The history of convergence can be traced to 2007 when The Institute of Chartered Accountants of India (ICAI) issued a concept paper which focused on achieving convergence with IFRS. Convergence of Indian Generally Accepted Accounting Principles (GAAP) with the International Financial Reporting Standards (IFRS) has been one of the most discussed topics in recent times. After a number of delays, the Ministry of Corporate Affairs (MCA), in a press release issued on January 2, 2015, announced its long-awaited road map for implementing the Indian Accounting Standards (Ind AS). Its revised plan for the adoption of Ind AS converged with the IFRS issued by the International Accounting Standards Board (IASB) has resolved the uncertainty surrounding the execution timeline of Ind AS in India. This paper deals with Ind AS, its history and the bottlenecks in its implementation. The paper aims to analyze the major carve-outs/ins in Ind AS as compared to IFRS, to identify the impact of the key changes of convergence on the financial statements and to analyze the key differences between the existing accounting standards and the Ind AS (12, 110 and 115) as notified by MCA. With India opting for mandatory convergence with IFRS, as envisaged in the maiden budget speech of Finance Minister, Arun Jaitley, understanding the implications of Ind AS becomes imperative.

The concept of convergence first arose in the late 1950s in response to post-World War II economic integration and related increases in cross-border capital flows. The foundation for international accounting standards was laid in 1966, when it was proposed that an International Study Group be started comprising the Institute of Chartered Accountants of England and Wales (ICAEW), American Institute of Certified Public Accountants (AICPA) and Canadian Institute of Chartered Accountants (CICA). As a result, the Accountants International Study Group (AISG) was set up in 1967, which published papers on important topics. The International Accounting Standards Committee (IASC), formed in 1973, was the first international standardssetting body. It was reorganized in 2001 and became an independent international standard setter, the International Accounting Standards Board (IASB). The European Union (EU) adopted legislation requiring all listed companies to prepare their consolidated financial statements using IFRS starting in 2005, becoming the first major capital market to require IFRS. The EU subsequently decided to ‘carve-out’ a portion of the international standard for financial instruments, producing a European version of IFRS. In September 2002, the FASB and the IASB met jointly and agreed to work together to improve and converge US. GAAP and IFRS (the Norwalk Agreement). The Norwalk Agreement set out the shared goal of developing compatible, high-quality accounting standards that could be used for both domestic and cross-border financial reporting. It also established broad tactics to achieve their goal, develop standards jointly, eliminate narrow differences whenever possible, and once converged, stay converged. As of 2013, the EU and more than 100 other countries either require or permit the use of IFRS issued by the IASB or a local variant of them.

Accounting Research and Audit Practices, Study of Convergence,The Institute of Chartered Accountants of India (ICAI), Generally Accepted Accounting Principles (GAAP), Ministry of Corporate Affairs (MCA), GAAP, IFRS, Major Carve-Outs.