Financial Reporting & Disclosures

Financial Reporting

Increased size and complexity of businesses in an increasingly competitive environment, coupled with unconventional business models, intensive use of IT and a renewed focus on risk management spurred by recent accounting frauds have vastly increased the importance of internal control procedures. Internal Audit, which should be regarded as a part of internal control procedures, is also required to play a very significant and critical role in evaluating the adequacy of internal controls and assessing the extent of compliance with the applicable laws and regulations, policies and procedures and suggesting ways to reduce the costs and promote efficiency. In view of this, the independence of Internal Auditor has assumed great significance.

International Financial Reporting Standards (IFRSs), issued by the International Accounting Standards Board (IASB), which are increasingly being recognized as global accounting standards, are in use in over 100 countries and about 40 more are in the process of either adopting or converging with them. While some countries have adopted the IFRSs without modifications, others have tailored the IFRSs to their country-specific conditions during the process of convergence.

In India, gap between Indian and International Financial Reporting Standards (IFRSs) has been narrowing. Subsequent to Companies (Amendment) Act, 1999, when the Central Government was vested with the powers to notify Accounting Standards, the process of harmonization with International Accounting Standards (now IFRSs), was taken up. After preparation of the draft by ICAI and due consultation with NACAS, the Companies (Accounting Standards) Rules 2006, which are substantially harmonized with IFRSs were issued in December 2006 for application from financial year commencing 1.4.2007.

As per Government policy announced in 2008, the Indian Accounting Standards are expected to be fully convergent with IFRSs wef April 1, 2011. The roadmap for convergence with IFRS has since been reviewed by the Ministry of Corporate Affairs and a revised roadmap issued for applying the converged accounting standards to specified class of companies in phases starting from 1st April, 2011 to 2014.

IICA Forum on Financial Reporting and Disclosures facilitates discussion, exchange of ideas, brainstorming and provides a platform for interaction, study and research on contemporary issues related to financial reporting and disclosures such as independence of internal auditor, enabling fair audit, due diligence by auditors during company audit, creative accounting and role of auditors in detection of fraud, issues relating to convergence of Indian accounting standards with International Financial Reporting Standards (IFRS), fair value accounting and other related subjects.

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