Question

Appendix 1-2
Financial Statements and Selected Notes from the Annual Report of INFOSYS.
Please refer to pages 85-148 of the 2009 annual report of Infosys. Its web address is www.infosys.com. https://www.infosys.com/investors/reports-filings/annual-report/annual/Documents/Infosys-AR-09.pdf

Appendix 1-2 (refers you to) the financial statements (including selected notes) and auditor’s report for Infosys Technologies Limited. Infosys was incorporated in 1981 as Infosys Consultants Private Limited, as a private company under the Indian Companies Act. Its name eventually evolved into Infosys Technologies Limited in 1992, when the company went public. Its mission is to provide high quality and cost competitive technology solutions for companies around the world. It has grown into a $5 billion company with a market capitalization in excess of $15 billion.

In examining the information (referred to) in Appendix 1-2, comment on how the statements of Infosys stack up to other companies in the industry in meeting the information needs of a nondomestic investor such as yourself. Specifically, what reporting practices raise issues for you? What reporting practices do you find particularly helpful? In preparing your critique, compare the reporting practices of Infosys to a service provider in your country, most of whom maintain corporate Web sites on the Internet.

Answer 1

The financial statements of Infosys are prepared in accordance with the International Financial Reporting Standards (IFRS). The preface to the IFRSs have mentioned that the auspicious objective of preparation of financial statements is to provide a true and fair picture of an organization as on the date to which the financial statements relate. The company has made sure that the investors, both domestic as well as non-domestic investors, will be able to assess the financial performance and financial position of the company from the appraisal of financial statements. All necessary information required to the stakeholders of an entity has been provided in the Annual Report of the company to enable them to take correct decision in relation to the company. However, the corporate governance reporting of the company has certainly some flaws as the detailed reporting lack clarity as to the various spheres on which the necessary amount has been spent. The adherence with IFRS has certainly helped us to appraise the financial performance and position of the company from financial statements. However, compare to the reporting of companies such as IBM and Apple Inc. the financial statements of Infosys lack clarity in many areas. The financial performance of Infosys in different regions of the world have not been segregated properly which is not the case in the financial reports of IBM and Apple Inc. Thus, assessment of financial performance of Infosys in different regions of the company is quite difficult compare to IBM and Apple Inc.