alexa International Financial Reporting Standards (IFRS) Adoption on Financial Decisions
ISSN: 2168-9601

Journal of Accounting & Marketing
Open Access

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Research Article

International Financial Reporting Standards (IFRS) Adoption on Financial Decisions

Katta Ashok Kumar*

Business Management Department, Saveetha University, Chennai, India

*Corresponding Author:
Katta Ashok Kumar
Research Scholar and
Assistant Professor of Business Management
Saveetha University, Chennai, India
Tel: 0875-4862-598
E-mail: [email protected]

Received Date: July 28, 2015; Accepted Date: September 19, 2015; Published Date: September 29, 2015

Citation: Kumar KA (2015) International Financial Reporting Standards (IFRS) Adoption on Financial Decisions. J Account Mark 4:141. doi:10.4172/2168-9601.1000141

Copyright: © 2015 Kumar KA. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.



Expansion of business environment in 1990s changed the financial set up of India from the conventional
bank based borrowings to market based one. This necessitated companies to address global stakeholders. The regulatory requirement of different countries also necessitated companies to do multiple reporting i.e., one as per home country standard and the other as per the host country standard. To avoid multiple reporting and to address global stakeholders, a uniform system of reporting was felt necessary to facilitate comparisons, which resulted in the establishment of International Accounting Standard Board (IASB) which issued International Financial Reporting Standards (IFRS). Financial reporting is to present financial information about the status of a company which is used by the stakeholders before any decisions are made with regard to investment, finance, dividend etc. Users of
financial reports are; investors, creditors, employees, customers, competitors, government, public etc. and purpose of usage of these reports differ from person to person. Certain Indian companies having listed in foreign stock exchanges are reporting IFRS voluntarily in their financia statements. The present study tries to understand the impact of this voluntary adoption of International Financial Reporting Standards on the financial decision makers, through a case analysis of Wipro Ltd. The analysis compared the major financial parameters under IFRS and Indian GAAP as reported by Wipro Ltd. for a period of four years from 2009-10 to 2012 - 13. The results postulate an increase in liquidity ratio; equity ratio; interest coverage ratio; marginal increase in debt equity ratio; and no significant increase in profitability ratios except net profit ratio which rose marginally in the year 2013. Overall the results indicate that the adoption of fair value accounting and strict requirement in adhering to accounting standards have strengthened the financial indicators and provided the decision makers a transparent,
true and fair accounting highlighters.

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