What is the relevancy of IFRS?
The IFRS is relevant to the extent that the financial statements as per the international standards would make the comparisons of the Indian companies and their international competitors / stakeholders/ partners easier. So, the basic idea is to increase the trust and reliance placed by the investors, stakeholders and analysts in the companies. For the companies, which are subsidiary to the foreign companies, it would be mandatory if their parent company uses IFRS. To a great extent, the IFRS documents would help the domestic companies to raise the capital abroad.
What are the Costs involved in this transition?
The costs are as follows:
Identification and mapping the differences in the accounting standards
Implementation which would require the system and software's
Adjustments in the data storage and availability.
Will the costs ultimately increase?
No, ultimately the costs of the capital and financial reporting should come down. The challenge is transition from Indian system to IFRS.
Are there any regulatory hurdles?
Yes, there are. India would be requiring to amend some provisions (which are key provisions) of the Companies Act 1956, SEBI Act, IrDA Act apart from the RBI Regulations. Out of them, the new Companies Bill has been provided with the changes. Since the deadline for Banking & Insurance, is a little away, the necessary amendments will be carried out later.