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05/02/2013

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 Get updated on IFRS
Welcome to the first issue of theinitiative taken by
Indian Papaya
.If you are new to IFRS, this is aPerfect place to startUnderstanding the changesHappening in our country.If you are already involved in theConvergence of IFRS, this is aPlace of great resource for you.
IFRS…..in India
Volume 1 – November ‘09
The Countdown Begins…….
Come 2011 and Indian Inc will experience a drastic changes in the way financialstatements are reported. India is among 150 – odd countries that have decided to adoptthe International Financial Reporting Standards (IFRS) in 2011.However, the question remains : Is Corporate India ready to joins the ranks of EU,Australia, Singapore and Sri Lanka, which are among the 100 IFRS- compliant countries?IFRS compliance would require changes right from the grassroots level, beginning withacademic inputs and training. And this is not going to be an easy task, given the limitedtime frame before the new standards come into force.“The transition will be a tough challenge for the country as it requires a shift in theacademic approach, along with regulatory challenges. The Institute of CharteredAccountants of India (ICAI) and the government will have to play a larger role incountering industry problems,” said Vijay Mathur, partner, BSR & Co., the Indian arm of KPMG.He was addressing a technical conference on IFRS, organized by the Confederation of Indian Industries (CII), in association with KPMG India on Thursday. He added that themajor problem that industries are likely to face is a talent crunch since, even in thecurrent scenario, there is a scarcity of qualified resources.“Companies need to start following a planned strategy as early as possible, as the failureto do so would put them in an awkward situation. The understanding and implementationof IFRS is not easy, and only if companies start following certain common standards now,would they be able to shift towards the new standards from 2011,” said Neville Dumsia,executive director, private equity advisory, KPMG India.He said India has begun integrating with global financial markets. When companies arecrossing national boundaries, reporting financial statements under IFRS is a necessary tofacilitate cross-border transactions and makes comparisons easier, he added.“There is a need to give accounting staff appropriate training. Companies need to drawup detailed plans for migrating to IFRS as early as possible, to make the transitionsmooth and flawless,” he said.Accounting teams should be conversant not only with new standards but also withinformation technology to support the new financial reporting architecture, Mathur said.IFRS, previously known as International Accounting Standards (IAS), are standards andinterpretations adopted by the International Accounting Standards Board (IASB). IASBadopted IAS in April 2001, and renamed it IFRS.
. . . .
 
Inspiration Inside
Monthly E – News Letter Monthly E – News Letter 
Indian Papaya
 
 Events
PIRON AND BSE TRAININGINSTITUTE are organizinga Master class on IFRS for corporate audience as well as for industry finance and accountsprofessionals which will heldon
10th & 11th December 
 in Mumbai at BSE TrainingInstitute.This workshop is a Roadmapto IFRS Convergence. This is anopportunity for every participantacross the country to connectwith each other on financerelated topics, which willinclude topics on US GAAP,IGAAP and IFRS Convergence.To get the details log on to :
Useful Links
Get updated on latestdevelopments In IFRS by visitingthe link mentioned belowregularly.
. . . .
 
Inspiration Inside
The business case of IFRS in Indian Context
Source : The Economic Times
International Financial Reporting Standards (IFRS) is gathering storm and most countriesbarring the US and a few others have either adopted IFRS or their national generally acceptedaccounting principles (GAAP) are converging to IFRS.Australia, New Zealand, China, Singapore, Japan, Middle East, Africa and the EuropeanUnion have either adopted or are converging to IFRS. The eminent status to IFRS cameabout after the EU made it mandatory for all its listed companies starting 2005.Consequently, more than 8,000 EU-listed companies adopted IFRS in one go.US capital markets are losing their attractiveness as a result of what many view as excessiveregulation. As a consequence, many believe that the predominance of US GAAP as astandard may be coming to an end. This could make large companies look at other capitalmarkets, and in many of those capital markets IFRS are accepted.More than 1,100 Chinese companies have recently switched over to new accountingstandards bringing their books in line with international norms. India follows Indian GAAP,which is inspired by International Accounting Standards (IAS).However, Indian GAAP has not kept pace with the changes that followed IAS’metamorphosis to IFRS. The most important change in IFRS is the application of fair valuation principles. Key standards based on fair valuation principles that have not yet beenrolled out under Indian GAAP relate to business combinations, financial instruments andinvestment properties. There are also several areas where there are critical differencesbetween Indian GAAP and IFRS.The key questions for India are:* Should Indian GAAP be converged with IFRS?* What are the pros and cons?* What are the hurdles and impediments in fully converging with IFRS?* What are the precautions that need to be taken?* Whether Indian GAAP should be converged with IFRS?* Is there an option or alternative?IOSCO requires all its constituents to converge to IFRS and therefore departing from IFRSis not a solution . Besides, India has globalised and if it has to invest abroad or attractinbound investments it must follow global standards. Seen from this perspective, thesooner we converge to IFRS the better. When most of the developed world followsIFRS, can we lag behind?The accounting framework in India has been characterized by relatively less complexaccounting guidance with a bias towards historical cost accounting and focus on thecontractual form of the arrangement. Therefore, audit committee awareness of conceptsaround fair value recognition and measurement, reflecting the substance of thearrangement and applying relatively more complex accounting concepts and modelsis likely to be low. This would necessitate the need to create awareness among auditcommittee members on these concepts as it affects companies that they are involved with.
 
 Imp. Notice
IFRS Diploma Program from ACCA
This programme enables professionals toget Diploma from ACCA (the Associationof Chartered Certified Accountants).ACCA is the largest and fastest growingglobal professional accountancy body inthe world, with over 320,000membersand students in 170 countries.The ACCA Diploma in InternationalFinancial Reporting (DipIFR) providesits clients' and understanding of theconcepts and principles which underpinthem, and of their application in theinternational marketplace.ATC International, official publishingpartner of ACCA, provides the studymaterial(DipIFR) and the course offered isdesigned by PIRON and ATC to keep itflexible, so that the Diploma is beingcompleted in three to six months.FOR MORE DETAILS LOG ON TO :-www.indianpapaya.com/dipifr.com
. . . .
 
Inspiration Inside
As compared to formal classroom-type training, a preferred approach in the Indian contextwould be for management to spend sufficient time in advance with audit committee memberson key changes to accounting policies of the company and their implementation uponadoption of IFRS.This process should commence sufficiently in advance of the actual transition to enable auditcommittee members to familiarize themselves with IFRS accounting concepts and their implementation. Similarly, auditors would need to spend relatively more time with membersof the audit committee educating them on IFRS interpretation and judgmental matters asthey affect the company. A customized and company-specific approach is likely to be a goodway to educate audit committees.In the initial period, audit committees will likely rely more on both management and theexternal auditors to understand concepts and accounting models that are unique to IFRS andthat represent a change from current accounting practice.During this initial period, audit committees will likely focus on sufficient debate betweenmanagement and the external auditors on key judgement and interpretation issues andwould focus on these areas as they evaluate the financial reporting process adopted by thecompany. Audit committees may question the manner in which such matters have beenresolved, with a focus on whether the external auditor is satisfied in relation to the positionadopted by management.Fair valueIn India, relatively few assets are traded on markets—primarily plain vanilla equities andbonds. How will the ‘fair value’ concept of IFRS be applied? Are there other challengesfor audit committees in handling fair value?Given the relatively less developed debt and asset markets in India, fair value determinationwill be a challenge for management, auditors and audit committees .There are no easy answers and management, auditors and audit committee members wouldneed to work together closely to evaluate the process used by management for determiningfair values. Having said that, generally the assets and liabilities held/issued by Indianorganisations are also relatively less complex and accordingly some of these valuationchallenges may be addressed by extrapolating available information .It is likely that asset and financial markets in India will develop over time easing the processof fair value determination. In the initial period, management, auditors and audit committeesmay decide to place relatively more reliance on external independent valuation specialists.Indian management and audit committees are also not familiar with managing the volatilitythat arises out of applying fair value concepts to financial instruments such as derivatives.The committees would need to devise and implement appropriate hedge accounting principlesand policies to address such volatility or familiarize themselves with communicating suchvolatility to external stakeholders.It not true that IFRS necessarily imposes any additional short-term , quarterly results-orientedviews of corporate strategy. Indian corporations have been publishing quarterly results for quite some time now and adopting IFRS will not result in a change in financial reportingstrategies. What will be needed is a will to change mindsets to get a better understandingof the financial results, along with a strategy to manage and communicate volatility thatarises from applying the fair value principles.
The business case of IFRS in Indian Context
Source : The Economic TimesContinued

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