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India May Not Be Ready for IFRS

Some Indian businesses might not be ready to make the April 1, 2013, switch to

India's government ministers have set the country on a path toward adopting International Financial Reporting Standards by April 1, 2013, but some of the country's largest corporations may not be ready in time, which could present problems for implementation, according to The Hindu Business Line.

“Almost 70 per cent of the companies believe it is illogical and not good for the corporate sector," Jamil Khatri, global head of the accounting advisory services practice at audit firm KPMG, told the source. "Many companies are not inclined because many of the provisions are stringent in India. The cost of borrowing will come down, profits will come down."

One of the biggest issues for Indian businesses is the impact IFRS will have on taxation. According to the source, companies will have to make a significant amount of adjustments under the new reporting standard, and it is unclear whether there will be a positive or negative impact on taxes. Khatri went on to say that businesses in some industries - particularly engineering, manufacturing and finance - will be more reluctant than others to make the switch.

This year, Nigeria made the switch to IFRS, and its companies have not been without some headaches. According to BusinessDay, the Nigerian system to date has been very different from IFRS, and it is important for businesses to make the transition smoothly and effectively. The news source highlighted some considerations for Nigerian companies that can be helpful for organizations in any country when it comes to implementing IFRS.

Include all statements: Companies that are preparing interim financial statements should be sure to include all the necessary statements, including Statement of Cash Flow and Statement of Equity, the source said. This is in addition to the Statement of Comprehensive Income and the Statement of Financial Position.

Include accounting policies: According to BusinessDay, companies preparing their financial statements under IFRS should include accounting policies in the notes. This makes it easier for users to understand the new reports.

Restate financial positions: First-time preparers of IFRS reports should be careful to restate their financial positions from their country's generally accepted accounting principles to IFRS. "For example if the deemed cost election is made, this must be reflected in the restated opening transition statement of financial position," the source said.