We had argued earlier in this column that India needs to align its accounting norms with the International Financial Reporting Standards (IFRS), which now have acceptance in more than 150 countries. So we welcome the decision by the Institute of Chartered Accountants of India (Icai) to shift to IFRS norms by 2011.
Local accounting norms are an oddity in a globalized world. Indian companies have been raising capital and buying peers abroad. It is but natural that they should report their numbers in a manner that is accepted in other markets. There is also the other advantage—local accountants will be much better placed to offer accounting outsourcing services to Western firms.
The new IFRS norms will ensure that the way everything from physical assets to inventory to derivatives are accounted for will change. It will take a lot of time for accountants and investors to adjust. Four years is ample time to get ready.