On July 24, 2007, the Council of the Institute of Chartered Accountants of India (ICAI) decided to fully converge with International Financial Reporting Standards (IFRSs) for accounting periods beginning on or after April 1, 2011. As of that date, all publicly-accountable enterprises (including listed companies, banks, and insurance companies) will be required to adopt IFRSs.
Commentary: India's commitment to IFRS convergence is significant as India's economy is large, growing, and increasingly intertwined with the economies of developed nations such as the United States.
Financial executives in companies having related entities that use Indian GAAP should be aware that India's financial reporting standards will change significantly in the next few years and, once converged with IFRSs, will continue to change significantly for many years thereafter.
Direct convergence with U.S. GAAP has once again been rejected in favor of IFRSs by a major economic power. India's recent action highlights the increasingly isolated position of U.S. financial reporting standards and increases the incentives for the U.S. to converge U.S. GAAP with IFRSs, which would affect all U.S. companies, not just multi-nationals.
Read the IASB's Press Release here.
