IFRS- an outline to Indian Business Scenario

Abstract

IFRS can be explained in a narrow as well as a broad sense. In the narrow sense IFRS is the new numbered series of pronouncements that IASB has issued. In the broad sense IFRS includes standards and interpretations approved by the IASB, IASC & SIC. These new set of accounting standards is more principles based as compared to the earlier standards that were basically an Economic development of any country requires a sound financial reporting system sustained by good governance, clearly defined quality standards and established regulatory framework. As the accounting standards formulating body in our country, the Institute of Chartered Accountants of India (ICAI), has always formulated accounting standards that have withstood the test of time. As we globalize, the significance of convergence increases with International Financial Reporting Standards (IFRS). In today’s scenario of global business village India cannot afford to insulate itself from the developments and modifications taking place worldwide. Irrespective of the varying opinions convergence of IFRS with local standards is now not just a forum of discussion but a reality. There are significant differences between the accounting treatments laid down in the existing Accounting Standards as against the treatments envisaged in the converged Indian Accounting Standards. These differences necessarily will have an impact on the depiction of profit and financial position of an enterprise. As the regulators and various stakeholders use the financial statements to achieve numerous objectives, they cannot afford to ignore the impact of implementation of the converged Indian accounting standards or Ind AS. Regulators would need to be aware of their impact on regulatory accounts, the return earned on assets and profit position under various regulated services.