Comparison of Accounting Standards of Coal India Ltd in India and Ceylon Steel Corporation in Sri Lanka

Running head: RESEARCH REPORT
Research Report
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Abstract
This research project is conducted to learn accounting standards and norms typically followed
in India and Sri Lanka. The purpose of the research is to evaluate the accounting standards of
Sri Lanka and India. Thus, identify the standards and their impact on the organizations, the
research considers two differentorganizations such Coal India Limited in India and Ceylon
Steel Corporation in Sri Lanka. The review of literature indicates that both the nations
conduct accounting operation on the basis of Global Accounting Standards. The review of
literature also indicates that the major features of “Sri Lanka Accounting Standards” consists
of the accounting procedures which is prefixed with SLFRS and LKAS and LKAS is the
main accounting standards in Sri Lanka. The review of literature has been observed with the
Ind AS being named and number conforming to International Financial Reporting Standards
(IFRS). The research includes a secondary analysis which is conducted by collecting
secondary data from peer reviewed journals, blogs and annual report of the selected
organizations. To derive the outcome from the data findings, thematic data analysis has been
performed. The findings indicate that there are several differences in accounting standards in
India and Sri Lanka. However, the despite the differences in the accounting standa4rds,
organizations follow global accounting standards to make understandable accounting
standards format, which is further represented to investors for taking investment decisions.

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Table of Contents
1.0 Introduction..........................................................................................................................3
1.1 Background to the research..............................................................................................4
1.2 Research Questions and Explanation...............................................................................4
2.0 Literature Review.................................................................................................................5
2.1 Accounting standards followed both in India and Sri Lanka...........................................6
2.2 Dissimilarities between the accounting standards both India and Sri Lanka...................7
3.0 Research Methodology.........................................................................................................8
3.1 Research philosophy........................................................................................................8
3.2 Research approach...........................................................................................................8
3.3 Data collection.................................................................................................................9
3.4 Qualitative data collection method...................................................................................9
3.5 Ethical consideration......................................................................................................10
3.6 Research limitation.........................................................................................................10
4.0 Investigation and Research Findings.................................................................................10
Theme 1: Comparison of Accounting Standards Followed in Sri Lanka and India............10
Theme 2: Similarity in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation..........................................................................................................................14
Theme 3: Differences in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation..........................................................................................................................17
5. Ratio Analysis of Coal India Ltd in India and Ceylon Steel Corporation...........................20

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5.1. Profitability Ratios........................................................................................................20
5.2. Efficiency Ratios...........................................................................................................21
5.3. Liquidity Ratios.............................................................................................................21
5.4. Solvency Ratios.............................................................................................................22
6.0 Conclusion..........................................................................................................................23
References and Bibliography...................................................................................................25

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Topic: Comparison of accounting standards of Coal India Ltd in India and Ceylon Steel
Corporation in Sri Lanka
1.0 Introduction
This research report is based on financial accounting procedures standards of India
and Sri Lanka. It has been identified that the recent paradigm in the economic environment in
India in the last few years led to extending attention being put forward to account standards
as the base towardsensuring potent as well as transparent financial reporting by corporates.As
mentionedby Brown, PreiatoandTarca (2014), accounting standards are the documented or
written statementsconsistingof rules and instructions which is further issued by the
accounting institutions, for the preparation of uniform as well as consistent financial
statements. This may further havefurther impact on different users of accounting information.
Wang (2014) mentioned that the fact that “International Financial Reporting Standards”
(IFRSs), issued by International Accounting Standards Board, as the uniform language of
business to protect the interest of international investor brought into the focus of IAS/IFRS. A
two decades ago, “The Institute of Chartered Accountants” in India become a premier
accounting body in the nation, took upon itself the leadership role by developing Accounting
Standards Board in the year 1997. Nonetheless, Today in India, the accounting standards
have come a long way (Pacter, 2014). However, the effectiveness of developed accounting
standards in India have not been assessed as required.
On the other side, the accounting standards in Sri Lanka observed some significant
changes based on the objectives set by nation itself. Sri Lanka is determined to makes
changes in the accounting standards with objective of developing understandable, enforceable
accounting standards that needs high quality transparent as well as comparable information in
the financial statement. The government of the nation is making effort to promote theuse as

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well as rigorous applications those standards. Thus, to identify the effectiveness of
accounting standards of both the nations, this research report performs a comparative analysis
involving two different organizations namely Coal India Limited and Ceylon Steel
Corporation in Sri Lanka.
1.1 Background to the research
As put forward by Preiato, Brown and Tarca (2015) Accounting Standards are
formed with the focus to harmonize different accounting policies as well as practices in the
use in a nation. Therefore, the major goal of Accounting Standard is, to minimize the
accounting alternatives in the making of financial statements within the grounds of
rationality. Thus, ensuring comparability of financial statements of differentorganizationsas
with the focus to deliver meaningful information to different users of financial statements to
allow to make informed economic decisions. As put forward by Mora and Walker (2015) The
Companies Act and several other statutes in Indian mentions that the financial statement of an
organizations should deliver a true as well as fair view of its financial stateas well as working
outcome. Theprinciple of this act also reveals that thisnecessity is implicit even in the absent
of a particular statutory provisions to this effect. According to Crawford et al., (2014),
financialreporting framework Sri Lanka indicates that Institute of CharteredAccount of Sri
Lanka made a significant decisions to converge with all pronouncements imposed by IASB.
1.2 Research Questions and Explanation
1. What are aspects based on which the differences in the accounting standards between
India and Sri Lanka can be compared?
This research question is appropriate because as the topic revolves around the differences and
similarities of accounting standards of two difference nations. This research question helps to
know all differences in accounting standards followed by India and Sri Lanka.

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2. What are the similarities in Accounting Standards of Coal India Ltd and Ceylon Steel
Corporation?
There are many differences existing in the accounting standards of India and Sri
Lanka but the exact differences are not yet reviewed. So, identifying the accounting standards
of Coal India and Ceylon Steel Corporation will help to know how the similarities and norms
create impact on the organizational operation.
3. What are the differences in the accounting standards Coal India Ltd and Ceylon Steel
Corporation?
This research question is designed to identify how the differences create the barriers
and breakthrough for the organizations. The research question will help to learn how the
organizations in India and Sri Lanka are dealing with the accounting barriers.
2.0 Literature Review
This section of the report provides a comparative analysis of the accounting standards
of two nations namely India and Sri Lanka. To conduct the analysis, twenty different peer-
review journals performed on accounting standards of India and Sri Lanka. Likewise, in order
to make the analysis and critical, booth advantages and disadvantage of accounting standard
produced developed by the nation. As mentioned by Nurunnabi (2015) “Indian Accounting
Standard” is considered as the primary “Accounting Standards Board (ASB). It is identified
that ASB is observed to be a group under the “Institute of Chartered Accountants of India”
which further contains different representatives from governmental stake and academicians
from some relevant professional bodies like ICAI. Likewise, the compare the accounting
standards of both the nations in the review, this section of the research includes facts and
findings of scholarly researched papers.

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2.1 Accounting standards followed both in India and Sri Lanka
As mentioned by Vijitha and Nimalathasan (2014) a reliable and uniform financial
reporting is a significant aspect of a good corporate governance around the world. The author
has mentioned that different nations have different sets of accounting standards to operate
and control the financial reporting by their corporate sector. Nonetheless, with the advent of
globalization, the investment beyond limits as well as trading has enhanced. Therefore, the
author has suggested that the investors require a uniform globally accepted set of Accounting
Standards followed by the organizations; thereby, the comparison across the organization
internationally is facilitated. Therefore, initiative, many nations with the inclusion of India
have positively responded to such requirements. The International Accounting Standards
(IASB) is identified as an international “Accounting Standard” setter. Similarly, Sri Lanka
also follow the global accounting standards to modernize the accounting programs
(Abayadeera&Watty, 2014). In this context, Nagendrakumar, Fonseka and Dissanayake
(2015) commented that modern economic usually rely on the cross border transactions and
the free flow of International Capital. It is identified that a large percentage of all financial
transactions take place across the boarders and this number is expected to increase.
In addition, in Sri Lanka, the major governing body for the accounting standards have
been observed to be separated in the form of convergence of “Sri Lanka Accounting
Standards” as well as “International Financial Reporting Standards” (IFRSs) for generating
high quality solutions. Furthermore, it has also been identified that the fundamental feature of
“Sri Lanka AccountingStandards’” may include some accounting procedures which is
prefixed with SLFRS. As put forward by Albu, Albu and Alexander (2014), SLFRS is
referred as the major accounting standards in Sri Lanka which could correspond to IFRS as
well as LKAS. So, as both the nations are identified to prepare their financial reports
according to “International Financial Reporting Standards” the accounting procedures are