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

area of hedge accounting and impairment, where currently work is underway. it is expected that ifrs 9 will replace ias 39 in its entirety by june 2011. bis central bankers ’ speeches ifrs convergence – implementation in the indian context and challenges in the backdrop of the developments after the global financial crisis, the ministry of corporate affairs ( mca ), goi set up a high - powered core group under the chairmanship of secretary ( mca ) to study the impact of ifrss and to understand the preparedness of the indian companies for converging with ifrss. the road map towards ifrs convergence for corporates from april 1, 2011 has been finalized by the ministry of corporate affairs in january, 2010. convergence also entails maintaining consistency with legal and regulatory requirements prevalent in the country. towards this end, amendments need to be made to existing laws and regulations, notably the companies act, 1956 provisions and schedules that detail the requirements of financial statements need to be harmonized with ifrs requirements and converged indian accounting standards need to be notified under section 211 ( 3c ) of the said act. additionally there are also issues relating to taxation under an ifrs converged environment. there is also a need to improve awareness in general and build technical competence for the accounting and auditing profession on ifrs. the icai has already included a comparative study of indian accounting standards with international standards in its syllabus for ca final advanced accountancy and is also offering courses and seminars for its members to update them in the field. the rbi too has been holding periodical seminars and workshops to educate its staff on ifrs provisions. challenges for banks and non - banking financial companies in respect of banks and nbfcs, in view of the special issues involved ( finalisation of ifrs 9 expected in the middle of 2011 ), a separate road map was prepared in march 2010 for convergence with ifrs for the banking industry and nbfcs. the convergence process would be from period beginning april 1, 2013, with a phased approach for urban banks and nbfcs. this gives the banking system some time to adopt to the standards in a smooth and non - disruptive manner. it has to be noted, however, that banks will be significantly affected by the ias 39 replacement project and a number of other accounting developments including those relating to financial instruments, fair value measurement, financial statement presentation and consolidation. some of the major changes pertain to certain critical areas such as classification and measurement of financial assets