Banks adopt multiple strategies for IFRS switchover

However, companies have been asked to provide a comparative figure for the previous year, effectively advancing the transition to April 2010. So now with barely six months to go, banks are adopting a multi-pronged approach to ready themselves, more so as they will feel the impact of the changeover to a greater extent as their  operations involve multiple financial instruments.

Talking to Deccan Herald, Vijaya Bank Chairman & Managing Director Albert Tauro said, “We have conducted a training workshop to gear employees for IFRS which was  held by experts from large accounting firms. We have also recruited three Chartered Accountants from ICAI to bring some thought process of the IFRS scheme into the working of the bank. We are drawing a roadmap for IFRS implementation in the bank. ” He added that Indian Banker’s Association (IBA) has taken a lead role in helping  banks draw a roadmap and updating their knowledge skills in many ways like creation of a working group of bank representatives, conducting seminars and arranging training workshops.

Committee  set up
To come up with the guidelines on the new accounting norm, a committee has been formed by the Indian Banks’ Association (IBA) and RBI. The new standard will drastically change the way banks report their financials. If implemented fully, it will give them space to keep accounts as per their own business experience, rather than the industry-wise generic accounting rules they are following at present.

As State Bank of Mysore Managing Director Dilip Mavinkure explained, “A team has been set up at the corporate centres which are State Bank of India, Mumbai and State Bank of Mysore, Bangalore to examine the gaps between the current accounting system in India and IFRS, and what changes the bank needs to incorporate in order to comply with the new system with regard to software, analysis, extraction of data and some accounting policies are being looked into.” He added that State Bank of India has appointed a consultant , which is one of the top four accounting firms in the world (he declined to name the firm)  which has started training the bank’s staff in August this year.
The consultant, who has a lot of experience in moving financial sector institutions into IFRS in Europe, Australia and Singapore, has held meetings with core teams and  collection of data has commenced for starting a parallel run for preparation of financial statements, both under the current accounting standards and IFRS.

Some banks are setting up internal cells dedicated to IFRS accounting. “We are currently on the learning curve and we are concentrating on improving knowledge levels of the staff. For this, our staff is attending seminars organised for the very purpose.” said Corporation Bank CMD  Garg. Meanwhile, audit firms such as PricewaterhouseCoopers , KPMG, and Ernst and Young are working with banks to help them meet the deadline.