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.