IFRS is a globalization theme and many countries in theworld like Hong Kong, Australia, Pakistan, Russia, SouthAfrica, Singapore, Turkey, and European Union werefollowing. Approximately, 150 Countries across the worldare following IFRS. Adoption of IFRS means the use of theInternational Financial Reporting Standards as the primaryGAAP by the domestic listed and unlisted companies in theirconsolidated Financial Statements for the external FinancialReporting. This means that the basis of the presentation noteand auditor’s report indicate that the Financial Statementsare prepared on the basis of IFRSs.
It will provide a chance for India to integrate with the commonAccounting International Standards which will save the costwhich has to be incurred by MNC’s and internationally listedcorporate for maintaining dual accounting and reportingsystem. IFRS would enhance the comparability between theFinancial Statements of various companies across the globe.The industry would be able to raise capital from the foreignmarkets at lower cost if it can create confidence in the mindsof the foreign investors that its Financial Statements complywith the globally accepted Accounting Standards. It wouldreduce different accounting requirements prevailing invarious countries thereby enabling the enterprises to reducethe cost of compliances. It serves international clients byproviding professional opportunities. It would increasetheir mobility to work in different parts of the world either inindustry or practice.
The Government has created general awareness about IFRSand the ground is prepared to bring necessary changes inthe accounting practices. The Ministry of Corporate Affairsis constrained delaying the adoption of IFRS. It is madeoptional to the companies to either report their FinancialStatements based on the existing Indian AS or adopt IFRS.A decision may be taken to make the application of IFRSmandatory from the year 2016.
Though the time line forconvergence of Indian GAAP with IFRS is April 2011, manylarge listed companies have already adopted new standardsand those who are in transition will be actively incorporatingthe change in the coming years