A Comparative Analysis Of Financial Accounting Standards Of India And Sri Lanka

Background and Significance

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 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.

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. 

Literature Review

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.

1. 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.

1. 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.

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.

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.

Methodology

 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 observed to be based on multiple types of he consideration which are further identified to be considered as per the prescribed by the regulations of the board. For example, Indian accounting standards SLFRS 3 is observed to be as the major accounting standards for the business combination. On the basis of different sorts of similarities under this standards. Hence, SLFRS focuses on recognizing and measuring different types of financial statements, as per the identifiable assets needed for the liabilities considered. 

According to Vijitha and Nimalathasan (2014) the most significant difference in the accounting procedures followed in Sri Lanka and India is observed with the “Accounting Policies”, “Changes in Accounting Estimates” as well as “Errors”. Furthermore, it has also been identified that the implementation of LKAS 8 corresponds to theapplication of “accounting policies and changes pertaining to the tax effect of the correction prior to the retrospectiveadjustment which are further considered to be applied to the changes in the accounting policies (Abayadeera&Watty, 2014).  Furthermore, it is also identified that prior errors are observed with the “exclusion from and mis-statements” that are considered to be available as derived and taken onto account while preparing the financial statements. Such errors are observed to be considered with the mistake in using the accounting policies. Some major differences are explained here with AS 24 Related Party Disclosure and “LKAS 24 Related Party Disclosure”. Some of the disclosure under AS24 Related Party Disclosure has been mentioned with the disclosure made by the parent organization for the joint venture, associated and subsidiaries that are known as the related parties (Vijitha&Nimalathasan, 2014).  The application of such standards is observedwith the major objectives of improving the reliability as well as relevance of entity’s financial statements.

Results

To conduct research, the detailed analysis has been conducted by considering the secondary data. The secondary data has been collected from the reliable secondary sources such as books, peer reviewed journal articles, newspaper articles, blogs and annual report of the organization. The following section and paragraph provides the detailed description of the research methodologies used in the research.

According to Mkansi and Acheampong (2012), there are three different types of research philosophies such as positivism, interpretivism, and pragmatism. According to the principle of positivism, the knowledge can be driven through the generation of hypothesis and this further lead to the creation of generalisation of validated patterns of evidences with the core belief of deduction. On the other side, in interpretivism, the knowledge can be gained through meaning-rich context sensitive as well as subjectively constructed accounts of the study considering the principle of induction.

Unlike positivism and interpretivism, pragmatism focuses on developing knowledge that will have practical bearing and frame relevant action. However, in the present research, interpretivism research philosophy will be used because in interpretivism research philosophy, the research findings are usually judged against the criteria of meaning and casual adequacy and transferability.

There are two different types of research approaches namely deductive and inductive research approaches. The major difference between this inductive and deductive research approach functionally aims new theory and test theory while the inductive theory is concerned with the development of new theory which emerges from the data. As put forward by Maxwell (2012), a deductive research approach typically begins with the hypothesis but the inductive research approach use the research questions to decrees the scope of the study. However, for the current study, inductive research has been applied.

Even though, the study does not form new theories, the study is based on the inductive research approach because with the help of exiting theories, the research questions have been answered. On the basis of the theoretical underpinning with research to corporate social responsibility and its impact on the organizational performance.

There are two different types of data such as primary data and secondary data.  The primary data are usually a fresh and they are collected for the first time and thus, they are original in content (Neuman 2013). Unlike primary data, the secondary data are those which have been collected by a parties and which already been used, analysed and passed through the statistical process. However, for the present research, the secondary data has been collected from the reliable secondary sources such as peer reviewed journals conducted on CSR and its impact, books on CSR management. In addition, the newspaper articles have also been used to collect the statistical information. The annual reports of Coal India Ltd and Ceylon Steel Corporation have been used as the real-world evidences in the analysis.

Discussion

Qualitative data collection techniques are usually explanatory in type and they are majorly concerned with deriving insights and understanding on the underlying factors and motivations. Therefore, the qualitative research method has been used in the research because it is often considered to be providing rich data regarding the existence of real life people to understand the behaviour within its broader context. However, in the present study, thematic analysis has been conducted.

Ethical consideration is another significant challenge that researcher often faces during the making of the project. The principle of Data Collection Act 1998, the data has been kept confidential and the identity of the respondents has not been disclosed or mentioned anywhere in the research work. When it comes to primary secondary data collection, there is no such major challenge that researches faces but as the secondary data has been collected, data provided by other researchers have clearly been acknowledge to avoid the copyright issue. To avoid any challenges from the external parties, all organizational data have been taken from organization’s corporate websites and annual report. 

The present research is limited to secondary analysis only, the study lacks a primary analysis.  In addition to this, time and budget is another significant limitation that the research faces because due to lack of time, the entire research work process have been narrowed down. More rich content would has been collected if some more time was given to the research. Thereby, the research lacks consistency and the scope for future research is limited.

From analyzing the gathered data from Institute of Charter Accountants in India and Sri Lankan Accounting Standards Committee it has been gathered that both the countries follow accounting standards that has both similar and different attributes. From analyzing the Indian accounting standards described in the figure below it can be observed that the accounting standards board carries out the function of following the accounting standards (Abayadeera&Watty, 2014). The Indian accounting standards described below also takes into consideration the applicable laws, customs, usages as well as business environment. IFRS accounting standards are followed in India that ensures suitable representation of companies financial statements to all the parties interested. The accounting standards board of India is observed to include industry representatives, Central board of direct taxes and Controller and Auditor General of India (Abayadeera&Watty, 2014). Moreover, certain accounting standards such as IASC and ICAI consider accuracy and consistency to be the vital aspects of financial statements. In addition, it has also been assumed that the financial statements are drawn on accrual basis without any changes within the accounting policies. Moreover, these Indian accounting standards also make sure that there is a necessity of liquidating or winding up the substantial aspects of the company. The accounting standards ranging from AS-1 to AS-22 provides vita considerations that support the selection and application of suitable accounting policies (Das, 2015). 

Conclusion

From analyzing the accounting standards of Sri Lanka that is mentioned under LKAS, the chartered accountants of the nation indicated that the nation follows accounting standards under Auditing Standards Act No 15 of 1995 (Dewi, 2015). This authorizes Institute of Chartered Accountants of Sri Lanka for issuing relevant accounting standards and needs particular business enterprises for developing and presenting the financial statements in adherence with Sri Lankan Accounting Sanders. Accounting standards of Sri Lanka is observed to include accounting standards that is different from Indian standards and is explained as SLFRS and LKAS. In addition, the nation has also implemented IFRIC and SICS pronouncements that are issued by the IASB. Accounting standards of Sri Lanka further considers the fact that all the companies operating within this nation must follow “Statements of Recommended Practices”, “financial Reporting Guidelines” and “Statement of Alternate Treatment” those are issued by the accounting institute (Dissanayake, 2017). 

Sri Lankan accounting standards LKAS 1 “Presentation of Financial Statements” is explained within the paragraphs of 1-139. All the paragraphs mentioned within the accounting standards list are deemed to have equal opportunity. Under SLFRS accounting standard, presentation of general purpose financial statements must ensure comparability both with an organizational financial statements and financial statements of other organizations (Abayadeera&Watty, 2014). It is made sure by the Sri Lankan accounting standards that an organization whose financial statements are in alignment with SLFRS must ensure an explicit along with unreserved statement of the compliance within the notes made by the company. Moreover, following this accounting standard an organization must not explain financial statements as complying with SLFRS standards unless they are aligned with all the requirements of the accounting standards. Opposing to the Indian accounting standards, the SLFRS ensures that an organization cannot rectify the accounting policies either through disclosure of the accounting policies or by means of exploratory materials or notes (Abayadeera&Watty, 2014). On the other hand, IFRS followed by India ensures that an organization must follow accounting disclosure policies mentioned under AS-1. This facilitates in dealing with disclosure of considerable accounting policies followed by Indian organizations in development of their financial statements. 

Differences in Accounting Standards of Both Nations (IFRS and SLFRS)

Accounting Standards Followed in Coal India Ltd and Ceylon Steel Corporation is observed to have similar accounting standards based on the qualitative aspects (Abayadeera & Watty, 2014). Both the accounting standards of Sri Lanka and Australia much as IFRS and SLFRS is observed to be similar based on certain qualitative characteristics that must be followed by the organizations in preparation of their financial statements. Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka is observed to maintain compliance with the accounting standards and qualitative characteristics within AASB framework and SLFRS (Khan, 2016).

• Faithful Representation- Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka are observed to prepare transparent and fair financial statements representation within the annual report prepared by these companies. For making sure that faithful representation of financial statements, both these companies ensure that shareholder confidence has a significant role focused on the perception of the organization (Abayadeera&Watty, 2014). Audit report prepared by KMPG for these companies also takes into account the faithful representation of financial report is maintained by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka. This is for the reason that these companies follow important accounting standards faithfully and considerably (Doliya& Singh, 2016).
• Relevance- Based on such accounting standards set by SLFRS and AASB, it can be observed that Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka provide relevant information in supporting the better decision making process of the organization. Considering the case of these companies, it is gathered that they follow the relevancy standards set by AASB, IFRS and SLFRS. These companies also take into consideration the current depreciation rates and tax along with other aspects. This is the reason for which the financial decisions taken by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka are deemed to maintain valuable aspect that is also reflected in their financial statements (Kamath, 2017).
• Verifiability- Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka is observed to maintain the qualitative aspect of verifiability within their financial statements in consideration to the accounting standards followed within their respective countries such as IFRS, AASB and SLFRS. Complying by these standards, the companies are observed to maintain their financial data in a manner that the investors remain able to verify the same in an effective manner (Abayadeera&Watty, 2014). In order to make sure that financial statements verifiability is maintained Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka considers preparing a section where notes will be explained in the organization’s annual report along with all their financial statements.
• Comparability- Based on the accounting standards followed in India and Sri Lanka such as IFRS, AASB and SLFRS, it is mentioned that these companies provides increased opportunities to all its stakeholders that can facilitate them in understanding the differences as well as similarities and deviations in the financial information explained within their financial reports (Ratnatunga&Tse, 2017). Certain vital information is provided to the users by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka through charts as well as tables. This enhances understanding of the financial statements represented by companies which can further facilitate them in better decision making. Financial position of Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka can also be compared with its competitors within the market that facilitates representing real financial position of these organizations (Abayadeera&Watty, 2014).
• Understandability- AASB, IFRS and SLFRS ensures that the Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka complies with understandability qualitative aspects of these standards in order to prepare financial information in a manner that makes it simple for the investors to understand financial statements in an effective manner. Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka reports their financial statements in a format that is aligned with financial reporting conceptual framework mentioned under AASB, IASB and SLFRS accounting conceptual framework which supports its investors in understanding them in an efficient way (Abayadeera&Watty, 2014).
• Timeliness- Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka follows the accounting standards of AASB, IASB and SLFRS in making their financial statements highly reliable and of better quality based on which investors can take better decision making regarding their further investment within these organizations. Quarterly along with the annual reports of Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka are prepared in a manner so that it offers to its investors a proper view regarding the situation of the companies (Saggar& Singh, 2017). Considering the same, accounting standards followed by both of these companies belonging to different companies are similar. This is because they comply by the accounting standards of timely information disclosure that can facilitate them in obtaining a fair perception concerning the performance and position of companies in the market. 

Based on several amendments made in the accounting standards followed in India and Sri Lanka it has been gathered that there are certain differences within the accounting standards followed by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka. It has been evidenced that Ceylon Steel Corporation of Sri Lanka puts an increased focus on the balance sheet in comparison to historical focus on profit and loss account. These new standards are prefixed to be SLFRS in accordance with LKAS and corresponding to IAS (Bhatt & Olive, 2016).

On the other hand, Coal India Ltd of India follows IFRS and AASB that has certain different accounting standards complaisance in comparison to the Sri Lankan ones. For instance, Coal India Ltd of India follows “AS 22- Accounting for Taxes on Income”, based on which the debt and securities of this company is deemed to be listed within recognized stock exchange of India. Considering the same accounting standard, Coal India Ltd of India considers that takes on income is acquired within a definite financial period as the expenses and revenue are related and the company also considers that taxable income might significantly be different from accounting income (Kraal, Yapa& Joshi, 2015).

Moreover, it has been observed in case of Coal India Ltd of India that it follows “IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors” that is associated with the changes associated with the misstatement or omission of items based on their nature or size, collectively or individually. In Coal India Ltd previous period errors are observed in the “misstatements and omissions form” within its financial statements. The company considers that this takes place from the “misuse, failure or offering unreliable information” that is deemed to be attained and taken into consideration while developing financial statements of this company (Kuruppu, Oyelere& Al-Jabri, 2015). 

In contrast, Ceylon Steel Corporation of Sri Lanka is observed to follow “LKAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors” that is different from the Indian accounting standards. The implementation of LKAS 8 in the company corresponds to the implementation of the accounting policies. Moreover, Ceylon Steel Corporation considers conducting changes focused on tax impacts of the corrections before the retrospective adjustments (Perera& Chand, 2015). This is observed to be applied within the accounting policy changes that are observed to be accounted based on the disclosers prepared in compliance with LKAS 12 Income Taxes. 

Certain differences in the implementation of accounting standards by Ceylon Steel Corporation and Coal India Ltd are observed through measuring differences in its standards. Coal India Ltd follows “Ind AS 24 Related Party Disclosures” and Ceylon Steel Corporation follows “LKAS 24-Related Party Disclosures”. Different disclosures that are made by Coal India Ltd based on “Ind AS 24 Related Party Disclosures” that considers disclosure can be made by the organization for joint venture, subsidiaries and associated referred as related parties (Ratnatunga, Balachandran&Tse, 2017). Differing the same, Ceylon Steel Corporation follows “LKAS 24-Related Party Disclosures” that ensures prescribed criteria for choosing and changing accounting policies along with ensuring changes within accounting anticipations focused on error corrections.

Profitability Ratio Analysis:-
	Coal India Ltd	Ceylon Steel Corporation
Particulars	2017	2016	2017	2016
Revenue (A)	83,808.00	83,560.00	55475	53473
Net Profit/Loss after Tax (D)	9266	14267	1422.1	726.3
Ordinary Equity(H)	24872	34937	1533.5	-1234.8
Total Assets (G)	116078.87	112828.2	22915.8	23502.2
Net Profit Margin (D/A)	11.06%	17.07%	2.56%	1.36%
Return on  Equity (A/H))	37.25%	40.84%	92.74%	-58.82%
Return on Assets (G/D)	7.98%	12.64%	6.21%	3.09%

Net profit margin of Coal India Ltd is observed to decrease from the years from 2017 to 2016. This is for the reason that the company is not able to use its assets in a better manner for increasing its profitability that indicates poor performance of the company in earning profits (Abayadeera & Watty, 2014). On the other hand net profit margin of Ceylon Steel Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that the company has been capable to be highly effective in turning sales into real profit.

Return on assets of Coal India Ltd is observed to decrease from the years from 2017 to 2016. This is for the reason that it is not being able to attain enough profit in comparison to its overall resources. On the other hand return on assets of Ceylon Steel Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that it is highly capable to increase its profit margin through employing its assets and increasing sales (Bhatt & Olive, 2016).

	Coal India Ltd	Ceylon Steel Corporation
Particulars	2017	2016	2017	2016
Cost of Goods Sold(A)	122,294.46	108,147.54	39739.7	38538.6
Inventory (H)	8,945.27	7,569.17	4080.4	4558.5
Revenue (A)	83,808.00	83,560.00	55475	53473
Total Assets (G)	116078.87	112828.2	22915.8	23502.2
Inventory Turnover Ratio (A/H))	13.67	14.29	9.74	8.45
Total Asset Turnover Ratio (A/G)	0.72	0.74	2.42	2.28

Inventory turnover ratio of Coal India Ltd is observed to decrease from the years from 2017 to 2016. This is for the reason that the company is not that able to manage its inventory through considering the cost of goods sold (Abayadeera & Watty, 2014). On the other hand inventory turnover ratio of Ceylon Steel Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that the company is efficient in selling its inventory through increase sales or by offering huge discounts.

Total asset turnover of Coal India Ltd is observed to decrease from the years from 2017 to 2016. On the other hand total assets turnover of Ceylon Steel Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that both the companies indicate increased sales and less accumulation of inventory (Bhatt & Olive, 2016). This also serves as an effective measure of business performance as this signifies that these companies are making high profit on each sale.

Short-Term Liquidity Ratio Analysis:-
	Coal India Ltd	Ceylon Steel Corporation
	2017	2016	2017	2016
Total Current Assets (A)	68263.06	72326.52	6994.2	7427
Receivables (D)	10735.85	11447.61	744.7	763.9
Cash and equivalents (B)	3579.93	4876.4	909.4	948.1
Total Current Liabilities (F)	42,231.98	31,354.16	8824.2	8992.7
Current Ratio (A/F)	1.62	2.31	0.79	0.83
Quick Ratio [(B+D)/F)	0.34	0.52	0.19	0.19

Current ratio of Coal India Ltd is observed to decrease from the years from 2017 to 2016. This is for the reason that the company has attained increased capability to pay its short term along with long term obligations. This also indicates enhanced company operations through addressing liabilities. On the other hand current ratio of Ceylon Steel Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that it indicates under trading and over capitalization done by the company and this also signifies that the company has high solvency (Abayadeera & Watty, 2014).

Quick ratio of Coal India Ltd is observed to decrease from the years from 2017 to 2016. On the other hand net profit margin of Ceylon Steel Corporation is observed to remain constant in 2017 in comparison to 2016. This is for the reason that both the companies are observed to depend excessively on inventory along with other assets to address its short term liabilities (Bhatt & Olive, 2016). This also indicates that the company does not have enough assets to pay off its creditors.

Debt Equity Ratio
	Coal India Ltd	Ceylon Steel Corporation
	2017	2016	2017	2016
Total Liabilities (A)	42,231.98	31,354.16	13039.7	14720.3
Total Assets (B)	116078.87	112828.2	22915.8	23502.2
Total Equity (C )	24872	34937	1533.5	-1234.8
Debt-to-total Assets Ratio  (A/B)	0.36	0.28	0.57	0.63
Debt to Equity Ratio (A/C)	1.70	0.90	8.50	-11.92

Debt to total assets ratio of Coal India Ltd is observed to increase from the years from 2017 to 2016. On the other hand net profit margin of Ceylon Steel Corporation is observed to decrease in 2017 in comparison to 2016. This is for the reason that both the companies have less amount total assets that are financed by its liabilities, debt and creditors. It also signifies that both the organizations are sluggish in enhancing its profitability and acquiring increased assets with time (Abayadeera & Watty, 2014).

Debt to equity ratio of Coal India Ltd is observed to decrease from the years from 2017 to 2016. On the other hand debt to equity ratio of Ceylon Steel Corporation is observed to increase in 2017 in comparison to 2016. This is for the reason that both the companies are not that capable to attain enough cash for addressing all its debt obligations and the company has increased assets that are debt financed (Bhatt & Olive, 2016).

Conclusion

This research report was 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 towards ensuring potent as well as transparent financial reporting by corporate. It was gathered from the paper that 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 different organizations focus to deliver meaningful information to different users of financial statements and allow making informed economic decisions. It is also gathered that Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka is observed to prepare transparent and fair financial statements representation within the annual report prepared by these companies. For making sure that faithful representation of financial statements, both these companies ensure that shareholder confidence has a significant role focused on the perception of the organization. Audit report prepared by KMPG for these companies also takes into account the faithful representation of financial report is maintained by Coal India Ltd of India and Ceylon Steel Corporation of Sri Lanka. Analysis of the research indicated that Ceylon Steel Corporation of Sri Lanka puts an increased focus on the balance sheet in comparison to historical focus on profit and loss account. These new standards are prefixed to be SLFRS in accordance with LKAS and corresponding to IAS. 

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