A new generation of accounting principles was needed to harmonise the accounting practices with those practiced globally. India made a commitment towards the convergence of Accounting Standards (AS) with International Financial Reporting Standards (IFRS) at the G20 Summit in 2009. As on date,the Ministry of Corporate Affairs has notified 40 Ind AS-converged IFRS and laid down an Ind AS transition road map for companies.
However, the dynamic business landscape and growing business complexities posed significant challenges in converging to the changing financial reporting framework for Indian corporates. There was a lack of appropriate guidance for not only the preparation of financial statements as per the new standards, but also for the changing organisational structure and the transformation process itself.
To simplify financial reporting and provide senior management with practical advice, an ‘Ind AS survey’ was conducted by Mazars India in association with the PHD Chamber of Commerce. The results of the survey have been compiled in this report which illustrates how companies may improve their annual reporting. This document will also benefit of the companies which are yet to implement Ind AS.
The extensive report provides clarifications regarding the various regulations. It has a detailed analysis of how the majority has responded to these changes along with Mazars’ views on the same. It covers essential learnings from the Phase I companies and also the impact of Ind AS on various industrial sectors. Following are some key highlights from the survey results:
- A huge majority of the respondents (83.33%) confirmed that learnings and experiences of Phase 1 companies will aid Phase II companies.
- More than half of the respondents (54.76%) believe that adoption of Ind AS by Phase I companies has enhanced quality of their financial reporting to some extent.
- The major challenges as faced by the companies appear to be resourcing staff and knowledge, as 71.69% have responded.
- Over 70% corroborate that enough time is provided to the Phase companies II for smooth implementation of Ind AS.
- A little over half of the respondents (52.38%) believe that Phase I companies have faced more problems in changing the system rather than accounting under the Ind AS regime.
Overall, implementation of Ind AS by the Phase I companies has not only enhanced the quality of their reporting but, in a way,has paved way for implementation by Phase II companies. Companies seem to be well aware of the challenges that lie ahead,both from within the organisation and from the outside economic environment.
We believe that the road to Ind AS implementation will be smoother with time to come. In the long run,this would lead to not only a similar financial reporting structure globally, but also bring more acceptability amid stakeholders worldwide.