Introduction to IFRS

IFRS stands for International Financial Reporting Standards. IFRS is A Set of International Accounting Standards stating how particular types of transaction and other events should be reported in financial statement IFRS:-A set of Financial Reporting Standards issued by the International Accounting Standards Board (IASB) is recognized under the brand name IRRSs. IFRSs’ is a trade mark of the International Accounting Standards Committee Foundation. IFRSs comprise of: International Financial Reporting Standards International Accounting Standards and Interpretations originated by the International Financial Reporting Interpretations Committee( IFRIC) and Interpretations issued by the former Standing Interpretations Committee ( SIC).

The IASB is an independent standard setting body of the International Accounting Standards Committee Foundation (IASC Foundation) . . and Approve Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC).Introduction to IFRS Presently there are 8 International Financial Reporting Standards. 15 IFRIC interpretations and 11 SIC interpretations. The principal responsibilities of the IASB are to: Develop and issue International Financial Reporting Standards and Exposure Drafts. 29 International Accounting Standards . Structure of IASC Foundation and IASB The International Accounting Standards Committee (IASC) was renamed as International Accounting Standards Board ( IASB).

To establish benchmark for evaluating the quality of financial statements prepared by the enterprise.Introduction to IFRS Objective OF IFRS To standardize accounting methods and procedures. To ensure the users of financial statements get creditable financial information. To attain international levels in the related areas . To lay down principles for preparation and presentation.

e. the P & L Account and the Balance Sheet comply with accounting standards referred in section 211 (3C).e. 1999 w. (4) where answer to (3)(d) is negative or with qualification. 1956 As per Section 211 sub sections (3 A).10.f.Introduction to IFRS Accounting Standards and the Companies Act. in consultation with National Advisory Committee on Accounting Standards. the applicable accounting standards had been followed along with proper explanation relating to material departure. 31. Section 227 sub section (3)(d) inserted by the Finance Act. it shall also state the reasons thereof.1998: (3)(d) the auditor's report shall also state whether.10. 2000 w. if any. .2000: (2AA) The Board's report shall also include a Directors' Responsibility Statement indicating therein (1) that in preparation of annual accounts. 1999 w.12.1998: (3A) every P & L Account and Balance Sheet shall comply with accounting standards. Section 217 sub section (2AA) inserted by the Companies Amendment Act. 13.f. in his opinion. 31. (3 B) and (3 C) inserted by the Companies Amendment Act. (3 B) deviations.f. (3 C) "accounting standards" means standards of accounting recommended by ICAI or as may be prescribed by Central Govt.e. to be disclosed with reasons and financial effect of deviation.

enabling businesses. Foreign Direct Investors (FDI).Introduction to IFRS WHY IFRS ? India is one of the over 100 countries that have or are moving towards IFRS ( International Financial Reporting Standards) convergence with a view to bringing about a uniformity in reporting systems globally. . Foreign companies having subsidiaries in India are having to recast their accounts to meet Indian & overseas reporting requirements which are different. finances and funds to access more opportunities. overseas financial institutional investors (FII) are more comfortable with compatible accounting standards and companies accessing overseas funds feel the need for recast of accounts in keeping with globally accepted standards. Indian companies are listed on overseas stock exchanges and have to recast their accounts to be compliant with GAAP requirements of those countries. ICAI has decided to implement IFRS in India. The Ministry of Corporate Affairs has also announced its commitment to convergence to IFRS by 2011.

IFRS in India would cover the following public interest entities in the first phase. and financial institutions Turnover in preceding year > INR 1 billion Borrowing in preceding year > INR 250 million Holding or subsidiary of the above IFRS is not applicable to SME’s as of now . or have a substantial public interest. or public sector companies. mutual funds. Listed companies Banks. insurance companies.Introduction to IFRS IFRS To WHOM APPLICABLE ? Compliance with IFRS in India is restricted to ‘Public Entities’ which include those companies & entities listed on any stock exchange or have raised money from the public.

Introduction to IFRS WHEN IFRS ? IFRS for public entities in India is applicable from 01/04/2011. This fundamental and pervasive nature of impact of IFRS. the way the entity looks at its assets and their usage. makes it imperative that sufficient planning and thought is given to this aspect and choices made at the transition stage itself. The opening IFRS balance sheet at the date of transition to IFRS – 01/04/2010. which is the start date for full comparative information presentation in IFRS IMPACT OF IFRS IFRS implementation affects several areas of the business entity. A detailed analysis of all aspects of impact and change as well as all legal documentation and communication becomes necessary. . the way legal documents are drafted. as well as the its communications with its stakeholders and also the way it conducts its business. such as presentation of accounts. the accounting policies and procedures. as they determine the effect on the company and its operations.

Introduction to IFRS LIST OF IFRS IFRS-1 IFRS-2 IFRS-3 IFRS-4 IFRS-5 IFRS-6 IFRS-7 IFRS-8 First time Adoption of International Financial Reporting Standards Share-based payments Business Combinations Insurance Contracts Non Current Assets held for sale and Discontinued Operations Exploration for and evaluation of Mineral Resources. Financial Instruments-Disclosures Operating Segments .

13. 12. 5. 9. 15. 10. 8. Changes in Accounting Estimates and Errors Events after the Reporting Period Construction Contracts Income Taxes Property. IAS 1 IAS 2 IAS 7 IAS 8 IAS 10 IAS11 IAS12 IAS16 IAS17 IAS18 IAS19 IAS20 IAS21 IAS23 IAS 24 Presentation of Financial Statements Inventories Statement of Cash Flows Accounting Policies. 4.Introduction to IFRS LIST OF IASs 1. 11. 7. Plant and Equipment Leases Revenue Employee Benefits Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates Borrowing Costs Related Party Disclosures . 6. 14. 2 3.

27. Consolidated and Separate Financial Statements Investments in Associates Financial Reporting in Hyperinflationary Economies Interests in Joint Ventures Financial Instruments : Presentation Earnings per Share Interim Financial Reporting Impairment of Assets Provisions.Introduction to IFRS LIST OF IASs 16. 28. 18. 29. 20. 26. 19. IAS 26 IAS 27 IAS 28 IAS 29 IAS 31 IAS 32 IAS 33 IAS 34 IAS 36 IAS 37 IAS 38 IAS 39 IAS 40 IAS 41 Accounting and Reporting by Retirement Benefit Plans. 17. 25. 21 22. 23. 24. Contingent Liabilities and Contingent Assets Intangible Assets Financial Instruments : Recognition and Measurement Investment Property Agriculture .

Restoration and Similar Liabilities IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments IFRIC 4 Determining Whether an Arrangement Contains a Lease IFRIC 5 Rights to Interests Arising from Decommissioning.2009 1. IFRIC 1 Changes in Existing Decommissioning. IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies 7. IFRIC 8 Scope of IFRS 2 * 8 IFRCI 9 Reassessment of Embedded Derivatives 9. IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset. 2. IFRIC13 Customer Loyalty Programme 13. 5. 4. IFRIC 18 Transfer of Assets from Customers * Interpretations contained in IFRIC 8 and IFRIC 11 are now included in IFRS 2 ( as amended in June 2009).Waste Electrical and Electronic Equipment 6. 3. IFRIC 6 Liabilities Arising from Participating in a Specific Market . IFRIC 10 Interim Financial Reporting and Impairment 10 IFRIC11* IFRS 2: Group and Treasury Share Transactions 11. IFRIC 15 Agreement for the Construction of Real Estate 15 IFRIC 16 Hedges of Net investments in a Foreign Operation 16 IFRIC 17 Distribution of Non Cash Assets to Owners 17. Restoration and Environmental Rehabilitation Funds.11. . IFRIC 12 Service Concession Arrangements 12.Introduction to IFRS List of IFRIC Interpretations as on 30. Minimum Funding Requirements an their Interaction 14.

6. 11.11. SIC 7 SIC 10 SIC 12 SIC 13 SIC15 SIC 21 SIC 25 SIC 27 SIC 29 SIC 31 SIC 32 Introduction of the Euro Government Assistance – No Specific Relation to Operating Activities Consolidation – Special Purpose Entities Jointly Controlled Entities – Non-Monetary Contributions by Ventures Operating Leases – Incentives Income Taxes – Recovery of Revalued Non-Depreciable Assets Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders Evaluating the Substance of Transactions in the Legal Form of a Lease Disclosure – Service Concession Arrangements Revenue – Barter Transactions Involving Advertising Services Intangible Assets – Website Costs . 5. 10. 2. 9. 3. 7. 4. 8.Introduction to IFRS List of SIC Interpretations as on 30.2009 1.

Introduction to IFRS Requirements of IFRS IFRS financial statements consist of (IAS1. An entity preparing IFRS accounts for the first time must apply IFRS in full for the current and comparative period although there are transitional exemptions (IFRS1.7). . including a summary of the significant accounting policies Comparative information is provided for the previous reporting period (IAS 1.8) A Statement of Financial Position A Comparative Income Statement Either a statement of changes in equity (SOCE) or a statement of recognized income or expense ("SORIE") A Cash Flow Statement or Statement of Cash Flows Notes.36).

The main changes from the previous version are to require that an entity must: present all non-owner changes in equity (that is. present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting 'balance sheet' will become 'statement of financial position' 'income statement' will become 'statement of comprehensive income' 'cash flow statement' will become 'statement of cash flows'. Components of comprehensive income may not be presented in the statement of changes in equity. The revised IAS 1 is effective for annual periods beginning on or after 1 January 2009. 'comprehensive income' ) either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Early adoption is permitted. the IASB issued a revised IAS 1 Presentation of Financial Statements. .Introduction to IFRS On 6 September 2007.

Introduction to IFRS First Time Adoption of IFRS IFRS 1 requires an entity to comply with each IFRS effective at the reporting date for its first IFRS financial statements. which are different type of asset. In particular. liability or component of equity under IFRSs. and Apply IFRSs in measuring all recognized assets and liabilities. Reclassify items that it recognized under previous GAAP as one type of asset. Do not recognize items as assets or liabilities if IFRSs do not permit such recognition. the IFRS requires an entity to do the following in the opening IFRS balance sheet that it prepares as a starting point for its accounting under IFRSs: Recognize all assets and liabilities whose recognition is required by IFRSs. liability or component of equity. .


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