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TABLE OF CONTENTS

TITLE

SR.N
O.

PAGE
NO.

1.

INTRODUCTION OF INTERNATIONAL FINANCIAL


REPORTING STANDARD

2.

OBJECTIVES OF IFRS

CHARACTERISTICS OF IFRS

4.

IFRS ISSUED TILL DATE

11

5.

IFRS 1 - FIRST TIME ADOPTION OF IFRS

12

6.

GLOBAL CONVERGENCE

15

7.

CONVERGENCE IN INDIA

18

8.

PROCESS OF CONVERGENCE TO IFRS

26

9.

BENEFITS OF ADOPTING IFRS FOR INDIAN COMPANIES

27

10.

CHALLENGES IN ADOPTION AND FULL COMPLIANCE


WITH
IFRS IN INDIA

29

11.

RELATED AMENDMENTS

30

12.

CONCLUSION

31

13.

BIBLIOGRAPHY

32

1. INTRODUCTION OF INTERNATIONAL FINANCIAL REPORTING STANDARD


The Institute of Chartered Accountant of India (ICAI) has decided the strategy for adoption of
IFRS in India with effect from 1st April, 2011. At present over 110 countries in the European Union,
Africa, West Asia and Asia Pacific regions either require or permit the use of IFRS. Even in the US
there is ongoing debate about adoption of IFRS replacing the US GAAP.
Now the International Accounting Standards Board (IASB) that issues IFRS and the Financial
Accounting Standards Boards (FASB) that issues the US GAAP are cooperating and they have long
term projects and short term projects to converge US GAAP into IFRS.
MEANING OF IFRS

International Financial Reporting Standards (IFRS) are global accounting standards used by more
than 100 countries in the world. The International accounting standards Board (IASB), a private sector
body, develops and approves IFRS. The IASB replaced the International Accounting standards
Committee (IASC) in 2001.
I.F.R.S. represent sets of financial reporting standards issued by International Accounting
Standards Board (I.A.S.B.). This Board is independent standard setting body of International
Accounting Standards Committee Foundation (I.A.S.C.). In July 2005 IASC Foundation was formed. It
constitutes team of 22 trustees from various countries.
SCOPEOF IFRS
The term IFRS has both, a narrow and a broad meaning. Narrowly, IFRS refers to the new
numbered series of pronouncements that the IASB is issuing, as distinct from the IAS series issued
earlier. More broadly, IFRS refers to the entire body of IASB pronouncements, including standards
and interpretations.
Till date, IASB has issued 41 IAS and 9 IFRS. 33 SIC (Standing Interpretations Committee) are
also issued to provide guidance on some interpretation issues arising from IAS and IFRS.
2. OBJECTIVES OF IFRS
The objective of IFRS is to ensure that an entitys first financial statements, and its interim
financial reports contain high quality information which is :
1
2
3

Transparent for users


Provides a suitable starting point for accounting under IFRS.
Can be generated at a cost which does not exceed the benefits to user.

Conceptual Framework for Financial Statements issued under IFRS is summed up below :
1

Position, Performance and Flows :


Balance sheet, Profit & Loss Statement and Cash Flow Statements make
up the financial statement of an entity. The objective of financial statements of a business entity
is to provide information about the financial position, performance and cash flows of the entity
that is useful for economic decision making by a broad range of the users who are not in a
position to demand reports tailored to meet their particular information needs.
General purpose financial statements provide information to help users to estimate the equity
value of the reporting entity. To assess an entitys prospects for future net cash inflows, existing
and potential investors, lenders and other creditors need information about the resources of the
entity, claims against the entity, and how efficiently and effectively the entitys management has
discharged its responsibilities to use the entitys resources.

Stewardship :

Financial statements also show the results of the stewardship of


management the accountability of management for the resources entrusted to it. Shareholders
who vote on whether to retain directors or replace them, and on how members of management
should be remunerated for their services, need information on which to base their decisions.
Shareholders decision making processes may include evaluating how management of the entity
performed against management in competing entities in similar circumstances.
3. CHARACTERISTICS OF IFRS
1. Qualitative :
The qualitative characteristics of useful financial information are the characteristics of
information that are likely to be most useful to existing and potential investors, lenders and other
creditors for making decisions about the reporting entity on the basis of information in its financial
report. Understandability, relevance, materiality, reliability and comparability are the main qualitative
characteristics.
2. Understandability :
The information provided in financial statement should be presented in a way that makes it
comprehensible by users. Users should have a reasonable knowledge of business and economic
activities and accounting and a willingness to study the information with reasonable diligence. Relevant
information should not be omitted on the grounds that it may be too difficult for some users to
understand. Classifying and presenting information clearly and concisely makes it understandable.
1

Relevance :
The information provided in financial statements must be relevant to the decisions of users.

Information has the quality of relevance when it helps users to evaluate past, present or future events
or confirming, or correcting, their past evaluations.
2

Materiality:
Information is material if its omission or misstatement could influence the decisions of users.

Materiality depends on the size of the item or error judged in the particular circumstances of its
omission or misstatement. Materiality provides a cut-off point for relevance.

Reliability:

Information is reliable when it is

from material error and bias and represents faithfully that

which it either purports to represents or could reasonably be expected to represent. Financial statements
are not free from bias if, by the selection or presentation of information, they are intended to
influence the making of decision or judgment in order to achieve a predetermined result or outcome.
The information should be complete, neutral and free from error. To be reliable, the information in
financial statements must be complete within the bounds of materiality and cost. An omission can
cause information to be false or misleading and thus unreliable and deficient in terms in terms of its
relevance.
4

Comparability :
Users must be able to compare the financial statements of an entity through time to identify

trends in its financial position and performance. Users must also be able to compare the financial
statements of different entities to evaluate their relative financial position, performance and cash
flows. The measurement and display of the financial effects of similar transactions and other events
and conditions must be carried out in a consistent way throughout an entity and over time for the
entity, and in a consistent way across entities. Users must be informed of the accounting policies
employed in the preparation of the financial statements, and of any changes in those policies and the
effects of such changes.
5

Timeliness :
To be relevant, financial information must be able to influence the economic decisions of users.

Timeliness involves providing the information within the decision time frame. If there is undue delay
in the reporting of information it may lose its relevance. Management may need to balance the
relative merits of timely reporting and the provision of reliable information. In achieving a balance
between relevance and reliability, the overriding consideration is how best to satisfy the needs of
users in making economic decisions.
6

Balance between benefit and cost :


The benefits derived from information should exceed the cost of providing it. The evaluation of

benefits and costs is substantially a judge mental process. Furthermore, the costs are not necessarily
borne by those users who enjoy the benefits, and often the benefits of the information are enjoyed
by a broad range of external users. Financial reporting information helps capital providers make better
decisions, which results in more efficient functioning of capital markets and a lower cost of capital
for the economy as a whole.

4. IFRS ISSUED TILL DATE


Following is the List of IFRS issued till date:
IFRS 1

First-time

Adoption

of

International

Financial

Standards.
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 Assets

IFRS 7

Financial instruments: Disclosures

IFRS 8

Operating Segments

IFRS 9

Financial Instruments

Reporting

5. IFRS 1 - FIRST TIME ADOPTION OF IFRS


Following is the summary of IFRS 1 (First Time Adoption of IFRS).
1

Issue Date :
IFRS 1 (First Time Adoption of International Financial Reporting Standards) was issued in June
2003.

Application :
It applies to an entity whose first IFRS financial statement are for a period beginning on or
after 1 January 2004. It applies when an entity adopts IFRSs for the first by an explicit statement
of compliance with IFRSs. Most companies apply IFRS 1 when they move from local accounting
standards to international accounting standards.

Definitions :
a First IFRS reporting period - the latest reporting period covered by first IFRS financial
statement.
b First time adopter an entity that presents first IFRS financial statements in which an
c

explicit and unreserved statement of compliance is made.


Opening IFRS statement of financial position an entitys statement of financial position at

the date of transition to IFRSs.


d Previous GAAP the basis of accounting used immediately before the adoption of IFRS.
e Date of transition the beginning of the earliest period for which an entity presents full
comparative information under IFRSs in its first IFRS financial statements.

Objective :
The objective of this IFRS is to ensure that an entitys first IFRS financial statements, and
its interim financial reports for part of the period covered by those financial statements, contain
high quality information that :
a Is transparent for users and comparable over all periods presented;
b Provides a suitable starting point for accounting in accordance with International Financial
c

Reporting Standards (IFRSs);


Can be generated at a cost that does not exceed the benefits.

Opening BS :
An entity shall prepare and present an opening IFRS statement of Financial position at the date
of transaction to IFRSs. This is the starting point for its accounting in accordance with IFRSs.

Accounting Policies :
An entity shall use the same accounting policies in its opening IFRS statement of financial

position and throughout all periods presented in its first IFRS financial statements. In general, those
accounting policies shall comply with each IFRS effective at the end of its first IFRS reporting
period. For example, if an entity adopts IFRS for the financial year ending on 31 st March, 2012, then
it should apply the accounting policies in effect as at 31 st March, 2012 for all the comparative
periods.
7

Steps :
In general, the IFRS requires an entity to do the following in the opening IFRS statement of

financial position that it prepares as a starting point for its accounting under IFRSs :
a

Include all assets and liabilities that the IFRS require (e.g. assets held under finance lease

and lease obligations);


b Exclude any assets or liabilities not permitted by the IFRS (e.g. provisions which do not
c

meet the definition of liability);


Reclassify any item, liability or equity (current/non-current, liability/equity) in accordance with

IFRS (e.g. preferred shares with fixed maturity as debt rather than equity);
d Measure all assets and liabilities by applying IFRS (e.g. at cost, fair value or a discounted
e
8

amount); and
Adjust the difference due to above steps in the reserves (e.g. revaluation reserve).

Exemption :
The IFRS grants 10 limited exemptions from these requirements in specified areas where the

cost of complying with them would be likely to exceed the benefits to users of financial statements.
9

Prohibitions :
The IFRS also makes 4 prohibitions regarding retrospective application of IFRS in some areas.

Hindsight should not be used to revise estimates. The estimates made under previous local standards
can be revised only to correct objectives errors.
10 Disclosures :
The IFRS requires disclosures that explain the effects of transition from previous standards to
IFRS on the entitys reported financial position, financial performance and cash flows. The first IFRS
Financial Statement should include a reconciliation of :
i
ii

Equity and
Net profit, from previous GAAP to IFRS.

6. GLOBAL CONVERGENCE
NEED :
Each country has its own set of rules, regulations and reporting standards. When a company
decides to raise capital from the foreign markets, the rules and regulations of that foreign country will
apply. The final accounts in rupees need to be translated in foreign currency in order to be acceptable
to foreign investors.
If an Indian Company wishes to raise capital in the U.S., its final accounts based on Indian
Accounting Standards need to be re worked as per the U.S.A. accounting standards in order to be
acceptable to U.S. investors. The two SETS of accounts local and global must be comparable.
International analysts and investors would like to compare financial statements based on similar
accounting standards. There is a strong need to bring about uniformity, comparability, transparency and
adaptability in financial statements. Multiplicity of accounting standards around the world creates
confusion, encourages errors and facilitates fraud.
The financial statements will not be useful if accounting for the same events and information
produces different financial statements due to adoption of different sets of accounting standards. The
cure for these ills is to have a single set of high quality global standards. The convergence is very
much essential also for companies whose shares are listed in both domestic and foreign stock
exchange.

ROLE OF IASB / IFRS :


The task of creating such single set of high quality global standards, was taken up by
International Accounting Standards Board (IASB) which led to the creation of International Financial
Reporting Standards (IFRS). The goal of the IFRS is to create single set of accounting standards that
can be applied anywhere in the world, allowing investors to compare the performance of business
entities across geographic boundaries. The harmonization of financial reporting around the world will
help to raise confidence of investors in the information they are using to make their financial
decisions.
MEANING :
1

General : In general terms, convergence, means to achieve harmony in relation to IFRS.

Precise : In precise terms, converge means to design and maintain national accounting standards
in a way that financial statements prepared in accordance with national accounting standards
draw unreserved statement of compliance with IFRS.

Compliance with IFRS : International Accounting Standard (IAS) 1, Presentation of Financial


statements, states that financial statements shall not be described as complying with IFRS unless
they comply with all the requirements of IFRS.

Exceptions : However, this does not imply that financial statements comply with IFRS only
when IFRS are adopted word by word. The IASB accepts that adding disclosure requirements
or removing optional treatments does not crates non compliance with IFRS. Indeed, the IASB
aims to remove optional treatments from IFRS. This makes it clear that if a country wants to
add a disclosure that is considered necessary in the local environment, or removes an optional
treatment, this will not amount to non compliance with IFRS. Thus, convergence with IFRS
means adoption of IFRS with the above exceptions, where necessary.

Entities : For a country to be IFRS compliant, it is not necessary that IFRS are applied to all
entities of different sizes and of different public interests. Even the IASB recognizes that IFRS
are suitable for publicity accountable entities. The IASB has, therefore, recently issued a
separate set of IFRS for Small and Medium sized Entities (SME).

CHALLENGES :
The process of convergence faces the following challenges :
a
b
c
d
e

Preparing financial statements under IFRS poses a great challenge to the accountants.
Cultural, legal and political differences may cause difficulties in convergence.
Reconciliation and restatement of financial statements is costly.
There are disagreements in some countries with the requirements of certain specific IFRS.
Some IFRS are complicated in nature.

EXTENT :
IFRS are used in many parts of the world, including the European union, Australia, South Africa
and Russia. More than 100 countries have required or permitted the use of IFRS since 2001 and the
number is excepted to increase to 150 by 2011.
The Group of 20 leader countries (G20) reaffirmed their commitment to global convergence in
accounting standards in a meeting held at Pittsburgh (United States) in September 2009, calling on
international accounting bodies to complete their convergence project by June 2011.

Some of the major countries that are seeking to converge with IFRS by 2011 include Canada,
Korea, India and Brazil.

7. CONVERGENCE IN INDIA
NEEDS :
In the era of globalization, India cannot ignore the developments taking place worldwide.
High quality financial reporting is essential for a global capital market. A few Indian companies
are already listed on overseas stock exchanges and many more are in the process of getting
themselves listed. Also, the recent acquisitions of foreign companies by Indian companies makes a
stronger case for adoption of IFRS.
At present, the Accounting Standards Board (ASB) of the Inst. of C.A. of India (ICAI)
formulates the Accounting Standards (AS) based on IFRS. However, these standards remain
sensitive to local conditions, including the legal and economic environment. AS issued by ICAI
depart from the corresponding IFRS in order to ensure consistency with legal, regulatory and
economic environment of India.
ROLE OF ICAI :
Convergence with IFRS would require several changes in Indian laws and decision processes.
In India, the Institute of Chartered Accountants of India (ICAI) is on way towards convergence of
its Accounting Standards (AS) with global reporting standards. The ICAI, being a member of the
International Federation of Accountants (IFAC), studies the IFRS and tries to integrate them, to the
extent possible, in the light of the laws, customs, practices and business environment.
Recognizing the growing need of full convergence of Indian Accounting Standards with IFRS,
the ICAI has constituted a Group to interact with government and regulatory authorities. This
group has constituted separate core groups to identify inconsistencies between IFRS and various
relevant acts. IFRS Task Force has also been formed to examine various issues involved in the
convergence process. The Task Force has proposed for adoption of IFRS, in phased manner, for
listed entities and public interest entities form accounting periods commencing on or after April
1,2011.

IFRS CATEGORIES:

The ICAI has also classified IFRS into four broad categories as part of its convergence strategy,
which can be detailed as follows :
1

First category describes IFRS which can be adopted immediately or in the immediate future in
view of no or minor differences (for example construction contracts, borrowing costs,

inventories ).
Second category includes IFRS which may require some time to reach a level of technical
preparedness by the industry and professionals, keeping in view the existing economic

environment and other factors ( for example, share-based payments ).


Third category includes IFRS which have conceptual differences with corresponding Indian
Accounting Standards and where further dialogue and discussions with the IASB may be

required ( consolidation, jointventures, provisions and contingent liabilities ).


Last category comprises if IFRS which would require changes in laws/regulations.

CORE GROUP BY MCA :


A Core Group has been constituted by the Ministry of Corporate Affairs (MCA) for convergence
of Indian Accounting Standards with International Accounting Standards with International Financial
Reporting Standards (IFRS). It is made up of various officials from the Institute of Chartered
Accountants of India (ICAI), Ministry of Finance, Securities and Exchange Board of India (SEBI),
Insurance Regulatory and Development Authority (IRDA), Reserve Bank of India (RBI), Comptroller
and Auditor General (C&AG), Pension Fund Regulatory and Development Authority (PFRDA), Industry
representatives and other experts.
The Core Group also deals with amendments required in the Companies Act, 1956, the related
Schedules - VI AND XIV and Accounting Standards Rules for the purpose of convergence, the
implementation challenges especially those related to legal and accounting framework and transitional
issues.
IFRS - COMPLIANT STANDARDS :
The ICAI has already started the process of issuing IFRS equivalent AS and revising the
existing standards and Guidance Notes to bring them at par with IFRS. ASB has, so far, issued thirty
five Accounting Standards.
Thirty five Indian Accounting Standards converged with International Financial Reporting
Standards ( henceforth called IND AS ) have been notified by the Ministry of Corporate Affairs (MCA)
as on February, 2011. The Ministry of Corporate Affairs will implement the IFRS converged Indian
Accounting Standards in a phased manner after various including tax related issues are resolved with
the concerned Departments. The date of implementation of the IND AS will be notified by Minister at
a later date.

Till date 41 IAS have been issued, but 12 have been withdrawn, As on date 29 IAS are in
force.
IND AS 101 First-time adoption of Indian Accounting Standards
IND AS 102 Share based Payment
IND AS 103 Business Combinations
IND AS 104 Insurance Contracts
IND AS 105 Non -current Assets Held for Sale and Discontinued operations
IND AS 106 Exploration for and Evaluation of Mineral Resources
IND AS 107 Financial Instruments : Disclosures
IND AS 108 Operating Segments
IND AS 1 Presentation of Financial Statements
IND AS 2 Inventories
IND AS 7 Statement of Cash Flows
IND AS

8 Accounting Policies, Changes in Accounting Estimates & Errors

IND AS 10 Events after the Reporting Period


IND AS 11 Construction Contracts
IND AS 12 Income Taxes
IND AS 16 property, Plant and Equipment
IND AS 17 Lease
IND AS 18 Revenue
IND AS 19 employee Benefits
IND AS 20 Accounting for Government Grants & disclosure of Assistance
IND AS 21 The Effects of Changes in Foreign Exchange Rates
IND AS 23 Borrowing Costs
IND AS 24 Related Party Disclosures
IND AS 26 Accounting and Reporting by Retirement Benefit Plans

IND AS 27 Consolidated and Separate Financial Statements


IND AS 28 Investments in Associates
IND AS 29 Financial Reporting in Hyperinflationary Economics
IND AS 31 Interests in Joint Ventures
IND AS 32 Financial Instruments: Presentation
IND AS 33 Earnings per share
IND AS 34 Interim Financial Reporting
IND AS 36 Impairment of Assets
IND AS 37 Provisions, Contingent Liabilities and assets
IND AS 38 Intangible Assets
IND AS 39 Financial Instrument : Recognition and Measurement
(to be replaced by IFRS 9)
IND AS 40 Investment Property
IND AS 41 Agriculture
(NOTE : IND AS 101 108 correspond with IFRS 1- 8. IND as 1 40 correspond with IAS 1 40.)
TWO SEPARATE SETS OF ACCOUNTING STANDARDS :
The Core Group has decided that there will be two separate sets of Accounting Standards under
Section 211(3C) of the Companies Act, 1956, which are as follows :
1

Indian Accounting Standards Converged with the IFRS :


These are the standards which are being converged by eliminating the
differences of the Indian Accounting Standards vis--vis IFRS. These standards shall be applied
for all companies falling under Phase I to Phase III.

Indian Accounting Standards notified in the Companies (Accounting Standards) Rules, 2006 :
These are the standards used, at present, by Indian Companies under the
Companies Act, 1956. Companies not falling within the threshold limits prescribed for IFRS
compliance in the respective phases shall continue to use these standard in the preparation and
presentation of financial statements.

PHASES FOR IMPLEMENTATION :


On 22nd January 2010, the Ministry of Corporate Affairs has issued a press
release setting out the roadmap for convergence with IFRS for certain defined entities with effect
from accounting periods commencing on or after April 1, 2011.
EXHIBIT 1 : PHASES FOR IMPLEMENTATION
Class of Companies

Opening Balance
sheet as per
converged
accounting
standards 1

Insurance Companies

April 1,2012

Scheduled Commercial Banks

April 1,2013

Banking
Companies

Urban Co-

Net worth in excess of Rs.300 crores

operative Banks

Net worth in excess of Rs.200 crores but April 1,2014

(UCB)

not exceeding Rs.300 crores


Net worth not exceeding of Rs.200 crores

Regional Rural Banks (RRB)

April 1,2013

Optional
Optional

Non - Banking Companies which are a part of NSE Nifty 50


Financial

Companies which are a part of BSE Sensex 30

Companies
(NBFC) 2

April 1,2013
Companies whether listed or not, which have a not worth
in excess of Rs.1,000 crores
Listed

April 1,2014

All NBFCs that Non listed which have a net worth in


do not fall in excess of Rs.500 crores
the
categories

above Non listed which have a net worth not


exceeding

Rs.500 crores

April 1,2014

Optional

Companies which are a part of NSE Nifty 50


Other
Companies

Companies which are a 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 net worth in April 1,2011
excess of Rs.1,000 crores

Other

(Phase 1)
Companies whether listed or not, which have net worth in April 1,2013

Companies 2

excess of Rs.500 crores but not exceeding Rs.1,000 crores

(Phase 2)

Listed companies which have a net worth not exceeding April 1,2014
Rs.500 crores

(Phase 3)

Non listed companies which have a net worth not


exceeding

Rs.500

crores

and

whose

shares

or

other

securities are not listed on stock exchanges outside India

Optional

Other defined small and medium sized companies (SMC)


1

The opening balance sheets shall have to be converted as per converged Accounting Standards
as on the said date.

For NBFCs and companies whose financial year commences on any date other than April 1,
the conversion of the opening balance sheet will be on the financial year commencing on a
date immediately following April 1 of the relevant year.

Latest Status :
MCA convened a meeting of Core Group in September 2012 to consider the revised
road map. ICAI has been requested to suggest new road map considering the status of the IFRS
developments by the IASB.
The revised roadmap to be suggested to MCA is under consideration of the Council
of the ICAI and is excepted to be finalized shortly. Implementation date will be greatly dependent on
the completion of the current projects by IASB. Regulators for the Insurance Companies and banks
have indicated that they will await the finalization of IFRA 4 and IFRS 9

PROCESS OF CONVERGENCE TO IFRS :

8. BENEFITS OF ADOPTING IFRS FOR INDIAN COMPANIES


The decision by ICAI to coverage with IFRS is a path breaking decision. It is likely to provide
the following benefits to Indian companies.
1

Improved access to International capital markets :


Many Indian companies are expanding or acquiring companies outside India for which huge

capital is required. Majority of world stock exchange require financial information prepared under

IFRS.

Change to IFRS will enable Indian companies to have access to international capital markets

as IFRS is globally acceptable.

Lower cost of capital :


Change to IFRS will lower the cost of raising funds, as there will be no need for preparing two

sets of financial statements (one under IFRS and another under Indian Accounting Standards). It will
also reduce audit fees and higher rate of interest.

Enable benchmarking with global peers and improve brand value:


Adoption of IFRS will enable companies to gain a broader and deeper understanding of its relative

standing in the global market.

With adoption of IFRS companies can set targets and milestones

based on global business environment, rather than merely local ones.

Escape Multiple Reporting :


Convergence to IFRS, by all group entities, will enable company managements to have one

financial reporting platform for the Indian as well as foreign components / branches. This will eliminate
the need for multiple reports and significant adjustments for preparing Consolidated financial statements
or filing financial statements in different stock exchanges.
5

Reflects true value of acquisitions :


In Indian GAAP, business combinations (amalgamations or absorptions), with few exceptions,
are recorded at costs and not at fair values of net assets taken over. Purchase consideration paid
for intangible assets not recorded in the vendors books is usually not reflected separately in the
financial statements; instead the amount gets added to goodwill.
Hence, true value of the business combination is not reported in the financial statements. IFRS
will overcome this drawback as it requires accounting for net taken over in a business combination
at fair value. It requires recognition of intangible assets, even though they have not been recorded
in the vendors financial statements.

New opportunities :
IFRS will open up many opportunities in the services sector. With accountants trained in IFRS,
India can act as the accountant for the global community.
As IFRS emphasizes fair value, it will provide jobs to professionals, including accountants,
valuers and actuaries. It will help the BPO (Business Process Outsourcing) concerns in India.

9. CHALLENGES IN ADOPTION AND FULL COMPLIANCE WITH

IFRS IN INDIA

There are several practical challenges in adoption of and full compliance with IFRS in India.
1

Several laws and regulations governing financial accounting and reporting in India need to be
amended.

There are certain sections of the Companies Act that over ride the provisions of IFRS.

There is a shortage of professionals with practical IFRS conversion experience and therefore
many companies will have to depend on external advisors and their auditors.

There is an urgent need to build adequate IFRS skills among the Indian accounting
professionals to manage the conversion

10. RELATED AMENDMENTS


Compliance with converged IFRS is, however, not possible until the regulations / laws are
amended. In India, IFRS convergence is subject to direct or indirect control of several regulators, such
as National Advisory Committee on Accounting Standards (NACAS) established by the Ministry of
Corporate Affaires (MCA), the Reserve Bank of India (RBI), the Insurance Regulatory and
Development Authority (IRDA) and the Security and Exchange Board of India (SEBI).
Further, the Indian Companies Act, 1956 provides guidance on accounting and financial
reporting matters. The requirements of Schedule VI of Act, which currently prescribes the format for
presentation of financial statements for Indian companies, are substantially different from the
presentation and disclosure requirements under IFRS.

Convergence with IFRS will also require significant changes from the tax authorities [Central
Board of Direct Taxes (CBDT) ] on treatment of various accounting transactions.

CONCLUSION
The decision by ICAI to coverage with IFRS is a path-breaking decision. It is likely to provide
the various new opportunities in Indian companies.

In Indian GAAP, business combinations, with few exceptions, are recorded at costs and not at
fair values of net assets taken over. Purchases consideration paid for intangible assets not recorded in
the vendors books is usually not reflected separately in the financial statement; instead the amount
gets added to good will.

IFRS will open of many opportunities in service sector. With accountants trends in IFRS, India
can act as the accountant for the global community. IFRS provide job to professional, including
accountants, valuears and actuaries. It will also help to BPO.

BIBLIOGRAPHY
There have been many good books on IFRS written over the years. Some of those that have inspired the
writing of this are listed & Internet sites are given below:-

SOURCES AND SUGGESTED READINGS:1

Advance financial accounting text books.

Management Accounts & Financial Accounts text books (Manan Prakashan).

www.wikipedia.co.in