Indian companies with over Rs 500 crore net worth will have to change their accounting rules for better international comparison

From April 1 onwards, companies that have a net-worth of Rs 500 crore or more will have to follow the new Indian Accounting Standards (Ind AS). The move has come despite experts raising concerns over many firms not being ready for the change.

The new standards made for these companies are benchmarked to the International Financial Reporting Standards (IFRS), so that Indian corporate accounts are comparable internationally. The move is expected to fill up the gaps in India’s current reporting standards.

Companies would be required to make wider disclosures on transactions and associated companies, and also to provide explanations on various numbers in their books.

As per the roadmap of the corporate affairs ministry, all companies, listed or unlisted, that have a net-worth of over Rs 500 crore along with their holding, subsidiary, joint venture and associate companies would need to comply to the change in the first phase.

From next year April, the rule would cover companies with a net worth of over Rs 250 crore and up to Rs 500 crore. This net worth will be calculated as of March 31, 2014.

As per the new rule, classification of financial assets and liabilities will be impacted, and many items that were not included in the balance sheets will now have to be reported.

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