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Introduction
Board (IASB). India, a country with great culture and great economic prospects, is an interesting
convergence (Adhikari et al., 2021). India is a challenging country for our analysis of the impact
of IFRS imports on developing countries due to its size – being the fifth largest country by
nominal GDP In terms of GDP and secondarily in terms of population, the prevailing accounting
practices can have a significant impact beyond borders. Secondly, the accounting system, which
was defined as primitive a few years ago and relied almost entirely on British colonial heritage,
has recently undergone a major transformation for purposes of globalization markets. India has
demonstrated commitment to join the IFRS convergence process. India has been actively
participating in IFRS convergence since 2011. This study proves the growing potential of IFRS
Literature Review
accounting reporting standards have raised concerns on the development and direction towards
ongoing convergence. Several key factors that are deeply embedded in the Indian political
economy as well as in corporate circles constitute the ongoing debate on whether to adopt IFRS.
Modern accounting principles coexist with traditional practices that are deeply embedded in
Indian cultural heritage. IFRS amendments require a careful balance with recognition of the
is the concept of taking a cautious approach to income and assets as opposed to IFRS neutrality.
Due to the number of economic disparities and regional differences in India, uniform adoption of
IFRS may not be a viable task to accomplish (Almaqtari et al.,2020). IFRS, as a universal
financial reporting mechanism provides better and more transparent comparisons to facilitate
Adhikari et al., (2021) study supports the adoption, showing that IFRS adoption reduces
the cost of capital for firms in developing countries. The study by Bansal & Garg (2021) echoes
this sentiment, emphasizing that convergence will facilitate greater access to global financial
markets and stimulate foreign investment and hence Indian economic growth. IFRS are generally
based on Western legal and economic systems hence it fails to fully reflect the reality in
developing countries like India. Research by Shrivastava & Muhram (2022) reveals the
where IFRS principles can collide with homegrown accounting and cultural and ethical
values. In India, there have also been concerns over the compatibility of fair value accounting
Iyer & Chakravarthy (2022) identified various signs that point towards Institutional and
India. Regulatory bodies, professional accounting organizations, and their alignment with
international standards play a significant role. The literature points out historical development of
professional accounting regulation in India shaped by British colonial heritages. Alignment with
convergence. Studies by Tawiah (2020) warn about significant costs and technical difficulties in
implementing it, especially among smaller Indian firms whose net benefits may be minor.
Indian Accounting Standards (IndAs) were Converged with IFRS and mandated under
reduced variability in net income, higher volume magnitude of discretionary accruals, delayed
recognition losses and lower value relevance reported earnings. The study findings imply that
may be there is a learning curve to the benefits of IFRS. Tawiah(2020) emphasizes the
consideration of diverse economic events in various states and sectors. Some regions, especially
those with a deep-seated economic background are likely to face opposition in terms of adopting
IFRS standards (Akhtare et al., 2022). Economic reforms and policies should address such
differences so as to make the convergence process holistic while benefiting all sections of
economy. The literature review highlights theories of IFRS convergence in India. Proponents
argue that the adoption of global accounting standards provides transparency, comparability, and
access to international capital markets. Proponents of the efficiency concept believe that ongoing
Critical Discussion
Standards (IFRS) in India are generating diverse views among stakeholders, including policy
makers and professional bodies. Discussions often focus on the challenges, concerns and
potential benefits associated with aligning India’s financial reporting system with global
standards. Specific subsidiaries and sectors, such as manufacturing and real estate, express fears
over the financial and operational burden of the Ind AS transition by 2020. The FICCI report
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estimated the cost of registration for IFRS implementation were Rs 125 billion, raising concerns
between perception and feasibility calls for careful attention as to government support and
Moreover, divergent views have focused on the relevance of some IFRS principles in the
Indian context. For example, concerns remain about how fair accounting is used in low-risk
trading environments. This gap is particularly evident in areas such as the accounting for
goodwill, where which historically Indian GAAP allowed for cash payments while IFRS
prescribed fair value (Srivastava& Muhram,2021).Fair value volatility also highlights the
potential for volatility, raising concerns about its suitability for Indian businesses financial
reporting.
The debate extends to financial instruments as well as accounting. Karunia et al., (2020)
instruments is in contrast to the historical cost approach This change can provide transparency,
for market volatility exposure has increased to increase volatility. Potentially negative changes
for Indian companies operating in a dynamic and sustainable economic environment are
unpredictable (Adhan 2020). The study also revealed differences in revenue recognition practices
between Indian standards and IFRS. The debate has focused on the timing and criteria for
revenue recognition, with implications for financial statement users and comparability. The
transition to IFRS principles in this area stimulates discussion about the resilience of India’s
industry and the potential flexibility required for seamless integration. Beyond the specific
statistical treatment, the question of legal rights and enforcement emerges as a major concern.
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Conclusion
In conclusion, the IFRS harmonization project in India represents a complex and nuanced
effort initiated by various factors. The delayed adoption of IFRS standards in India reflects the
complex cultural, economic and legal interactions of the country (Singh et al.,2020).The study
understanding and respecting India’s unique cultural heritage and economic diversity. Long-term
convention requires a balance of tradition between the preservation of accounting methods and
the adoption of global standards recommended by IFRS (Iyer et al.,2022). India’s IFRS journey
is not only about technical accounting standards but also about balancing global integration and
domestic interests. By focusing on contextual issues, adapting the process to local needs, and
creating an ongoing dialogue, policymakers can ensure that it is not limited to international
investors and the platform serves but a variety of stakeholders in India’s own vibrant and
harmonization in India depends on careful consideration of cultural, economic and legal factors
thereby ensuring convergence between IFRS and Indian accounting reporting standards.
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References
Adhikari, A., Bansal, M., & Kumar, A. (2021). IFRS convergence and accounting quality: India
a case study. Journal of International Accounting, Auditing and Taxation, 45, 100430.
Akhtar, M. A., Khan, K. A., & Tripathi, P. K. (2022). The impact of IFRS convergence on key
Almaqtari, F. A., Farhan, N. H., Al-Homaidi, E. A., & Mishra, N. (2020). An empirical
evaluation of financial reporting quality of the Indian GAAP and Indian accounting
Bansal, M., & Garg, A. (2021). Do high-quality standards ensure higher accounting quality? A
Bathla, S., Sharma, A. K., & Kandpal, V. (2023). Stakeholders’ Response to IFRS
Firoz, M., & Dalal, S. (2023). The effect of IFRS convergence on risk disclosure: an
investigation into the Indian accounting system. International Journal of Accounting &
Iyer, S. V., & Chakravarthy, L. (2022). Examination of the convergence route to IFRS reporting
Karunia, A. N., NurFauzia, A., & Yulitaningtias, N. Z. (2020). National Culture, IFRS
Convergence, and The Accounting Quality: Evidence from EAGLEs Countries. The
Rajpurohit, P. (2021). First Time IFRS Convergence in India: Impact on Key Accounting
Saravanan, R., Mohammad, F., & Kumar, P. (2023). Does IFRS convergence affect the
Research.
Singh, G., Kaur, S., & Sharma, R. (2020). Impact of IFRS convergence on financial statements
Srivastava, A., & Muharam, H. (2021). Value relevance of earnings and book values during
Srivastava, A., & Muharam, H. (2022). Value relevance of accounting information during IFRS
3), 249-270.
Weerathunga, P. R., Xiaofang, C., Nurunnabi, M., Kulathunga, K. M. M. C. B., & Swarnapali,