Impact of IFRS

In conclusion, there is no significant impact on the performance due to the convergence of IFRS in the agricultural companies in Sri Lanka. As a part of our analysis we considered the impact to the key performance indicators. There we noticed that the impact is very insignificant due to the convergence of IFRS. However, we are convinced that the classification of Biological assets and Agricultural Produce changed drastically due to the convergence. Prior to the convergence Biological Assets in the Plantation sector were classified under property plant and equipment. After adopting LKAS 41, they are classified under biological assets. Therefore, it is noted that the convergence of IFRS impacted on classification and not on the performance to the financial statements. As per the management’s perception, it can be concluded that the Most of the managers prefer new standard requirements but do not have an enough and more idea about how the new standards work. Since this is a newly introduced standard under LKASs, most of the managers do not have sufficient knowledge on this area. Also management does not have enough resources to comply with the criteria specified by the standard. As an example in Sri Lanka there is an issue of lack of qualified valuers. Therefore, companies have to bear a huge cost in order to fulfill the standard criteria. Since Sri Lanka is a developing country, still it has given a priority to the agricultural sector. The government as well as the private sector is undertaking so many projects relating to the agriculture. Through accounting standards, it is expected to increase the efficiency and effectiveness of the projects. Even though a proper accounting standard for agricultural related companies are introduced, there is no significant change in the company performance identified through this research. The main reason identified is that the cost is really high in order to be applicable in Sri Lanka and lack of knowledge regarding the standard. Therefore, it is recommended that the proper infrastructure should be provided to the companies in order to comply with the standard. Further it is needed to give proper understanding to the management regarding the applicable standard. Then the huge growth in the key performance indicators will be seen.