In the era of Liberalization, Privatization and Globalization (LPG), convergence with IFRS is the need of hour. In India, it is necessary to adopt the provisions of IFRS in order to develop consistency with the regulatory and economic environment. IFRS is set to become universally acceptable. The evolution of IFRS can be said to be a major event in the area of financial reporting. On a worldwide basis, Accounting Standards (AS) are used as necessary rigid mechanism tool for grounding purpose for the preparation of financial report, as well as audit purposes. The present article highlights the role of AS across the world and harmonizes the AS of different bodies. It also discusses the challenges involved in the adoption of IFRS and the convergence of AS with certain suggestions.

The rapid globalization of capital markets has highlighted the need for a uniform set of financial reporting rules worldwide and has become the major driving force behind the convergence of Accounting Standards (AS) across the globe. The evolution of International Financial Reporting Standards (IFRS) marks the biggest revolution in financial reporting. Synchronization of AS will bring about uniformity as well as precision to the financial reports for assessment in different countries. It shall act as a yardstick against global rivalry and will develop the effectiveness of the capital market. As a result, adopting IFRS will be an imperative landmark in India. Presently, nearly 102 countries worldwide entail the use of IFRS in the preparation of financial reports in their respective countries. By 2011, the number is expected to reach 150. In India, the Institute of Chartered Accountants of India (ICAI) is responsible for the implementation of IFRS. This has to be done along with the National Advisory Committee on AS established by the Ministry of Corporate Affairs, Government of India, and various regulators such as the Reserve Bank of India, the Insurance Regulatory and Development Authority and the Securities and Exchange Board of India (SEBI).

Now, the ICAI is thinking and formulating the plan of action for the implementation of IFRS latest by April 1, 2011. AS are the key important mechanisms for the preparation of its normal financial statements as well as for its subsequent audit purposes of the enterprise on a worldwide basis. AS are important tools for providing useful information to various stakeholders of the financial statements. Under the global business scenario, the members of the business community are badly in need of a common accounting language which should be uniformly applicable across the globe. The reporting system of IFRS is a precondition for attracting potential foreign as well as Indian investors and this could be achieved through synchronization of AS.

AS are to be established worldwide, but due to globalization, the business environment, variety of AS and principles among the nations of the world, it has been a sustainable problem. In the process of harmonization of accounting practices, several standard-setting bodies and organizations have actively involved themselves.

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