Global Convergence of Accounting Standards (Commerce Achiever)
The world is getting smaller and smaller, globalization has made it possible to accept the world as one market. For better understanding of the business reporting and consistency in accounting policies, there was an urgent need to align to one global accounting language. Application of a single set of accounting requirements would increase the comparability of different entities. This is the reason for more than 120 countries to follow global accounting standards i.e. International Financial Reporting Standards (IFRS). In this article I will give an overview of Indian Accounting Standards converged with IFRS (Ind AS).
The organisation communicates its Financial Position using financial statements and reports. For any communication to be effective and efficient, the language must be the same. It will be difficult to communicate if the language is different i.e. comparing, analysing, etc. of Financial statements of different organisation will be difficult. The problem of uniform reporting of Financial Statement had overcome by introduction of common set of Standards known as Accounting Standards.
If the financial accounting process is not properly regulated, there is possibility of financial statements being misleading, tendentious and providing a distorted picture of the business, rather than the true state of affairs. In order to ensure transparency, consistency, comparability, adequacy and reliability of financial reporting, it is essential to standardize the accounting principles and policies.
Accounting standards are written policy documents issued by expert accounting body or by government or other regulatory body covering the aspects of recognition, measurement, treatment, presentation and disclosure of accounting transactions in the financial statements.
Every country has its own set of Local Accounting Standards for recognition, measurement, presentation & disclosure of financial statement.
In India, Local standards are known as Accounting Standards (AS) issued by Accounting Standard Board (ASB) in consultation with Institute of Chartered Accountants of India (ICAI).
Now, the apple to apple comparison was possible at national level due to introduction of Accounting Standards. Today, we are living in Global Era, now we are supposed to create apple to apple situation at Global level. The answer to this is International Financial Reporting Standards (IFRSs)
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