Converging accounting standards challenge issuers

The International Accounting Standards Board (IASB) recently reported the announcement by the Council of the Institute of Chartered Accountants of India (ICAI) at its July 2007 meeting that Indian accounting standards will achieve full convergence with International Financial Reporting Standards (IFRS) for accounting periods commencing on or after 1 April 2011.

This article, the second of two on the subject, considers some of the challenges Indian companies and auditors face in making the transition to IFRS financial reporting.

Harmonizing standards

Alongside Indian generally accepted accounting practices (GAAP), Indian companies are also subject to a number of additional accounting standards and related requirements. For example, the Indian securities regulator sets out standards for accounting for employee stock option plans and presentation formats for quarterly financial reporting, while the Reserve Bank of India is the standard keeper for accounting by banks, including the treatment of non-performing assets.

Arun Balasubramanian is a partner at Linklaters. His practice is focused on India-related capital markets matters, and his recent transactions include the US$2.2 billion IPO of DLF, the US$1.9 billion IPO of Cairn India, the US$700 million AIM listing of Unitech Corporate Parks and GDR and QIP offerings for a number of issuers His other transactions include the IPOs of TCS, NTPC and IDFC and the ONGC and IPCL disinvestments.