CONVERGENCE OF INTERNATIONAL FINANCIAL REPORTING …alochanachakra.in/gallery/50-acj-april-1377.pdf · accounting standards in the United States where US GAAP is applied. The present

CONVERGENCE OF INTERNATIONAL FINANCIAL REPORTING

STANDARDS (IFRS) IN INDIAN ACCOUNTING CURRICULUM

DEEPAK KUMAR ADHANA

Research Scholar, Institute of Mgt. Studies & Research (IMSAR), M.D. University, Rohtak

[email protected]

ABSTRACT:

Last 30-40 years of globalisation have witnessed increasing interdependence among the world

nations. Although nations are physically separated, they seem integrated through cross border

flows of goods, services, people, capital, information and culture. Foreign Direct Investments,

Foreign Institutional Investors, Merger and Acquisition, Franchising and Business

Outsourcing are some example of international transaction in global business. Integration of

the capital market has necessitated the unification of financial reporting methods and hence,

the Accounting. Accounting is a language of any business. It helps to identify measure and

communicate accounting information to permit informed judgement and decisions by the

users of the information. With the intention of alliance in accounting methods, International

Financial Reporting Standards, IFRS have developed.

IFRS are accounting standards issued by the IFRS Foundation and Landon-based

International Accounting Standards Board (IASB) to provide a common global language for

business affairs so that company accounts are understandable and comparable across

international boundaries. IFRS requires businesses to report their financial results

and financial position using the same rules; this means that, barring any fraudulent

manipulation, there is considerable uniformity in the financial reporting of all businesses

using IFRS, which makes it easier to compare and contrast their financial results. IFRS are

widely used around the world by more than 140 countries but have not replaced the separate

accounting standards in the United States where US GAAP is applied.

The present paper discusses the worldwide transition from national accounting standards to

international accounting standards. The paper further exhibits progression of IFRS in an

Indian context in the form of Ind AS? It also studies the probable benefits and challenges in

process of convergence. Finally, the paper concludes with a foreseeable future perspective.

KEYWORDS—GAAP, ICAI, IFRS, IND AS

Alochana Chakra Journal

Volume IX, Issue IV, April/2020

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I. INTRODUCTION:

Although the original discourse on accounting methods is 500 years old, accounting standards as

we know them today are of relatively recent origin. They have largely evolved in well-developed

capital markets of Western countries as an aid to a serious agency problem intrinsic to corporate.

In a corporate entity, ownership is separated from the management. The providers of capital gain

the status of outsiders to the organisation whereas mangers become insiders. Managers have the

real controlling powers with detailed knowledge of the firm‟s overall performance. Being

outsiders, owners are always apprehensive that mangers act in their own self-interest. Thus, they

are willing to supply more capital only at a premium to compensate for this information

disadvantage. To ensure flow of capital at low cost, it is thus pertinent to keep a check on

mangers performance through performance reports verified independently by professional

auditors. In this context, uniform accounting and auditing standards have evolved as a relatively

low-cost solution to this serious agency problem. Improvements and rigorous enforcement of

accounting standards has helped to underpin how capital is allocated, improve financial reporting

quality, reduce information asymmetry and facilitate efficient functioning of capital markets.

Different accounting standards are followed worldwide to tap varied national economic and

social forces. Much of the diversity have resulted from deeply entrenched differences in legal

systems, income tax systems, historical, political and economic ties, size and complexity of

business enterprises, development of financial market, sources of investment and financing, the

level of community education, predominant culture and language and the overall economic

development. These different accounting standards provide different accounting choices,

applications of which, therefore, results in different financial reporting quality.

Ongoing globalization of the world economy has brought to the forefront the problems

engendered by differences in these accounting reports. To participate internationally, analysts

and investors require understanding of integrities of different sets of rules and regulations.

Translations and reinstatements of financial statements constitute arduous exercise in terms of

money and time. Further, the robustness of different accounting standards and principles has

been questioned. Uniformity, rationalisation, comparability, transparency and adaptability in

financial statements are very much required for true cross-border economic and financial



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integration. As a result, the quest for international harmonization through adoption of

International Financial Reporting Standard (IFRS) has been widely accepted as useful and

rational.

II. OBJECTIVES OF STUDY:

The study has been geared to achieve the following objectives;

1. To study the International Financial Reporting Standards (IFRS) introduction and its

worldwide position

2. To exhibits the progression of IFRS in an Indian context in the form of Ind AS

3. To discuss the various opportunities and benefits expected of IFRS in India

4. To study the challenges faced by the stakeholders in the process of convergence of IFRS in

India

III. RESEARCH METHODOLOGY:

Data Collection Method: This study has been carried out with the help of secondary data only,

all the data has been collected from the various sources such as websites & reports and compiled

as said by the need of the study.

Sources of Data Collection: The study is based on the published data. The data was extracted

from the various journals, magazines and websites particularly from International Financial

Reporting Standard (I FRS), Ministry of Corporate Affairs, Government of India and Institute of

Chartered Accountants of India (ICAI). Graphs have also been used wherever required to depict

statistical data of during the study period.

IV. INTERNATIONAL FINANCIAL REPORTING STANDARD: THE BACKGROUND

The debate on international harmonization of accounting standards started in the 1960s. It

formally commenced in 1973 with the establishment of the International Accounting Standards

Committee (IASC) by the representatives of various Accounting bodies from Netherlands,

Mexico, Canada, France Germany, Japan UK & US. IASC was assigned with the task of drafting

international accounting standards to gain investors‟ confidence and provide a strong investment

climate. This private-sector initiative was founded and funded as per an agreement between the

accountancy bodies of over 75 countries (including the Institute of Chartered Accountants of



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India). Between 1973 and 2000, the IASC developed a comprehensive list of accounting

standards and interpretations, a conceptual framework and other guidance.

The ascendency of IASC as the major global standard setter, however, arguably took place in the

2000s. In 2001, the IASC formally restructured into International Accounting Standards Board,

IASB, a full-time, London-based, independent, privately funded organization to formulate and

implement international accounting standards. All 41 standards issued by the IASC were adopted

and were amended and updated according to industry and accounting needs to be renamed as

IFRS, International Financial Reporting Standards.

The first major boost to the new standards came with the 25-nations member European Union's

(EU) decision to adopt them in 2002. With this decision, it became mandatory for EU-registered

companies to adopt IFRS by 2005. This brought in nearly one-third of the world economy at

once under the ambit of IFRS. The EU decision provided momentum toward a single standard

throughout the world by promoting a domino effect within other countries. IFRS provided the

European members with a ready-made high-quality set of accounting standards which, by and

large, replaced the existing 25 conflicting national accounting standards. Further, adoption of

IFRS by Australia, New Zealand, Hong Kong and South Africa provided momentum for the

worldwide adoption of IFRS. The adoption has been supported by many international

organisations, including the G20, World Bank, International Monetary Fund, Basel Committee,

Figure 1: Evolution of International Financial Reporting Standards



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International Organisation of Securities Commissions and International Federation of

Accountants. China has substantially converged with IFRS in 2006. Russia and Brazil have also

adopted IFRS for all companies whose securities are publicly traded. The East Asian countries

such as Malaysia have converged with IFRS since 2012, Korea since 2011 and Singapore is also

going for full convergence with IFRS since 2009.

The IFRS project has been rationalized by the idea that a global, common accounting standard

will further integrate and enhance the efficiency of financial markets globally. This will inter alia

result in improvement in financial reporting quality through transparency and accountability,

corporate governance and stewardship, informed economic decision making thereby maximizing

the use of economic resources.

Adoption of IFRS is arguably a remarkable success story of international convergence. This

convergence was never self-evident. In many other movements of corporate governance

harmonization, there have been resistance. The adoption of IFRS from such a large cohort of

countries is seen as a great achievement considering various country-specific attributes. It

becomes even more remarkable, as it represents a fundamental change in the conceptual

foundation and basic principles of financial accounting and the trust exhibited in a private

organization, namely, IASB, to formulate and implement accounting standards.

The adoption of International Financial Reporting Standards and plans for convergence or

harmonisation differ widely by jurisdiction. As per IFRS Foundation report, as of September

2018, 87% of profiled jurisdictions require IFRS Standards for most domestically accountable

companies. Out of 166 profiled jurisdictions, 144 require IFRS Standards for all or most

companies, 12 jurisdictions permit all or most companies to use IFRS Standards, 9 jurisdictions

have their own national standards or are moving to IFRS Standards and 1 jurisdiction requires

IFRS Standards for financial institutions. 15 of 20 G20 economies require the use of IFRS

Standards. 86 of 166 profiled jurisdictions require or permit the use of the IFRS for small and

medium enterprises, SMEs. The GDP of jurisdictions that require the use of IFRS Standards is

$35 trillion of the total world‟s $76 trillion. 27,000 domestically listed companies on 88 major

stock exchanges in the world use IFRS Standards. Some of these jurisdictions like EU and

Canada, have adopted IFRS as issued by IASB with or without limited modification of their local



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GAAP with IFRS, whereas, emerging countries like China and India have modified IFRS to

meet their domestic conditions such as economic policy issues, financial regulation norms and

taxation.

The remaining major capital markets without an IFRS mandate are (i) the US, with no current

plans to change; (ii) Japan, where voluntary adoption is permitted but not required; and (iii)

China, which intends to fully converge at some undefined future date. In 2002, IASB and

Financial Accounting Standard Board (FASB), the body supporting US GAAP, announced a

programme aimed at eliminating differences between IFRS and US GAAP.

V. IFRS vs. US GAAP

In August 2008, FASB conceded that US could no longer function in the global economy by

prescribing American rules for other countries to follow. Thus, it allowed foreign companies

access to U.S. capital markets while reporting under IFRS. Until this move, any company

wanting to be listed on the New York Stock Exchange (NYSE) or any other U.S. exchange, had

to engage in a costly reconciliation between its IFRS-compliant financial records and the results

under GAAP. In 2012, the SEC announced that it expected separate US GAAP to continue for

the foreseeable future but sought to encourage further work to align the two standards.

International Financial Reporting Standards (IFRSs) are considered a “principles- based” set of

standards. In fact, they establish broad rules rather than dictating specific treatments. As opposed

to this, US GAAP is a rules-based approach.

In US GAAP, there is more instruction in the application of standards to specific examples and

industries. The differences in the compliance are rooted in the different market environmental

factors and structures of corporate governance in which IFRS is implemented.

Figure 2: IFRS vs. GAAP



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What is IFRS and why it is necessary:

IFRS is the set of uniform accounting standards which is used by the companies, accountants,

auditors, investors, regulators & tax authorities etc of different nations for preparing books of the

accounts or Annual Financial Statements. In other words, IFRS is rules which have uniform

accounting language which is followed worldwide. It is also known as a principles-based set of

standards which are easy to understand & apply. At present IFRS standards are used by almost

140 nations.

Why IFRS?

i. It brings transparency in the financial statements of the companies. It helps the investors to

take better economic decisions.

ii. These standards strengthen accountability by removing the bridge between the people who

invest the capital and the person whom money is given.

iii. It improves the economic efficiency of the companies.

iv. It helps the companies to identify the business opportunities and risk associated with the

business.

v. There is a use of single accounting Language over the globe.

vi. It lowers the capital cost and reduces international reporting cost to regulate affairs across

the globe.

Methods for Implementation of IFRS

There are two methods which are used by different countries to implement IFRS they are:

Integration of Capital Market

Need for Unification of Financial Reporting

Unification of Accounting

Figure 3: Need of International Financial Reporting Standards



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1. Adoption – Adoption means adopting IFRS or taking something as it is. It means

companies applying for IFRS would be implemented in the same manner issue by the

International Accounting Standards Board. Adoption of IFRS means counties implementing

standards which are the blueprint of the IFRS.

2. Convergence – Convergence means implementing IFRS with some modifications or

changes. Government alters or amends the IFRS rule according to the requirement of their

nation.

Ind AS converged with IFRS

Ind AS are converged with the International Financial Reporting Standards (IFRS).Convergence

with IFRS means India has used IFRS with some modifications and changes in consideration to

the requirement of the nation.

Indian AS = IFRS + Carve outs – Carve in + Removal of Options

Carve out – A different treatment in Ind AS as compared to IFRS. In some cases, Indian

Accounting Standards uses different treatment for accounting. It means in IFRS some treatment

was given and on the same problem in Ind As we are doing some another treatment.

Carve in – An Additional guidance is inserted in Ind As which is not there in IFRS. For e.g. –

Accounting of Common Control Transaction is inserted in Ind As but is not there in IFRS.

Removal of Options – It means that for some IFRS, the choice for accounting treatment is

available but for some standards in Ind As those choices have been removed.

VI. IND AS: IFRS IN AN INDIAN CONTEXT:

India is a recent participant in the IFRS adoption chain when the Ministry of Corporate Affairs

(MCA) announced its roadmap for adoption of the Indian Accounting Standards (Ind-AS) from

the financial year 2016-2017. India implemented a policy of gradual convergence to IFRS. In the

process, it worked towards resolving several local issues and absorbing the implications of

convergence. There are generic issues and other specific issues, for example, technical, multi-

layered legislative and institutional frameworks for accounting and auditing and banking to be



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resolved. The solutions to these issues require timely coordination between various aspects of the

Indian legislative and institutional framework for accounting and auditing.

Resource dependency and continuous interaction with the outside world are reasons for IFRS

adoption in India. In India, the major emphasis of aligning its practiced accounting standards

with the rest of the world has gained momentum since 1991, as part of an initiative to liberalize

the Indian economy and attracting foreign participation in technology, businesses and

investment. As the USA was the major source of such resources, India aligned its accounting

standards with the US GAAP to meet the precondition of transparency in financial reporting by

foreign investors. Successful alignment of Indian GAAP with US GAAP encouraged essential

foreign participation in Indian business. It also provided Institute of Chartered Accountants of

India, ICAI, with experience and the reputation for bringing such changes in regard to

accounting standards, governance, training and regulatory frameworks. Under its aegis, the

Council of the ICAI has, so far, issued 29 Accounting Standards. However, AS 6 on

„Depreciation Accounting‟ has been withdrawn on revision of AS 10 „Property, Plant and

Equipment‟, whereas; AS 8 on „Accounting for Research and Development‟ has been withdrawn

consequent to the issuance of AS 26 on „Intangible Assets‟. Thus, effectively, there are 27

Accounting Standards at present.

The ICAI being the accounting standards-setting body in India, way back in 2006, initiated the

process of moving towards the IFRS with a view to enhance acceptability and transparency of

the financial information communicated by the Indian corporate through their financial

statements. This move towards IFRS was subsequently accepted by the Government of India.

However, decision was made to converge and not to adopt IFRS issued by the IASB. The

decision of convergence rather than adoption was taken after the detailed analysis of IFRS

requirements and extensive discussions with various stakeholders. It has been decided that there

will be two separate sets of Accounting Standards viz.

(i) Indian Accounting Standards converged with the IFRS i.e. Ind AS and

(ii) Existing Notified Accounting Standards.



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The MCA in India, the nodal ministry for implementation of “Ind-AS converged with IFRS”,

announced the roadmap for its implementation starting on 1 April 2011.However, this date was

deferred in view of the pending resolution of several issues regarding taxation, the accounting

regulatory framework, banking, awareness, training and implementation cost of the Ind-AS.

Finally, MCA, via a press release dated 6 January 2015, announced its roadmap for adoption of

the Ind-AS from the financial year 2016-2017.

This was followed by the announcement of a roadmap drawn up for the implementation of Ind-

AS for banking companies, insurance companies and non-banking finance companies via a press

release on18 January 2016. The roadmap for adoption of Ind-AS has a phased approach based on

the net worth of a company and other factors such as listings on exchanges within and outside

India.

Pursuant to the above announcement, various steps have been taken to facilitate the

implementation of Ind AS. MCA has issued the Companies (Indian Accounting Standards)

Rules, 2015 vide Notification dated February 16, 2015 covering the revised roadmap of

Phase 1

• wef FY 2016-17

• All Listed/ Unlisted Companies having a net worth of Rs 500 crore or itsholding, subsidiaries, joint ventures or associate company will adopt IndAs from 1st April 2016.

Phase 2

• wef FY 2017-18

• All the remaining Listed Companies in the process of listing AND alsothe unlisted companies withworth of Rs 250 crore or more to implementInd AS from 1st April 2017

Phase 3

• wef FY 2018-19

• All Listed/ Unlisted NBFC‟s having a net worth of Rs 500 crore or itsholdings. subsidiaries, joint ventures or associate company will adoptInd As from 1st April 2018.

Phase 4

• wef FY 2019-20

• All Listed NBFC‟s and all the other NBFCs having a net worth of Rs250 crore to implementInd As from 1st April 2019.

Figure 4: Roadmap of International Financial Reporting Standards



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implementation of Ind AS for companies other than Banking Companies, Insurance Companies

and NBFCs. As per the Notification, Indian Accounting Standards (Ind AS) converged with

International Financial Reporting Standards (IFRS) shall be implemented on voluntary basis

from 1st April, 2015 and mandatorily from 1st April, 2016. Separate road-maps have been

prescribed for implementation of Ind AS to Banking, Insurance companies and NBFCs

respectively.

Reserve Bank of India in March 2019 deferred IFRS implementation till further notice due to

changes in certain laws and thus time required for implementing these changes. As per IRDA

circular dated June 28, 2017, all insurance companies in India are required to adopt Ind As from

April 1, 2020. However The Insurance Regulatory and Development Authority of India (IRDA)

have decided to defer the implementation of Ind AS (Indian Accounting Standards) in

the insurance sector until the International Accounting Standards Board (IASB) issues final

amendment to International Financial Reporting Standard 17 (IFRS 17).

VII. IFRS: OPPORTUNITIES

The increasing adoption of IFRS is driven primarily by the needs of large corporations seeking

access to international public equity markets, large financial intermediaries (institutions) seeking

global investment opportunities and sometimes market providers in the hope of deepening their

own markets.

EU statement issued in Brussels on 7 June 2002 on adoption of IFRS outlined the expected

benefits of IFRS. It stated that it will help to eliminate barriers to cross-border trading in

securities by ensuring that company accounts throughout the EU are more reliable, transparent

and easily comparable. This will in turn increase market efficiency and reduce the cost of raising

capital for companies, ultimately improving competitiveness and helping boost growth.

The benefits, thus, expected of IFRS have been hereby discussed.

A. Eliminate barriers to cross-border investing:

The adoption of IFRS facilitates cross-border investments through the easy comparison of

financial statements between countries as evident in the decisions of international investors.



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B. Improves accounting and disclosure quality and reduces earning management:

IFRS enhances the transparency and reliability of financial statements, which subsequently

improve its usefulness for external users such as analysts and investors. Previous domestic

accounting standards were designed to attend tax and government needs and were not adequately

prepared to inform investors, analysts, and other market participants. IFRS are not only relevant

to external parties but are also useful to management decision making as well.

Despite being researched and elaborated for several decades, there is no precise and universal

definition of accounting qualities. They can be traced according to several attributes of “good”

financial reporting, including accruals quality, timely loss recognition, earnings smoothing,

earnings persistence, value relevance, reliability and predictability.

C. Enhances comparability:

IFRS adoption improves the similarity facet of cross-country information comparability without

discernibly impairing the difference facet of comparability. Several studies also suggest that

greater information comparability facilitates international transactions and minimizes exchange

costs. Comparability is positively associated with analyst forecast accuracy, and negatively

associated with forecast optimism dispersion.

D. Value relevance of accounting Information:

Many studies have compared the value relevance of domestic GAAP and IFRS to investors

through an Ohlson price regression model. This model helps to explain value relevance of

accounting information. It explains market value per share using earning per share and book

value of equity per share. Studies have found that both earning per share and book value of

equity per share significantly and positively explain market value per share during the periods

followed by IFRS adoption although earning per share was not a significant predictor prior to

IFRS adoption. Even for a country categorized by strong investor protection and high-quality

financial reporting and enforcement, IFRS adoption has been found to affect the associations

between accounting information and market value.

E. Improves analysts’ earnings forecast:



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Through higher disclosure and transparency in financial statements, IFRS enables analysts to

issue earnings forecasts that are more accurate and less dispersed, and disagreement in issuing

target price reduced to minimum. Further, countries with a big gap between local standards and

IFRS, should present a bigger improvement in accounting quality, which in turn would improve

analysts‟ forecast accuracy.

F. Market efficiency, liquidity and the cost of equity capital:

IFRS-based disclosures appear to have improved the efficiency of stock prices. Stock‟s market

volatility are driven more by news about the firm itself, rather than by news about other firms.

There is a famous saying in market that „liquidity begets liquidity‟. This is because more

investors with money to invest and more companies seeking additional equity capital are drawn

to more liquid markets. Market operators also like to run more liquid markets for fairly obvious

reasons of self-interest. It has been found that IFRS have a potentially beneficial role to play in

fostering more liquid markets. Regarding cost of capital, research suggests that there is a

negative association between IFRS adoption and cost of equity capital. This is because; IFRS

has assisted in the development of efficient equity market that has helped firm‟s total cheap

capital.

VIII. IFRS: CHALLENGES

The past decade saw sporadic efforts to identify the challenges of implementation of IFRS with

respect to complex nature, communication, translation and its uniform interpretation, and to

understand the challenges faced by users and practitioners, with respect to education, staffing,

cost, training and IT infrastructure. Challenges in the process of convergence to IFRS have been

hereby discussed.

A. IFRS transition and implementation obstacles:

IFRS implementation is considered to be a costly procedure, particularly for smaller companies.

The widespread changes relating to deferred taxes, segment reporting, property, plant and

equipment valuation, intangible assets depreciation and unquestionably the increased disclosure

requirements are not easy for the majority of accountants to learn. Personnel training has



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emerged as one of the major problems faced. The task of implementing IFRS is further

complicated by IFRS continually evolving, and not yet being finalised in many jurisdictions.

B. Existing institutional and legislative framework:

A country‟s accounting policy making system comprises of the capital markets structure and

level of development, legal requirements, professional accounting standards, tax law and

managerial philosophy. The existing institutional and legislative framework is not developed

enough to allow an integrated application of IFRS. It is a common complain that the supervisory

authorities do not provide adequate guidelines concerning the practical application of IFRS. A

major source of these difficulties is the lack of comprehensive training regarding the technical

aspects of the application of IFRS.

Corporate governance at country and firm levels is believed to have an important influence on

many aspects of the firm‟s behaviour such as its disclosure policy, transparency, financial policy,

the quality of its accounting numbers, choice of auditor and so forth; and to influence the

properties of analysts‟ forecasts, as well as its cost of capital. IFRS is more likely to be adopted

in countries with strong corporate governance codes.

The compliance with IFRS predominately depends on a national regulatory framework. It has

been argued that accounting standard setting is futile in the absence of enforcement. Without

enforcement the accounting rules will be only symbolic in nature unless accompanied by sound

program for monitoring compliance and imposing sanctions for non-compliance.

C. Fair value concerns:

A major issue in applying the IFRS is using the fair value accounting as the prime source of

measurement for asset/liability. The IASB endorses the fair value approach in the context of

relevance. Therefore, IASB has taken up the function of improving the reporting requirements.

However, from the evidence of the financial crisis and the Enron case, the use of fair value is

expected to increase volatility in the reported values of assets and earnings. More importantly,

most respondents believe that IFRS allow considerable discretion to both accountants and

auditors to exercise their judgment. Within this context, it has been expressed the reservation that



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IFRS provide considerable scope to firms to influence accounting numbers through the

application of appropriate accounting treatments.

D. Variables of interest:

Various variables of interest are subjectively influenced. There remains a debate on what exactly

constitutes accounting quality and how it should be measured. It cannot be directly observed and

collected from commercial databases. Discretionary accrual models have been criticized for their

measurement errors and low power settings, which limit their ability to monitor earnings

management. Additionally, discretionary accrual models may not be appropriate in the cross-

country setting because of data restrictions.

E. Internal management systems:

Building in flexibility is a prerequisite to dealing with a world marked by constant change and

innovation. As more companies consolidate their businesses under the new financial reporting

requirements; they may need to renegotiate financing agreements, adjust debt covenants and

reconsider the implications for other long-term contracts such as leases and derivative

arrangements. Internal operations may need to change as companies begin to integrate the new

reporting scheme throughout their businesses.

E. Differences in socio-economic conditions:

Although capital and product markets have integrated, entrenched differences in socio-economic

conditions, culture and value systems cause substantial differences in accounting practices across

countries and these differences cannot be removed overnight.

F. Mandatory vs. Voluntary adoption:

A link has been drawn between the benefits of adoption and the strength of the firm‟s

commitment to comply with the standards. More „serious‟, voluntary adopters have been found

to benefit more from larger increases in market liquidity and larger declines in the cost of capital.

Voluntary adoption of IFRS results in improved accounting quality rather than mandatory

adoption.



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CONCLUSION:

Taking into consideration the normative, positive consequences of IFRS, numerous researches

have tried to investigate whether the transition from one‟s national GAAP to IFRS will bring

about some improvements in the accounting quality. Nevertheless, researches were not

conclusive. Although some studies have documented the increase in accounting quality, many

have proved mixed, ambiguous or even negative findings. Country-specific factors and

enterprise specific factors have played their own role during the convergence process. The

impact of IFRS is never guaranteed just because of mere adoption of the uniform standards but

rather tends to rely largely on the dynamics of the locality of the adoptee. Moreover, IFRS are

not static: new standards are being introduced and existing standards revised frequently.

With respect to education and training, there is a big role for the universities and also for

accounting firms and professional bodies in equipping university graduates for a career in

accounting, in developing well-trained teachers and researchers, and in catering for the

professional development needs of practitioners.

A recent study found that among various companies reporting results under both GAAP and

IFRS, majority showed higher earnings with the international standards in place. Investors will

also have reason to rejoice, as the new standards make company financials easier to compare,

enabling them to invest inter nationally with more knowledge and confidence.

MCA‟s announcement of the roadmap for implementation of Ind-AS starting 1 April 2016

conveyed the Indian Government‟s commitment to adopting Ind-AS, but also brings forth

discussion on the implementation challenges for various stakeholders. Issues such as awareness,

training, cost, interpretation, IT infrastructure and staffing have been unanimously perceived as

challenges during the implementation process in the context of India. Experiences of banking

industry in the process of convergence would be interesting to investigate as it represents both

the users‟ and preparers‟ perspective. As a user, it deploys its funds from customers…based on

accounting reports developed from accounting standards. As a preparer, it accounts for

transactions regarding non-performing loans, hedge accounting valuation, regulatory compliance

and taxation. Further efforts from ICAI on training and awareness may be undertaken in the



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future. The ICAI has been found to be competent enough in the past and will prove to be so in

the future as well.

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