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The Finance Minister’s announcement to introduce new accounting standards converged with International Financial Reporting Standards (IFRS) is a welcome step towards the long pending alignment of Indian financial reporting standards with global standards. It is expected that companies would be permitted to voluntarily follow the new converged Indian Accounting Standards (Ind-AS) from 2015-16, which will become mandatory from 2016-17. The timelines for the financial services sector, including banks and insurance companies, is also expected to be finalised soon. Further, the tax accounting standards will also be notified separately.
As the capital market and investment activity gains momentum, both in India and globally, it is of utmost importance to have a uniform globally accepted standard in financial reporting that would aid in better comparability and transparency. These converged standards are likely to increase global acceptance of financial statements of Indian companies, thus resulting in lower cost of capital and improved valuations.
The appended KPMG IFRS Flash News aims to provide companies with an insight to the proposed implementation of the new accounting standards and how it impacts them, and accordingly develop an approach for their IFRS/Ind-AS transition to ensure a smooth implementation and be compliant with the regulations prescribed, in a timely manner.