More than one-fourth of top 100 companies listed on the BSE saw their net profit get impacted by the implementation of the new accounting norms and most of the firms provided only minimum disclosures, says a study.
The new norms — Indian Accounting Standards (Ind AS) –is mandatorily applicable to certain class of companies starting from April 1, 2016.
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“28 per cent of BSE 100 companies experienced more than a 10 per cent impact on their net profit,” said a study on implementation of Ind AS done by leading consultancy EY.
The findings are based on a review of the financial results of BSE 100 companies that were covered in the first phase of Ind AS implementation road map.
“Most of the impact on net profit might have been neutralised by the exemptions availed by companies. In many cases, the net profit impact may not be significant, but the impact on individual accounting captions may be significant,” it noted.
Further, EY said majority of the companies provided only minimum disclosures required in the regulation and did not voluntarily provide additional disclosures to better clarify the transition to Ind AS.
“Only 10 per cent of the companies presented equity reconciliation as on April 1, 2015 and only 15 per cent for the year ended March 31, 2016,” it added.
Further, an analysis of the equity reconciliation of these companies showed that 44 per cent of them had an impact of over 10 per cent on their net worth.
Among others, the study focused on understanding the impact of Ind AS on key performance indicators, quality of information disclosed in the published financial results and the level of preparedness of companies in their transition.
Ind AS is converged with the International Financial Reporting Standards (IFRS).