In this era of globalization and economic reforms, political boundaries are no longer barriers for the companies to exchange the idea, services and items. Convergence of Indian Accounting Standards (GAAP) with US GAAP is essential to take advantage of foreign capital and technology. GAAP, which is known as Generally Accepted Accounting Principles, is based on the double accounting system. With the help of these principles preparers and users are able to understand the financial statements which are prepared by various companies in the world. This research article highlights the concept of Indian GAAP and US GAAP, the various issues involved in GAAP, advantages to Indian companies, need for harmonization of Indian GAAP with US GAAP, the shortcomings of Indian GAAP and suggestions to improve Indian accounting GAAP as per national and international requirements.

In order to make the language of accountancy understandable to all people as far as practicable, the accountants all over the world have developed certain rules, procedures and conventions, which represent a consensus view by the profession of good accounting practices and procedures and are generally referred to as Generally Accepted Accounting Principles (GAAP). The Accounting Principles Board of AICPA states that "Generally Accepted Accounting Principles incorporate the consensus at any time to which economic resources and obligations should be recorded as assets and liabilities, how the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed and which financial statement should be prepared". Accounting principles are man-made and are derived from experiences and reasons, which when proven useful, become accepted as principles of accounting.

There are vast differences between Indian, international and US GAAP, both in number and substance. The Institute of Chartered Accountants of India (ICAI) has attuned its Accounting Standards more in line with the International Accounting Standards (IAS); thus, reducing the gap between Indian GAAP and International GAAP. ICAI has issued 29 accounting standards so far and has almost covered all the areas on which IASB has issued accounting standards. In fact, the work of issuing accounting standards by ICAI has relatively been lessened due to the existence of lAS. However, the differences between US GAAP and Indian GAAP persist and are very wide. The FASB of USA has issued almost 144 accounting standards with a plethora of APB opinions, Accounting Research Bulletins, etc.

The Accounting World Magazine, Accounting Standards, Globalization, Economic Reforms, Generally Accepted Accounting Principles, GAAP, Double Accounting System, Financial Statements, Indian Economy, Corporate Firms, International Accounting Firms, Traditional Accounting Systems, Accounting Policies.