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IN
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INTRODUCTION
• IFRS is an accounting framework
• establishes recognition, measurement, presentation and
disclosure requirements relating to transactions and events that
are reflected in the financial statements.
• IFRS was developed in the year 2001 by the International
Accounting Standards Board (IASB) in the public interest to
provide a single set of high quality, understandable and
uniform accounting standards.
THE GLOBAL MOVE TOWARDS IFRS
Canada
2009/11
Europe
2005
United States
(2014/15/16?) China Japan
2007 (2016)
India
2011
Brazil
2010
Chile
2009
South Africa
2005 Australia
2005
Current or anticipated requirement
or option to use IFRS (or equivalent)
China Similar to IFRS
(effective for
IFRS ADOPTION listed entities
2007)
Approximately 100 Brazil 2010
Russia Currently
countries have applicable for
adopted or are in the banks.
process of adoption South Korea 2011
Status of adoption by USA 2014/15/16
some countries which UK 2005
compete with India for
Nepal 2011 (as per action
capital allocation: plan released)
IFRS IN INDIA – PHASE I
The following categories of companies will convert their
opening balance sheets as at 1st April, 2011, in
compliance with the notified accounting standards
which are convergent with IFRS.
a. Companies which are part of NSE – Nifty 50
b. Companies which are part of BSE - Sensex 30
c. Companies whose shares or other securities are listed
on stock exchanges outside India
d. Companies, whether listed or not, which have a net
worth in excess of Rs.1,000 crores.
IFRS IN INDIA – PHASE II
The companies, whether listed or not, having a
net worth exceeding Rs. 500 crores but not
exceeding Rs. 1,000 crores will convert their
opening balance sheet as at 1st April, 2013, if the
financial year commences on or after 1st April,
2013 in compliance with the notified accounting
standards which are convergent with IFRS.
IFRS IN INDIA – PHASE III
Listed companies which have a net worth of
Rs. 500 crores or less will convert their opening
balance sheet as at 1st April, 2014, if the
financial year commences on or after 1st April,
2014, whichever is later, in compliance with the
notified accounting standards which are
convergent with IFRS.
IFRS IN INDIA – ROAD MAP
NON-BANKING FINANCE COMPANIES
Type of institution Opening B/s conversion date
•Companies which are part of NSE Nifty April 1, 2013
50Companies & which are part of BSE -
Sensex 30
•Companies, whether listed or not, which
have a net worth in excess of Rs.1,000
crores.
All listed NBFCs and unlisted NBFCs April 1, 2014
which do not fall in the above categories
and which have a net worth in excess of
Rs. 500 crores
NEED OF IFRS
To make a common platform for better understanding of accounting,
internationally.
Synchronization of accounting standards across the globe.
To create comparable, reliable, and transparent financial statements.
To facilitate greater cross-border capital raising and trade.
To have company-wide one accounting language which have subsidiaries in
different countries.
IFRS IMPLEMENTATION ISSUES
Treasury Management Valuation Distribution
Hedge Accounting Fair valuation approach 2010-11 profit will change
Investments Fair valuation methodologies Dividend policy
Investor Debt Covenants
relations IAS 1 requirements
Changes in EPS
EU experience
Mergers &
ORGANISATION Acquisitions
Control
IT Systems
Goodwill
Disclosures (IFRS 7)
Capital reserve
Hedge accounting
IFRS 1 option
Data collection
HR Management
Training Compensation
Revised CTC ESOP fair value
Targets not achievable
MIS Director remuneration
Tax Implication
Increased volatility Investors
Fair value adjustment
Fluctuations outside
Most item will flow
control
through P & L
Fair value adjustment
Steps
Parallel run and test
systems
Implement business
decisions
Train staff
Design and implement
systems
Plan the
implementation
Think of business
issues
Scope the
impact
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BENEFITS OF IFRS ON INDIAN
CORPORATES
Improvement in comparability of financial information and
financial performance with global peers and industry standards
.
Adoption of IFRS is expected to result in better quality of
financial reporting due to consistent application of accounting
principles and improvement in reliability of financial
statements.
Better access to and reduction in the cost of capital raised from
global capital market since IFRS are now accepted as a
financial reporting framework for companies seeking to raise
funds from most capital markets across the globe.
TYPES OF IFRS
IFRS 1 First-time Adoption of IFRS
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 4 Insurance Contracts
IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations
IFRS 6 Exploration for and evaluation of Mineral
Resources
IFRS 7 Financial Instruments: Disclosures
IFRS 8 Operating Segments
IFRS RESOURCES
IASB website [Link]
ICAI’s website [Link]
[Link]
[Link]
[Link]
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