Coming up with financials that are comparable with other calls for the availability of a standard will regulate all the involved companies. With accounting, the provision of a standardized way of describing an entity’s financial performance is enhanced for investors, companies, and regulators, among other interested parties. It is, therefore, the work of financial standards to aid in the preparation of financial statement in a manner that helps regulate the whole market. This is especially for the companies listed on the public stock exchanges. One of the common standards used is the International Financial Reporting Standards (IFRS). Although it was not widely used before, today, over a hundred countries are using it. The company that will be used in this report to discuss the use of IFRS is Wipro limited in India.
Overview of the company
Wipro Limited is an Indian based company, which is the country’s leading IT provider. They are responsible for the provision of globally, Business Process Services, as well as IT products. Mohamed Premji founded the company on the 29 December 1945, but his son took over after his death in 1966 at 21 years. Wipro is a public limited company that is domiciled and incorporated in India. In the Bombay Stock Exchange as that of the Indian National Stock Exchange, it is the primary listing. The company has also been listed on the New York Stock Exchange due to its American Depository Shares («WIPRO LIMITED AND SUBSIDIARIES», 2015).
India’s national reporting and regulatory environment
As from 1 April 2016, corporate financial reporting has been India’s major report. This originated from a regulatory decision that was made to change the corporate financial statements from the accounting framework that was prevailing, that is, Accounting Standards (AS). They are now supposed to start using the International Financial Reporting Standards (IND-AS). This makes India one of more than 100 countries using the IFRS for its public companies for ease in shareholder financial communication. Today, it is a requirement for companies in India to prepare as well as do a presentation of their financial statements under the IFRS as the company law dictates. This is in the need to converge the accounting standards with IFRS and was meant to be done from 1 April 2016 («WIPRO LIMITED AND SUBSIDIARIES», 2015).
The company’s accounts and the extent of IFRS use
According to the company’s 2014/2015 financial statement, they were prepared based on the IFR. However, some new accounting standards had not been adopted by that time. The first one is IFRS 9 concerning the financial instruments. The version comes up with one approach to classifying and measuring financial statements based on the company’s cash flow and its business model of management. The other one that has not been adopted is IFRS 15 that talks about the revenue received from the contracts received from their customers. The standard recognizes the revenue in the depiction of the transferring of promised services and goods to the customer. This is in reflection to the entitlement in exchange for the services and products. IFRS 16 was also not adopted and talks about leases. In the standard, the model for single lessee accounting calls for the recognition of liabilities and assets for all the leases with a 12 months term («Wipro Annual Report April 2015», 2015).
The enforcement of IFRS in India
Although some companies had already started implementing IFRS, the initial intention of India was converging with IFRS beginning 2011. However, this was however postponed. A revised roadmap was however released by the Indian Ministry of Corporate affairs in the January of 2015. This roadmap indicated that the companies that had a Rs.500 crore net worth or more had to apply the Indian Accounting Standards that were in a big way joined with the IFRS beginning 1 April 2016. On the other hand, the corporates that had a net worth of Rs.500 crore or below and listed or in the process of listing, as well as those with a Rs.250 crore or above were required to apply the standards beginning 1 April 2017. Additionally, the companies in Insurance, non-banking, and banking finance that were exempt from the roadmap were given another one that was written in 2016 January that would be enforced starting 1 April 2018 («India», 2016).
Therefore, companies needed to apply the Indian Accounting Standards (Ind-AS) in various stages. First, it could be done voluntarily for those companies that began on 1 April 2015 for the period that ended 31 March 2015. Nonetheless, those that had to comply mandatorily after 1 April 2016. Those companies were those with listed debt securities, those with a net worth of Rs.500 crore and more, and those holding joint venture, subsidiary, and associate companies. For all the companies that had to comply, they were supposed to comply with all the regulations of the standards. Therefore, so far in India, most of the companies are complying with the Indian Accounting Standards (Ind-AS) which has incorporated the IFRS («India», 2016).
Evaluation of the companies accounts in comparison to its global competitors
Just like any other company, Wipro has its own competitors. In the Indian IT scene, Wipro is the biggest player. In India, it features in top 5 IT firms and is also known widely globally. Some of its competitors include Tata consultancy services (TCS), HCL technologies, Infosys, Tech Mahindra, Oracle Financial services, Ramco system, among many others. HCL Tech is a global technology dealing with infrastructure services, software services, selling networking equipment as well as the processing of outsourcing services. It is a big competitor of Wipro and according to the 28 April 2016, it was listed as the fourth after Wipro, with a net profit of Rs. 4,733.68 cr. The company that took the first position was TCS, dealing in the provision of IT services, outsourcing, and business solutions. In the money markets, it recorded a net profit of Rs 22,882.70 Cr. In the second position came Infosys, a company that deals in technology, business consulting, engineering, as well as outsourcing services. It recorded a net profit of Rs. Cr. 12,164.00 in the money market. Wipro came in third with a net profit of Rs. 8,099.00 Cr. All the companies above use the IFRS and as such Wipro’s accounts can be compared to theirs («Wipro Competition, Wipro Comparison with Competitors», 2016).
The IFRS are the standards being adopted by many companies throughout the world. Therefore, since most companies have gone global, it is advisable that the companies employ them in their recording and reporting of their financing. India has not been left behind, and it has gone ahead to make it law for its companies to use the standards. Wipro is an Indian-based company with a global presence that has also adopted IFRS for easy of competition in the international markets.
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Wipro Annual Report April 2015. (2016). Wipro.com. Retrieved 28 June 2016, from http://www.wipro.com/microsite/annualreport/2014-15/financial-statements-notes-to-the-financial-statement-standalone.html
Wipro Competition, Wipro Comparison with Competitors. (2016).Moneycontrol.com. Retrieved 28 June 2016, from http://www.moneycontrol.com/competition/wipro/comparison/W
WIPRO LIMITED AND SUBSIDIARIES. (2015). wipro.com. Retrieved 28 June 2016, from http://www.wipro.com/documents/investors/pdf-files/IFRS-Financials-Dec-2015.pdf