Indian Accounting Standards (IAS) convergence with IFRS, April 2015
With the completion of the enactment of Companies Act, 2013, the Ministry of Corporate Affairs has started the process of convergence of the Indian Accounting Standards with the International Financial Reporting Standards (IFRS), which is to be implemented from April 2015.
A revised roadmap has been proposed for the implementation of International Financial Reporting Standards by Ministry of Corporate Affairs (MCA).The new roadmap has two sets of accounting standards as stated in the earlier roadmap of 2010, which are as follows:
- Comprises the Indian Accounting Standards (Ind AS) converged with the IFRS, which will be applicable to a specified class of companies for preparation of consolidated financial statements as defined in Companies Act.
- Comprises the existing notified Accounting Standards (AS) which shall be applicable for preparation of individual financial statements of the companies preparing consolidated financial statements as per Ind AS and for financial statements of other companies.
According to the proposed roadmap, in the first phase starting April 1, 2015, the MCA plans to implement the International Financial Reporting Standards (IFRS) for the companies that have a net worth of over Rs. 1,000 crore.
In the second phase, all the companies listed or non- listed with net worth of over Rs. 500 crore but less 1,000 crore will have to converge with IFRS from the fiscal year beginning April 1, 2016.
However the Banking and Insurance companies are currently exempted from complying with the IFRS. The roadmap for banking companies, NBFCs and insurance companies will be released after consultation with their respective regulators i.e. Reserve Bank of India (RBI) and Insurance Regulatory and Development Authority of India (IRDA).
Once the convergence with IFRS is complete, the companies must file the financial statement in IFRS XBRL format. XBRL and IFRS go hand in hand as both are intended to standardize financial reporting by promoting transparency and improving the quality and comparability of business information.
The first IFRS Taxonomy was developed by the IASB IFRS Foundation XBRL Team and was issued on 25 March 2011. Recently IASB IFRS Foundation team released IFRS Taxonomy 2014 version on 5 March 2014.
The IFRS Taxonomy is the XBRL (eXtensible Business Reporting Language) representation of the complete IFRS, including International Accounting Standards (IASs), Interpretations, and the IFRS for Small and Medium-sized Entities (SMEs), as issued by the IASB.
XBRL taxonomies are available for most of the major national financial reporting standards around the world, and the IFRS Taxonomy is intended for use by entities reporting in IFRS. By providing the IFRS Taxonomy, the IFRS Foundation seeks to address the demand for an electronic standard to transmit IFRS financial information.
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