The issue of convergence with International Financial Reporting Standards (IFRS) has been gaining considerable momentum in India after the announcement from the Institute of Chartered Accountants of India that with effect from April 1, 2011 all listed and public sector entities should converge their reporting systems with the IFRS. This article discusses the probable areas of impact due to the convergence and the preparedness expected to efficiently handle the change.

International Financial Reporting Standards (IFRS) is emerging as the primary accounting framework, having widespread global acceptance, with more than 130 countries across the world adopting the International Accounting Standard Board (IASB) guidelines. This move is expected to bring almost the entire world on one single uniform accounting platform. This would provide numerous benefits to a large number of entities for doing global business. Moving from the Indian Generally Accepted Accounting Principles (GAAP) to IFRS is very significant, as it involves changes in accounting policies. It has significant accounting consequences with far reaching business implications.

Experts are of the opinion that there would be a major impact on the profitability and the way in which business management is looked at by various stakeholders due to the convergence to IFRS. Also, it is expected that there would be deviations in the way major leveraging ratios are calculated after the convergence with IFRS.

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