You are on page 1of 18

IFRS AND GAAP







 PRESENTED
BY:-
 ABBAS
ANSARI
 MORADABAD
 abbasali4u4ever@gmail.com
Converging in to
international financial
reporting standards
Infosys technologies LTD- it was founded
on july 2,1981 in pune by NR Narayana
Murthy and 6 other people .the company
was incorporated as private company and
went public in 1993.in its recent annual
reports , infosys technologies limited also
provides its balance sheet and p/l a/c as
per the inter national financial reporting
standards
International financial
reporting standards
 IFRS are standards ,interpretations and
framework adopted by the international
accounting standards board [IASB] which
was issued between 1973 and 2001 by
IASB

IFRS & Indian GAAP
•The IFRS or the International Finance Regulation Standards are
defined by the International Accounting Standards Board. The IFRS
is increasingly being adopted by companies across the globe for
preparing their financial statements. IFRS comprises of International
Financial Reporting Standard, International Accounting Standard,
and Interpretation originated by the International Financial Reporting
Interpretations Committee.
•Indian GAAP are the standards notified by the central govt. under the
companies (Accounting Standard)Rules,2006 (applicable to all
companies) vide notification G.S.R.739(E) dated 7 Dec. 2006 and to
the relevant requirements of the companies Act,1956.


Differences between IFRS &Indian
GAAP
IFRS Indian GAAP
1. IAS 1 (2007)-Presentation of 1.AS 1-Disclosure of accounting
Financial
2.Financialstatements
Statements under policies/schedule
2. The componentsVIoftofinancial
IFRS comprises of companies act,1956.
statement are-
A statement of financial position Balance sheet

A statement of comprehensive Statement of profit & loss

income Cash flow statement.(not

A statement of cash-flows mandatory for small and medium


A statement of changes in equity sized companies).

Notes including summary of Explanatory notes including

accounting policies and summary of accounting policies


explanatory notes
3.Omission or misstatements are 3. Financial statement should
material
4. if individually
An entity is required or disclose
to present 4. No suchall classification
“material” items,
are i.e.
collectively
current
5. they could
& non-current
Fair presentation influence
assets
requires and itemsFairthe
required
5. knowledgerequires
presentation of which
the economic
liabilities,
faithful decisionsofofthe
as separate
representation users might influence
compliance withthe
thedecisions
applicableof
taken
effectsonofthe
thebasis
classifications of statement
in the financial
transaction, other of the user of theoffinancial
requirements the companies
statements.
financial
events andposition
conditions in statements.
Act,1956 and the other
accordance with the definitions regulatory requirements and the
of and recognition criteria for application of the qualitative
assets, liabilities, income and characteristics of the accounting
expenses set out in the frame standard framework.
work.
INCOME STATEMENT AS PER IFRS

FOREIGN
REVENUES
COST
GROSS
SELLING
ADMINS.
GAIN ON
OF SALE 31.03.05
AMORTAIZATI
TOTAL
OPERATING
PROFIT
AND 1592
908
684
104
2128
234
450
11
(2) 31.03.06
2152
1248
904
137
173
310
-594
(18) Absolute
560
340
220
33
245
76
144
(11)
(16) Percentage
35.17
37.44
32.16
31.73
35.15
32.47
32
(100)
(800)
REVENUES
MARKETING
EXPENCES
ON
OPERATING
INCOME
OF
CURRENCY
LONG
OF increase/decrea change
INTANGIBLE
EXPENCES
TERM
EXCHANGE se
ASSESTS
INVESTMENT
OTHER INCOME 26 49 23 88.46
NET
INCOME 485 625 140 28.86
BEFORE
PROVISION FOR 72 70 (2) (2.77)
INCOME
INCOME TAX
TAX
NET INCOME 413 555 142 34.38
NET INCOME - 5 5 100
ATTRIBUTE TO
MINORITY
NET INCOME 413 550 137 33.17
INTEREST
ATTRIBUTE TO
SHAREHOLDERS
OF PARENT
COMPANY
Interpretations as per IFRS
vRevenue increased in 2006 in comparison
to 2005 by 35% which is good for
company.
vGross profit is also increased in 2006 by 32
%
Which is good for company.

The co. had paid interest to minorities which

will help in tax reduction.


 The net profit is increased at very high rate.


Comparative analysis of
change change
the IFRS
REVENUES
SOFTWARE 2466
based
3427 961 38.96
FINANCIAL
SOFTWARE 1032 1324 B/S
292 of 28.29
SERVICE
Infosys
MANAGEME
SEGMENT
NT
in
million dollars
SOFTWARE
SEGMENT 1320 1568 248 18.78
TELECOM
SEGMENT
SOFTWARE 698 968 270 38.68
RETAIL
SEGMENT
SOFTWARE 1614 2236 622 38.53
OTHERS
TOTAL 7130 9521 2391 33.53
REVENUE
EXPENSES
SOFTWARE 3765 5066 1301 34
DEV.BUSS.P
ROCESS
MANAGEME
GROSS 3365 4455 139 39.4%
PROFIT
OPERATING
EXPENCES
SELLING 461 600 139 30.15
AND
MARKETING
GEN.AND
EXPENCES 569 764 195 34.27
ADMINISTR
ATION EXP
DEPRICIATI 287 437 150 52.26
ON
TOTAL 1317 1801 484 36.75
OPERATING
EXPENCES
OPERATING 2048 2654 606 29.58
PROFIT
BEFORE
OTHER TAX 124 139 15 12.09
INCOME
(NET)
INCOME 2172 2792 620 28.54
BEFORE TAX
INCOME 326 313 (13) (0.03)
Currency rate
 A/c to Indian GAAP
 selling expenses= Rs 461 crores
A/c to IFRS

 selling expenses= 104 million $


Comparing both, we get

 1$=4610000000/104000000
 =Rs 44.32
Thus currency rate is 1 USD = Rs 44.32
INTERPETATION
 The cost of production and gross profit is
almost same in both the years instead of
increase in sales that means the co. is
incurring some per unit cost during both
the years.
 In 2006 the co. had not charged
depreciation to P/L which may create
problem in future.
 Income before interest & tax in both the
years is almost same.
 The net profit after tax & interest is almost
same that means co. is showing constant
growth.
NAME OF COMPANIES USING
IFRS

 TATA
 WIPRO
 NIIT
 MAHINDRA & MAHINDRA
 BOMBAY DYING
 DR. REDDY LABORATORIES
REASON FOR ADAPTING IFRS

 IFRS has become mandatory for listing in


the European markets after 2007.
 The other reason is that the new norms
provide for stiffer provisioning for mark-
to-market losses, also known as AS-30
standards.
 For companies with exposure in European
markets through equity or debt, such
transparency is essential to raise capital
cheap and hence
 Institute of Chartered Accountants of India
(ICAI), has set a time line of 2011
Comparison b/w both p/l
 Indian GAAP has followed the Accounting
standard of India (AS1) while IFRS has
followed International Accounting
Standards (IAS1).
 In IFRS foreign currency exchange gains
has been taken but in GAAP it is not
taken.
 Gain on sale of long term investment has
been considered in IFRS but not in GAAP.
 Attribution from income to minority interest
is considered in IFRS .
comparison
1.Indian gaap has followed the accounting
standard of india(Asi) while ifrs has
followed international accounting
standard,
2.According to ifrs the gross profit is
increased by 32.16% and according to
gaap it is 31.79.
3.In ifrs statement selling and distribution
expenses are 31.73% and in gaap
statement it is increased by 30.15%.
comparison
1.According to ifrs the other income is increased by
88.46% and in gaap it is only increased by
12.09%.
2.According to ifrs the net income is increased by
34.38% and in gaap it is increased by
34.29%.there are only minor difference
between them in net income