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International Financial Reporting Standards (IFRS) are
a set of international accounting standards stating how particular types
of transactions and other events should be reported in financial
statements. IFRS are issued by the International Accounting Standards
Board (IASB), and they specify exactly how accountants must maintain and report
their accounts. IFRS were established in order to have a common accounting
language, so business and accounts can be understood from company to company
and country to country.

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Standard
IFRS Requirements

IFRS covers a wide range of accounting activities. There are
certain aspects of business practice for which IFRS set mandatory rules.

Statement of Financial Position: This is also
known as a balance sheet. IFRS influences the ways in which the
components of a balance sheet are reported.
Statement of Comprehensive Income: This can take
the form of one statement, or it can be separated into a profit and
loss statement and a statement of other income, including property
and equipment.
Statement of Changes in Equity: Also known as
a statement of retained earnings, this documents the company’s change in
earnings or profit for the given financial period.
Statement of Cash Flow: This report
summarizes the company’s financial transactions in the given period,
separating cash flow into Operations, Investing, and Financing.

In addition to these basic reports, a company must also give a
summary of its accounting policies. The full report is often seen side by side
with the previous report, to show the changes in profit and loss. A parent
company must create separate account reports for each of its subsidiary companies.

Objectives of the IFRS Foundation

The objectives of the IFRS Foundation are:

·       To
develop, in the public interest, a single set of high quality, understandable,
enforceable and globally accepted financial reporting standards based upon
clearly articulated principles. These standards should require high quality,
transparent and comparable information in financial statements and other
financial reporting to help investors, other participants in the world’s
capital markets and other users of financial information make economic
decisions

 

·       to
promote the use and rigorous application of those standards

 

·       in
fulfilling the above objectives, to take account of, as appropriate, the needs
of a range of sizes and types of entities in diverse economic settings

 

·       To
promote and facilitate adoption of International Financial Reporting Standards
(IFRSs), being the standards and interpretations issued by the IASB, through
the convergence of national accounting standards and IFRSs

 

BENEFITS OF IFRS

·       Same
language

·       Cross
border investments leading to economic growth

·       Comparability
of financial statements of any two companies anywhere in the world

·       Globalization
of economy and world trade

·       For multinational
companies:

         – Consolidation of group financial statements
made easier.

         – Accounting and audit functions made easier
and cheaper

         – Compliance with regulatory requirements of
bodies such as stock exchanges

         -Mergers and acquisitions made easier

         -Access to multinational funds

IFRS in India

ICAI has decided to follow a convergence approach
to IFRS implementation rather than adoption of IFRS as issued by the IASB due to
various reasons as follows:

? The legal and the regulatory environment
prevailing in the country.

? Alternative accounting choices that are
permitted in IFRS may be incompatible with the local requirements and
considerations within specified sectors and industries.

? The current level of
preparedness within the country        for
implementation of IFRS.

CONCLUSIONS

 

·       Yet there is lack of understanding about impact of IFRS on financial
statements. Hence it is responsibility of educational faculty to come out with
some writings to facilitate information about IFRS.

·       Separate courses should be started in the universities and affiliated
college on the International Financial Reporting Standards.

·       Separate text books containing case studies along with some practical examples should be prepared
by the academicians.

·       There is need to undertake the projects for the research work on
IFRS and universities, UGC should give some funds on the research work of IFRS.

·       Universities and colleges should revise their syllabi and
curriculum at various levels like B.Com, M.Com, M.B.A. and other Accounting
Courses and include IFRS as a part of syllabus.

·       Academic institutes should organize the conferences, seminars,
workshops on IFRS and related issues along with interaction or with the
coordination of ICAI.

·        There is huge need to train
the accountancy teachers, students, and officials so, training camps should be organized
by the authority bodies.