a transaction may be completed, while the other, leg may still have to take place. for instance, questions arise on several issues such as to whether unsold goods at the end of the accounting period can be valued at cost or realizable value and the applicable cost formula, alternative method for evaluating depreciated / amortized value of fixed assets, how to ascertain the value of a number of assets / liabilities, claims and counter - claims and the correct treatment of uncertainties involved in evaluating a particular transaction. therefore, there is an imperative need for evolving appropriate accounting policies and accounting standards to deal with these questions. importance of accounting standards accounting as a “ language of business ” communicates the financial results and health of an enterprise to various interested parties by means of periodical financial statements. like any other language accounting should have its grammar and these sets of rules are accounting standards. the objective of accounting standards is three fold. firstly, they help to standardize the diverse accounting policies and eliminate the incomparability of financial bis central bankers ’ speeches statements within an entity and across entities. secondly, they facilitate the presentation of high quality, transparent and comparable information in financial statements. thirdly, they reduce to accounting alternatives and thereby eliminate the element of subjectivity in financial statements. india has a long tradition of framing accounting standards in the country. the institute of chartered accountants of india ( icai ) set up under an act of parliament had constituted an accounting standards board ( asb ) in april 1977 and the asb has been framing the indian accounting standards for the last three decades. international financial reporting standards globalization of financial markets has meant an increased focus on international standards in accounting and has intensified efforts towards a single set of high quality, globally acceptable set of accounting standards. financial statements prepared in different countries according to different set of rules, mean numerous national sets of standards, each with its own set of interpretation about a similar transaction, making it difficult to compare, analyse and interpret financial statements across nations. a financial reporting system supported by strong governance, high quality standards, and firm regulatory framework is the key to economic development. indeed, sound financial reporting standards underline the trust that investors place in financial reporting information and thus play an important role in contributing to the economic development of a country. needless to mention, internationally accepted accounting standards play a major role in this entire process. it is in this context that the role of an independent, global standard - setting body such as the

washington next fall to attend the third such conference, hosted by the federal reserve. we hope these conferences will inspire further work on these important topics and will highlight the issues that researchers are addressing, and more broadly promote the conversations we are having in the economic and finance professions. thank you for your work, and i look forward to seeing you at the federal reserve next year. 1 1. see www. federalreserve. gov / aboutthefed / diversityinclusion. htm 2 2. www. federalreserve. gov / publications / minority - women - inclusion. htm 2 / 2 bis central bankers'speeches