Introduction to IFRS
F
● ull Form: International Financial Reporting Standards(IFRS).
● Issued by: IFRS Foundation and the International AccountingStandards Board
(IASB).
● Purpose: To create a global standard for financialstatements that enhances
comparability, transparency, and reliability [2].
Key Objectives
1. U niformity: Provide a consistent financial reportingframework for companies
globally.
2. Transparency: Promote clear and understandable financialdisclosures.
3. Comparability: Enable cross-border comparisons offinancial performance.
4. Accountability: Help investors and regulators assessfinancial statements [6].
IFRS Applicability Worldwide
● IFRS is either required or permitted in 168 jurisdictions, including major economies
like Australia, Brazil, and Canada [6].
● Some countries, such as India, have converged IFRS with domestic standards (e.g.,
Ind AS) to align with local requirements [3][5].
Advantages of IFRS
1. G lobal Acceptance: Enhances credibility by aligningaccounting practices with
global norms [4].
2. Cross-Border Investments: Easier comparison for investorsand analysts, boosting
international investments.
3. Reduced Financial Barriers: Aids multinational companiesby standardizing
financial reporting rules.
4. Better Decision-Making: Improves the quality and reliabilityof financial data
available to stakeholders [2].
Challenges in Adoption
1. C omplexity: Transitioning from local standards toIFRS requires extensive training
and system adjustments.
2. Cost: Companies need significant resources for implementation,such as software
upgrades and expert consultation.
3. C
ultural & Legal Barriers: Adapting global standards to local laws and practices can
be difficult [4].
IFRS in India
Implementation: India uses Ind AS, which are IFRS-convergedstandards.
●
● Why Ind AS?: To harmonize international accountingnorms while considering Indian
legal and economic conditions [5].
● Benefits in India:
○ Enhances transparency in financial statements.
○ Aligns Indian companies with global financial practices, aiding international
trade and investment [3].
Difference: IFRS vs. Ind AS
Aspect IFRS Ind AS
Scope Global India-specific (converged)
Flexibility More principles-based A
dapted for Indian
scenarios
Legal Framework General guidelines Aligned with Indian laws
Future of IFRS
Increasing globalization will drive further adoption of IFRS globally.
●
● Continued refinement is essential to address emerging financial complexities and
technological advancements.
