The remarkable acceptance of IFRS by 140+ countries across the globe indicates that it will become a ‘de-facto’ language for financial reporting globally. A global, uniform standard in financial reporting is much required to achieve definite reporting structure, sustainable reporting of the business affairs, reduce redundancy, enhance comprehensiveness and comparability.
However, while talking about global harmonisation in financial reporting, it should be noted that the disparities in accounting standards are not just inter-economy but intra-economy as well. Within a country, gradation in the standards exists.
Thus, it is important to evaluate whether sustainable reporting by adopting a common global standard like IFRS will ensure holistic sustainability in financial reporting. Also, the current and potential usefulness of such reporting should be evaluated. Further, the current and potential usefulness of sustainable reporting standard is evaluated for the chosen country India.
The adoption of IFRS by different countries is either in the form of integration of the international standards with the existing accounting standards or in the form of replacing the existing one. The latter is not opted for because it is a sudden change and may impact the entire economy.
Therefore, the former alternate opts for to transit to the IFRS system. Thus, the economies are in the preparatory phase, transition phase or incorporated phase.
IFRS is a principle-based standard and is based on the IAS framework. It can, therefore, be interpreted in different ways based on the interpretation of the management. Despite the variations, the theoretical advantages of using IFRS as a universal financial language exhibit evidence academically.
Use of International Financial Reporting Standards is supported by businesses, investors and other stakeholders in need of high quality and global accounting standard that renders transparency and reflects economic reality in the reporting. The standard-setting process is not biased to any legal or national constraints which lead to more neutrality and thus sustainability.
IFRS is intended for unifying the standards for financial reporting. Sustainable reporting ensures that the companies’ performance reporting is triple- bottom line reporting which includes financial and non- financial reporting like social, environmental and corporate governance perspective. Thus, IFRS does not solely achieve sustainable reporting, but jointly with GRI it achieves the motive.