What is IFRS?

IFRS are standards and interpretations adopted by the IASB (International Accounting Standards Board), a body earlier known as IASC (C for Committee). The London-based Board started its operations in 2001, and is “committed to developing, in the public interest, a single set of high quality, global accounting standards that require transparent and comparable information in general purpose financial statements,” as the IASB’s publication ‘International Accounting Standards 2004’ explains.

Were there international standards prior to IFRS?

Yes, the IASC used to issue International Accounting Standards (IAS), between 1973 and 2001, and these form part of the IFRS now. Created in 1973, the Committee’s members were common with those of the IFAC (International Federation of Accountants), an umbrella organisation of accountancy bodies.

However, lacking any mandatory authority, IASC’s standards relied on persuasion for adoption. Another lacuna was that the body had to accommodate the interests of member-countries, resulting in many alternative treatments in the standards. “In April 2001 the IASB adopted all IAS and continued their development, calling the new standards IFRS,” educates Wikipedia.

How is the acceptance of the international standards now?

High. Which explains why India too decided to join the global path, as a latecomer, though. If you look back, a significant development was what happened in 1995: The IASC entered into an agreement with IOSCO (International Organisation of Securities Commission) to develop by 1999 a set of core standards, which the IOSCO could recommend for cross-border capital raising. Happily for the IASC, the ‘core’ was ready as planned, and the year 2000 proved to be a milestone: the Commission formally accepted the IASC’s core standards as a basis for cross-border listing. Indian members of the IOSCO include the BSE (Bombay Stock Exchange), the NSE (National Stock Exchange), SEBI (Securities and Exchange Board of India), and FMC (Forward Markets Commission).

What is convergence? Why is it required?

Convergence means a coming together from different directions, especially a uniting or merging of groups or tendencies that were originally opposed or very different, as Encarta defines. In the ‘accounting standards’ con text, convergence is about aligning of national requirements with the international norms. Immediate benefits of convergence are comparability of financial statements, portability of professional skills across countries, ease of M&A (merger and acquisition) process, and doing away with the need to translate accounts according to different accounting norms.

Who is following IFRS?