GLOBAL CONVERGENCE OF FINANCIAL REPORTING

Abstract

All major economies have established time lines to converge with or adopt IFRSs in the near
future. The international convergence efforts of the organisation are also supported by the Group of
20 Leaders (G20) who, at their September 2009 meeting in Pittsburgh, US, called on international
accounting bodies to redouble their efforts to achieve this objective within the context of their
independent standard-setting process. In particular, they asked the IASB and the US FASB to
complete their convergence project by June 2011. Adopting a single global accounting language will
ensure relevance, completeness, understandability, reliability, timeliness, neutrality, verifiability,
consistency, comparability and transparency of financial statements and these bring about a
qualitative change in the accounting information reports which will strengthen the confidence and
empower investors and other users of accounting information around the world. It will also help
acquirers to assess the actual worth of the target companies in cross border deals and thereby
furthering the economic growth and business expansion globally. For a decade the companies in India
have been using both – US GAAPs and more recently International Financial Reporting Standards
(IFRS) to raise funds from US and European Markets. The Institute of Chartered Accountants of
India has announced that it will align existing accounting standards with IFRS w.e.f. April 1, 2011 to
join the group of 100 countries reporting under IFRS.