The stabilization and structural adjustment program initiated with the process of economic reforms helped the economies to steadily open to global competition. With the leveraging of technology, the financial flows from one country to another has enabled financial globalization much quicker than industrial globalization. Further, globalization of financial flows and investments demand transparency in disclosures at the corporate level and uniformity in the formats of presentations of financial statements for better understanding and interpretation. This has resulted in the need for internationally accepted accounting principles for which the International Financial Reporting Standards (IFRS) are drawn. When the firms shift from the local accounting standards towards the IFRS, there is a perceived impact on the financial statements, which is particularly very high in banks. The authors, G Santosh Reddy and Ruchir Desai, in the paper, “Explanatory Process for Adoption of IFRS in Indian Banks”, discuss the IFRS adoption process for Indian banks for effective implementation of IFRS. The authors observe that the Indian banks need to take into account the differences between the accounting standards that are adopted in the past and the new ones to estimate the differences and understand the impact, item-wise, and estimate the impact on equity and regulatory ratios in the process of adoption to IFRS.

In the next paper, “Assessing the Risk of Fraud in Published IFRS and Nigerian GAAP Financial Reports: A Comparative Application of the Beneish Models”, the authors, Nwoye Ugochukwu J, Obiorah Justina N and Ekesiobi Chukwunonso, have used Beneish 8-factored and 5-factored variables within relevant items of the financial reports of selected manufacturing firms to evaluate the quality of financial reporting post-IFRS adoption (Nigeria adopted the same in 2012) of published financial statements in comparison to the firms where the Nigerian GAAP is used and presented. They attempt to address the issue whether IFRS provisions positively discourage unethical practices among preparers of financial statements and companies’ management team members.

Presently, environmental protection has become one of the important aspects of global economies, and accounting and disclosure practices for environmental issues have been receiving increasing attention from the regulators, governments and agencies. On the other hand, a proactive approach of the corporate increases the share value in the market on account of sustainability of the business over a long period. The authors, Ayoib CHE-AHMAD, Nosakhare Peter OSAZUWA and Chijoke Oscar MGBAME, in the paper—“Environmental Accounting and Firm Profitability in Nigeria: Do Firm-Specific Effects Matter?”—make an attempt to explain the impact of environmental accounting disclosure practices on firm’s financial performance. They observe that there is a significant relationship between the environmental disclosure practices of the firm moderated with firm-specific variables and its financial performance.

The Research Note, “Inventory Management Accounting for Obsolete Inventory”, focuses on issues pertaining to accounting for the inventory like the ones where the product is not in demand; not usable for manufacturing; finished good produced and unsold for a long period because of development of new and better product with new technology; and so on. The note makes an attempt to present the issues and challenges an entity faces in identifying such inventory and in accounting for the same along with some models used in practice.

-- Vunyale Narender
Consulting Editor