IFRS

International financial
reporting standards
PRESENTED BYMOHAMMAD ASIF
BEG
MOHD OWAIS
SIDDIQUI

IFRS
IFRS stands for International Financial Reporting
Standards.
As indicated within the title, these standards are
aimed at a global practice.
Ultimately, the goal is to achieve a single set of highquality, common accounting standards used around
the world.
These standards are the result of a convergence of
international viewpoints.
The rules to be followed by accountants to maintain
books of accounts which is comparable,
understandable, reliable and relevant as per the
users internal or external.

WHY IFRS ?

A single set of accounting standards would

enable internationally to standardize training
and assure better quality on a global screen,
it would also permit international capital to
flow more freely, enabling companies to
develop consistent global practices on
accounting problems. It would be beneficial
to regulators too, as a complexity associated
with needing to understand various reporting
regimes would be reduced.

Benefits of IFRS

Same language
Comparability of financial statements of any two
companies anywhere in the world
Globalisation of economy and world trade
For multinational companies:
- Consolidation of group financial statements made
easier
- Accounting and audit functions made easier and cheaper
-Mergers and acquisitions made easier
-Access to multinational funds

Elements of financial
statements
Equity =

Asset

resource controlled by
the entity

Income

recognized increase in
asset/decrease in liability
in current reporting period

result of past event

liabilities

expected inflow of
economic benefits

Liability

present obligation
arising from past event
expected outflow of
economic benefits

assets less

that result in increased

equity except

Expense

recognized decrease in
asset/increase in liability
in current reporting period

IFRS ISSUED BY
IASB

IFRS
Standard

Standard Name

Effective
Date

IFRS 1

First-time Adoption of International Financial Reporting

Standards

1 July 2009

IFRS 2

Share-based Payment

1 January
2005

IFRS 3

Business Combinations

1 July 2009

Insurance Contracts

1 January
2005

Non-current Assets Held for Sale and Discontinued Operations

1 January
2005

Exploration for and Evaluation of Mineral Resources

1 January
2006

Financial Instruments - Disclosures

1 January
2007

Operating Segments

1 January
2009

Financial Instruments

1 January
2015

IFRS 4
IFRS 5
IFRS 6
IFRS 7
IFRS 8
IFRS 9

IFRS in India Why

One language

Comparability enhanced
Understanding enhanced
One set of books
Access to Global capital markets
Low cost of capital
Attract foreign investment
Elimination of multiple reports
Reflect true value of acquisitions

India and IFRS

In India, there will be two set of Accounting

Standards

The existing Indian Accounting Standards (AS)

Applicable to all companies which are not
required to adopt IFRS converged standards.

Indian Accounting Standards, as converged

with IFRS (Ind-AS)
Applicable to companies operating in India
in phased manner. The date of
implementation of the Ind-AS is expected to
be with effect from Financial Year 2016-17.

Indian Accounting
Standard(Ind-AS)

Ind AS
Standard

Standard Name

Effective Date

Ind AS-1

Presentation of Financial Statements

1 January 2005

Ind AS-2

Inventories

1 January 2005

Ind AS-7

Statement of Cash Flows

1 January 1994

Ind AS-8

Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2005

Ind AS-10

Events after the Reporting Period

1 January 2005

Ind AS-11

Construction Contracts

1 January 1995

Ind AS-12

Income Taxes

1 January 1998

Ind AS-16

Property, Plant and Equipment

1 January 2005

Ind AS-17

Leases

1 January 2005

Ind AS-18

Revenue

1 January 1995

Ind AS-19

1 January 2013

Ind AS-20

Employee Benefits
Accounting for Government Grants and Disclosure of
Government Assistance

Ind AS-21

The Effects of Changes in Foreign Exchange Rates

1 January 2005

Ind AS-23

Borrowing Costs

1 January 2009

Ind AS-24

Related Party Disclosures

1 January 2011

1 January 1984

Indian Accounting
Standard(Ind-AS)

Ind AS
Standard

Standard Name

Effective Date

Ind AS-26

Accounting and Reporting by Retirement Benefit Plans

1 January 1988

Ind AS-27

Separate Financial Statements

1 January 2013

Ind AS-28

Investments in Associates and Joint Ventures

1 January 2013

Ind AS-29

Financial Reporting in Hyperinflationary Economies

1 January 2007

Ind AS-32

Financial Instruments - Presentation

1 January 2005

Ind AS-33

Earnings per Share

1 January 2005

Ind AS-34

Interim Financial Reporting

1 January 1999

Ind AS-36

Impairment of Assets

1 January 2004

Ind As-37

Provisions, Contingent Liabilities and Contingent Assets

1 January 1999

Ind AS-38

Intangible Assets

1 January 2004

Ind AS-39

Financial Instruments - Recognition and Measurement

1 January 2005

Ind AS-40

Investment Property

1 January 2005

Ind AS-41

Agriculture

1 January 2003

DIFFERENCE BETWEEN
IFRS AND INDIAN
IFRS are or
based
GAAP
ASon Principles whereas

Indian GAAP or Accounting Standards are

based on Rules. For example, under the
Indian laws, Balance Sheet and Statement
f Profit & Loss are prepared according to
Schedule III of the Companies Act 2013,
whereas IFRS do not prescribe any format
for these. IFRS prescribe that items should
be shown in the Balance Sheet as per the
principles associated with each items.

Contd.

IFRS are based on Fair Value concept

whereas Indian GAAP or Accounting
Standards are based on Historical Cost
concept. As per Indian GAAP assets are
shown in the Balance Sheet at Historical
Cost and as such depreciation is also
charged on such historical cost but IFRS
require that the assets and liabilities
should be shown at current or fair value
as at the of Balance Sheet.

Convergence with
IFRSs:
Indian
Indian
Accounting Standards (ASs)
Perspective

are

formulated on the basis of the IFRSs.

While formulating ASs, the endeavor of the
ICAI remains to converge with the IFRSs.
The ICAI has till date issued 29 ASs
corresponding to IFRSs.
Some recent ASs, issued by the ICAI, are
totally at par with the corresponding IFRSs,
e.g., the Standards on Impairment of
Assets and Construction Contracts.

Contd.

While
formulating
Indian
Accounting
Standards, changes from the corresponding
IAS/ IFRS are made only in those cases
where these are unavoidable considering:

Legal and/ or regulatory framework prevailing in

the country.
To reduce or eliminate the alternatives so as to
ensure comparability.
State of economic environment in the country
Level of preparedness of various interest groups
involved in implementing the accounting
standards.

Challenges of IFRS

Economic Environment

Some IFRSs require fair value approach to be followed,

examples include:

IAS 39, Financial Instruments: Recognition and Measurement

IAS 41, Agriculture

The markets of many economies such as India normally

do not have adequate depth and breadth for reliable
determination of fair values.
With a view to provide further guidance on the use of
fair value approach, the IASB is developing a document.
Till date, no viable solution of objective fair value
measures is available.

Contd.

SME concerns

SMEs face problems in implementing IFRSs

because of:

Scarcity of resources and expertise with the

SMEs to achieve compliance
Cost of compliance not commensurate with the
expected benefits

Keeping in view the difficulties faced by the

SMEs, the IASB is developing an IFRS for
SMEs.

Contd.

Training to Preparers

Some IFRSs are complex.

There is lack of adequate skills amongst the preparers
and users of Financial Statements to apply IFRSs.
Proper implementation of such IFRSs requires
extensive education of preparers

Interpretation

A large number of application issues arise while

applying IFRSs.
There is a need to have a forum which may address
the application issues in specific cases.

Some interesting
facts
!
On 6 September 2007, the IASB issued a

revised IAS 1 Presentation of Financial

Statements. The main changes are:
'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'.

THANK YOU
for listening