There are a few who have asked why I haven’t written on IFRSs and I’m sure there may be a few others thinking the same. I wonder why I have not written on something which is close to my heart. I have decided that I will tell a very little about IFRSs from what I know, to begin with.
First What is IFRSs?
IFRSs are accounting standards which are aimed at universal acceptability. They are set with the objective of suiting global requirements. The abbreviation is International Financial Reporting Standards. It includes International Accounting Standards (IASs), IFRICs and SICs (Interpretations). The nomenclatures are different due to some revamping of the board setting the standards. The latest name is IFRSs. IFRSs are nothing but global accounting standards.
Next, Why IFRSs?
The answer is obvious in present day scenario. Everything is globalised rather localized today. The market is in unison across the world. The economic meltdown in US is felt all across the globe. The investors and consumers are almost knit together into a single bundle all over the world. There is no country that stands on its own today. With the extent of localization around the world, a need for uniform reporting was felt. To cater to such needs, IFRSs were formulated. As said earlier, they aim at uniformity in reporting of an enterprise, irrespective of its geographical jurisdiction. Post IFRSs era, Financial statements of enterprise in Europe, Asia or US will be the same. The investors will be in a better position to comprehend financial information. Yes, IFRSs are needed for globalised economies.
How is it different from Accounting Standards in India?
This is the question in most of our minds. The answer would be surprising for many, as I realized it to be. There is not much difference between our AS and IFRSs. This is because, IFRSs and AS are principle based and AS derives its roots to erstwhile IASs and now IFRSs. The present differences, probably is due to the extent of activities that is undertaken by the IASB (board) in relation to IFRSs and the lack of it in Indian scenario. However, with the issue of standards on Financial Instruments, the gap is narrowed down, still minor differences on disclosures exists, though not in principles. Other major difference is Fair Value focus of IFRSs, which though present in AS is not as mandatorily evident as in the case of IFRSs. The differences will be ironed out with the convergence by 2011 as proposed by Government of India and ICAI.
What is convergence?
To have a global accounting language, India, rather ICAI had two alternatives. One – Adopt IFRSs as issued by the IASB or Two – Adapt IFRSs into our AS such that compliance of AS will result in compliance of IFRSs. The ICAI has as always gone in with alternative two. This process of upgrading our AS is called as convergence, in simple terms. For technical meaning refer ICAI’s publication ‘Concept Paper on Convergence with IFRSs’
What should we professionals do?
First What is IFRSs?
IFRSs are accounting standards which are aimed at universal acceptability. They are set with the objective of suiting global requirements. The abbreviation is International Financial Reporting Standards. It includes International Accounting Standards (IASs), IFRICs and SICs (Interpretations). The nomenclatures are different due to some revamping of the board setting the standards. The latest name is IFRSs. IFRSs are nothing but global accounting standards.
Next, Why IFRSs?
The answer is obvious in present day scenario. Everything is globalised rather localized today. The market is in unison across the world. The economic meltdown in US is felt all across the globe. The investors and consumers are almost knit together into a single bundle all over the world. There is no country that stands on its own today. With the extent of localization around the world, a need for uniform reporting was felt. To cater to such needs, IFRSs were formulated. As said earlier, they aim at uniformity in reporting of an enterprise, irrespective of its geographical jurisdiction. Post IFRSs era, Financial statements of enterprise in Europe, Asia or US will be the same. The investors will be in a better position to comprehend financial information. Yes, IFRSs are needed for globalised economies.
How is it different from Accounting Standards in India?
This is the question in most of our minds. The answer would be surprising for many, as I realized it to be. There is not much difference between our AS and IFRSs. This is because, IFRSs and AS are principle based and AS derives its roots to erstwhile IASs and now IFRSs. The present differences, probably is due to the extent of activities that is undertaken by the IASB (board) in relation to IFRSs and the lack of it in Indian scenario. However, with the issue of standards on Financial Instruments, the gap is narrowed down, still minor differences on disclosures exists, though not in principles. Other major difference is Fair Value focus of IFRSs, which though present in AS is not as mandatorily evident as in the case of IFRSs. The differences will be ironed out with the convergence by 2011 as proposed by Government of India and ICAI.
What is convergence?
To have a global accounting language, India, rather ICAI had two alternatives. One – Adopt IFRSs as issued by the IASB or Two – Adapt IFRSs into our AS such that compliance of AS will result in compliance of IFRSs. The ICAI has as always gone in with alternative two. This process of upgrading our AS is called as convergence, in simple terms. For technical meaning refer ICAI’s publication ‘Concept Paper on Convergence with IFRSs’
What should we professionals do?
We should not wait for 2011 to happen. We should get updated to IFRSs as early as possible and make transition process smooth for our clients. We should remove the block that IFRSs are something new. Lets have a secret unveiled now. If you know AS, you know 80% of IFRSs. There is just a gap of 20% that can be bridged with ease. There is nothing new but a little bit extra, in the form of more disclosures. Positive approach towards IFRSs is that we need to have.
Looking forward for your comments.
this one seems to be far more organised than your earlier ones da. may this was achieved due to greater clarity of thought u hav on the above subject..... short and simple..... superb da
ReplyDeletei think compared to the other three, this was very clear.........right on the point. rate u 85% for this attempt
ReplyDelete