The IFRS compliance will boost and facilitate foreign capital inflow

The road map for phase-wise convergence as already been cleared for the Indian public interest entities and accordingly the companies falling under phase 1 (effective 1 April 2011) have been identified. Indian regulators and the Institute of Chartered Accountants of India (ICAI) have been aggressively working towards meeting the timelines and the respective companies are already gearing up for the D-day,however,there are still many milestones to be achieved before the D-day namely relevant amendments in the companies act/bill,notification of all converged accounting standards by National Advisory Council for Accounting Standards (NACAS),completion of the on-going process of carve outs and the road map for resolution of tax implications arising out of convergence.

By not making restatement of the financial statements for the immediately preceding year mandatory,we have already subtly pushed transition by one year and any further extension may expose us to global criticism (we are already being criticized for the carve outs/deviations from IFRS as issued by IASB). India as one of most emerging economy and a leading member of G20 countries should aspire to hold the purity of IFRS and the sanctity of the commitment.

In terms of the benefits for the average investors,IFRS being global standards brings in universal comparability and benchmarking of the financial statements and with lot of emphasis on qualitative disclosures,there is much more transparency in the financial statements. The IFRS compliant financial statements have far more international credibility and acceptability and all this enhances the valuations of the entity in the eyes of the investors globally and thus boosting and facilitating foreign capital inflow.

How can IFRS be viewed as a career opportunity for young CAs and ICWAs?

IFRS is definitely opening up lot of avenues and newer opportunities and challenges for the aspiring CAs and ICWAs and as there is a definite dearth of IFRS skilled resources in India which opens up the way for whole new career graph and profile for the Indian CAs and ICWAs.

But having said that,the Indian CAs and ICWAs have to come up to the speed and the expectations if they wish to play dominant role in future or else theyll be rendered obsolete.Within IFRS,apart from being generalists,CAs and ICWAs should aspire towards developing high level technical expertise and also specific domain expertise in financial instruments and fair valuations. With IFRS being adopted globally,there will be immense opportunities for Indian CAs and ICWAs to work on global engagements on and off shore.

Do you expect some surprises when the big real estate companies would declare full details of their land banks and assets under IFRS? Will it impact the real estate sector/stocks?

In terms of the recent developments,real estate sector seems to be one of the significant beneficiary of the carve outs in revenue recognition and treatment of investment properties. As regards revenue recognition,the real estate companies would be following percentage completion method for revenue recognition and this will put at rest the confusion around different practices being followed by different companies. This will definitely bring more comparability and uniformity which in long run would benefit the sector. As regards the treatment of investment properties under fair value model,the accounting of fair value changes through other comprehensive income rather than profit and loss will eliminate volatility in the profit and loss account for each reporting period. The impact of the same on the real estate sector is what remains to be seen.

Further,the practice of joint-development agreements are quite common in real estate industry where land owner gets specified portion of area in consideration for the land. Such transactions are regarded as barter under Indian GAAP and not accounted for. However,IFRS requires these transactions to be reflected at fair value which will result in accounting significant impact.

The LIC Housing Scam has once again started the debate on the role of Independent Directors? You are on the Board of several listed companies. What advice would you give to make structural change in the way Independent Directors are chosen and appointed so as to make it a more responsible position?

The debate on regulations governing independent directors is very engaging at the moment. The new shape will emerge as Company law gets amended. Our listing guidelines are the finest in the world. We ought to let the evolution take shape and express views only after the new consensus emerges.

Appointing a nomination committee which could play a significant role in board level appointments would give comfort to the investors at large. The nomination committee to be made responsible for search,short listing and recommending names of appropriate independent directors. The nomination committee would function as a sub-set of the Board and under the directions of the Board.

ELSS is set to lose its tax exempt status according to Draft DTC. It is one of the most attractive investment as well as tax saving vehicle. What are your comments on it and your suggestion to the investors as well as Finance Ministry?

According to the proposed Direct Tax Code (DTC) effective April 1,2012,investors will not be able to get tax benefits if they invest in ELSS or insurance-based tax-saver unit linked insurance plans (ULIPS). The point to be noted is that the revised Direct Tax Code will only be applicable only on fresh investments made from April 1,2012,and not on existing investments. So investors should make sure that this financial year they make full use of benefits of ELSS mutual funds.

Apart from hitting hard the mutual fund industry,it will also hit hard the investors. So along with the various forums and industry organisations we are making representation before the Government to extend benefits to ELSS mutual funds..