– Brazil & Canada-announced convergence from 2010 & 2011
respectively.
– China and Canada have announced their intention to adopt IFRS
– Securities & Exchange Commission (SEC), USA has permitted filing of
IFRS-compliant financial statements without requiring presentation of
reconciliation statement between US GAAPs and IFRSs.
– SEC roadmap permitting US domestic companies to prepare financial
statements as per IFRSs:
 Will examine this proposal and take a decision in 2011
 If considered fit, allow them to do so from 2014

3. Financial Reporting Standards
• Sound financial reporting structure is imperative to
the economic development and effective functioning
of capital markets in emerging economies.
• It helps in mitigating risks, building investor
confidence and putting scarce economic resources to
their best use.
• High Quality Financial Reporting Standards is a pillar
on which the financial reporting structure of an
economy stands.

4. Financial Reporting Standards
• Historically, various countries in Asia and countries
with developing economies were developing their
own national accounting standards.
• In some countries, the standard-setters were
professional bodies while in others, they were
governments and regulators.
• Accordingly there was diversity among the Standards
developed by various countries
• These Standards reflected the culture, history, and
the characteristics of accounting problems facing the
country concerned.

5. Key Challenges in Adopting/ Adapting
IFRSs in Emerging Economies
• Accounting Standard-setters in emerging Economies
are facing various challenges in adopting/ adapting
IFRSs such as the following:
 Non-compatible legal and regulatory environment
 Concerns over SMEs
 Economic Environment
 Level of preparedness
 Education Needs of Preparers/Auditors

6. ICAI’s Decision to Converge
with IFRS
• In view of global developments and expected benefits of
convergence with IFRS, in 2007, ICAI decided to converge
with IFRS
• The Ministry of Corporate Affairs, Govt. of India, also
supported the initiative of ICAI to converge with IFRS
• Roadmap for implementation of IFRS-converged
standards in phase-wise manner, beginning from
accounting periods commencing on or after 1st April
2011, has been laid down by the MCA

7. ICAI’s initiatives to achieve
Convergence
• Formulation of IFRS-converged Accounting Standards
is the most significant milestone to achieve
convergence
– Accounting Standards corresponding to all IAS/IFRS are
being formulated
– This process is nearing completion
– Status of preparation of IFES-converged Standards is given
in subsequent slides
– It is expected that all the Standards would shortly be ready
for notification by the Government.

8. ICAI’s initiatives to achieve
Convergence (Contd…)
• Process followed in formulation of IFRS-converged
Standards
– IFRS are reviewed
– As far as possible, no change is made unless absolutely
essential keeping in view the Indian conditions and
circumstances
– Optional treatments prescribed under IFRS are removed
keeping in view Indian environment to bring about
comparability
– Conceptual issues, if any, are identified and taken up with
the IASB

9. ICAI’s initiatives to achieve
Convergence (Contd…)
Status of preparation of IFRS converged standards
as far as ICAI is concerned
S No. Standards Status
1. Standards cleared by Council 36
2. Exposure Drafts issued Nil
3. Standards before ASB 2
Total 38

10. ICAI’s initiatives to achieve
Convergence (Contd…)
Status of preparation of IFRS converged standards as
far as NACAS is concerned
S No. Standards Status
1. Standards cleared by NACAS 23
2. Standards considered by NACAS and specific 9
issues to be resolved
3. Standards to be placed before NACAS at its 4
next meeting
Total 36
All IFRICs and SICs contained in the above Standards will be
considered by NACAS separately.

11. MCA’s Initiatives for Convergence
• Press Release issued by MCA indicating:
 Two separate sets of Accounting Standards u/s section
211(3C) of the Companies Act, 1956.
• Indian Accounting Standards converged with IFRS
applicable to the specified class of companies in
three phases
• Existing notified Accounting Standards applicable to
companies not coved by above including Small and
Medium Companies (SMCs).
 Roadmap for application of IFRS converged
Accounting Standards
 Roadmap for Banking and Insurance companies

12. MCA’s Initiatives for Convergence
• Constitution of following Core Group and Sub Groups:
– Core Group headed by Secretary, MCA
– Sub-group 1 headed by Mr. Y.H. Malegam
• to finalise the roadmap for achieving convergence
• to get the changes in laws and regulations
– Sub-group 2 headed by Mr. Mohandas Pai to address
industry-specific issues

13. Phase-wise Roadmap for application
of IFRS converged Accounting
Standards for Companies
• Phase-I:- Following categories of companies will prepare
opening balance sheets as per IFRS converged
Standards as at 1st April, 2011, if the financial year
commences on or after 1st April,2011
a. NSE – Nifty 50
b. BSE - Sensex 30
c. Whose shares or other securities are listed on stock
exchanges outside India
d. Whether listed or not, which have a net worth in
excess of Rs.1,000 crores.
( Phase-1 implementation has been deferred by the Ministry
of Corporate Affairs)

14. Phase-wise Roadmap for application of
IFRS converged Accounting Standards
for Companies
• Phase-II :-
Whether listed or not, having a net worth exceeding Rs.
500 crores but not exceeding Rs. 1,000 crores will
convert their opening balance sheet as at 1st April, 2013,
if the financial year commences on or after 1st April,
2013

15. Phase-wise Roadmap for application of
IFRS converged Accounting Standards
for Companies
• Phase-III :-
Listed companies which have a net worth of Rs. 500
crores or less will convert their opening balance sheet as
at 1st April, 2014, if the financial year commences on or
after 1st April, 2014, whichever is later,

16. Roadmap - applicability of notified
accounting standards which are not
converged with the IFRS
• companies which fall in the following categories will need
to follow only the notified accounting standards which are
not converged with the IFRS. These companies are: -
(a) Non-listed companies which have a net worth of Rs.
500 crores or less and whose shares or other
securities are not listed on Stock Exchanges outside
India.
(b) Small and Medium Companies (SMCs).
(though they may voluntarily opt to follow the notified
accounting standards which are converged with the IFRS)

17. ROADMAP
FOR
INSURANCE COMPANIES,
BANKING COMPANIES
AND
NON-BANKING FINANCE COMPANIES

18. Insurance companies
All insurance companies will convert their opening
balance sheet as at 1st April, 2012 in compliance with the
converged Indian Accounting Standards.

19. Banking companies
Converged Indian Accounting Standards.
• All scheduled commercial banks and those urban co-
operative banks (UCBs) which have a net worth in
excess of Rs. 300 crores will convert their opening
balance sheet as at 1st April, 2013
• (b) Urban co-operative banks which have a net worth in
excess of Rs. 200 crores but not exceeding Rs. 300
crores will convert their opening balance sheets as at 1st
April, 2014

20. Banking companies
Existing notified Indian Accounting Standards which
are not converged with IFRSs
• Urban co-operative banks which have a net worth not
exceeding Rs. 200 crores and Regional Rural banks
(RRBs) (though they may voluntarily opt to follow
converged Indian Accounting Standards do so)

21. Non-Banking Financial companies
• Following NBFCs will convert their opening balance sheet
as at 1st April, 2013 if the financial year commences on
1st April (or if the financial year commences on any other
date, then on the date immediately following 1st April,
2013)
(a) NSE – Nifty 50
(b) BSE - Sensex 30
(c) Companies, whether listed or not, which have a net
worth in excess of Rs.1,000 crores

22. Non-Banking Financial companies
• All listed NBFCs and those unlisted NBFCs which do not
fall in the categories (in last slide) and
• which have a net worth in excess of Rs. 500 crores
will convert their opening balance sheet as at 1st April
2014 if the financial year commences on 1st April (or if the
financial year commences on any other date, then on that
date following 1st April 2014)

23. Non-Banking Financial
companies
• Unlisted NBFCs which have a net worth of Rs.
500 crores or less
– need to follow only the notified Indian accounting
standards which are not converged with the IFRSs.
– though they may voluntarily opt to (i.e the converged
Indian accounting standards), do so, but

24. Recent developments to achieve
Convergence
• IFRS-compliant Schedule VI to the Companies Act has
been formulated and approved by NACAS.
• Draft of Schedule XIV to the Companies Act is under
preparation and the draft is likely to be finalised shortly.
• Scheme of numbering of IFRS converged Indian
Accounting Standards has been finalised.

25. ICAI’s other initiatives to achieve
Convergence
• Another significant role of the ICAI is to provide education and
training to all the concerned stakeholders for proper
implementation of IFRSs
– Certificate course on IFRSs has been launched
– Around 2000 members have undergone this course
– IFRS e-learning course has been started
– in collaboration with the MCA, a large-scale IFRS awareness drive to
hold workshops at various places in the country has been started
– As a part of this IFRS awareness drive, 14 workshops have been
organised which have been attended by more than 850 delegates.

26. ICAI’s other initiatives to achieve
Convergence
• Taking up issues with IASB where there are conceptual
differences
• Participation in IFRS development process
1) Participation in the IFRS formulation from an early stage
– Sending comments to IASB on various discussion papers, exposure
drafts, etc.
– Participation in World Standards-setters meetings with IASB
2)Participation in Regional Standards-setters meetings with IASB
3)Enhancing relations and communication with other standard setters
4)Participation in international round-tables before the finalisation of
IFRS