Hans Hoogervorst speaks about Ind AS as a 'stepping stone towards full IFRS adoption'
05 Feb 2015
At an IFRS Foundation conference in Mumbai, IASB Chairman Hans Hoogervorst commended India for the progress with the new Indian Accounting Standards (Ind AS) that are converging with IFRS, but also pointed at the benefits of full IFRS adoption.
In January 2015, the Indian Ministry of Corporate Affairs (MCA) released a revised road map for the adoption of Ind AS and said that the notification of the standards themselves would follow "shortly". Mr Hoogervorst called the Indian IFRS developments "impressive achievements" and commented that "the new Ind AS should be considered as a very important stepping-stone on the path to adoption of IFRS". He also listed the benefits of embracing IFRS:
- a public commitment to high standards in corporate governance and reporting,
- a most likely fall in the cost of capital,
- a passport to access almost every capital market in the world, and
- acquisition of a skill set that is internationally recognised and highly sought after.
Yet Mr Hoogervorst warned that stopping at convergence without in the end fully adopting IFRS might mean that India will not reap the full benefits:
Foreign investors do not have the time or the resources to study the intricacies of accounting standards. They want to see the well-known brand of IFRS: anything else makes them raise their eyebrows. So for India to draw the full benefits of IFRS, it is very important that the Indian carve-outs should not only be small; they should also have a limited lifetime. It is important that investors see them as only an intermediate step on the way to full IFRS.
Indeed, the danger would otherwise be that Indian companies would incur the full cost of transition to a new standard without receiving the full benefits and international recognition that come with IFRS adoption.
Mr Hoogervorst also spoke about the fear that adoption of IFRS leads to a loss of national sovereignty in accounting standard-setting. He pointed at the many other jurisdictions that have adopted IFRS and commented: "I do not believe that all these jurisdictions have simply rescinded their sovereignty in accounting standards. They have instead made a free choice to pool their standard-setting in an international organisation." He also stressed the IASB's ability and willingness to listen carefully to its stakeholders and promised to continue the close working relationship with India that sprang up in the recent months in the years to come.
The full transcript of Mr Hoogervorst's speech is available on the IASB's website.
