Volume : V, Issue : VII, July - 2016

Adoption of IFRS as a tool to prevent economic crisis

Smt. Tulasi B V

Abstract :

 International Financial Reporting Standards is a set of International Accounting Standards stating how particular types of transactions and other events should be reported in Financial Statements. IFRS are generally principles–based standards and seek to avoid a rule book mentality. IFRS are issued by the international accounting standards board. IFRS are well accepted standards for assessment of the financial position and performance of a business across the globe. As we know that the world becoming a global village, organizations and investors who operate business in several countries need to know each nation’s accounting principles. Although, basic accounting principles are widely accepted but the application of certain accounting principles in different economic and cultural environment has lead to significant differences as how accountant reports similar transactions. IFRS is important whether it is small, medium, or large scale business organization. Today Indian businesses engage in cross border, report to non–Indian stakeholders and manage overseas operations. Investors feel that, the need to recognise and understand IFRS is inevitable since Indian investors keep looking for overseas investment opportunities. India has been joining IFRS club from the financial year 2012 and included all listed companies, all banking companies, all financial institutions, all scheduled commercial banks, all insurance companies, and all NBFC. Today, India’s IFRS approach to convergence rather than adoption is a debate among companies, preparers, government and stakeholders. There is a subtle difference between convergence and adoption of IFRS in India. Convergence means to achieve harmony with IFRS, it can be considered to design and maintain National Accounting Standards in a way the financial statements prepared in accordance with national Accounting Standards. Adoption is a process of adopting IFRS word by word. Adoption enables a common language as far as financial reporting is considered. It helps for the improvement of capital flows across borders with a relative ease. Increased capital flow will reduce the cost of capital and reduced cost of capital can enable more employment creation.

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

Smt. Tulasi B V Adoption of IFRS as a tool to prevent economic crisis International Journal of Scientific Research,Volume : 5 | Issue : 7|July 2016

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