It seems that I was not the first to report that IFRS adoption in India could be on the rocks. Compliance Week editor Matt Kelly posted a link to their short blurb headlined "India Could Abandon Mandatory IFRS" from February 18th. India's parliament was reportedly stalled on needed legislation, and that its Ministry of Company Affairs was considering delaying IFRS adoption, and even making it optional.

As to the sources of differences between IFRS and Indian accounting standards (Ind AS), Deloitte's website has an article that tabulates the many differences, large and small. And, another Deloitte article from last month states that IFRS adoption may never have been in the cards for India:

[T]he Ind AS are based on IFRSs, but include some changes which are noted in the appendix to each standard. Some of the modifications may prevent an entity following Ind AS from making an explicit and unreserved statement of compliance with IFRSs (Ind AS 1 … requires a statement of compliance with Ind AS, not IFRSs). [bolded italics added]

It appears from a quick review of all of this – the numerous differences, and the requirement to comply with Ind AS instead of IFRS – is that India is more focused on trying to converge their own standards where possible with IFRS rather than an outright adoption of IFRS. But, why India would want to do this, I don't know. Perhaps, the strategy is for issuers in India to continue to have the standards they desire, while doing everything they can to avoid being seen as an outlier by the rest of the world – at least on the big issues.

But, if that has been the strategy, India may have just come to the realization that it would fail. From reading an interview with India's Chairman of its legally constituted National Advisory Committee on Accounting Standards, the mindset of India's accounting establishment reminds me more of the defunct reserve-oriented income statement smoothing approach once practiced and perfected by the Germans. The interview mentions four major carve-outs from IFRS; but one in particular, on foreign currency debt, best reflects the great divide that still exists after years of dickering back and forth with the IASB.

Ever since the mid-1970s, the U.S. has required that foreign currency-denominated debt instruments be measured at the balance sheet spot rate, with changes due to remeasurement recognized in income for the period. International standards eventually followed suit; but, Indian issuers, who obviously rely on foreign debt more heavily than their U.S. or European counterparts are unwilling to tolerate the income statement volatility. Hence, an IFRS carve-out permits the issuer to spread anyforeign exchange gain or loss over the life of the loan. The evident result: balance sheet, wrong; income statement, wrong; issuers, happy.

Also, it seems, that India would never be able to abide revenue recognition rules that would measure agricultural commodities at fair value -- too much income statement volatility. Nor are they willing to deprive their booming construction industry of percentage-of-completion accounting.

These are all clearly fundamental differences, but the most important thing to contemplate is not whether the Indian accounting establishment's views have merit. Think instead about the difference in financial reporting mindsets, which could not possibly be bridged by a single set of global accounting standards.

If IFRS adoption was ever a goal worth pursuing, it has long since vanished, and the political motivations of its remaining supporters are now deprived of any pretense of legitimacy. It's time to let the rest of the world "countdown to IFRS" if they want to, but If the SEC were really serious about protecting investors, it would scrap the IFRS roadmap. In its place, there should be a new plan for making U.S. GAAP unquestionably the pre-eminent financial reporting system in the world.

Could the U.S. create the best financial reporting system in the world while at the same time caring about IFRS convergence? No way. Let's stop the charade.