IFRS convergence is finally here in India

Finally India is all set to adapt to IFRS through its revised set of Accounting Standards (Ind AS) which are the converged accounting standards with IFRS starting next year.

The Ministry of Corporate Affairs (MCA) has issued a notification dated 16 February 2015 announcing the Companies (Indian Accounting Standards) Rules, 2015 for the applicability of the IndAS in a phase wise manner.

The applicability has been liked to the Net Worth and listing status of the companies.

Starting 1-Apr-2016 all companies having a Net Worth of Rs 500 crore or more will be required to present the Financial Statements under Ind AS. This will also require comparative Ind AS information for the period of 1-Apr-15 to 31-Mar-16.

[Net Worth: Net Worth will be determined based on the standalone accounts of the company as on 31-Mar-14 or the first audited period ending after that date. Net Worth calculation would be as per Sec 2(57) of Companies Act 2013 which means:

Paid Share Capital + Reserves (out of profits i.e. excluding Reserves out of Revaluation of Assets, depreciation write-backs and Amalgamation) + Securities Premium - Accumulated Losses - Deferred Expenditure - Miscellaneous Expenditure not written off]

Starting 1-Apr-2017, Listed companies as well as others with a net worth equal to or exceeding Rs 250 crore will also have to adopt Ind AS. 

Important Notes:

- The Ind AS will also apply to subsidiaries, joint ventures, associates as well as holding companies of the entities covered by the roadmap.

- An overseas subsidiary, associate or joint venture of an Indian company is not required to prepare its stand-alone financial statements as per the Ind AS, and instead, may continue with its jurisdictional requirements. However, these entities will still have to report their Ind AS adjusted numbers for their Indian parent company to prepare consolidated Ind AS accounts

- Ind AS will apply to both consolidated as well as standalone financial statements of a company.