INTRODUCTION

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International accounting standard board has so far issued forty one accounting standard large number of standards have been revised and twelve IAS have been superseded and deleted. IAS has been given a new number series as IFRS. The total number of IFRS issued till date are eight. A key moment in the move to IAS/IFRS came to 6 th June, 2002 when the European council of ministers approved the regulation that would require all EU companies listed on a regulated market to prepare accounts in accordance with International Accounting Standards for accounting periods beginning on or after 1st January, 2005. Today the accounting world feels that IAS/IFRS should be common language for accounting, as it is the only set of standards that has been prepared through wide international consultation

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Convergence Project in India
 In October 2007, ICAI issued concept paper giving the approach and roadmap for convergence  Various study groups have been formed  The convergence exercise will be taken up in phases - listed and bigger companies initially, smaller public companies thereafter, and eventually all private companies/SMEs  The ministry of Company affairs has appointed two working groups, headed by Mr. Y.H. Malegam and Mr. Mohandas Pai to finalise the roadmap to IFRS convergence.  SEBI Committee on Disclosures and Accounting Standards (SCODA) is the standing Committee - Voluntary adoption of International Financial Reporting Standards (IFRS) by listed entities having overseas subsidiaries or by all listed entities.

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IFRS in India
 On April 5, 2010 Amendment to listing Agreement provides the option of adoption of International Financial Reporting Standards (IFRS) by listed entities having subsidiaries while declaring Consolidated results/financial statements  Standalone results will be as per the existing Indian GAAP  On January 22, 2010 MCA has released Road Map for convergence with IFRS – For large Companies

IFRS in India – Phase I
 The following categories of companies will convert their opening balance sheets as at 1st April, 2011, if the financial year commences on or after 1st April, 2011 in compliance with the notified accounting standards which are convergent with IFRS. These companies are: Companies which are part of NSE – Nifty 50  Companies which are part of BSE - Sensex 30  Companies whose shares or other securities are listed on stock exchanges outside India  Companies, whether listed or not, which have a net worth in excess of Rs.1,000 crores.

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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
When the accounting year ends on a date other than 31 st March, the conversion of the opening Balance Sheet will be made in relation to the first Balance Sheet which is made on a date after 31st March.  Companies which fall in the following categories will not be required to follow the notified accounting standards which are converged with the IFRS (though they may voluntarily opt to do so) but need to follow only the notified accounting standards which are not converged with the IFRS.

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These companies are: (a) Non-listed companies which have a net worth of Rs. 500 crores or less and whose shares or other securities are not listed on Stock Exchanges outside India. (b) Small and Medium Companies (SMCs).  The draft of the Companies (Amendment) Bill, proposing for changes to the Companies Act, 1956 will be prepared incorporating the recommendation of Sub-Group 1 Report.  Revised Schedule VI to the Companies Act, 1956 according to the converged Accounting Standards has been submitted by the ICAI to NACAS which, after review, will submit to the Ministry. Amendments to Schedule XIV will also be made in a time bound manner.  In respect of the converged Accounting Standards, the Chairman of the Accounting Standards Board of ICAI will submit the converged version of Accounting Standards to NACAS from time to time for recommendations and onward submission to Ministry. However, convergence of all the accounting standards will be completed by ICAI and NACAS will submit its recommendations to the Ministry.  Roadmap recommended by Core Group of MCA in respect of insurance companies, banking companies and non-banking finance companies.

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Insurance companies:All insurance companies will convert their opening balance sheet as at 1stApril, 2012 in compliance with the converged Indian Accounting Standards.

Banking companies:(a) All scheduled commercial banks and those urban cooperative banks(UCBs) which have a net worth in excess of Rs. 300 crores will convert theiropening balance sheet as at 1st April, 2013 in compliance with the first set ofAccounting Standards (i.e. the converged Indian Accounting Standards). (b) Urban co-operative banks which have a net worth in excess of Rs. 200crores but not exceeding Rs. 300 crores will convert their opening balance sheets as at 1st April, 2014 in compliance with the first set of Accounting Standards (i.e. the converged Indian Accounting Standards). (c) Urban co-operative banks which have a net worth not exceeding Rs. 200crores and Regional Rural banks (RRBs) will not be required to apply the first set of Accounting Standards i.e. the converged Indian Accounting Standards(though they may voluntarily opt to do so) and need to follow only the existing notified Indian Accounting Standards which are not converged with IFRSs.

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Non-Banking finance companies
Type of institution Opening B/s conversion date

 Companieswhich are part of NSE Nifty 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 which do not fall in the above categories and which have a net worth in excess of Rs. 500 crores

April 1, 2013

April 1, 2014

Unlisted NBFCs which have a net worth of Rs. 500 crores or less will not be required to apply the converged Indian Accounting Standards.

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• International Accounting Standards Committee Foundation. The body which oversees the International Accounting Standards Board. • International Accounting Standards Board (IASB). The body which sets International Financial Reporting Standards (IFRS) and approve interpretations • International Financial Reporting Interpretations Committee (IFRIC). Responsible for interpretation of standards and issue guidance on issues that have not yet been addressed by standards. • The Standards Advisory Council (SAC). Forum to provide broad strategic advice on IASB’s agenda priorities and insight into costs and benefits of projects. IFRS Hierarchy Statement • International Accounting Standards (IAS) • International Financial Reporting Standards (IFRS) • Standard Interpretations (SIC) • International Financial Reporting Interpretations (IFRIC)

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IFRS Structure
 The term “IFRSs” currently comprises of:  9 IFRSs, 29 IASs (originally 41), 18 IFRIC and 11 SIC interpretations, plus the Framework  There are 15 new standards and major projects for which exposure drafts are issued  Final SME standard was been issued in July 2009.  8 existing standards are being amended for which exposure drafts are issued

IFRS – Standards
 Preface to International Financial Reporting Standards  Framework for the Preparation and Presentation of Financial Statements  IFRS 1 First-time Adoption of International Financial Reporting Standards  IFRS 2 Share-based Payment  IFRS 3(2008) 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
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 IFRS 8 Operating Segments*  IFRS 9 Financial Instruments - Assets * Annual periods beginning on or after 1 January 2009. Supersedes IAS 14 from that date, or date of earlier application.  IAS 1(2007) Presentation of Financial Statements  IAS 2 Inventories  IAS 7 Statement of Cash Flows  IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors  IAS 10 Events after the Reporting Period  IAS 11 Construction Contracts  IAS 12 Income Taxes  IAS 16 Property, Plant and Equipment  IAS 17 Leases  IAS 18 Revenue  IAS 19 Employee Benefits  IAS 20 Accounting for Government Grants and Disclosure of Government Assistance  IAS 21 The Effects of Changes in Foreign Exchange Rates  IAS 23 Borrowing Costs  IAS 24 Related Party Disclosures  IAS 26 Accounting and Reporting by Retirement Benefit Plans
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 IAS 27(2008) Consolidated and Separate Financial Statements  IAS 28 Investments in Associates  IAS 29 Financial Reporting in Hyperinflationary Economies  IAS 31 Interests in Joint Ventures  IAS 32 Financial Instruments: Presentation  IAS 33 Earnings per Share  IAS 34 Interim Financial Reporting  IAS 36 Impairment of Assets  IAS 37 Provisions, Contingent Liabilities and Contingent Assets  IAS 38 Intangible Assets  IAS 39 Financial Instruments: Recognition and Measurement  IAS 40 Investment Property  IAS 41 Agriculture

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Business and organisation considerations IFRS impact beyond financial statements

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Planning for IFRS
      Technical Accounting Tax Internal Processes and Statutory Reporting Technology Infrastructure Organizational Issues Implementation strategy and timeline

IFRS Conversion Approach
 Determine business case & future state vision for IFRS adoption  Perform comprehensive IFRS conversion  Enable continued IFRS reporting and perform knowledge transfer

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Experience Learned
 Be Strategic. Accounting choices and a principles based approach provides opportunity.  The business will be impacted. Taxes. Systems. Debt Covenants. Dividends. Earnings. MIS. The reach of IFRS can be widespread.  Execution counts. Understanding concepts is only the beginning. Striking the numbers and documenting your position requires a very large effort.  Communication is critical. Internal communication across your business is needed. External communication with all stakeholders is important. Don’t forget the analysts!  Disclosures require a lot of effort. Don’t leave this until it’s too late. The information requirements are extensive

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