A study on convergence or adoption of international financial reporting standards (IFRS) in India

Desti, Kannaiah (2014) A study on convergence or adoption of international financial reporting standards (IFRS) in India. International Journal of Multidisciplinary Thought, 4 (3). pp. 13-28.

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Abstract

International Financial Reporting Standards (IFRS) is a set of International Accounting Standards stating how particular types of transactions and other events should be reported in Financial Statements. IFRS are generally principles-based standards and seek to avoid a rule book mentality. IFRS are issued by the International Accounting Standards Board. IFRS are well accepted standards for assessment of the financial position and performance of a business across the globe. As we know that the world becoming a global village, organizations and investors who operate business in several countries need to know each nation’s accounting principles. Although, basic accounting principles are widely accepted but the application of certain accounting principles in different economic and cultural environment has led to significant differences as how accountant reports similar transactions. IFRS is important whether it is small, medium or large scale business organization. Today, Indian businesses engage in cross border, report to non-Indian stakeholders and mange overseas operations. Investor's feel that, the need to recognize and understand IFRS is inevitable since Indian investors keep looking for overseas investment opportunities. India has been joining IFRS club from the financial year 2012 and included all listed companies, all banking companies, all financial institutions, all scheduled commercial banks, all insurance companies and all NBFC. Today, India's IFRS approach to convergence rather than adoption is a debate among the companies, preparers, government and the stakeholders. There is a subtle difference between Convergence and Adoption of IFRS in India. Convergence means to achieve harmony with IFRS, it can be considered "to design and maintain national accounting standards in a way the financial statements prepared in accordance with National Accounting Standards (NAS). Adoption is a process of adopting IFRS word by word. Adoption enables a common language as far as financial reporting is concerned. It helps for the improvement of capital flows across borders with relative ease. Increased capital flow will reduce cost of capital and reduced cost of capital can enable more employment creation.

Item ID: 37165
Item Type: Article (Scholarly Work)
ISSN: 2156-6992
Date Deposited: 23 Jan 2015 05:43
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150199 Accounting, Auditing and Accountability not elsewhere classified @ 50%
13 EDUCATION > 1399 Other Education > 139999 Education not elsewhere classified @ 50%
SEO Codes: 90 COMMERCIAL SERVICES AND TOURISM > 9001 Financial Services > 900199 Financial Services not elsewhere classified @ 50%
90 COMMERCIAL SERVICES AND TOURISM > 9001 Financial Services > 900102 Investment Services (excl. Superannuation) @ 50%
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