Discuss about the Managing Corporate Governance Management.
As discussed by Tawiah & Benjamin (2015), “Indian Accounting Standard (Ind-AS)” is considered as the primary “accounting standard” adopted by the companies in India and was issued under the supervision of “Accounting Standards Board (ASB)”. ASB is observed to be a group under “Institute of Chartered Accountants of India (ICAI)” which consists of the various representatives from the government department and academicians from the other professional bodies such as ICAI, representatives from “ASSOCHAM, CII and FICCI”. It has been further discerned that Ind AS is named and numbered conforming with the “International Financial Reporting Standards (IFRS)”. The standards are recommended by the “National Advisory Committee on Accounting Standards (NACAS)” as recommended by the “Ministry of Corporate Affairs (MCA)”. The MCA is responsible for imparting the accounting standards which are applicable to the companies of India.
The “Institute of Chartered Accountants of Sri Lanka” is identified to adopt the main accounting procedure in Sri Lanka which are relevant to the “financial reporting standards” as issued by “International Accounting Standards Board (IASB)”. This institute is responsible for the developing the appropriate standards as per maintaining the uniformity of the financial reporting throughout the country which is comparable globally. It needs to be further observed that the “Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995” authorised the “Institute of Chartered Accountants of Sri Lanka” for issuing of the “Sri Lanka Accounting Standards” with the required stated business enterprises for preparing and presenting the various types of the information which are seen to be following the “Sri Lanka Accounting Standards”. The main features of the “Sri Lanka Accounting Standards” consists of the accounting procedures prefixed with the SLFRS and LKAS. SLFRS is referred as the main accounting standard in Sri Lanka which corresponds to the IFRS and LKAS. The report aims to discuss the various types of the about the financial accounting procedures between India and Sri Lanka. The study has further discerned the common part, differences, pros and cons of the both country accounting standards and sources (Kraal, Yapa & Joshi, 2015).
As per the depictions of the different types accounting standards in India it has been seen that Ind AS is named and numbered conforming with the “International Financial Reporting Standards (IFRS)”. The standards are recommended by the “National Advisory Committee on Accounting Standards (NACAS)” as recommended by the “Ministry of Corporate Affairs (MCA)”. Similarly, in Sri Lanka the main governing body for the accounting standards has been seen to be discerned in form of the convergence of the “Sri Lanka Accounting Standards” and “International Financial Reporting Standards (IFRSs)” for producing high quality solutions. It has been also depicted that the main features of the “Sri Lanka Accounting Standards” consists of the accounting procedures prefixed with the “SLFRS and LKAS”. SLFRS is referred as the main accounting standard in Sri Lanka which corresponds to the IFRS and LKAS (Kumar, Goyal & Mitra, 2018).
As both the countries are recognized to prepare their financial reports in accordance with “International Financial Reporting Standards (IFRSs)” the accounting procedures are seen to be based on the different types of the considerations which are seen to be taken into account as per prescribed by the regulations of the board. For instance, the in Indian accounting standard, business combination is followed with “Ind AS 103”, and in Sri Lankan accounting standard SLFRS 3 is seen as the main accounting standard for the business combinations. Based on the different types of the similarities under this standard, the SLFRS aims to recognise and measure the various types of the financial statements as per the identifiable assets required for the liabilities assumed which are seen to be assumed as per the “non-controlling interest” in the acquire. Similarly, in India the various types of the accounting standard are seen to be followed as per the “non-controlling interest”. Some of the other similar aspects of the accounting are based on the application of the “Share Based payments (Ind AS 102)” and “Share Based payments (SLFRS 2)”. Some of the other types of the similarities with the accounting standards has been further application various types of the standards which are seen to be associated to the “SLFRS 3-Business Combinations” and “Ind AS 103 Business Combination”. The most noted similarity in the accounting procedure followed in India and Sri Lanka has been also taken into consideration with the “Ind AS 113 Fair Value Measurement” and “SLFRS 13-Fair Value Measurement” (Bhasin, 2016).
As discussed by Khan (2016), it has been discerned that the most noted difference in the accounting procedure followed in India and Sri Lanka has been seen with the “Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors” and “LKAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors”. The application of the LKAS 8 corresponds to the application of the “accounting policies” and changes pertaining to the tax impacts of the corrections prior to the retrospective adjustments which are seen to be applied to the changes in the accounting policies which are seen to be accounted as per the disclosures made in accordance with the LKAS 12 Income Taxes. However, “IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors” relates to the changes which are related to the “omissions or misstatements of items” of the items as per the “size or nature, individually or collectively”. The prior period errors are seen with the “omissions from, and misstatements” in the financial statements which arises from the “failure to use, or misuse of, reliable information” which are seen to be available as obtained and taken onto account while preparations of the financial statements. These errors are seen to be considered with the mistakes in applying the “accounting policies” “oversights or misinterpretations of facts, and fraud” (Doliya & Singh, 2016).
Some of the different types of the differences are depicted with “Ind AS 24 Related Party Disclosures” and “LKAS 24-Related Party Disclosures”. The different type of the disclosures under the “Ind AS 24 Related Party Disclosures” has been stated with the disclosure made by the parent company for the “associate, subsidiaries or joint venture which are termed as related parties”. On the contrary the objective of the “LKAS 24-Related Party Disclosures” is depicted with the prescribed criteria for selecting and changing of the accounting the policies and changes in the accounting estimates along with the corrections of the errors. The application of these standards is seen with the main objective of enhancing the reliability and relevance of the entity’s financial statements (Bhasin, 2015).
The application of the new accounting standards in India has been seen to be conducive for various types of the companies which are seen to be related to recognition of the substance over the importance of the fair value for computing the financial statements. The accuracy in the financial report will be further able to contribute to comply with the different types of the legal provisions and reflecting on the m”ost current picture” of the financials. The impact on the financials has been further seen to be considered with the “revenue, operating profit, net profit, book value, goodwill, and return on equity”. In the previous rules the sales were contributed after deducting the excise duty. However, as per the newer norms the excise duty is treated as tax on manufacturing activity. Hence, this needs to be considered as a part under revenue. The increase in the revenues of the company is seen to depress the operating margin. Some of the other advantages to the implementation of the accounting standard is conducive for fostering transparency. The application of the new accounting standard expects the companies to follow the published accounting standard while creating of the financial statement. The standards as per the “FASB incorporates the needs of financial statement” and taking the relevant feedback while creation of the accounting standards. Importance of using the accounting standards is concerned with the guidance provided to the accountants. The financial reporting issues are considered with the “published accounting standard to determine how to record the event” (Dewi, 2015).
The chartered accountants of the India have been further seen to allow the accountants to trust the “guidance provided through the accounting standard which is passed because of rigorous process of ensuring everyone’s needs” (Bhatt & Olive, 2016).
As per the report of First – time Adoption of “Sri Lanka Accounting Standards”, the main objective of the SLFRS is seen with ensuring SLFRS financial statements and the interim financial report consist of the financial statements with best quality. The SLFRS ensures that the reports are prepared with highest amount of transparency which is comparable across all periods and acts as a suitable starting point for the accounting as per “Sri Lanka Accounting Standards”. It has been also observed that SLFRS 1 is implemented with more transparency and comparable over all the periods. The introduction of SLFRS 15 and SLFRS 16 is seen to be having a significant impact on the “financial performance, financial position and disclosures to the financial statements”. The main discussions of the topic are included with the transitional provisions. Some of the different types of the other considerations of the information has been based on the significant improvement of the reporting related to the “Income Tax, VAT, NBT and ESC implications on SLFRS 15, Stamp Duty implications on SLFRS 16” (Perera, 2016).
The various types of the findings on the benefits of the insurance contracts has been considered with the disclosures explaining the insurer’s financial statement associated to the insurance contracts which helps the users of the financial statement in understanding the “amount, timing and uncertainty of future cash flows from insurance contracts”. Some of the other improvement areas has been depicted with the significant number of the disclosure which are relevant to assess the entity’s financial position and performance. The accounting procedures has further included the nature and extent of the risks associated to the “financial instruments” in which the entities are exposed during and end of the financial reporting period. The various types of other principles are conducive in recognizing, presenting and measuring the significant information which are related to presenting financial assets and “financial liabilities in LKAS 32 Financial Instruments: Presentation and LKAS 39 Financial Instruments: Recognition and Measurement” (Wijesiri, Viganò & Meoli, 2015).
The main limitation of the accounting standards is seen with difficulties of the “IFRS financial statements” in terms of the bringing in comparability and reliability with other accounting standards. The various types of the alternatives are able to eliminating the choices between the alternatives which brings rigidity. This is seen to take away the flexibility in application of the relevant accounting principles. The alternatives are seen to be having their own arguments and choosing the best standard has been depicted as a challenging task. It has been further discerned that the accounting standards cannot override with the statue (Madurapperuma, Thilakerathne & Manawadu, 2016).
The disadvantage of using the accounting standards includes the inflexible framework which the accountants should always comply. Every company in India is seen to face different experiences. In addition to this, it needs to be further discerned that the accountants must be making the unique experiences to fit the different types of the guidelines of the published accounting standard. It needs to be further understood that compliance to the study can be of significant disadvantage which takes into account the cost for the company to comply with the new standards. In several types of the other scenarios the companies must design new procedures as per the IAS which may even involve large financial investment including the “labor costs, system upgrades and employee training” (Pacter, 2014).
The main disadvantage of the new accounting system is also depicted to consume more time and labour intensive in the initial adoption. In case the different types of the system under the accounting standards are met then there is scope of the unbalanced financial statements which may lead to significant number of variances in the financial report. The harmonization of the accounting standards is also depicted with the several types of the political and financial issues (Ahmed et al., 2016).
The present weaknesses and the inconsistencies in the revenue standards in the company’s “accounting for similar transactions” which have led to the diversity in revenue recognition practices as per the SLFRS. It needs to be further seen that the various types of the new standards as per the SLFRS 15 has been further able to incorporate little effect on the timing and amount of the revenue recognition for several “straightforward transactions such as retail transactions”. The significant nature of the other contracts such as the “long-term service” contracts and multiple element arrangements with the IFRS 15 has been seen with several drawbacks as per the “changes either to the amount or timing of the revenue recognised by a company”. The SLFRS 16 is depicted to introduce a “single lessee” accounting model and requires the lessee to recognise assets and liabilities for all the leases with the exception on the contracts which are seen to be less than 12 months. This excludes the considerations of several leases which are having lease contract time of more than 12 months. It has been further determined that the lessee is required to recognise the right to use the assets represented with the right to use the “underlying leased asset and obligations to make the lease payments”. There has been significant nature of the changes which are associated to the present operating lease model for lessees. The entities need to consider the reasonable and supportable information which is determined for the recognition financial instrument becomes delinquent. In general, this has been seen to increase the credit risk.
It is seen that the current audit methods are not attuned to the budget compliance needed for the changes pertaining to the methods which are needed to support the certification of the audit. The various types of the other areas of the concern for the SLFRS implementation is depicted with high cost, susceptibility to manipulation and lack of global acceptance. The small companies in the country are seen to be lacking in terms of sufficient resources which are needed for IFRS adoption. The different types of the information are further seen with the susceptibility to manipulation which may lead to manipulation of profit. This new set of the standard is considered with the required changes which is associated to the implementation of stricter rules for companies valuing their statements in a similar fashion. The lack of global acceptance is considered as another drawback in countries where the IFRS has not been adopted. In terms of the large multinationals which are also operating in the US, comparison of the financial statements becomes a difficult task. The rationale for the difficulty in this comparison of the financial statement which is seen with US not adopting to the IFRS standard (Nagirikandalage & Binsardi, 2017).
Conclusion
The comparison of the accounting standards has been performed after assessment of the annual statements of Coal India Ltd in India and Ceylon Steel Corporation in Sri Lanka. Both the companies are identified as public companies. The findings of the study have been able to link the overall research with the literature review.
The similarity between the accounting standards followed in India and Sri Lanka has been seen with Ind AS being named and numbered conforming with the “International Financial Reporting Standards (IFRS)”. The standards are recommended by the “National Advisory Committee on Accounting Standards (NACAS)” as recommended by the “Ministry of Corporate Affairs (MCA)”. Similarly, in Sri Lanka the main governing body for the accounting standards has been seen to be discerned in form of the convergence of the “Sri Lanka Accounting Standards” and “International Financial Reporting Standards (IFRSs)” for producing high quality solutions. It has been also depicted that the main features of the “Sri Lanka Accounting Standards” consists of the accounting procedures prefixed with the “SLFRS and LKAS”. The significant differences between the accounting standards followed in India and Sri Lanka is taken into account with “Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors” and “LKAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors”. It is depicted that LKAS 8 corresponds to the application of the accounting policies and changes pertaining to the tax impacts of the corrections prior to the retrospective adjustments which are seen to be applied to the changes in the accounting policies which are seen to be accounted as per the disclosures made in accordance with the LKAS 12 Income Taxes. On the other hand, “IAS 8 Accounting Policies, changes in Accounting Estimates and Errors” relates to the changes which are related to the “omissions or misstatements of items” of the items as per the “size or nature, individually or collectively”. The significant nature of the advantages of the accounting standards followed in India is considered with accuracy in the financial report will be further able to contribute to comply with the different types of the legal provisions and reflecting on the most current picture of the financials. In a similar way Pros of the accounting standard followed in Sri Lanka is discerned with ensuring SLFRS “financial statements” and the interim financial report consist of the financial statements with best quality. The SLFRS ensures that the reports are prepared with highest amount of transparency which is comparable across all periods and acts as a suitable starting point for the accounting as per “Sri Lanka Accounting Standards”. It has been also observed that SLFRS 1 is implemented with more transparency and comparable over all the periods. The introduction of SLFRS 15 and SLFRS 16 is seen to be having a significant impact on the “financial performance, financial position and disclosures to the financial statements”. The main disadvantages of the accounting standard followed in India is seen with eliminating the choices between the alternatives which brings rigidity. This is seen to take away the flexibility in application of the relevant accounting principles. The alternatives are seen to be having their own arguments and choosing the best standard has been depicted as a challenging task. The Cons of the accounting standard followed in Sri Lanka is identified with weaknesses and the inconsistencies in the revenue standards in the company’s “accounting for similar transactions” which have led to the “diversity in revenue recognition” practices as per the SLFRS.
References
Ahmed, J. U., Imran, S. M., Musa, S. M., & Hasan, R. (2016). Managing corporate governance management of family firms in South Asia: evidence from Bangladesh and Sri Lanka. International Journal of Corporate Governance, 7(1), 78-101.
Bhasin, M. L. (2015). Corporate accounting fraud: A case study of Satyam Computers Limited.
Bhasin, M. L. (2016). Survey of Creative Accounting Practices: An Empirical Study. Wulfenia Journal KLAGENFURT, 23(1), 143-162.
Bhatt, A. K., & Olive, L. M. (2016). A Study of Expectancy of Welfare Measures in Cement Industry of Rajasthan. International Journal For Research In Business, Management And Accounting, 2(3), 36-46.
Dewi, N. H. U. (2015). Adaptability Fair Value Accounting at The Public Company in Indonesia. PEOPLE: International Journal of Social Sciences, 1(1).
Doliya, P., & Singh, J. P. (2016, March). THE CURIOUS CASE OF PENSION ACCOUNTING. In Proceedings of the NIDA International Business Conference 2016− Sustainability in Business (p. 63).
Khan, S. (2016). Developing a sustainable accounting framework vis a vis cement industry a study on select Indian cases.
Kraal, D., Yapa, P. W. S., & Joshi, M. (2015). The Adoption of International Accounting Standard (IAS) 12 Income Taxes: Convergence or Divergence with Local Accounting Standards in Selected ASEAN Countries?.
Kumar, S. B., Goyal, V., & Mitra, S. K. (2018). DO INDIAN FIRMS MANAGE EARNING NUMBERS? AN EMPIRICAL INVESTIGATION. Academy of Accounting and Financial Studies Journal, 22(1).
Madurapperuma, M. W., Thilakerathne, P. M. C., & Manawadu, I. N. (2016). Accounting Record Keeping Practices in Small and Medium Sized Enterprise? s (SME? s) in Sri Lanka. Journal of Finance and Accounting, 4(4), 188-193.
Nagirikandalage, P., & Binsardi, B. (2017). Inquiry into the cultural impact on cost accounting systems (CAS) in Sri Lanka. Managerial Auditing Journal, 32(4/5), 463-499.
Pacter, P. (2014). Global accounting standards-From Vision to reality. The CPA Journal, 84(1), 6.
Perera, M. H. B. (2016). ACCOUNTING FOR STATE INDUSTRIAL AND COMMERCIAL ENTERPRISES IN A DEVELOPING COUNTRY WITH SPECIAL REFERENCE TO SRI LANKA.
Tawiah, V. K., & Benjamin, M. (2015). Conservatism Analysis on Indian Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
Wijesiri, M., Viganò, L., & Meoli, M. (2015). Efficiency of microfinance institutions in Sri Lanka: a two-stage double bootstrap DEA approach. Economic Modelling, 47, 74-83.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download