Corporate India’s High Level of Awareness, Yet to Translate into Action on the Ground on Implementing Ind-AS Standards, According to KPMG India ‘Ind-AS Pulse – Transition Readiness Survey’

• Only 17% of the total respondents have completed an impact assessment, while 54% of the total respondents are yet to start

• 63% of the total respondents want voluntary adoption of IFRS to be permitted

• 61 per cent of all respondents and 91 per cent of listed company respondents believe significant stakeholder communication for successful transition to Ind-AS

Convergence with IFRS will have organisation wide implications for most companies, potentially impacting key business arrangements. However, despite Boards and senior management of 94% of listed company respondents being aware of these implications, companies are behind the curve in carrying out an impact assessment. Transition to Ind-AS will also require significant training of key stakeholders and require effective use of technology for smooth implementation. 61% of all respondents and 91% of listed company respondents believe this area requires significant stakeholder communication, reveals KPMG India ‘Ind-AS Pulse -Transition Readiness Survey’.

This survey provides a summary of the current state of readiness of Indian companies to manage this transition and the key implementation challenges and potential benefits that they perceive from this transition.

Companies transitioning into Ind AS no doubt will have organisation wide implications in areas beyond accounting. The move to Ind AS standards is expected to significantly enhance the quality of and transparency in financial reporting by Indian companies. It could also enhance the international comparability of financial statements of Indian companies and make the Indian capital markets more attractive.

Sai Venkateshwaran, Partner and Head of Accounting Advisory Services (AAS), KPMG in India says, “India Inc is gearing up for the long awaited convergence with IFRS, with a greater level of awareness of the changes expected on transition to Ind-AS.  There is also an overall appreciation of the key challenges involved, both from an accounting perspective as well as the organisation-wide issues including technology changes, training needs of people, impact on business arrangements and structures and stakeholder communications. However, this awareness hasn't translated into action with most of India Inc. still behind the curve in carrying out an impact assessment specific to their organisations.”

He adds, “Another interesting revelation is that close to half the respondents believe that carve-outs from IFRS diminish the acceptability of Ind-AS standards and almost two-thirds of the respondents believe they should be given the option to voluntarily adopt full IFRS standards instead of Ind-AS. These are certainly important stakeholder reactions that the regulators should take into account when deciding the future of India's convergence efforts.”

The survey also brought out four key themes:

• Accounting Standards transition is firmly on the agenda for the Board of Directors and management. There is general awareness within companies about the requirements. The preparers are pleased that the roadmap and the standards have been issued in advance and that there is no uncertainty on applicability to companies

• Companies also acknowledge that this change cannot be handled solely by internal teams who have to handle business as usual processes and that external assistance would be required. This is also primarily because there is an understanding that some of the areas of accounting are complex under Ind AS and a general up skilling of financial reporting function would be required

• The fact that it is an organisation wide change is also a position that companies acknowledge and there is need for updating IT systems and MIS. Communication with key stakeholders in advance of the release of financial results in 2016 is also well understood

• An interesting message coming out is that companies have not started working on AS transition just yet. Considering the pervasive implication as well as complexity that this exercise entails we believe that the time to start preparing for the transition is upon the corporates. With firm direction coming from the MCA it is unlikely that there will be any roll back form the implementation calendar.

About the survey

The KPMG Ind-AS Pulse – Transition Readiness Survey was conducted by circulating an online questionnaire and received responses from senior executives from over 100 companies, which included listed (40%) and unlisted companies from varied industries across Manufacturing, Information Technology, Financial Services, Healthcare, Retail, Infrastructure, Real Estate, Energy and natural resources & Telecommunications.

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About KPMG in India

KPMG in India is the Indian member firm of KPMG International and was established in September 1993. It strives to provide rapid, performance-based, industry-focused and technology-enabled services, which reflect a shared knowledge of global and local industries and its experience of the Indian business environment. KPMG provides services to over 2,000 international and national clients in India and has offices in Mumbai, NCR, Bangalore, Chennai, Hyderabad, Kolkata, Chandigarh, Ahmedabad, Pune and Kochi.

KPMG International is a global network of firms providing professional services. We have 153,000 outstanding professionals working together to deliver value in 156 countries worldwide. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.  Each KPMG member firm is a legally distinct and separate entity and describes itself as such. www.kpmg.com/in