Convergence of accounting standards across the globe is the next revolutionary change in
the accounting world. With the European Union (EU) having adopted IFRS from 2005, the
convergence of accounting standards across the globe gained momentum. Since
then, more than 100 countries have adopted IFRS and by the year 2011, around 150 countries would
be expected to become IFRS compliant. The Institute of Chartered Accountants of India (ICAI)
has decided that in India, IFRS should be adopted for the public entities such as listed entities,
banks and insurance entities and large-sized entities from the accounting period beginning on or
after April 1, 2011.
The International Accounting Standards Board (IASB), a private sector body, develops IFRS.
In the year 2001, IASB replaced International Accounting Standards Committee (IASC), which
was created in 1973 to develop International Accounting Standards (IAS). The standards issued
from 1973 to 2001 by IASC were adopted and further developed by IASB, calling these new
standards as IFRS.
Due to globalization, lots of cross-border investments
are taking place. Companies are operating in different parts of
the world and are accessing international capital markets.
Indian companies too are getting listed on international
stock exchanges and, therefore, for all global stakeholders
concerned, a unified set of standards ensuring a common
financial reporting language is required. Convergence of
Indian Accounting Standards with IFRS will ensure reliable and
high-quality financial statements for Indian companies and
this would mean greater competitiveness in the global arena. |
