10/9/2012

IFRS

Objectives of this Session

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Why IFRS ? What is Accounting Standard ? IFRS in India?

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Contents..
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Who are the stakeholders Expectation of Stakeholders What are all Standards we come across? Objectives of IFRS? Accounting Standards & the Companies Act Why IFRS?

Contents..
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IFRS to whom applicable List of IFRS What is Ind-AS Benefits Implementation Status

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Who are all the Stakeholders

Shareholders Customers Employees Suppliers Local Community Government General Public

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Expectation of Stakeholders
Return Quality Security Credibility Support Statutory Compliance Reliable data / information

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Sources of Information
Annual Report of the Company

Balance Sheet Profit & Loss Account Cash Flow Statement Schedule to BS and P&L Notes to Accounts Directors Report Auditors Report Statistics and graphs

Sources of Information
Reports to Government Departments

MCA Income Tax SEBI Stock Exchange RBI

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News Papers / Journal Friends / business contacts Employees of the Company

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Concerns of Stakeholders
Reliability of Information Accuracy of information Authenticity Accuracy of Data Level of Transparency Window dressing Sincerety

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How the concerns are addressed

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Accounting Standards Auditing Standards GAAP Reporting Standards Formats Guidelines Compliance requirements Etc.

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Objective OF IFRS
To standardize accounting methods and procedures. To lay down principles for preparation and presentation. To establish benchmark for evaluating the quality of financial statements prepared by the enterprise. To ensure the users of financial statements get creditable financial information. To attain international levels in the related areas

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What is IFRS ?
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IFRS stands for International Financial Reporting Standards. IFRS is A Set of International Accounting Standards stating how particular types of transaction and other events should be reported in financial statement IFRS:-A set of Financial Reporting Standards issued by the International Accounting Standards Board (IASB) is recognized under the brand name IRRSs. IFRSs is a trade mark of the International Accounting Standards Committee Foundation. IFRSs comprise of: International Financial Reporting Standards International Accounting Standards and Interpretations originated by the International Financial Reporting Interpretations Committee( IFRIC) and Interpretations issued by the former Standing Interpretations Committee ( SIC).

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Requirements of IFRS
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IFRS financial statements consist of (IAS1.8) A Statement of Financial Position A Comparative Income Statement Either a statement of changes in equity (SOCE) or a statement of recognized income or expense ("SORIE") A Cash Flow Statement or Statement of Cash Flows Notes, including a summary of the significant accounting policies Comparative information is provided for the previous reporting period (IAS 1.36). An entity preparing IFRS accounts for the first time must apply IFRS in full for the current and comparative period although there are transitional exemptions (IFRS1.7).

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Accounting Standards Companies Act, 1956

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and

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As per Section 211 sub sections (3 A), (3 B) and (3 C) inserted by the Companies Amendment Act, 1999 w.e.f. 31.10.1998: (3A) every P & L Account and Balance Sheet shall comply with accounting standards, (3 B) deviations, if any, to be disclosed with reasons and financial effect of deviation, (3 C) "accounting standards" means standards of accounting recommended by ICAI or as may be prescribed by Central Govt. in consultation with National Advisory Committee on Accounting Standards.

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Accounting Standards Companies Act, 1956

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and

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Section 217 sub section (2AA) inserted by the Companies Amendment Act, 2000 w.e.f. 13.12.2000:
(2AA) The Board's report shall also include a

Directors' Responsibility Statement indicating therein (1) that in preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure.

Accounting Standards and the Companies Act, 1956

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Section 227 sub section (3)(d) inserted by the Finance Act, 1999 w.e.f. 31.10.1998: (3)(d) the auditor's report shall also state whether, in his opinion, the P & L Account and the Balance Sheet comply with accounting standards referred in section 211 (3C), (4) where answer to (3)(d) is negative or with qualification, it shall also state the reasons thereof.

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l WHY
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IFRS ?

India is one of the over 100 countries that have or are moving towards IFRS ( International Financial Reporting Standards) convergence with a view to bringing about a uniformity in reporting systems globally, enabling businesses, finances and funds to access more opportunities. Indian companies are listed on overseas stock exchanges and have to recast their accounts to be compliant with GAAP requirements of those countries. Foreign companies having subsidiaries in India are having to recast their accounts to meet Indian & overseas reporting requirements which are different.

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IFRS ?

Foreign Direct Investors (FDI), overseas financial institutional investors (FII) are more comfortable with compatible accounting standards and companies accessing overseas funds feel the need for recast of accounts in keeping with globally accepted standards. ICAI has decided to implement IFRS in India. The Ministry of Corporate Affairs has also announced its commitment to convergence to IFRS.

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IFRS To WHOM APPLICABLE ?

Compliance with IFRS in India is restricted to Public Entities which include those companies & entities listed on any stock exchange or have raised money from the public, or have a substantial public interest, or public sector companies. IFRS in India would cover the following public interest entities in the first phase. Listed companies Banks, insurance companies, mutual funds, and financial institutions Turnover in preceding year > INR 1 billion Borrowing in preceding year > INR 250 million Holding or subsidiary of the above IFRS is not applicable to SMEs as of now

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LIST OF IFRS
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IFRS-1 IFRS-2 IFRS-3 IFRS-4 IFRS-5 IFRS-6 IFRS-7 IFRS-8

First time Adoption of International Financial Reporting Standards Share-based payments Business Combinations Insurance Contracts Non Current Assets held for sale and Discontinued Operations Exploration for and evaluation of Mineral Resources. Financial Instruments-Disclosures Operating Segments

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Benefits
Uniformity l Facilitates Comparison l Improves Reliability l Assets at Current Value l Clarity on Liabilities l Transparency l Ensuring Statutory Compliance
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Implementation Status
ICAI has submitted its report to MCA. l MCA has to approve. l It is likely to be effective from 1st April 2014.
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Question Hour

To summarize our discussions

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Basically IFRS helps the stakeholders to get proper and right information and data, Brings Uniformity in reporting Contents of IFRS Benefits of IFRS

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Review
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Go to Objectives of this Session and check whether the same have been achieved.

Food for thoughts

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To be HAPPY

Be Honest Have Ambition Keep Positive Mindset Do Prioritize your tasks Believe in You

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