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EC has concerns on India's IFRS move

Wednesday 3 August 2011 - by Andrew Hickley


India is raising "significant uncertainty" about its convergence on IFRS accounting standards as it has made numerous modifications and carve-outs from the global rules, the European Commission has warned.

A staff document from the commission argues that India is at risk of creating a country-specific version of the standards that differ from those used worldwide, despite agreeing to adopt IFRS by 31 December 2011.

The billion-strong nation has made changes to "important areas" such as agriculture, financial instruments, negative goodwill and real estate, it says.

Despite Indian officials previously indicating that it will fully endorse the standards, the "latest developments introduce ambiguity about the country's commitment towards an IFRS-compliant financial reporting system", says the report released on Tuesday.

The commission fears that there will be a "number of issues to resolve" to ensure a smooth switch over to IFRS when firms are trying to incorporate the new standards.


Thirty-five Indian Generally Accepted Accounting Principles were issued on 25 February though the expected date these will apply has since been delayed.

The EC says: "Thus, the question remains whether companies complying with these Indian GAAP would be able to make an unreserved statement of compliance with IFRS."

Financial statements from businesses in India are accepted within the EU until 31 December 2011. The commission has to decide before the end of the year whether convergence towards IFRS has been sufficient to allow the EU to continue accepting these statements.

The report - compiled by the Committee of European Securities Regulators and its successor the European Securities and Markets Authority - also warns that because no issuers in India have taken advantage of early adoption of IFRS, regulators have no experience of enforcement.

However the EC says it is much more encouraged about progress in China. The jurisdiction must also prove it has sufficiently converged its standards so that the EU will continue to accept its financial statements.


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READERS' COMMENTS
2011-10-19 07:44:52 | Anonymous
EC means
2011-08-05 07:25:16 | Anonymous
what is the name of the EU report ss mentioned in the article?