Question

1. Choose a country that has adopted IFRSs (i.e. global accounting standards) for at least 3 or more years, as revealed in the accounting literature, and discuss the following: I. In what year did the country adopt IFRSs? II. Were the IFRSs introduced all together (at once), or gradually into the local accounting standards of your chosen country? Explain the possible reason. III. Discuss the benefits and challenges reported in the literature about the adoption of IFRSs in your chosen country.

Answer 1

1) India has adopted IFRS (Global Accounting standards) in Accounting Cirriculam in India in 2011.

2) The strategy for adoption of IFRS was done in phases

1st it's Voluntary adoption and after that:

In the Phase 1, India made some mandatory applicability for the following companies for beginning on or after 2016

a) Net worth of Rs. 500 Crore

b) Holding, subsidiary or joint venture

In Phase 2, It has been made mandatory for the following companies from 2017 onwards

a) Companies equity and/or debt securities in stock exchange worth less that Rs. 500 crores

b) Unlisted companies net worth between Rs. 250 and Rs. 500 Crores

Benefits:

Investors, Economy, Accounting Professionals, Industry

1) Implementation of IFRS will benefit the economy by increasing the growth of its international business. It facilities the maintenance of orderly and efficient capital markets and also helps in increasing the capital growth and thereby economic growth.

2) The reason being that the industry would be able to raise capital from foreign markets at a lower cost if it can create confidence in the minds of foreign investors that its financial statements comply with globally accepted accounting standards.

Challenges:

1) Training and Education

Lack of training facilities and academic courses on IFRS will also pose challenge in India.

2) Legal consideration

3) Taxation Effect

IFRS convergence would affect most of the items in the financial statements and consequently the tax liabilities would also undergo a change.

4) Fair Value measurement

It also involves a lot of hard work in arriving at the fair value and valuation experts have to be used.

5) Difference in GAAP and IFRS

It would be a challenge to bring about awareness of IFRS and its impact among the users of financial statements.