ADOPTION AND IMPLEMENTATION OF IFRS: AN IMPERATIVE NEED FOR SMEs IN INDIA

Small and medium enterprises (SMEs) have made noteworthy participation towards industrial growth, manufacturing, export and employment creation particularly at the low-skill level. SMEs Employing close to 40% of India's workforce and contributing 45% to India's manufacturing output Although they employ 40% of India's workforce, they only contribute 17% to the Indian GDP., SMEs play a critical role in generating millions of jobs, especially at the low-skill level. The country's 1.3 million SMEs account for 40% of India's total exports. The movement to IFRS being the global benchmark in accounting standards in gaining momentum with about 100 countries already moving to IFRS as the standard (or at least have converged very close to IFRS). In EU, IFRS is mandatory since 2005. In 2007 China adopted IFRS within 1 year of announcing the changeover. The International Financial Reporting Standards (IFRS) for Small and Medium Scale enterprises is a adaptation and generalization of full international financing reporting standards aimed at meeting the needs of Small and Medium scale enterprises financing reporting and to simplify the financial reporting. The adoption of IFRS across the country is taking place rapidly to bring about accounting quality improvement through a single set of standards for financial reporting. The International Financial Reporting Standards (IFRS) was issued by International Accounting Standards Board (IASB). All major economies have established timelines to converge with, or adopt the IFRS. The adoption of the International Financial Reporting Standards surely will ensure uniformity, comparability and reliability of the financial reporting across the world. The intent of the study is to investigate features of adoption of IFRS and to address issue and challenges while adopting IFRS for small and medium scale enterprises in India and the context of IFRS in Indian Scenario. The paper also identifies benefits for small and medium scale enterprises through adoption of IFRS and to make comparison between India GAAP framework with IFRS for small and medium enterprises. Key Words: IFRS, Financial Statements, Accounting Principles, Small and Medium Enterprises, Financial Reporting Policy