Question 3 OR (b)

Convergence with IFRS and whether it is needed

3 marks

Time to write
About 6 minutes

From an older CBCS paper

Question

Question 3 OR (b) · 3 marks

What is meant by convergence of IFRS ? Is such convergence needed at all ? 3

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

6 minfor 3 marks

Read from the question

  • Is such convergence…?A yes-or-no question: answer it in your first line, then explain why.

Write it in this order

  1. 1 Meaning of convergence 1 mark 1 min
  2. 2 Why it is needed 2 marks 5 min

Easy marks

  • Meaning of convergence (step 1, 1 mark): a definition in one or two lines. It opens the answer, so it takes a minute or two.

Short on time? Cut step 2 short rather than leave anything out.

Try it first. About 6 minutes for 3 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Meaning. Convergence means bringing a country's own accounting standards into line with International Financial Reporting Standards (IFRS), the single set of global standards issued by the IASB, so that the national standards and IFRS lead to the same accounting, without necessarily adopting IFRS word for word. In India the ICAI gives due consideration to international standards and integrates them in the light of Indian conditions.

Is convergence needed? Yes.

  1. Comparability across countries: standards bring uniformity of rules and policies, and so consistency and comparability of financial statements; global investors can compare Indian firms with foreign ones.
  2. Access to foreign capital at lower cost, and easier listing abroad.
  3. One reporting language for multinational groups, avoiding reconciliation between national GAAPs.
  4. Reliability: a widely accepted framework reduces the scope for manipulating reported data.

Convergence rather than full adoption allows for local legal and economic conditions.

Where the 3 marks sit

#ComponentMarks
1Meaning of convergence1
2Why it is needed2
Total3
Keyboard: ← → previous and next question, / search

Report a problemopens an email to admin@getkunji.com with the question ID1861-Q3ORbalready filled in.