Infosys, an Indian multinational company that is now a global leader in innovation and technology, took off on the journey for the installation of Indian Accounting Standards (IndAS) to synchronize with international financial reporting standards. This shift is taken for the sake of more clarity, compatibility, and enhanced financial disclosures, making Infosys more determined and more capable of meeting regulatory requirements. This case study will show us how many challenges, strategies, and outcomes came along the road to implementing IndAS.

Backstory

Starting from FY 2016–17, the Ministry of Corporate Affairs of the Government of India mandated that any company with a net worth greater than INR 500 crores, IndAS will be mandatory for them. IndAS converged with the International Financial Reporting Standards (IFRS). Infosys, because of its broad global operations and complex financial framework, faced plenty of obstacles while shifting towards India.

Obstacles
  • Financial instruments’ complexity

Infosys addresses various financial instruments, including derivatives and foreign currency transactions. IndAS can provide correct valuation and classification for these instruments.

  • Revenue Realisation

IndAS 115 is used to deal with revenue from contracts with customers, imposed changes in revenue recognition policies. Infosys had to reexamine its number of long-term contracts to cope up with the new standards.

  • Employee advantage

To switch to IndAS 19, post-employment benefits and other long-term employee benefits had to be recalculated, which required a lot of statistical work.

  • Combination of Modifications

Infosys had to make sure that all of its branches and joint ventures used IndAS the same way, which meant making a lot of changes to how the company was consolidated.

Deployment Strategies
  • Project Management Offices(PMO)

Infosys set up a separate platform management office (PMO) to handle the change. Teams of professionals from financial, IT, HR, and operations were part of the PMO to make sure that everything would work well together.

  • Implementation of training and development

Financial professionals participate in training programs to increase their familiarity with IndAS. This includes e-learning modules, sessions, workshops etc.

  • Schemes and Practices

Infosys made changes to its ERP tools to meet the needs of IndAS. This meant setting up the systems to work with the new financial rules, making it easier to collect data, and making sure the reporting tools were strong.

  • Advisor Alliance

Infosys hired outside consultants, such as the “Big Four” accounting companies, to help with the transition to IndAS. These experts gave advice on how to handle complicated accounting issues and meet compliance standards.

Notable Outcomes
  • Improved Financial Reporting

With the application of IndAS, financial reporting is enhanced, thus realizing increased visibility and perception of the financial position of Infosys. This leads to increased stakeholder trust because the financial reports are done in a clear and consistent manner.

  • Regulatory Adherence

By following all of the rules set by regulators, Infosys avoided the fines and damage to its image that could have come from not doing so.

  • Operational productivity

The simplified processes and updated systems made operations run more smoothly. Instead of doing boring compliance tasks, the finance team could spend more time on long-term financial planning.

  • Participation of Stakeholders

Infosys’s proactive method to telling investors, clients, and employees about the switch to IndAS built trust. During the transition time, keeping stakeholders’ trust through regular updates and clear reporting was very important.

Insights gained
  • Early planning and getting involved

Early involvement with stakeholders and careful planning were very important for the smooth implementation of IndAS. By putting up a PMO and hiring consultants early on in the process, Infosys took the initiative to avoid problems.

  • Constant Training

As a qualification measure, inducting and continuously training the finance team for the complex nature of IndAS was essential. This proved to be a key investment in human capital for the smooth transition.

  • Durable Procedures and Systems

It was necessary to improve data collection and ERP tools in order to meet compliance and reporting requirements. The investment that Infosys made in technology was a big part of making the shift possible.

  • Cooperation and Exchange of Information

High quality of interdisciplinary cooperation and clear reporting to other teams and stakeholders also proved to be essential in this regard. Another advantage that could be attributed to Infosys is that changes were coordinated and integrated, so there were basically no disruptions during the transition.

Questions to Understand your ability

Ques1: Why did Infosys switch to IndAS?

  1. To cut down costs
  2. To match international accounting standards
  3. To boost market share
  4. To launch new IT systems

Ques2: When did the Indian government make IndAS mandatory for big companies?

  1. FY 2014–15
  2. FY 2015–16
  3. FY 2016–17
  4. FY 2017–18

Ques3: What were Infosys’s main hurdles during the IndAS switch?

  1. Market competition and IT upgrades
  2. Handling financial instruments, revenue rules, employee benefits, and consolidation
  3. Marketing and product development
  4. Customer satisfaction and supply chain

Ques4: What was the PMO’s job in Infosys’s IndAS project?

  1. Managed ads
  2. Oversaw the transition and integration
  3. Developed new software
  4. Solved customer issues

Ques5: Who helped Infosys with the IndAS switch?

  1. Local accounting firms
  2. Big Four accounting firms
  3. Mid-sized consultants
  4. Government accountants
Conclusion

Excellence in financial reporting and regulatory compliance, which form the core of Infosys, shows from the fact that it became possible to adopt IndAS successfully. Indeed, it was very difficult to handle but was managed due to the established strategic planning, good processes, and continued engagement with the stakeholders. This case underlines how important and effective a well-coordinated plan is for dealing with very complex changes in regulation and meeting organizational goals.

FAQ's

Infosys wanted to align with international accounting standards for better clarity and disclosure.

From FY 2016–17, for companies with a net worth over INR 500 crores.

They had trouble with financial instruments, recognizing income, employee benefits, and merging their businesses.

They set up a Project Management Office (PMO), provided extensive training, upgraded ERP systems, and hired consultants.

Better financial reporting, compliance with regulations, smoother operations, and better stakeholder trust.

Through workshops, e-learning, and hands-on sessions.

To meet the new accounting standards, improve data collection, and enhance reporting.

By regularly updating and transparently reporting progress, keeping everyone’s trust intact.