Australia is one of the founding members of the International Accounting Standards Committee, whereas, India is its first associate member. Both these commonwealth countries have derived their accounting practices from the UK. This article compares one of the accounting standards that has a global significance as prevailing in these two important countries.

Accounting standards prescribe how certain categories of events and transactions have to be recorded in the accounting books. These, in turn, serve the purpose of uniformity in the outputs of financial results and efforts, and enable a fair presentation of the financial picture. For an interested bystander such as an investor or a trade partner, it ensures a reasonable accuracy of the data presented. For peers, it enables a reliable comparison. For the supervisor, it provides a set of authentic data. Countries the world over, therefore, have evolved national accounting standards.

With globalization in economic activities like cross-border trade and investments, the need for uniform accounting standards or harmonization of the existing national accounting standards has assumed importance. Capital market regulators are particularly interested in this.

The constitution of International Accounting Standards Board (IASB) specifically looks for harmonization of accounting standards worldwide. IASB has now representatives of nearly 150 countries and standards in many of these countries are either in full or predominantly in convergence with the international standards. For instance, the European Union Commission requires that all companies listed in its jurisdiction should comply with the IAS from 2005. Around 20 Middle East countries subscribed to IAS en masse under the aegis of the Arab Society of Certified Accountants (ASCA). Australia has brought its standards in conformity with the IAS. The International Organization of Securities Commissions (IOSCO) comprising of securities regulators from 174 countries is considering the endorsement of IASs for cross-border capital raising and listing purposes in all global markets. As at the end of 2005, nearly 100 countries claim to have brought their accounting standards in alignment with IAS. Leading countries in this category include the UK, Germany and Australia. A notable exception is the US, whose Financial Accounting Standard Board (FASB) has, however, agreed with IASB to "align their future agenda".

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