1694The Chartered AccountantMay 2007
qualied accountants and is likely to require a urther three millionover the coming years i it is to keep pace with its current rate o economic growth,” he added.Also, since IFRSs are air value driven, IFRS nations would needa large pool o valuation experts. India should be aware o thesechallenges and tackle them through advance planning, withoutdelaying its IFRS convergence target.One common criticism about IFRS is that it is heavily loaded inavour o air valuation principles. These principles are very subjectiveand would result in signicant volatility in periodic results. Worse still,whilst every other IFRS standard requires application o air valuationprinciples, there is not a single IFRS standard which provides guidanceon how air values are determined. A UK-based global accounting rmdid a small exercise to determine how reliable air values are. It wasnoticed that in a live example on ESOP valuation by making changesto the model input variables, all o which ell within the bound o acceptability, the option expense or a particular company could havebeen varied rom 40% to 155% o reported income. The FASB has recently issued Statement o Financial AccountingStandards No. 157 Fair Value Measurements (SFAS 157), whichestablishes a single set o guidance or air value measurementsunder US GAAP. The IASB (IFRS standard setter) recognised the needor consistent guidance on measuring air value in IFRSs and orconvergence with US GAAP. Consequently, IASB has decided to usethe FASB’s Statement as the starting point or developing its ownstandard on how to measure air values.One o IASB’s challenges is to ensure that it brings stability in theentire ramework, provide clarity on a large number o conusing issues,address appropriately the air value criticisms and most importantlyensure that the standards are interpreted and applied consistently, beit in Asia, Arica or America.A global accounting rm reviewed the rst IFRS nancialstatements o some o the largest corporations, to assess the degreeo consistency and comparability among companies that has resultedin IFRS adoption, and to ascertain how perormance measures basedon IFRS have been used in market communications. The key ndingso the survey are:
Despite the challenges and the signicant departure romprevious national GAAP, the rst IFRS implementation has beena resounding success overall.
Companies that have applied IFRS rst time continue to maintainthe favour o previous national GAAPs in the absence o best IFRSpractice, which will take some time to evolve.
Signicant judgements had to be applied in many situations,which exposes the conficts within and between IFRS standards.
The absence o industry-related IFRS standards and best practices(which will evolve overtime), consistency and comparabilitybetween various companies in an industry was aected.