Major Impact of IFRS on Indian Accounting Standard

Enactment of IFRS in accounting has a major impact on company's financial statements. There has been wide change in valuation of fixed assets, inventories and investments. it is expected to result in better quality of financial reporting due to consistent application of accounting principle and improvement in reliability of financial statements.

International Financial Reporting Standards has a very great impact on the company's across the globe because it is considered as a global accepted standards in which the accounting terms are taken.Under IFRS, accounting is done for all assets including hidden intangibles at fair value. As the assets are recognized at fair value, amortization of these assets will reduce future year profits under IFRS.
For Inventory, IFRS has strictly prohibited LIFO method and Inventory is carried at Net Realizable value.
IFRS will impact more to Larger Firms as compared to Smaller Firms.It has a positive impact on Financial Reporting and entities.On the Contrary IFRS caused increases in liabilities and leverage ratio and decreases in equity and earnings researched by Goodwin And Ahmed.

International Financial reporting Standards (IFRS) has a huge impact on the fixed assets , investments , inventories and intangiable assets. The adoption of IFRS will lead to show a better financial position of a company as it will then be using consistant accounting principals. All the assets will then be recorded at fair vale rather than recording at book value, inventories will be valued at LIFO and FIFO basis.
Basically implementation IFRS will lead to great impact on the organisation's financial position.

IFRS will be a big transition and will have a considerable impact on the computation of revenue, operating profit and net worth of the companies. Adoption of IFRS means that the entire set of accountancy will be required to undergo a drastic change. The differences are wide and deep routed.It would be a challenge to bring about awareness of IFRS and its impact among the users of financial statements. however, IFRS has came into India with positive aspects.

firs of all what is IFRS.international financial reporting standards termed as (IFRS) is a single set of accounting standards,developed and maintained by the international accounting standards board with the intention of those standards being capable of being applied on globally consistent basis.so talking about benefits in adopting this principle are: the ecnomic growth of company will increase,greater willingness on the part of investors to invest across borders,greater comparability of financial information for investors,more efficient allocation of resources,tranparency in transactions,and Migration to IFRS will enable them to access international capital markets without the risk premium involved in Indian GAAP financial statements,etc.for short term it will increase there cost intially but in long term indian companies will have greater opportunities.
indian companies has not fully adopted IFRS yet but it is still in progress.

The adoption of IFRS is expected to result in better quality of financial statements as now there would not be any confusion in relation to accounting procedure and will facilitate an easy understanding and comparability across global boundaries . UNDER IFRS asset are recognized at fair value and companies having high goodwill in balance sheet will see volatility in their earning . liability are also recognized at fair value.It may lead to a standardized accounting terms world wide. It will result in a positive impact as now there would not be any confusion in relation to accounting procedure and will facilitate in easy understanding and comparability of accounting principles and allow MNC from different parts of the world to invest in India and also big Indian companies will be able to expand to any other part of the world without changing its accounting policies and terms.

International Accounting Reporting Standards is a provider of information aiding n economic decisions, giving importance to
preference and changes in the financial position of an entity.In adopting this principle are: the ecnomic growth of company will increase,greater willingness on the part of investors to invest across borders,greater comparability of financial information for investors,more efficient allocation of resources,
Every country stipulates a method for companies to report financial data based on rules called accounting standards. India has so far followed Indian Generally Acceptable Accounting Principle (IGAAP). However, from FY17, it will follow Ind-AS whose principles are closely based on international accounting system called IFRS. This will increase comparability of Indian companies with their international counterparts. IFRS will impact more to Larger Firms as compared to Smaller Firms.I

Large number of studies in various parts of the world analysed the impact of IFRS on
corporates. They all found that the adoption of IFRS has had a positive impact on entities, financial reporting
and wider economic settings. Smaller firms had fewer adjustments upon IFRS adoption and experienced increases in net income and equity.

It will impact how key financials such as revenue, operating profit, net profit, book value, goodwill, and return on equity will be computed. For instance, under the existing rules, sales are calculated after deducting excise duty. Under the new norms, excise duty will be treated as a tax on manufacturing activity. Hence, it should be a part of revenue. This will increase the revenue of companies, but depress operating margin. However, EPS will remain unchanged.

As the enactment of IFRS in accounting, their has been a major impact on company's financial statements as wee as its position. There has been wide change in valuation of fixes assets, intangible assets, inventories and investments.
The adoption of IFRS is expected to result in better quality of financial reporting due to consistent application of accounting principles and improvement in reliability of financial statements.
The adaptation of IFRS is expected to result in better quality of financial reporting due to continuous adaptation of accounting principles. All the values of any assets are taken at fair value. Fixed assets are required to calculate on fair value rather than on book value, inventories are calculated on the basis of LIFO and FIFO, investments are valued through the calculation of profit and loss account.

Thus, IFRS have a great impact on Indian company's financial statements as company accounts are understandable and comparable across global boundaries.

Aman Chouhan
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Impact on companies It will impact how key financials such as revenue, operating profit, net profit, book value, goodwill, and return on equity will be computed. For instance, under the existing rules, sales are calculated after deducting excise duty. Under the new norms, excise duty will be treated as a tax on manufacturing activity. Hence, it should be a part of revenue. This will increase the revenue of companies, but depress operating margin. However, EPS will remain unchan ..

Improvement in comparability of financial information and financial performance with global peers and industry standards. This will result in more transparent financial reporting of a companies activities which will benefit investors, customers and other key stakeholders in India and overseas;
The adoption of IFRS is expected to result in better quality of financial reporting due to consistent application of accounting principles and improvement in reliability of financial statements. This, in turn, will lead to increased trust and reliance placed by investors, analysts and other stakeholders in a companies financial statements; and
Better access to and reduction in the cost of capital raised from global capital markets since IFRS are now accepted as a financial reporting framework for companies seeking to raise funds from most capital markets across the globe. A recent decision by the US Securities and Exchange Commission (SEC) permits foreign companies listed in the US to present financial statements in accordance with IFRS. This means that such companies will not be required to prepare separate financial statements under Generally Accepted Accounting Principles in the US (US GAAP).

FRS is a globalization theme and many countries in the
world like Hong Kong, Australia, Pakistan, Russia, South
Africa, Singapore, Turkey, and European Union.doption of IFRS means the use of the
International Financial Reporting Standards as the primary
GAAP by the domestic listed and unlisted companies in their
consolidated Financial Statements for the external Financial
Reporting. This means that the basis of the presentation note
and auditor’s report indicate that the Financial Statements
are prepared on the basis of IFRS.It will provide a chance for India to integrate with the common
Accounting International Standards which will save the cost
which has to be incurred by MNC’s and internationally listed
corporate for maintaining dual accounting and reporting
system. IFRS would enhance the comparability between the
Financial Statements of various companies across the globe.
The industry would be able to raise capital from the foreign
markets at lower cost if it can create confidence in the minds
of the foreign investors that its Financial Statements comply
with the globally accepted Accounting Standards. It would
reduce different accounting requirements prevailing in
various countries thereby enabling the enterprises to reduce
the cost of compliances. It serves international clients by
providing professional opportunities. It would increase
their mobility to work in different parts of the world either in
industry or practice.

The International Financial Reporting Standard (IFRS) has the major impact on co's financial statements.

There has been a wide change in valuation of fixed assets and intangible assets, inventories and investments.
Under this fixed assets are required to calculate on fair value instead of book value, for inventories IFRS has prohibited LIFO method and investments are valued through the calculation of profit and loss account.

The adoption of IFRS is expected to result in better quality of financial statements as now there would not be any confusion in relation to accounting procedure and it will facilitate an easy understanding more flexibility and greater comparability across global boundaries.

International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements.Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as promulgated by the IASB and include a statement acknowledging such conformity in audit reports.

Advantages-
-IFRS promise more accurate, timely and comprehensive financial statement information that is relevant to the national standards.
-This also helps new or small investors by making the reporting standards simpler and better quality as it puts small and new investors in the same position with other professional investors as it was impossible under the previous reporting standards.
-With increased transparency as promised by IFRS, the lenders also benefit from IFRS as it makes it compulsory for the companies recognize the loss immediately.
-The standardization of financial reporting which eventually improves the comparability of financial statements in major financial markets.
-The new IFRS reflects on economic substance more than legal form. This helps the companies and other stakeholders to have true and fair view of the companies’ transactions.

Disadvantages-
-The costs related to the application by multinational companies which comprise of changing the internal systems to make it compatible with the new reporting standards, training costs etc.
-Issues such as extraordinary loss/gain which are not allowed in the new IFRS still remain an issue.
-It takes some years for the harmonization and to have sufficient years of financial statements to be prepared under IFRS to improve consistency.

The adoption of IFRS is expected to result in better quality of financial statements as now there would be an easy understanding and comparability across global boundries.
As the assets are recognized at fair value, amortization of these assets will reduce future year profits under IFRS. IFRS requires a financial instrument to be classified as a liability or equity in accordance with its substance. For example, redeemable preference shares are treated as a liability and the preference dividend is recognized as interest cost. Compared to Indian GAAP, IFRS will show the firm as more geared and profits would be lower as a result of preference dividends being treated as interest.
under GAAP asset recognized at book value but UNDER IFRS asset are recognized at fair value and companies having high goodwill in balance sheet will see volatility in their earning . liability are also recognized at fair value.

The adoption of IFRS is expected to result in better quality of financial statements as now there would be an easy understanding and comparability across global boundries.
As the assets are recognized at fair value, amortization of these assets will reduce future year profits under IFRS. IFRS requires a financial instrument to be classified as a liability or equity in accordance with its substance. For example, redeemable preference shares are treated as a liability and the preference dividend is recognized as interest cost. Compared to Indian GAAP, IFRS will show the firm as more geared and profits would be lower as a result of preference dividends being treated as interest.
under GAAP asset recognized at book value but UNDER IFRS asset are recognized at fair value and companies having high goodwill in balance sheet will see volatility in their earning . liability are also recognized at fair value.

In the era of Globalization, India is one of the top developing nations in the world attracting large number of Multi national companies to invest in India. International Financial Reporting Standards (IFRS) is a global and universally accepted standard wherein the accounting terms are accepted internationally and helps in the effective understanding of the accounting norms and policies of any particular country.The new accounting standards recognise substance over form and importance of the fair value to compute financial statements. This means accurate reporting will gain importance over just complying with legal provisions and it should reflect the most current picture of financials. It will impact how key financials such as revenue, operating profit, net profit, book value, goodwill, and return on equity will be computed. For instance, under the existing rules, sales are calculated after deducting excise duty. Under the new norms, excise duty will be treated as a tax on manufacturing activity. Hence, it should be a part of revenue. This will increase the revenue of companies, but depress operating margin. However, EPS will remain unchanged.

IFRS is a set of rules on how accounting transactions should be recorded. These rules are globally accepted and help in effective understanding of accounting norms.
This will have a positive impact as there will be no confusion on what rules should be followed and what not. And this will overall increase the transparency in accounting.