Transition to Ind AS and Profit Reporting of the Initial Adopters

Our Heritage, Volume 68, Issue 8.

10 Pages Posted: 23 Oct 2019 Last revised: 22 May 2020

See all articles by Agnishwar Basu

Agnishwar Basu

University of North Bengal

Dr. Debabrata Mitra

North Bengal University

Date Written: September 13, 2019


Once investment and product market were opened up world-wide, it did not take much time to realise that differences in procedures of financial reporting in different parts of the world stood as a major barrier to readability of financial statements and consequently hampers expansion. As a uniform accounting and reporting framework, the IFRS was introduced with the objective to bring more transparency and for the better understanding of financial statements. However, unlike many other countries, India did not straightway adopt the IFRS, instead the Accounting Standard Board of the ICAI, in consultation with the Ministry of Corporate Affairs, opined for convergence with the IFRS by drafting a complete new set of Indian Accounting Standards, popularly known as Ind AS. The MCA released a phase-wise implementation plan and accordingly, the first phase of adoption took place in the financial year 2016-17. Nearly 350 companies adopted Ind AS for the year and also redrafted their comparative financial statements.
Reporting of Profit has been a major concern for corporates because of its stock-market implications. It has been seen that due to the transition to Ind AS, many figures including the Net Worth, the Working Capital, the Reserves have witnessed revisions. Further, the author of this paper in his earlier papers, observed that transition to Ind AS resulted in revaluation as well as reclassification of Balance Sheet items. Existing Literatures provide varied outcomes regarding the effect of IFRS over the financial reporting in different parts of the world. India’s case is unique and calls for evaluation as India is implanting a framework which is neither the old Indian GAAP, nor the IFRS. On other words, since the Ind AS differs from both, depending upon literatures that evaluated IFRS may not be appropriate.
In this paper, an attempt has been made to evaluate how the transition to Ind AS affected the profit reporting of the companies that adopted it during the first phase. Both the absolute profit figures and the relative return ratios have been taken into consideration. It is observed that unlike Balance Sheet items, the Reported Profit did not significantly change due to the transition. This is because the revenue items did not witness much of revaluation as a result of adoption of Ind AS. However, since Ind AS hit the Balance Sheets with reclassification of equity and liabilities, it affected the ROE ratios. This paper concludes that unlike Balance Sheet items, Reported Profit does not vary to a great extent due to the transition to Ind AS.

Keywords: IFRS, Ind AS, Accounting Standard, Financial Reporting

Suggested Citation

Basu, Agnishwar and Mitra, Dr. Debabrata, Transition to Ind AS and Profit Reporting of the Initial Adopters (September 13, 2019). Our Heritage, Volume 68, Issue 8., Available at SSRN: or

Agnishwar Basu (Contact Author)

University of North Bengal ( email )

Darjeeling, West Bengal

Dr. Debabrata Mitra

North Bengal University

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics