CII has come up with a guide?Journey to IFRS? that has been aimed at making the industry aware of challenges to IFRS convergence.
The publication, which provides an overview of IFRS, is a key initiative to map the process of integrating internationally recognized financial standards with the financial statements as presented in India.
Many nations have switched over to IFRS while others are in the process of converging their Generally Accepted Accounting Practices (GAAPs) to IFRS.
The Institute of Chartered Accountants of India (ICAI) has decided to fully converge with IFRS from the accounting periods commencing on or after April 1, 2011 for listed and other public interest entities such as banks, insurance and large sized entities.
“Over a 100 countries across the world have formally accepted IFRS in order to bring about standardization and greater comparability in presentation of financial statements. The US Securities and Exchange Commission (SEC) has also allowed foreign private filers in the US to file IFRS compliant financial statements”, said CII in the release.
According to CII, while convergence is desirable in the Indian context and would be facilitated by the fact that historically Indian standards have been based on IFRS, given the nature of accounting and peculiarities of the Indian economic environment, implementation of convergence can have its own set of problems.
However, the industry representatives opined that adoption of IFRS is expected to result in better quality of financial reporting due to consistent application of accounting principles and improvement in reliability of financial statements. This, in turn, will lead to increased trust and reliance placed by investors, analysts and other stakeholders in a company?s financial statement.
CII has also observed that with the world changing to IFRS, businesses in India would have a massive requirement for
IFRS resources, and Indian IFRS literateresources could feed this appetite and provide a huge fillip to this sector.
It will save the companies from additional costs and the risk factor involvedin significant reconciliation procedures, and of being exposed to errors in reporting under the different accounting frameworks.
