GAAP & IFAS Generally Accepted Accounting Principle & International Financial Accounting Standards. Group 1

GAAP(Generally Accepted Accounting Principles) Rules and standards Creation of uniform financial reports Private U.S. businesses are not required Consistency, fairness, honesty and accuracy

HISTORY SEC proposed, switch to IFRS from U.S. GAAP by 2014 SEC replaced CAP with the Financial Accounting Standards Board (FASB) AIA created Committee on Accounting Procedure Concept of GAAP introduced for the 1st time http://www.ifrs.org/About-us/IFRS-Foundation/Pages/Organisation-history.aspx SEC asked for assistance from the American Institute of Accountants (AIA) Securities and Exchange Commission (SEC) was created. Stock Market Crash (a.k.a. The Great Depression )

GAAP VS IFRS Basis GAAP IFRS Balance Sheet Current and noncurrent asset and liability categories are separated categories are required to be separated Intangible Assets Recognizes intangible assets at fair value Only examines intangible assets if they can be associated with a future benefit Documentations Statement of Comprehensive Income is required Statement of Comprehensive Income is not required Inventory Write Downs (IWD) IWD reversals are not permitted IWD reversals are possible under some conditions Extraordinary Items Listed separately under new income Included with other items on the income statement

PRINCIPLES Regularity Consistency Sincerity Permanence of Methods Non-Compensation Prudence Continuity Periodicity Materiality / Good Faith Utmost Good Faith

IFRS(International Financial Reporting Standards) Set of accounting standards Known as International Accounting Standards (IAS) Developed by International Accounting Standard Board (IASB) IFRS is a global language Understandability and making comparisons easier.

IFRS Modified form of IAS. Principles-based standards establishing broad rules. Rules while accounting for transaction and events in Financial Statements. Developed by International Accounting Standards Board (IASB)

HISTORY Now more than 100 countries uses the completed IFRS or synchronized form More than 70 countries were using it The IAS was implemented in countries European Union http://www.ifrs.org/About-us/IFRS-Foundation/Pages/Organisation-history.aspx Replaced by International Accounting Standards Board (IASB) in1st April, 2001 International Accounting Standard were issued by International Accounting Standards Committee (IASC

REGULATORY BODIES Trustee The Board Standing Advisory Council(SAC) IFRIC (International Financial Reporting Interpretation Committee)

NAS(Nepal Accounting Standards) Written policy documents Recognition, measurement, presentation and disclosure Issued its own NAS in 2001 A.D. to localize them properly NASs are the standards issued by Accounting Standards Board (ASB) 27 issued Nepalese accounting standards.

NFRS(Nepal Financial Reporting Standards) Designed as a common language for business Issued by Nepal Accounting Standard Board in 2013 Rules to be followed by accountants Comprised of Nepal Financial Reporting Standards; Nepal Accounting Standards; IFRIC Interpretations issued by the International Accounting Standards Board (IASB); Application Guidance and SIC interpretations issued by IASB

DEVELOPMENT OF NFRS Identification and review of issues to be considered Exchange of views with national regulators Consultation with ASB members and Advisory grounds Publishing exposure draft and letting it for public comments Final draft of standards (approval of at least 7 members of ASB essential)

GENERAL FEATURES OF NFRS Fair presentation and compliance with NFRS Going Concern Accrual basis Materiality and Aggression Frequency of Reporting Comparative Information Consistency of presentation

FOR WHOM ? Investors Multinational Companies Regulators Securities Industry and Stock Exchanges Developing Countries

APPLICABILITY TYPES Category A - from FY 2014-15 Listed Multinational Manufacturing Companies Listed State Owned Enterprises (SOEs Category B - from FY 2015-16 Commercial Banks, including State Owned Commercial Banks; All other Listed State Owned Enterprises (SOEs)

APPLICABILITY TYPES Category C - from FY 2016-17 All other Financial Institutions not covered under A & B above All other SOEs Insurance Companies All other Listed Companies All other Corporate Bodies Category D - from FY 2016-17 SMEs as defined and classified by ASB

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