Adoption of Ifrs in Indian Accounting Standard and Its Effect on Financial Statement Analysis of Indian Companies

Abstract

Objective: The objective of the study is to examine the effect of Ind AS implementation on the financial statements of select companies with the aim of comparing the two accounting standards with the available data of 13 companies. Method: The methodology adopted for this research comprises secondary data extracted from prowess database of 13 non- financial companies selected from top BSE 30 (companies those have prepared financial reports as per both IGAAP and Ind AS during transition period) and used for the comparison with the help of selective financial ratios. The sampling adopted is purposive sampling method for the selection of the companies. Results and Discussion: The results obtained revealed that there are changes and effect of implementation on profitability and liquidity on implication of Ind AS in companies but solvency remains same as in IGAAP. In the discussion section, these results are contextualized in light of the theoretical framework, highlighting the implications and relationships identified. Possible discrepancies and limitations of the study are also considered in this section. Research Implications: Financial reporting is crucial work that helps a firm to track their financial status in the market. For that, high quality uniform standards are required to compete with the global level market. Indian Accounting standards which is converged accounting standards from IFRS is introduced and implemented in India. The results and the method used to compare the effect of new and old accounting standards will make understand about the changes occur during the transition period and reason for changes in various components in the financial reporting of company. Originality/Value: This study is carried out on the basis of comparison of two accounting standards using various accounting ratios and those ratios were used in the Gray Comparability Index formula to know the conservatism for particular component from the statement of profit and loss and balance sheet of the company. This method allows the expertise and auditors to understand the root for the changes better, that occurred due to transition period in India.