An Empirical Study on Indian Financial Reporting System

1. INTRODUCTION

Accounting thought for the adoption of IFRS for a nation does not include just the discussion on issues, differences, impacts and challenges only. The study by Shortridge & Smith (2009) 43 supported the

IFRS is a new concept in accounting world and new for India too. Success of a project launching depends upon the proper planning. Good and timely planning removes the many barriers and of course threats present in the environment. Same with IFRS implementation project, there is need of good planning and subsequent planning review to adjust the changes in the economic environment and IFRS world. The study is relevant to the research from the preparedness perspective demanding parallel study along with issues involved in implementation for a particular nation. For the preparedness in accounting, it is needed to check the readiness of accounting professionals having the knowledge to evolution of new dimension in accounting world of IFRS.

Accounting thought for the adoption of IFRS for a nation does not include just the discussion on issues, differences, impacts and challenges only. Ghosh (2010) examined that IFRS is going to bring a lot of changes in accounting world. The preparedness in accounting is needed to check the readiness of accounting professionals and financial professionals having the knowledge to evolution of new dimension in accounting world of IFRS (Pickerin et al. (2008). A study by Shortridge & Smith (2009) supported the concept of preparedness of its professionals was critical to the in implementation for a particular nation. Smith (2008) investigated how the use of IFRS had dramatically increased worldwide in recent years. The survey conducted by author stated, ―Top corporate accounting officers are highly favorable for the acceptance of IFRS for financial reporting by all companies in all countries‖ and with that the IFRS have been perceived as difficult and challenging by practicing accounting professionals. Local, economic, cultural, social, institutional, political and several other factors function as barriers in the convergence of accounting standards (Pajunen, 2010). Moreover, the timing of the adoption in the form of preparedness is important for preparation and compliance level (Kaplan and Beier (2007). The timing of adoption IFRS impacts its success, Goswami, S. & Sarkar, A. (2011) found that there were significant differences exist among early adopter and late adopter based on the nature of the disclosure . Also, earlier adopters attach higher importance to IFRS rather than late adopter. Level of importance is affected by mostly consequences of IFRS and perception of manageability of IFRS adoption. Pickerin et al. (2008) analyzed the perceptions of preparers on the transition cost and benefits. The results revealed, ―prepares perceived many difficulties of implementation such as the uncertainty regarding interpretation of the standards and complexity of the standard themselves. This resulted in increased time and cost spent in discussion with auditors. Walton Peter (2011) specified areas such as accounting for financial instruments, accounting for income taxes and accounting for the impairment of assets were reported as difficult to obtain the necessary information to present the transactions or balances in accordance with IFRS‖. From the last few decades, many studies had been undertaken by researchers highlighting the need of IFRS for the whole world under a single accounting system. Most of the literature found belong to the countries adopted the IFRSs already. Besides, papers stating the preparedness, importance and stipulated impacts that strike in the researchers mind theoretically set the main content of the work.

To facilitate the study following research methodology was adopted:

The main objective of the study is to measure the degree of preparedness among financial officers regarding the IFRSs implementation. descriptive type of research design was adopted. It was descriptive in nature because it is based on the literature already existing in that particular area.

The data were collected from a sample size of 120. The respondents were selected randomly from IT companies in NCR.

The data regarding various aspects preparedness were collected with the help of a questionnaire. The data related to demographics were nominal in nature and the preparedness was measured on five point scale with the help of 18 statements.

This section represents the descriptive analysis of the variables used in this study. All the variables were selected and presented through figures, tables and percentages.

The above table 1 depicts about the total numbers of respondents according to their gender. It shows that out of the total 120 respondents, 60 percent or 72 were male respondents and remaining 40 percent were female respondents considered as the sample for the study.

When the age of respondents was considered, it was concluded that the majority of the Financial Professional 32 percent were from the age group of 30-40. It was followed by the age group of 40-50 which was 27 percent. The age group of above 50

percentage of 16 the total respondents.

Reviewing at the data for years of experience, the survey results had shown that the majority of the respondents, 38 percent were having a work experience of 5-10 years, followed by 23 percent of respondents with 10-15 years of experience and the rest of the 21 and 18 percent of the respondents were having an experience of 0-5 and above 15 years of experience respectively.

The majority of the respondents considered for the study, 44 percent were working in software organizations, 34 percent were rendering their services to IT firms and the rest 22 percent were working in BPO firms.

The category wise classification, as exhibited in table 5, revealed that the highest percentage 45 of the respondents were working in those firms registered in NSE and BSE both. It was followed by 32 percent of the respondents belonged to NSE firms and lastly, 23 percentage of the respondents serving BSE firms only.

To measure degree of preparedness among Financial professionals a questionnaire was used to were grouped in to 4 major factors through Exploratory Factors Analysis. The KMO value of .728 showing that the sample size was adequate according to the number of statements and Bartlett‘s test of Sphericity was significant at 0.000.

As it can be seen from the above table 6, first factor consists of 6 variables and it was labeled as “Organizational Support”. This factor explained 22 percent of the variance. The second factor is a combination of the 5 variables and it was labeled as “ Resource support”. This factor shown 20 percent of the variance. The third factor was made up of 2 variables and it may be named as “Basic Knowledge‖ with a variance of 12.The fourth factor was a combination of 2 variables it was labelled as ―Experience‖ representing a variance of 11.

The preparedness in accounting, is needed to check the readiness of accounting professionals and financial professionals having the knowledge to evolution of new dimension in accounting world of IFRS. Timing of the adoption in the form of preparedness is important for preparation and compliance level. In the present study the preparedness was measured with the help of 18 variables these variables were classified into five groups. The most prevalent factor among these was ―Organizational Support Plan‖ followed by ―Organizational Resource Plan‖. The fourth factor was ―Experience‖ preceded by “Basic Knowledge‖. Last but not the least factor was ―Training‖. As it

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Assistant Professor, IMSAR, MDU, Rohtak jagdeepsingla@gmail.com