The convergence of Indian accounting norms with global audit practice IFRS will have a bearing on the profits of telecom companies as they will be required to assign fair value to their assets, a study by telecom regulator TRAI has said.

Under IFRS, "financial assets or liabilities ... are recognised at fair value on the date of initial recognition. Adoption of IND AS will affect the profit for the year as well as the profit for subsequent years. Further, the current assets or liabilities will also change due to recognition of security deposit at present value," TRAI said.

In accounting, fair value is defined as an estimate of the potential market price of goods or service, taking into consideration factors like acquisition, production and distribution costs and replacement costs.

"This (the change in profit figures) will have an impact on the income tax payable to the government by such companies," it added.

In its ''Draft Study Paper on Implication of Adoption of IFRS on Indian Telecom Service Sector Companies', TRAI also said that the convergence will have an impact on annual licence fee payable by the service providers to Telecoms Department as there will be changes in accounting treatment of revenue recognition of certain services.

"As the revenue for the year of transaction will come down, the licence fee payable will be reduced for that year. However, the revenue will be accounted for in future years and licence fee will accordingly be deferred to those years, it said.

Further, companies will have to make separate set of accounts for to fulfill the requirements of TRAI's existing Accounting Separation Regulations, and under IFRS.

Though uncertainty still looms over the implementation date of the IFRS, as per the earlier road map laid out by the MCA, companies will have to prepare their accounts as per the new norm in a phased manner, beginning with companies that have a networth of over Rs 1,000 crore from April 1.

Further, while scheduled commercial banks and urban cooperative banks will adopt IFRS from April 1, 2013, all insurance companies will convert their opening balance sheets with IFRS from April, 2012.

Large, listed non-banking finance companies (NBFCs), will converge their opening books of accounts with IFRS norms from April 1, 2013.