BENEFITS OF IFRS
IFRS stands for International Financial reporting Standards. These are the standards issued by the International Accounting Standard Board. It also covers the wide range of International Accounting Standards issued by the International Accounting Standard Committee. IFRS has replaced the GAAP (Generally Accepted Accounting Principles). These standards are to be used by the business organisations that are engaged in commercial, financial, industrial and other similar activities. IFRS are very useful for business enterprises carrying on the business worldwide. The benefits of IFRS are as follows:
HELPFUL TO ENTERPRISES OPERATING GLOBALLY
The business entities having business operations in different countries will face problems of consolidation of financial statements of they prepare their financial statements according to the standards prevailing in different countries. IFRS unify the accounting practices worldwide as a result of which the problem of consolidation is avoided.
HELPFUL TO INVESTORS
Investors require high equality, relevant, reliable, transparent and comparable information in financial statements in order to make economic decisions. The use of common set of high quality accounting standards i.e. IFRS would be helpful to investors in comparison to financial statements prepared under different accounting standards adopted by different countries.
HELPFUL IN INDUSTRY
The obtaining of funds from outside the country becomes easier if the financial statements comply with Globally Accepted Accounting standards. Now a days most of the stock exchanges require information as per IFRS and convergence to IFRS would enable Indian Companies to access international capital market easily.
LOWER COST OF RAISING FUNDS ABROAD
The cost of raising funds abroad can be minimized under IFRS as there will be no need to prepare two sets of financial statements- one set on the basis of IFRS and another on the basis of Accounting Standards.
HELPFUL TO ACCOUNTING PROFESSIONALS
Accounting professionals will be able to provide better services in countries adopting IFRS.
TRUE AND FAIR VIEW
In IFRS based financial statements assets are valued on the concept of true and fair value i.e. on the basis of their market value. Indian Accounting Standards ignore this concept.