Significant changes in accounting practices and techniques, including for revaluation of fixed assets, can be expected with the Institute of Chartered Accountants of India (ICAI) giving a go-ahead to converge the Indian accounting standards with international standards from April 2011.
ICAI president Sunil Talalti said the ICAI council decided to converge the Indian standards with international financial reporting standards issued by the International Accounting Standards Board from the accounting periods starting on or after April 1, 2011.
?Like in other countries such as Australia, New Zealand and countries in the European Union, the IFRSs will be adopted for the listed entities and other public interest entities such as banks, insurance companies and large-sized entities,? he said, adding that it will lead to global acceptance of Indian accounting practices in an era when domestic companies were listing abroad or buying companies overseas.
Avinash Chander, technical director at, told FE that many of the present accounting standards would be revised as a result of the decision while ICAI will also introduce new ones to be in tune with international standards.
For example, the present Accounting Standard 10 (AS10) will be revised and its title will be changed from ?Accounting for Fixed Assets? to ?Property, Plant and Equipment?, as is there in international standard of IASB. ?As part of this revision, companies will have to either go for historical costs for valuing their fixed assets or else choose for a periodic revaluation system, also specifying the periodicity of revaluation that would need to be followed on a mandatory basis,? Chander said.
He said while companies can still revalue fixed assets like land and buildings, it is presently at their discretion and there is no fixed periodicity attached to the process. Other areas where changes can be expected are on financial instruments, where the ICAI is now planning to incorporate standards on accounting for derivatives like futures, options and swaps.