Indian companies seeking a US listing will now have to align their accounts to the new International Financial Reporting Standards (IFRS), rather than the US Generally Accepted Accounting Principles (GAAP). This is after a unanimous decision taken earlier this week by the US securities regulator. It said that foreign companies raising capital in the US will have use IFRS to disclose their financials.
There is more at stake than the manner in which the bean counters go about their jobs. The move to IFRS will help create a new world of globally unified accounting rules. Europe has already embraced the new standard and the US move is a partial embrace of it.
Global Indian companies will now have to start using IFRS for their overseas listings. It’s also time that our regulators ensure that local accounting rules are in sync with IFRS. After all, a global economy that seeks and attracts global capital needs global accounting rules.