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International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS)
OF
INTERNATIONAL FINANCIAL
REPORTING STANDARDS
(IFRS)
Today’s Discussion:
1. What is IFRS
2. Purpose of Financial Reporting Standards
3. How are IFRS developed
4. IFRS framework
5. Why IFRS
6. Principle based standards
7. IFRS in India
8. Benefits in Indian Context
9. Opportunities and Challenges
10. The way ahead
WHAT IS IFRS?
What is IFRS?
IFRS Framework…
Role of Conceptual Framework
Conceptual Framework sets out agreed concepts that underlie financial
reporting
objective, qualitative characteristics, element definitions.
IASB uses Conceptual Framework to set standards which
enhances consistency across standards
enhances consistency over time as Board members change
provides benchmark for judgments
Framework’s role in applying IFRSs
Preparers use the Framework to make the judgments that are necessary to
apply IFRSs
Auditors and regulators assess those judgements
Investors, lenders and others consider those judgements when using IFRS
financial information to inform their decisions
• No inconsistencies
• Judgement
• Minimum guidance
UPCOMING CHANGES
Upcoming Changes
• The IASB has issued its proposal to revise the Conceptual Framework
(the ‘ED’ or ‘the proposed Framework’). The primary purpose of the
Framework is to assist the IASB by identifying concepts it will use when
developing and revising standards. It will not be ‘GAAP’
• They will first have to prepare an opening balance sheet as per Ind AS on 1
April 2015.
• They will have to continue reporting their financial statements for the year
ending 31 March 2016 as per the existing Indian GAAP.
• However, they will also need to compile their financial statements as per Ind
AS for the year ending 31 March 2016.
• This parallel system of accounts will be required for one year ending March
2016 so that comparative Ind AS information can be provided. So for the
year FY 2015-16, companies will have to evaluate accounting implication of
transactions both under existing accounting standards as well as Ind AS
frameworks.
The Step by Step approach…
As part of this Ind AS transition process, companies will also have to prepare
• A reconciliation of income for the year ending March 2016 between Ind AS
and Indian GAAP.
Criteria Threshold
Companies whose equity and/or debt securities ` 500 crores or more
are listed or are in the process of listing on any
stock exchange in India or outside India (listed
companies) and having net worth
Intangible Assets
• The option to measure intangible asset acquired by way of government grant
at nominal amount plus any expenditure that is directly attributable to
prepare the asset has been removed; only fair value measure is required for
recognizing such intangible assets.
EXEMPTIONS
Exemptions
First-time adoption of Ind AS: Ind AS 101
Reporting Systems
Fair Valuation
Taxation
Transition to IndAS
Others
Opportunities for Chartered Accountants…
Training
Reporting Systems:
Opportunities for Chartered Accountants…
• The disclosure and reporting requirements under IFRS are
completely different from the Indian reporting requirements.
Fair Valuation:
• It also involves a lot of hard work in arriving at the fair value and
valuation experts have to be used.
Taxation:
• Given the new set of standards which are in offing, the transition
is going to be a challenge, trained CA’s can play a key role in the
same.
Actuarial Services:
Opportunities for Chartered Accountants…
• Presently, the requirement for obtaining actuary valuation is only
prescribed class of companies.
• There exists great opportunities for the CA’s in this field also.
Challenges
Awareness about international practices: Adoption of IFRS means that the
entire set of financial statements will be required to undergo a drastic
change.
For Companies