...International Financial Reporting Standards (IFRS) in Indian context Introduction Convergence with IFRS has gained momentum in recent years all over the World. 110+ countries including European Union, Australia, China, New Zealand, and Russia currently require or permit the use of IFRS. Apart from India, countries like Japan, Sri Lanka, Canada and Korea have also committed to adopt IFRS from 2011. United States of America has announced its intention to adopt IFRS from 2014 and it also permits foreign private filers in the U.S. Stock Exchanges to file IFRS complied Financial Statement, without requiring the presentation of reconciliation statement. In this scenario of globalisation, India cannot insulate itself from the developments taking place worldwide. In India, so far as the ICAI is concerned, its aim has always been to comply with the IFRS to the extent possible with the objective to formulate sound financial reporting standards. The ICAI, being a member of the International Federation of Accountants (IFAC), considers the IFRS and tries to integrate them, to the extent possible, in the light of the laws, customs, practices and business environment prevailing in India. The Preface to the Statements of Accounting Standards, issued by the ICAI, categorically recognises the same. Now, as the world globalizes, it has become imperative for India also to make a formal strategy for convergence with IFRS with the objective to harmonize with globally accepted accounting standards...
Words: 1824 - Pages: 8
...This article was downloaded by: [Library Services City University London] On: 26 July 2013, At: 08:32 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Accounting and Business Research Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rabr20 International Financial Reporting Standards (IFRS): pros and cons for investors Ray Ball a a University of Chicago Published online: 28 Feb 2012. To cite this article: Ray Ball (2006) International Financial Reporting Standards (IFRS): pros and cons for investors, Accounting and Business Research, 36:sup1, 5-27, DOI: 10.1080/00014788.2006.9730040 To link to this article: http://dx.doi.org/10.1080/00014788.2006.9730040 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information...
Words: 16830 - Pages: 68
...States Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) This paper examined the relationship between United States Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) and found merging both accounting standards into a worldwide standard is ideal for investors. Corporate financial statement requirements depend on location. The two accepted accounting standard systems are GAAP and IFRS. The differences between GAAP and IFRS are GAAP is rules-based and IFRS is principle-based. How can a worldwide accounting standard benefit the world economy? The answer depends on political will, culture, countries history, and business structure. Research indicated there are only slight differences between GAAP and IFRS. These slight differences must be explored further to predict the impact on companies, economic, and financial markets. GAAP and IFRS have to be reconciled as a worldwide accounting standard to efficiently allow investors to compare foreign companies. GAAP set the accounting standard for the United States since its inception in 1929. GAAP evolved over the last 60 years (Măciucă, Ursache, Moroşan, & Apetri, 2014). IFRS was established in 1973 (Smith, 2012). IFRS used GAAP as a source document for its standards, either to imitate, modify, or omit (Chevis, 2014). The European Union established IFRS as the standard in 2005 (Smith, 2012). In 2007, the United States allowed...
Words: 1271 - Pages: 6
...the International Financial Reporting Standards? Since 1936, accountants in the United States have been following a set of generally accepted guidelines, historically set by the American Institute of Certified Public Accountants, for their practices. These guidelines have come to be known as the Generally Accepted Accounting Principles, or GAAP. Since their creation, these principles have protected companies and investors from fraud, as accounting practices can sometimes be questionable. The GAAP holds companies accountable for their financial reporting activities and includes rules accountants must follow regarding recording transactions and preparing financial statements. Recently, there have been questions regarding the Generally Accepted Accounting Principles in the United States as opposed to the International Financial Recording Standards, or IFRS ; and whether or not the United States should adopt these new accounting standards. There are a number of pros and cons to the International Financial Recording Standards as well as the Generally Accepted Accounting Principles; however, I do not think that the United States should fully adopt the IFRS considering the history of the GAAP and the reason for the creation of its principles. As previously mentioned, the American Institute of Certified Public Accountants (AICPA) has been responsible for setting accounting standards. In 1973, the Financial Accounting Standards Board and the Governmental Accounting Standards Board...
Words: 1700 - Pages: 7
...gtgifrs.com: 1 IFRS IMPLEMENTATION AND CHALLENGES IN INDIA By Vandana Saxena Poria, OBE CEO, Get Through Guides Published in MEDC Monthly Economic Digest – August 2009 issue Need for universal GAAP In recent times, capital markets have become global and continue to expand. Moreover, there has been significant globalisation of production and trade. Investors can trade shares and securities worldwide. Entities are in a position to access the funds globally in the most advantageous markets. For this, investors from all over the world rely upon financial statements before taking decisions. They need to be convinced that the financial statements are true and fair and what they understand from the statements is what the person preparing them intends to convey. However, different countries adopt different accounting treatments and disclosure patterns with respect to the same economic event. This may create confusion among the users while interpreting the financial statements. Financial statements that are based on a single, universally accepted and used GAAP will enable the world to exchange financial information in a meaningful and trustworthy manner. This will accelerate the globalisation of finance. Adoption of IFRS worldwide and in India The use of International Financial Reporting Standards (IFRS) as a universal financial reporting language is gaining momentum across the globe. Several countries have implemented IFRS and converged their national GAAP to IFRS. More than 100 countries...
Words: 2877 - Pages: 12
...International Financial Reporting Standards (IFRS) MBA 691: Managerial Accounting Professor: Prepared by: April 19, 2009 Bibliography: • Ernst & Young, “U.S. GAAP vs. IFRS: The basics”, January 2009. • Securities & Exchange Commission, “Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers”, www.sec.gov/spotlight/ifrsroadmap.htm (Release No. 33-8982; November 14, 2008). • The Association of Chartered Certified Accountants (ACCA), “Impact of IFRS in Europe”, www.accaglobal.com/publicinterest/activities/research/reports/global_integration/, October 7, 2008. • Internal Auditor, magazine, “Getting Up To Speed with IFRS’, October 2008. • International Accounting Standards Board, “IASB Responds to G20 Recommendation and US GAAP Guidance’, www.iasb.org/News/Press+Releases/IASB+Responds+to+G20+Recommendations+and+US+GAAP+Guidance.htm, April 7, 2009. • EU Finance Ministers Statement, www.eu2009.cz/en/news-and-documents/news/statement-by-the-informal-ecofin-15621/ , April 4, 2009. • National Association of Corporate Directors (NACD) – Directors Monthly article, “IFRS – What The Board Needs to Know”, http://www.deloitte.com/dtt/cda/doc/content/us_assur_IFRS_DM%20Sep08_20080911pdf.pdf, September 2008. • Deloitte, www.deloitte.com/us/debates/IFRS. • Deloitte, “IFRS Conversion: Front or back...
Words: 2112 - Pages: 9
...Applying IFRS in Germany – Determinants and Consequences Joachim Gassen Wirtschaftswissenschaftliche Fakultät Humboldt-Universität zu Berlin 10099 Berlin, Germany Phone: +49(0)30-2093 5764 E-mail: gassen@wiwi.hu-berlin.de Thorsten Sellhorn Fakultät für Wirtschaftswissenschaft Ruhr-Universität Bochum Universitätsstraße 150 44780 Bochum, Germany Phone: +49(0)234-32 28300 E-mail: sellhorn@iur.rub.de First Version, June 2006 This Version, July 2006 Forthcoming in: Betriebswirtschaftliche Forschung und Praxis, 58 (4), 2006. We thank Karsten Detert for some of the data used in this study. Applying IFRS in Germany – Determinants and Consequences Abstract: We address three research questions motivated by the recent ascent of International Financial Reporting Standards (IFRS) in Europe. First, analyzing the determinants of voluntary IFRS adoption by publicly traded German firms during the period 19982004, we find that size, international exposure, dispersion of ownership, and recent IPOs are important drivers. Second, using the results from this determinant model to construct propensity score-matched samples of IFRS and German-GAAP (HGB) firms, we document significant differences in terms of earnings quality: IFRS firms have more persistent, less predictable and more conditionally conservative earnings. Third, analyzing information asymmetry differences between IFRS and HGB firms, we show that IFRS adopters experience a decline in bid-ask spread of 70 base points and an...
Words: 11298 - Pages: 46
...IFRS, International Financial Reporting Standards, are a set of accounting guidelines and standards just like the GAAP (American Institute of Certified Public Accountants, 2012). This is the first thing that Marie Claveau needs to understand, since the firms will be expecting people who can help in the adoption of the new international accounting standards. The standards were established by the international accounting standards board to become the globally accepted standards for use in the preparation of financial statements, in public companies. It is supposed to be a set of standards that can be used globally for the public companies, as well as private companies willing to use them as their accounting standards. Currently, it has been adopted in as many as 120 countries all over the world, with an aim of having an accounting standard that is uniform and easy for global accounting purposes (American Institute of Certified Public Accountants, 2012). Unlike each country having its own accounting standards, IFRS seeks to standardize accounting standards across the whole globe for easy comparison of accounts especially now when countries can no longer be independently sufficient economically (Securities of Exchange Commission, 2011). Thus, having an accounting standard accepted globally makes it easy for large companies and corporations to have an easy time and efficient accounting policies within all its global subsidiaries. Considering that, these firms will be engaged in the...
Words: 693 - Pages: 3
...IFRS and GAAP Convergence Mercy Hudson Strayer University I have read and understand Strayer University’s Academic Integrity Policy. I promise to conduct myself with integrity in the submission of all academic work to the University and will not give or receive unauthorized assistance for the completion of assignments, research papers, examinations or other work. I understand that violations of the Academic Integrity Policy will lead to disciplinary action against me, up to and including suspension or expulsion from the University. I understand that all students play a role in preserving the academic integrity of the University and have an obligation to report violations of the Academic Integrity Policy committed by other students. Chevron Corporation, an American multinational energy corporation is active in more than 180 countries. Chevron is one of the world’s six ‘super major’ oil companies. For the past five years, Chevron has been continuously ranked as one of America’s five largest corporations. Chevron’s headquarters is in San Ramon, California (Fox, 2012). It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron was originally known as Pacific Coast Oil Company in 1979, where they made their oil discovery in Pico Canyon north of Los Angeles, California (2012)....
Words: 1734 - Pages: 7
...by the International Accounting Standards Board and how it will affect U.S. GAAP Patrick C. Finney American Public University System Back in 2002, the United States reached an agreement with the International Accounting Standards Board or IASB addressing the need to develop a common worldwide standard for financial reporting under the Generally Accepted Accounting Practices (GAAP) and the International Financial Reporting Standards or IFRS. This meeting resulted in what is known as the, “Norwalk Agreement.” What was discussed at that meeting was an agreement to streamline the financial reporting process to make more compatible. Additionally, they will try to work together on any upcoming programs of theirs to maintin this agreement (FASB, 2014). As we discuss these proposed changes, keep in mind that as of present day, not all recommendations have been implemented. The bigger question is, will they ever be fully implemented? One of the bigger issues that will affect U.S. GAAP is revenue recognition. A major diference between U.S. GAAP and IFRS, is that IFRS does not drill down as far in terms of the specifics of industries. How this pricing wil factor into the these revenue models will differ among the US GAAP and IFRS systems respectively. Under US GAAP, revenue is based on the pricing criteria, which results in these possible amounts generally not being recorded as revenue until these variables are accounted for. IFRS looks to...
Words: 733 - Pages: 3
...Introduction: Recently almost every corporation has investments in foreign country. Due to the quick growth in cross-country investments, the demand for internationally comparable financial information increased significantly. As a result we witnessed many countries that have adopted International Financial Reporting Standards (IFRS) in replace of their global General Accepted Accounting Principles (GAAP), or at least have permitted IFRS. European Union is one important example of twenty eight countries that adopted IFRS in 2005. European policy makers state that the reason for adopting one set of accounting standers is to “level the playing field” for investors in the European capital market by increasing the comparability of financial statements prepared by publicly traded companies across Europe (Cascino and Gassen, 2012). Similarly, The International Accounting Standard Board (IASB) declares that a single set of high quality accounting standards is intended to provide investors with comparable financial statements and thus help them make better decisions (Cascino and Gassen, 2012). Increasing comparability is the same reason that motivates the Securities and Exchange Commission (SEC) to support the convergence to a global set of accounting standards (Cascino and Gassen). Information comparability is “the quality of information that enables users to identify similarities in and differences between two sets of economic phenomena” (Yip and Young, 2012). There are two...
Words: 1450 - Pages: 6
...1. Introduction Accounting standards establish the rules for accounting in a country and prescribe what should be reported in a company’s financial statements in that territory. Their purpose is to ensure that consistent approaches of accounting are adopted nationally. They minimize the risk of material misstatement in accounts and help investors make decisions by ensuring they can get comparable information. Accounting standards, as laid down by a country’s law, are applicable to all companies registered within its territory. But in order to ensure the success, the regulating process must be established. In Bangladesh BFRS and BAS are used as the accounting and reporting standards for the companies. Companies are obliged to follow those standards and laws and some are free from such restrictions. In this assignment, a theoretical analysis has been made regarding the accounting regulation and standard setting process in Bangladesh. 2. Accounting Regulation in Bangladesh All the companies in Bangladesh (both public limited companies and private limited companies) are regulated by The Companies Act of 1994 that provides the basic requirements for the companies. It includes the requirements about financial reporting and accounting practices. But most importantly, this act is silent about either Bangladesh Accounting Standards (BAS) or International Accounting Standards (IAS),. description about the laws and regulations for different types of entities in Bangladesh has been...
Words: 1182 - Pages: 5
...GAAP or IFRS WHEN WILL WE CONVERT? Paris Williams 10/1/2013 The accounting profession is on the verge of one of the most significant changes since the 1930s. In the very near future there is a great possibility that the United States Generally Accepted Accounting Principles (GAAP), as it is known today, will be replaced by the global standards known as the International Financial Reporting Standards. This paper will provide a history of IFRS and discuss the time frame of the conversion, along with is effects on U.S in the accounting perspective. Over the past few years, much talk of U.S adopting the IFRS as the basis for accounting principles has circulated amongst the accounting and business world. Although many may resent the conversion from U.S Generally Accepted Accounting Principles (GAAP) to the London-based International Financial Reporting Standards (IFRS), the movement has already began. Plans for this movement have already been proposed and put into effect, project and trials are being observed, and results are soon to come as the SEC and others make their final decision. However, with such a complex transition one must propose many questions such as, how will the movement affect us? What are some of the advantages and disadvantages? How do we adjust, and what is the ultimate benefit and purpose of converting? GAAP and IFRS are two separate sets of accounting standards used in different countries of the world. Although they both have the same...
Words: 1422 - Pages: 6
...INTRODUCTION For more than a decade now, there has been a movement around the world to develop a common set of high-quality accounting standards that can be applied globally. Comparable accounting around the world, if high standards are instilled and application was consistent, would make markets more efficient by letting investors compare companies from different countries. In particular, the issue of American adoption of International Financial Reporting Standards (IFRS) is of importance because IFRS standards are used by companies in many countries around the world, including all the countries in the European Union, and some say that the best hope for assuring that the international standards are uniformly followed would be having The Securities and Exchange Commission (SEC), responsible for deciding what accounting rules apply in the United States, involved in enforcing them (Norris, 2012). But, efforts have been under way for years to accomplish this convergence and in a number of areas they have been unable to reach agreements. Because of the expansion of commerce worldwide by many businesses, other issues have arose in this process, such as the need for common global regulation of banks and a need for a global set of ethical standards. In the 1970s, the Foreign Corrupt Practices Act (FPCA) sent a chill throughout the business community by criminalizing the act of making payments outside the US in pursuit of contracts (George, 2008). Making payments to obtain business is...
Words: 2102 - Pages: 9
...reasoning for financial reporting harmonisation…………………………….………………………………..3 3. Approaches to harmonisation………………………………………………………………………..…………………………..4 4. Obstacles in harmonisation………………………………………………….……………………………………………………..6 5. The convergence between IASB and FASB today and the Changes within the IASB towards achieving their goal ……………………………………………………………………………………………………………………7 Conclusion ………………………………………………………………………………………………………………………………………………8 References & bibliography………………………………………………………………….…………………………………………………..9 1. Harmonisation – what it means Harmonisation is the process which aims to converge the accounting practices around the world and to increase the compatibility between countries in regards to financial statements. However, we must keep in mind that this process does not target uniformity in the accounting practice, but to reduce the differences over time. Standardising the accounting practices around the world comes as a boomerang effect of capitalisation. We have companies that trade in different countries and thus they must oblige with each of the accounting practices of every country where the company produces financial statements. This leads to the situation where you have a company reporting a shareholders’ equity of just over $15 million under the UK regulations, while in accordance with the US accounting rules the same company reports a shareholders’ equity value of $32 million, a difference of over 100% between the two financial statements...
Words: 3025 - Pages: 13
