Convergence of Accounting Standards with International Financial Reporting Standards in India- Impact on Earnings Per Share of Selected Companies

Abstract

To make the world a global market International Accounting Standards Board (IASB) framed International Financial Reporting Standards (IFRS) for creating uniformity in accounting all over the world. To make India a global competitor Ministry of Corporate Affairs(MCA) also has made reporting as per IFRS mandatory from 1 1 April 2011, for the companies listed on Bombay Stock Exchange and National Stock Exchange having paid up capital of Rs.1000 Cr. or more. Much foreign research says that there are significant changes in financial performance as well as in EPS of the companies on convergence of accounts with IFRS. So, this study has been conducted to find out the impact on EPS of the selected companies on convergence of accounts with IFRS. The objective of the study is to compare the Earning per share (E.P.S.) by converging its accounts as per IFRS and accounts made based on Indian GAAPs and to specify reasons for changes in EPS. For primary data collection 16 questionnaires filled by Chartered Accountants have been taken into consideration. The Questionnaire was framed to take views of Chartered Accountants and Accounting professionals of various companies (Ernst & young, KPMG, BHEL etc.) on the problems faced by them in convergence of accounts with IFRS and impact on financial performance of the companies. For conducting study 5 companies were selected for comparison of EPS based on Indian GAAP and IFRS. A significant change in EPS of the companies as per IFRS and Indian GAAP was found on comparison. The researchers found the various reasons for differences for the changes in EPS of selected companies.