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REPORTING STANDARDs
Gagandeep
Kaur (127)
Rakhi Rani
(128)
INTRODUCTION
Going !on!ern*
Financial statements are present on a going concern basis unless
management either intends to liquidate the entity or to cease trading0
or has no realistic alternative but to do so.
-aterialit. *
#very material class of similar items has to be presented separately.
Items that are of a dissimilar nature or function shall be presented
separately unless they are immaterial.
Co(parati/e in,or(ation*
IF! requires entities to present comparative information in respect of
the preceding period for all amounts reported in the current period4s
2nancial statements. In addition comparative information shall also be
provided for narrative and descriptive information if it is relevant to
understanding the current period4s 2nancial statements.
Con#i#ten!. o, pre#entation*
IF! requires that the presentation and classi2cation of items in the
2nancial statements is retained from one period to the ne3t unless.
&D0&NT&G'" O IR"
Greater Co(para+ilit.
.ompanies that use the same standards to prepare their
2nancial statements can be compared to each other more
accurately.
-ore le1i+ilit.
IF! uses a principles5based0 rather than rules5based0
philosophy. & principles5based philosophy means that the
goal of each standard is to arrive at a reasonable valuation
and that there are many ways to get there. This gives
companies the freedom to adapt IF! to their particular
situation0 which leads to more easily read and useful
statements.
-ore Rele/an!e
The new IF! re6ects on economic substance more than legal form. This helps the
companies and other sta%eholders to have true and fair view of the companies7
transactions. The way IF! re6ects to gains and losses in a timely manner puts
IF! in a more reliable and credible position than the 8&&9 in terms of reporting
standards.
(a) assets that meet the criteria to be classi2ed as held for sale to
be measured at the lower of carrying amount and fair value less
costs to sell0 and depreciation on such assets to ceaseA
(b) an asset classi2ed as held for sale and the assets and liabilities
included within a disposal group classi2ed as held for sale to be
presented separately in the statement of 2nancial positionA
(b) the nature and e3tent of ris%s arising from 2nancial instruments to
which the entity is e3posed during the period and at the end of the
reporting period0 and how the entity manages those ris%s.
(i) whose debt or equity instruments are traded in a public mar%et (a domestic or
foreign stoc% e3change or an over5the5counter mar%et0 including local and regional
mar%ets)0 or
(ii) that 2les0 or is in the process of 2ling0 its 2nancial statements with a securities
commission or other regulatory organisation for the purpose of issuing any class of
instruments in a public mar%etA and
(b) the consolidated 2nancial statements of a group with a parent@
(i) whose debt or equity instruments are traded in a public mar%et (a domestic or
foreign stoc% e3change or an over5the5counter mar%et0 including local and regional
mar%ets)0 or
(ii) that 2les0 or is in the process of 2ling0 the consolidated 2nancial statements
with a securities commission or other
IR" : inan!ial In#tru(ent#
(a) requires an entity (the parent) that controls one or more other
entities (subsidiaries) to present consolidated 2nancial statements
-anipulation
There is a downside to the 6e3ibility that IF! allows@ companies can utili"e
only the methods they wish to0 allowing the 2nancial statements to show
only desired results. This can lead to revenue or pro2t manipulation0 can be
used to hide 2nancial problems in the company and can even encourage
fraud.
Co#t*
& small company would be impacted by a country4s adoption of IF! in the
same way a larger one would. ;owever0 small businesses do not have as
many resources at their disposal to implement the changes and train staf.
IR" B India O/er/ie)
.ompanies not covered in phase ' and having net worth e3ceeding II ?,,
crore (II ? billion)
9hase *@ /pening balance sheet as at ' &pril +,'E
Fisted companies not covered in the earlier phases K If the 2nancial year of a
company commences at a date other than ' &pril0 then it shall prepare its
opening balance sheet at the commencement of immediately following
2nancial year.