*Head, Department of Commerce, University College for Women, Koti, Hyderabad, India.
**Faculty, Department of Commerce, University College for Women, Koti, Hyderabad, India.
Online published on 9 October, 2012.
Accounting Standards are the statements of code of practice, of the Regulatory Accounting Bodies, that are to be observed in the preparation and presentation of the financial statements. They intend to harmonize the diverse accounting policies followed in the preparation and presentation of financial statements by different reporting enterprises so as to facilitate intra-firm and inter-firm comparison. Accountancy bodies, from all over the world are trying to harmonize the alternative accounting policies. In this context, the study is undertaken to measure the level of harmonization of Accounting Standards with the help of Comparability Index and Conservatism Index and to reason out the difference in the income reported according to the Indian GAAP and US GAAP.
The study is based on the secondary data. Secondary sources include Annual Reports of the select companies and the websites. There is a perfect harmony in the income reported in case of BHEL. There is a significant difference in the income reported under Indian GAAP and US GAAP in case of I Gate Patni, whereas, in case of other companies, there is not much difference. The same result is obtained with C Index.
The major differences in income reported under Indian GAAP and US GAAP are due to depreciation, amortization of goodwill and intangible assets, accounting for securities and derivatives. The harmonization would have a significant impact on future developments in corporate financial reporting and related financial disclosure everywhere.
