NEW DELHI: Only 53 per cent of Indian businesses are aware of the impending global changes in the existing accounting standards that will impact the way they recognise and report revenue, according to a survey.
Besides, of the 2,800 businesses surveyed by Grant Thornton, nearly 60 per cent believed that existing accounting standards, which are almost two decades old, need to be improved or replaced.
The new accounting standard IFRS is scheduled to be implemented next year. Areas that may be affected because of the new rules include multiple element arrangements, sales incentives, contingent pricing arrangements and contracts with a significant financing element.
Sai Venkateshwaran, Partner and IFRS Practice Leader of Grant Thornton India, said: "The proposals will change the amount or timing or revenue in some cases, although the impact will differ for companies applying IFRS, US GAAP and Indian GAAP."
He added, "The changes could be more significant for Indian companies considering that they are moving from a state where there is diversity in practice due to the limited guidance available under Indian GAAP."
Meanwhile, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are developing a joint proposal for converged revenue recognition standard.
The IASB and FASB's joint latest proposal was published in November, 2011, following a previous Exposure Draft in June 2010 and a Preliminary Views document in 2008.
However, more than three quarters (78 per cent) of the survey respondents believe that the latest joint proposals would lead to increased costs and 57 per cent said it would lead to more complexity.
Support for change was lowest in the US, the UK, and South Africa, while support was greatest in India, the ASEAN countries and Latin America.
Ed Nusbaum, CEO of Grant Thornton International said: "Revenue is a key performance measure for every business and a single, global accounting standard in this area is critical.
"The US literature suffers from the opposite problem of excessive guidance - much of which is specific to particular industries. The regional variations in attitude to the Boards' proposals are no doubt affected by these different starting points."
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