Challenges in Implementing IFRS in India: An Analytical Overview
Challenges in Implementing IFRS in India: An Analytical Overview
Challenges in Implementing IFRS in India: An Analytical Overview
Abstract
Accounting standards (AS) are authoritative standards for financial reporting and are the primary source of generally accepted
accounting principles (GAAP). Accounting standards specify how transactions and other events are to be renowned, calculated,
presented and revealed in financial statements. The aim of such standards is to endow with financial information to investors,
lenders, creditors, contributors and others that is useful in making decisions about providing resources to the entity. However,
Convergence would be a challenge in view of the conflicting legal and regulatory requirements related to financial statements, the
technical preparedness of industry and accounting professionals and economic environment prevailing in the country. A sample of
75 respondents comprising Chartered Accountants (CAs) and CA students in Coimbatore city, was taken into consideration using
convenience sampling. The measures taken by the ICAI and the other regulatory bodies to facilitate the smooth convergence to
IFRS are commendable and give the positive idea that the country is ready for convergence.
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International Journal of Advanced Research and Development
Analysis and Interpretation In Table 2, it was found that among the respondents 36 per
In India, with very less knowledge in IFRS very few business cent each were both ACA and FCA and 28 per cent were CA
organizations are using it to maintain their accounting records. students, 56 per cent respondents had the experience between
To know the perceptions of the users about the challenges in 6 and 10 years, all the respondents were from SIRC and 40 per
implementing IFRS, 75 respondents were chosen namely, cent respondents have cleared CA Final.
Chartered Accountants and CA students in Coimbatore city
and their opinion were collected Knowledge of IFRS
Pilot study was conducted for 25 respondents and the test of As IFRS is not yet fully applied India so the survey was
reliability was also tested using Cronbach’s Alpha, which is initiated by asking whether the respondents are aware about
shown in Table 1. IFRS. The results are shown in Table 3
Table 1: Test for Reliability
Table 3: Knowledge of IFRS
Cronbach's Alpha No of Respondents
Questions Respondents (in per cent)
0.670 50
One Accounting in World 93
Source: Computed Data
Never received any training in IFRS 80
The Test for Reliability was conducted to test the reliability of Ready to receive IFRS training in near
87
the opinion towards the challenges in implementing IFRS. The future
result of the revealed the alpha score of 0.670 No availability of sufficient qualified
81
professionals to adopt IFRS in India
Source: Computed Data
Personal Profile of the Respondents
To understand the challenges in IFRS implementation the In Table 3, it was found that among the respondents 93 per
opinion was collected from CA Professional and CA students cent were aware of the term One Accounting in world is IFRS,
in Coimbatore city and their Personal Profile is shown Table 2 where 80 per cent respondents never received any training in
Table 2: Personal Profile of Respondents IFRS, 87 per cent respondents are ready to receive IFRS
training in near future and 81 per cent respondents opined that
No. of Respondents
Profile there is no availability of sufficient qualified professionals to
Respondents in %
CA Students 14 28 adopt IFRS in India.
Designation ACA 18 36
FCA 18 36 Challenges of IFRS implementation
3-5 years 16 32 To know the major challenges faced by the companies while
Years of
6-10 years 28 56 implementing IFRS in India, closed- ended form questions
experience
More than 10 years 06 12 were asked using 5-point scale and the weights have been
Region SIRC 50 100 assigned as 5 for major difficulty and 1 for the least difficulty
UG 09 18 while implementing IFRS. Based on the scores, the ranks are
PG 13 26 assigned which are shown in Table 4.
Qualification
Cleared CPT (Direct CA) 08 16
CA Final 20 40
Source: Computed Data
As per the weighted average ranking it was found that “IFRS “Need training program for employees” was ranked third,
incurs huge financial expenses” was ranked first, then “IFRS pointing out that these are major implementation challenges in
requires internal process control” was ranked second and IFRS implementation.
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International Journal of Advanced Research and Development
Conclusion
The measures taken by the ICAI and the other regulatory
bodies to facilitate the smooth convergence to IFRS are
commendable and give the positive idea that the country is
ready for convergence. The need is to have systematic
approach to make the organization and investors ready for the
change and the standards ready for renovation. Indian
corporate are likely to reap significant benefits from adopting
IFRS. Since the cost compliance would be very high for the
medium-sized industry. However, several important matters
need to be addressed urgently if India hopes to achieve the
planned convergence.
References
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