Introduction of uniform accounting standards, need of the hour

A BUSINESSMAN on presenting his company's financial records to different accountants are likely to get varied estimates on projected profits for the forthcoming year. The need of the hour was the introduction of uniform accounting standards. This was the consensus opinion of a set of accountants who met here to weigh the pros and cons of International Financial Reporting Standards (IFRS).

Different Countries different Standards:-

Just as different accounting standards are followed in various countries, the opening up of economies world over leading to the emergence of many transnational companies, has brought out the need for a common accounting standard. It was such a necessity that gave birth to IFRS, the privately funded accounting standard-setter based in the UK. And administering IFRS is a board of 14 under the label of International Accounting Standards Board. The seminar, organised by Alliance India, saw accountants, financial managers and practising auditors from various industries participating in it.

Valuation of Intangible Assets:-

According to Mr Srinivas Vadlamani, under IFRS, even intangible assets (copyrights, patents, goodwill and intellectual property) could be revalued, which is not the case with Indian GAAP.Under the latter, only fixed assets can be revalued while under US GAAP no revaluation of even fixed assets is possible.

Areas Covered by IFRS:-

Mr Rajkumar S. Adukia of Adukia & Associates said the IFRS framework deals with the objectives of financial statement, qualitative characteristics, elements of financial statement, concept of capital and capital maintenance.

Adoption by more than 90 Countries !:-

Therefore, it is not surprising that IFRS is required or permitted for use in over 90 countries for financial reporting. Though a company can withhold application of IFRS in rare cases, where it is felt that such application would defeat the very objective of financial reporting, disclosure must be made for reason for override. No such override is generally permitted under either Indian or US GAAP. European Union, he said, had recently mandated application of IFRS for all listed companies.

Mr Gautam Doshi, President Reliance Infocomm, said IFRS was more flexible, dynamic and responsive to changes and could be applied across all types of industries and across many countries.

"Many national standards are virtually `word for word' or close to IFRS. This includes Australia, Singapore, India, Pakistan and New Zealand. Certain large Indian corporates have started voluntary conversion to IFRS", he said.Apart from EU other countries that have mandated application of IFRS for their listed companies are Russia, Mauritius, Australia and Taiwan.