CESR has published today its advice to the European Commission on the equivalence of Indian GAAP to IFRS which recommends allowing the continued use of Indian GAAP by issuers admitted to trading on European markets until 2011 by which time it is expected that Indian GAAP will have converged with IFRS.
CESR’s recommendations are contained in a technical advice (Ref. CESR/08-859) and can be summarised as follows:
CESR has recommended that the Commission accepts Indian GAAP according to Article 4 of the Commission Regulation establishing a mechanism for determining equivalence of third country GAAP. On the basis of the analysis CESR has undertaken, it believes it can draw the following conclusions:
- The Institute of Chartered Accounting of India (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 IFRS 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 programme. 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.
One of the conditions for accepting the continued use of third country accounting standards on European markets for a limited period, is the existence of an appropriate convergence or adoption programme to IFRS which seeks to ensure that convergence takes place by no later than 31st December 2011.
CESR received a mandate from the European Commission in March 2008 requesting technical advice on Canadian, Indian and South Korean GAAPs. In response to this mandate, CESR published a technical advice on Canadian and South Korean GAAPs in May 2008 and now, in this advice (Ref. CESR/08-859), CESR provides details of its work and conclusions concerning Indian GAAP. (See notes for editors for further information on the definition of equivalence and the process).
