The IUP Journal of Accounting Research and Audit Practices:
Evaluating the Effectiveness of IFRS Convergence in India: Auditors' Perspective

Article Details
Pub. Date : April, 2022
Product Name : The IUP Journal of Accounting Research and Audit Practices
Product Type : Article
Product Code : IJARAP020422
Author Name :Agnishwar Basu* and Debabrata Mitra**
Availability : YES
Subject/Domain : Finance
Download Format : PDF Format
No. of Pages : 16



The objective behind the introduction of International Financial Reporting Standards (IFRS) was to address the problem of 'comparability' of financial information and pave the way for cross-border trade and investments. However, unlike many other nations, India did not adopt the IFRS; instead, it converged with IFRS through preparing a completely new set of financial reporting framework, popularly known as the Indian Accounting Standards (Ind AS). After many postponements, the Ministry of Corporate Affairs (MCA) finally insisted on a transition to Ind AS from financial year 2016-17, and a phase-wise implementation plan was released. Accordingly, all major companies in India have already transited to Ind AS from the previous Indian Generally Accepted Accounting Principles (GAAP). In India, the power of statutory audits under the Companies Act, 2013, is vested upon practicing Chartered Accountants (CAs) only. As the auditor evaluates whether the financial statements comply with the applicable reporting framework, they also observe how the compliance was made. This study seeks to evaluate the success of the transition and ckeck the effectiveness of Ind AS through a survey among auditors.


Financial information plays a pivotal role in investment choices. From the initial days of globalization, companies tried to overcome the domestic barriers to attract both prospective investors and customers (Ball, 2006). However, the biggest problem in attracting investment was the financial information itself. Financial statements are prepared under the reporting framework applicable to the country of incorporation of the company and this framework differed across nations. As a result, a prospective US investor who is accustomed to financial statements of US companies (prepared under the US-Generally Accepted Accounting Principles (GAAP)) found it extremely difficult to read and understand the financials of an Indian company prepared under the Indian GAAP. As a result, 'comparability' of financial statements was impossible and this hindered foreign investment. The confusion resulted in