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ACCOUNTING STANDARDS
The forming of the International Accounting Standards Committee in 1973 was the
organized accounting profession`s most important and enduring response to the
growing internationalization of capital markets following the Second World War.

The IASC was the brain child of Sir Henry Benson, one of the leading lights of
the British Accountancy Profession. With the rise of multinational enterprise in
the 1960s and the consequent need to compare financial statements from different
parts of the world, he realized that an effort had to be launched to harmonize the
vastly different accountancy practises across countries.

IASC - History of International Accounting Standards

International Accounting Standards Committee (IASC) was founded in June
1973 in London. It was responsible for developing the International Accounting
Standards and promoting the use and application of these standards.
The IASC was founded as a result of an agreement between accountancy bodies
in the following countries:

 Australia - Institute of Chartered Accountants in Australia (ICAA) and the CPA

Australia

 Canada - Canadian Institute of Chartered Accountants (CICA)

 France - Ordre des Experts Comptable et des Comptables Agrees (Order of

Accounting Experts and Qualified Accountants)

 Germany - Institut der Wirtschaftsprüfer in Deutschland (IDW) (Institute of

Auditors in Germany) and the Wirtschaftsprüferkammer (WPK) (Chamber of
Auditors)

 Japan - Nihon Kouninkaikeishi Kyoukai Japanese Institute of Certified Public

Accountants, (JICPA)

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 Mexico - Instituto Mexicano de Contadores Publicos (IMCP) (Mexican
Institute of Public Accountants)

 Netherlands - Nederlands Instituut van Registeraccountants (NIVRA)

(Netherlands Institute of Registered Auditors)

 United Kingdom and Ireland –

a) Institute of Chartered Accountants in England and Wales (ICAEW),
b) Institute of Chartered Accountants of Scotland (ICAS),
c) Institute of Chartered Accountants in Ireland (ICAI),
d) Association of Chartered Certified Accountants (ACCA),
e) Chartered Institute of Management Accountants (CIMA), and
f) Chartered Institute of Public Finance and Accountancy (CIPFA)

 United States of America - American Institute of Certified Public

Accountants (AICPA)
The Institute of Chartered Accountants of Pakistan and the Pakistan Institute
of Industrial Accountants both became associate members in 1974.
The Institute of Chartered Accountants of India (ICAI) became an associate
member in 1974 and joined the board in 1993. In 1995, India began sharing
the delegation with the Institute of Chartered Accountants of Sri Lanka.
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Standards issued by IASC
The following are the Standards issued by IASC from 1975 to 2001. Some of them
were withdrawn and some were revised

# Name Issued

IAS 1 Presentation of Financial Statements 2007

IAS 2 Inventories 2005

Consolidated Financial Statements

IAS 3 Superseded in 1989 by IAS 27 and IAS 28 1976

Depreciation Accounting
IAS 4 Withdrawn in 1999

Information to Be Disclosed in Financial Statements

IAS 5 Superseded by IAS 1 effective 1 July 1998 1976

Accounting Responses to Changing Prices

IAS 6 Superseded by IAS 15, which was withdrawn December 2003

IAS 7 Statement of Cash Flows 1992

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 2003

Accounting for Research and Development Activities

IAS 9 Superseded by IAS 39 effective 1 July 1999

IAS
10 Events After the Reporting Period 2003
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IAS 11 Construction Contracts 1993

IAS 12 Income Taxes 1996

Presentation of Current Assets and Current Liabilities

IAS 13 Superseded by IAS 39 effective 1 July 1998

Segment Reporting
IAS 14 Superseded by IFRS 8 effective 1 January 2009 1997

Information Reflecting the Effects of Changing Prices

IAS 15 Withdrawn December 2003 2003

IAS 16 Property, Plant and Equipment 2003

IAS 17 Leases 2003

IAS 18 Revenue 1993

Employee Benefits (1998)

IAS 19 Superseded by IAS 19 (2011) effective 1 January 2013 1998

IAS 19 Employee Benefits (2011) 2011

Accounting for Government Grants and Disclosure of Government

IAS 20 Assistance 1983

IAS 21 The Effects of Changes in Foreign Exchange Rates 2003

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Business Combinations
IAS 22 Superseded by IFRS 3 effective 31 March 2004 1998

IAS 23 Borrowing Costs 2007

IAS 24 Related Party Disclosures 2009

Accounting for Investments

IAS 25 Superseded by IAS 39 and IAS 40 effective 2001

IAS 26 Accounting and Reporting by Retirement Benefit Plans 1987

IAS 27 Separate Financial Statements (2011) 2011

Consolidated and Separate Financial Statements

Superseded by IFRS 10, IFRS 12 and IAS 27 (2011) effective 1
IAS 27 January 2013 2003

IAS 28 Investments in Associates and Joint Ventures (2011) 2011

Investments in Associates
IAS 28 Superseded by IAS 28 (2011) and IFRS 12 effective 1 January 2013 2003

IAS 29 Financial Reporting in Hyperinflationary Economies 1989

Disclosures in the Financial Statements of Banks and Similar

Financial Institutions
IAS 30 Superseded by IFRS 7 effective 1 January 2007 1990

IAS 31 2003
Interests In Joint Ventures
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Superseded by IFRS 11 and IFRS 12 effective 1 January 2013

IAS 32 Financial Instruments: Presentation 2003

IAS 33 Earnings Per Share 2003

IAS 34 Interim Financial Reporting 1998

Discontinuing Operations
IAS 35 Superseded by IFRS 5 effective 1 January 2005 1998

IAS 36 Impairment of Assets 2004

IAS 37 Provisions, Contingent Liabilities and Contingent Assets 1998

IAS 38 Intangible Assets 2004

Financial Instruments: Recognition and Measurement

Superseded by IFRS 9 where IFRS 9 is applied
IAS 39 2003

IAS 40 Investment Property 2003

IAS 41 Agriculture 2001

Red Colour indicates standards which are applicable and not withdrawn by IASB
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IASB & IFRS Foundation
It was felt in late 90`s that IASC was not independent of its member bodies and
each member has its own interest and it was difficult to accommodate all. So a
committee was formed to issue a report for restructuring IASC. The committee
issued its report in 2000. Based on the recommendations of the report
“Recommendations on Shaping IASC for the future”, International Accounting
Standards Board (IASB) was formed to replace IASC and assumed standard
setting responsibilities.

The IASB is the independent standard setting body of the IFRS foundation.

The IFRS foundation is an independent, not-for-profit private sector

organisation working in the public interest.

Its principal objectives are

 to develop a single set of high quality, understandable, enforceable and

globally accepted international financial reporting standards (IFRSs)
through its standard-setting body, the IASB

 to promote the use and rigorous application of those standards

 to take account of the financial reporting needs of emerging economies

and small and medium-sized entities (SMEs)

 to promote and facilitate adoption of IFRSs, being the standards and

interpretations issued by the IASB, through the convergence of
national accounting standards and IFRSs.

On Apr 18, 2001 The IASB approved the following resolution: “All Standards and
Interpretations issued under previous constitutions continue to be applicable unless
and until they are amended or withdrawn. The IASB may amend or withdraw
International Accounting Standards and SIC Interpretations issued under previous
constitutions of IASC as well as issue new Standards and Interpretations.” The
effect of this resolution is that all IASC Standards and SIC Interpretations in effect
as of 1 April 2001 (the date on which the IASB assumed its duties) remain in
effect until they are amended or withdrawn by the IASB.

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Structure of IFRS Foundation

The IASB (International Accounting Standards Board)

The IASB is the independent standard-setting body of the IFRS Foundation. Its
members (currently 15 full-time members) are responsible for the development
and publication of IFRSs, including the IFRS for SMEs and for approving
Interpretations of IFRSs as developed by the IFRS Interpretations Committee
(formerly called the IFRIC). The IASB engages closely with stakeholders
around the world, including investors, analysts, regulators, business leaders,
accounting standard-setters and the accountancy profession.
The IFRS Interpretations Committee
The IFRS Interpretations Committee is the interpretative body of the IASB.
The mandate of the Interpretations Committee is to review on a timely
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basis widespread accounting issues that have arisen within the context of
current IFRSs and to provide authoritative guidance (IFRICs) on those issues.
TRUSTEES
The Trustees promote the work of the International Accounting Standards
Board (IASB)and the rigorous application of IFRSs but are not involved in any
technical matters relating to the standards. Trustees are appointed for a
renewable term of three years.
Trustee responsibilities
 appointing members of the IASB, the IFRS Interpretations
Committee and the IFRS Advisory Council;

 establishing and amending the operating procedures,

consultative arrangements and due process for the IASB, the
Interpretations Committee and the Advisory Council;
 reviewing annually the strategy of the IASB and assessing
its effectiveness;
 ensure the financing of the IFRS Foundation and approve annually
its budget.
Monitoring Board
The Monitoring Board's main responsibilities are to ensure that the Trustees
continue to discharge their duties as defined by the IFRS Foundation
Constitution, as well as approving the appointment or reappointment of Trustees
Advisory Bodies
The IASB's formal advisory bodies provide an important channel for the IASB to
receive input on its work and to consult interested parties from a broad range of
backgrounds and geographical regions in a transparent manner.
CONSITUTION
The Constitution was approved in its original form by the Board of the former
International Accounting Standards Committee (IASC) in March 2000 and by
the members of the IASB at a meeting in Edinburgh on 24 May 2000.
Constitution is the major document the IFRS Foundation and the IASB derive
their powers. The Constitution is reviewed for every 5 years

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STANDARD STETTING PROCESS

IFRSs are developed through an international consultation process called “the

due process”. It involves interested parties around the world.

The Due Process comprises 6 stages

 Setting the Agenda

 Planning

 Developing and publishing the discussion paper, the exposure draft, the
standard

 After the standard is issued

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SETTING THE AGENDA

The IASB evaluates the merits of adding a potential item to its agenda mainly
by reference to the needs of investors. The IASB considers

 the relevance of the information to the users and the reliability that could be
provided

 whether existing guidance available

 the possibility of increasing convergence

 the quality of standard to be developed

 resource constraints

PROJECT PLANNING

When adding an item to its active agenda, the IASB also decides whether to

 conduct the project alone

 jointly with another standard setter

A team is selected for the project by the two most senior members of the
technical staff. The project manager draws up a project plan under the supervision
of those directions

DEVELOPING & PUBLISHING THE DISCUSSION PAPER

A discussion paper includes

 a comprehensive overview of the issue

 possible approaches in addressing the issue

 the preliminary views of its authors or the IASB

 an invitation to comment

Although a discussion paper is not mandatory the IASB normally publishes it

to explain the issue and solicit early comments
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DEVELOPING & PUBLISHING THE EXPOSURE DRAFT(ED)

An Exposure Draft is the IASB`s main vehicle for consulting the public. An ED
sets out a specific proposal in the form of a proposed standard. The development
of an ED begins with the IASB considering

 issues on the basis of staff research & recommendations

 comments received on any discussion paper

 suggestions made by the interested parties

When the issues concerning are resolved at meeting the IASB instructs the staff
to draft the Exposure Draft.

The IASB publishes the Exposure Draft for public comment when

 the draft has been completed

 the IASB has balloted on it

DEVELOPING & PUBLISHING THE STANDARD

The development of an IFRS is carried out when the IASB considers the
comments received on the Exposure Draft. After resolving issues arising from the
Exposure Draft, the IASB considers whether it should expose its revised proposals
for public comment by publishing the second Exposure Draft. In considering the
need for re-exposure, the IASB

 identifies substantial issues that emerged during the exposure period that
it had not previously considered

 assesses the evidence it has considered

 evaluates whether it has sufficiently understood the issues and

actively sought the views of constituents

 considers whether the various viewpoints were aired in the ED and

adequately discussed and reviewed in the basis for conclusions

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When the IASB is satisfied that it has reached a conclusion on the issues arising
from the Exposure Draft, it instructs the staff to draft the IFRS

Ballot: Finally, after the due process is completed, all outstanding issues are
resolved and the IASB members have balloted in favor of publication, the IFRS
is issued.

AFTER AN IFRS IS ISSUED

The staff and the IASB members hold regular meetings with interested parties
to help understand unanticipated issues related to the practical implementation
and potential impact of its proposal

After a reasonable time, the IASB may consider initiating studies in the light of

 its review of the IFRS application

 changes in the financial & regulatory environment

 comments by the interested parties about the quality of the

IFRS These studies may result in a new agenda.
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List of IFRS Issued by IASB
Standards Originally Effective Date
Issued

IFRS 1 First time adoption of IFRS 2003 January 1 2004

IFRS 2 Share based Payments 2004 January 1 2005

IFRS 3 Business Combinations 2004 April 1 2004

IFRS 4 Insurance Contracts 2004 January 1 2005

IFRS 5 Non-current Assets held for sale & 2004 January 1 2005
Discontinuing operations

IFRS 6 Exploration for & Evaluation of 2004 January 1 2006

Mineral Resources

IFRS 7 Financial Instruments: Disclosure 2005 January 1 2007

IFRS 8 Operating Segments 2006 January 1 2009

IFRS 9 Financial Instruments 2009 January 1 2015

IFRS 10 Consolidated Financial Statements 2011 January 1 2013

IFRS 11 Joint Arrangements 2011 January 1 2013

IFRS 12 Disclosure of Interests in Other 2011 January 1 2013

Entities

IFRS 13 Fair Value Measurement 2011 January 1 2013

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Convergence – The move towards global standards
General Term – Convergence means to achieve harmony with IFRSs

Precise Term – Convergence 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 IFRSs

The goal of the IFRS Foundation and the IASB is to develop, in the public
interest, a single set of high-quality, understandable, enforceable and
globally accepted financial reporting standards based upon clearly
articulated principles.

In pursuit of this goal, the IASB works in close cooperation with stakeholders
around the world, including investors, national standard-setters, regulators,
auditors, academics, and others who have an interest in the development of high-
quality global standards.
Progress toward this goal has been steady. All major economies have
established time lines to converge with or adopt IFRSs in the near future.

IFRS in EUROPEAN UNION

In June 2002, the European Union adopted an IAS Regulation requiring European
companies listed in an EU securities market, including banks and insurance
companies, to prepare their consolidated financial statements in accordance with
IFRSs starting with financial statements for financial year 2005 onwards.

The following table gives the status of IFRS in various countries.

Country Status for listed companies as of December 2012
Required for fiscal years beginning on or after 1 January
Argentina
2012
Required for all private sector reporting entities and as the
Australia
basis for public sector reporting since 2005
Brazil Required for consolidated financial statements of banks

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and listed companies from 31 December 2010 and for
individual company accounts progressively since January
2008
Required from 1 January 2011 for all listed entities and
Canada permitted for private sector entities including not-for-
profit organizations
China Substantially converged national standards
Required via EU adoption and implementation process
Germany
since 2005
Required via EU adoption and implementation process
Italy
since 2005
Permitted from 2010 for a number of international
Japan
companies
Mexico Required from 2012
Republic of Korea Required from 2011
Following the formal adoption of IFRSs in Russia during
Russia 2011, public interest entities (PIEs) are now required to
prepare consolidated financial statements under IFRS
Required for banking and insurance companies; full
Saudi Arabia
convergence with IFRSs currently under consideration
South Africa Required for listed entities since 2005
Required via EU adoption and implementation process
United Kingdom
since 2005
Allowed for foreign issuers in the US since 2007; US SEC
committed to global accounting standards and IFRS best
United States
placed to meet that need in the US awaiting decision
regarding use of IFRSs for domestic companies
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Convergence between IFRSs and US GAAP
The IASB and the US Financial Accounting Standards Board (FASB) have
been working together since 2002 to achieve convergence of IFRSs and US
generally accepted accounting principles (GAAP). A common set of high
quality global standards remains a priority of both the IASB and the FASB.
In September 2002 the IASB and the FASB agreed to work together, in
consultation with other national and regional bodies, to remove the differences
between international standards and US GAAP. This decision was embodied in a
Memorandum of Understanding (MoU) between the boards known as the Norwalk
Agreement. The boards' commitment was further strengthened in 2006 when the
IASB and FASB set specific milestones to be reached by 2008 (A roadmap for
convergence 2006 - 2008).
In the light of the progress achieved by the boards and other factors, the US
Securities and Exchange Commission (SEC) removed in 2007 the requirement
for non-US companies registered in the United States to reconcile their financial
reports with US GAAP if their accounts complied with IFRSs as issued by the
IASB. At the same time, the SEC also published a proposed roadmap on adoption
of IFRSs for domestic US companies.
In 2008 the two boards issued an update to the MoU, which identified a
series of priorities and milestones, emphasising the goal of joint projects to
produce common, principle-based standards.
The Group of 20 Leaders (G20) called for standard-setters to re-double their
efforts to complete convergence in global accounting standards. Following this
request, in November 2009 the IASB and the FASB published a progress report
describing an intensification of their work programme, including the hosting of
monthly joint board meetings and to provide quarterly updates on their progress on
convergence projects.
In April 2012 the IASB and FASB published a joint progress report in which
they describe the progress made on financial instruments, including a joint
expected loss impairment ('provisioning') approach and a more converged
approach to classification and measurement.
In February 2013 the IASB and FASB published a high-level update on the status
and timeline of the remaining convergence projects. The report includes an update
on the impairment phase of the joint project on financial instruments.

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Accounting Standards in India
The Institute of Chartered Accountants of India (ICAI) being a premier accounting body
in the country took upon the leadership role by constituting the Accounting Standards
Board (ASB) in 1977

Important Milestones of Accounting Standard Board of ICAI

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List of Accounting Standards issued by ASB of ICAI
AS 1 Disclosure of Accounting Policies
AS 2 Valuation of Inventories
AS 3 Cash Flow Statements
AS 4 Contingencies and Events Occurring after the Balance Sheet Date
AS 5 Net Profit or Loss for the period, Prior Period Items and Changes in
Accounting Policies
AS 6 Depreciation Accounting
AS 7 Construction Contracts (revised 2002)
AS 9 Revenue Recognition
AS 10 Accounting for Fixed Assets
AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003),
AS 12 Accounting for Government Grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits (revised 2005)
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18 Related Party Disclosures
AS 19 Leases
AS 20 Earnings Per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income.
AS 23 Accounting for Investments in Associates in Consolidated Financial
Statements
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions, Contingent Liabilities and Contingent Assets
AS 30 Financial Instruments: Recognition and Measurement
AS 31 Financial Instruments: Presentation
AS 32 Financial Instruments: Disclosures

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Convergence in India:
After going through various legal procedures and consultation, the Ministry of
Corporate Affairs has notified 35 accounting standards called as IND AS for
the purpose of convergence.

Phases of Convergence
Phase 1: Companies forming part of Nifty & Sensex, whose securities are listed
outside India, whose Net worth > Rs 1000 crores

Phase 2: Companies whose Networth > Rs 500 Crores

Phase 3: Listed Companies whose Networth< 500 crs

Present Position of Convergence

The present position is that standards that would be applicable are notified.

The date of applicability is yet to be notified.

Finance Minister Shri Arun Jaitley in his Budget Speech in July said "There is
an urgent need to converge the current Indian accounting standards with the
International Financial Reporting Standards (IFRS)."

“Based on the international consensus, the regulators will separately notify the date
of implementation of Ind AS for the banks, insurance companies, etc. Standards
for the computation of tax would be notified separately,” he added.

From his speech we can understand that IFRS is the order of the day and those
working in Accounting and Finance Sector need to know IFRS to move further
in their career.

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