IND-AS and IFRS
There was a surmounting pressure on the Indian economy to adapt or use in some form the IFRS as used by many other parts of the world. The global investors sought financial statements from Indian companies in the format they would like to see these. Accordingly, the need for financial statements to get global was in a hindsight. So, instead of a complete move to IFRS, a modified version of IFRS in form of IND-AS is used. The ICAI has brought many professionals to carry the knowledge on the new GAAP through its certification course. Its Final examination on Financial Reporting tests on IND AS and not IGAAP currently. This could bring in more people at least aware of many requirements of IND AS if not IFRS. The IASB (International Accounting Standards Board) is happy with the fact that pretty much scope of the IFRS is expected to be used by the Indian economy. This is due to the fact that IND AS are picked considerably from IFRS subject to little customisation to suit Indian environment.
There are 2 prime challenges ahead for Indian economy on the use of IND AS: First, not all companies are required to use IND AS instantly. There is a timeline, depending on the size of a company, to mandatory use IND AS. Hence, not immediately, a company may be required to use IND AS, and therefore the motivation may be lost for the entire economy. The users of financial statements may have to compare a large company’s performance on the basis of financial statements prepared under IND AS against that of another small business on the basis of financial statements prepared under IGAAP, at least temporarily. However, this is still a good cautious move to get into IND AS by the Indian businesses.
The second challenge is to bring changes in existing IFRS or new IFRS into IND AS in future. How soon will that happen, again might need to go through the process of evaluation by the various stakeholders above, and not everyone may agree to bring those changes immediately. This is a bigger bottleneck to make IND AS comparable to IFRS for Indian businesses.