In this era of globalization, countries are becoming very close to trading and using each other's
resources for mutual benefit. Due to the overwhelming importance of international trade, it
becomes inevitable for all the countries to have a uniform method of documenting
and comparing financial results. Many nations, like Germany, Italy and Ireland, have
already converted their national Generally Accepted Accounting Principles (GAAP) into
International standards, while others like India and Canada are in the process of
convergence. IFRS is a globally accepted accounting structure that deals with the recognition of transactions, measurement
of items, and disclosure of the same in an uniform manner. The basic aim is to ensure
uniformity and comparability of business dealings across the globe.
The international accounting
standards have been developed by the International Accounting Standards Board (IASB) in the year
2001. There is a growing importance for a uniform single set of accounting rules all over the world,
as it facilitates accounting and auditing firms to prepare, compare and standardize the
business transactions and to ensure quality of the work done. It also helps to encourage smooth flow
of cross-border capital.
According to CII (Confederation of Indian Industry), though implementation of IFRS is
desirable in the Indian context, there will be a number of issues in its implementation because of
the complications of the nature of economy and the peculiarity of accounting systems
prevalent here. Considering the growing importance of IFRS across the world, the ICAI has recently
come up with a concept paper on "Convergence with IFRS
in India by April 1, 2011". The same has been endorsed
by the Ministry of Corporate Affairs (MCA), by
confirming the agenda for convergence. In short, IFRS and
its implementation will decide the future of
accounting practices in corporates. |
