CESR's tentative conclusion is that the current programme of the Institute of Chartered Accountants of India to converge Indian GAAP with IFRSs, if completed by 2011 as planned, will result in Indian GAAP that is equivalent to IFRSs. Therefore, CESR's proposed recommendation to the Commission is to allow companies currently using Indian GAAP for listing on a European securities market to continue to do so, without reconciliation through 2011 and, if India's convergence plan is achieved, to continue to do so after 2011. Following this consultation, CESR will report its final conclusion to the European Commission, which must make the final equivalence decision. Here is an excerpt from CESR's paper:
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On the basis of the information detailed above, CESR has drawn the following conclusions:
- The ICAI has made, in July 2007, a public commitment to adopt International Financial Reporting Standards before 31 December 2011;
- The Indian Government confirmed publicly in May 2008, its intention to achieve convergence with IFRS by 2011;
- The ICAI has noted that it might make modifications to IFRSs to reflect 'Indian conditions' such as requiring additional disclosures, changing some terminology and omitting some options or alternative treatments. However, these changes are expected to be minor and the stated intention of both the ICAI and the Indian Government is that Indian Accounting Standards will to all intents and purposes be fully IFRS compliant by the end of the program and that Indian issuers will therefore be in a position to make an absolute statement of compliance with IFRS in their notes.; and
- Effective measures are consequently being taken to secure the timely and complete convergence of Indian Accounting Standards to International Financial Reporting Standards by 31 December 2011....
If the Commission were minded to allow Indian issuers to use Indian GAAP when accessing EU markets, CESR recommends the Commission accept Indian GAAP according to article 4 of the Commission Regulation on the mechanism until it is in a position to make a decision under article 2.
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'The following table gives the key milestones that will need to be met for the Indian convergence program to be achieved, based on current assumptions in the concept paper and a changeover date of 1st April 2011 as announced in May 2008 by the Ministry of Corporate Affairs. The table also identifies the key decisions that both the ICAI and the Indian Government will need to make in order to implement the convergence program'.
| 2008 - 2009 |
- Revisions to be made to Indian accounting standards to converge them with their IFRS equivalents. 14 revised Indian standards will be issued in 2009.
- Accounting professionals to obtain training and thorough knowledge of IFRS.
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| 1st April 2010 |
- All Indian accounting standards to have been issued by ICAI to allow issuers to prepare comparative information for the changeover date.
- Any last differences from IFRS to be fixed during the year.
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| 1st April 2011 |
- Changeover date.
- First year of reporting under new IFRS-based accounting standards.
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Click for the Consultation Paper (PDF 508k).
