1. IFRS- An Intro By Mehul Shah 9723459572

2. B S R CONTEXT FOR DISCUSSION  IFRS: The Global Perspective  IFRS India Roadmap  Phased plan  Clarifications by MCA B S R

3. IASC /IASB IAS Convergence Transition date Adoption date ASB / NACAS US-GAAP and SEC Fair Value XBRL Indianized AS Companies Act IFRS

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5. The body which oversees the International Accounting Standards Board. International Accounting Standards Committee Foundation. The body which sets International Financial Reporting Standards (IFRS) and approve interpretations International Accounting Standards Board (IASB). Responsible for interpretation of standards and issue guidance on issues that have not yet been addressed by standards. International Financial Reporting Interpretations Committee (IFRIC).

6. International Financial Reporting Standards (IFRS) International Accounting Standards (IAS) Standard Interpretations (SIC) International Financial Reporting Interpretations (IFRIC) IFRS comprises: 9 IFRSs and 29 IASs 19 IFRIC and 11 SICs

7. Merger and Acquisition / ValuationIncrease in Level of assurance / credibilityCondition for listing abroad including GDRs and ADRsPre requisite for any joint venture or business relationshipInvestment boostUnavoidable in globalised economy By CA Mehul Shah ( 9723459572 ) 7

8. Globally acceptedSimplified ( but significant subjectivity involved)Substance over formTime value of moneyFair valueRestatementMore disclosure and reporting requirements 8 By CA Mehul Shah ( 9723459572 )

9. Framework in India

10. From where does Accounting Standards gets its legal recognition ?

11. Companies Act – Sec 211 (3A) every P & L Account and Balance Sheet shall comply with accounting standards, (3 B) deviations, if any, to be disclosed with reasons and financial effect of deviation, (3 C) "accounting standards" means standards of accounting recommended by ICAI or as may be prescribed by Central Govt. in consultation with National Advisory Committee on Accounting Standards. 11

12. Professional & Technical Expert Bodies Legal and Regulatory Authorities ICAI (Council and Accounting Standard Board)  ASB was formed in 1977 and has been issuing accounting standards (AS’s) since then  AS’s received ‘Legal’ recognition in 1999 when section 211(3C) of Companies Act 1956 was amended to this effect MCA (Ministry of Corporate Affairs)  Notifies or prescribes accounting standards/practices to be followed by the companies – the standards notified are basically AS’s recommended by ICAI and NACAS RBI (Reserve Bank of India)  Being a Banking sector Regulator, RBI issues Circulars, Guidelines on specific topics/accounting matters affecting banks SEBI (Securities & Exchange Board of India)  Being regulator of securities market, SEBI can issue circulars/notification on accounting matters for listed entities NACAS (National Advisory Committee on Accounting Standards)  Constituted in 1999 u/s 210A of Co. Act 1956  It’s Role is to ‘Advise’ Central Govt. on formulation of and laying down of AS’s for companies or a class of companies  Effectively, it reviews and clears AS’s of ICAI for notification by MCA under Co. Act 1956 RBI and SEBI have a representation on both the above bodies

13. In toto-adoption (‘Auto Mode’) i.e. simply start using IFRSs from a selected date and depend entirely on IASB for formulating standards Carve out approach i.e. review IFRSs issued by IASB, carve out sections not required and endorse rest of the IFRSs for local use Local equivalents approach i.e. develop & roll out IFRS equivalent Local Accounting Standards 13

14. In toto-adoption (‘Auto Mode’) i.e. simply start using IFRSs from a selected date and depend entirely on IASB for formulating standards Carve out approach i.e. review IFRSs issued by IASB, carve out sections not required and endorse rest of the IFRSs for local use Local equivalents approach i.e. develop & roll out IFRS equivalent Local Accounting Standards 14

15. Ministry of Corporate Affairs (MCA) had set up this High Powered group comprising various stakeholders, which is supported by two sub- groups. The first sub-group is to identify changes required in various laws, regulations and accounting standards for convergence with IFRS and to prepare a clear roadmap for achieving the same. The second sub-group of CFOs would interact with various stakeholders in order to understand their concerns on the issue of convergence with IFRS. 15

16.  The Core Group in its meeting held on January 11, 2010, has agreed that there will be two separate sets of accounting standards under section 211(3C) of the Companies Act, 1956.  First set would comprise of Accounting Standards (AS) which are converged with IFRS and applicable to specified companies.  The second set would comprise of existing AS and applicable to other companies and SMCs.

17. Announcement by the Ministry of Corporate Affairs (MCA) dated January 22, 2010 IFRS converged standards Existing Indian Accounting Standards

18. IFRS India Roadmap 18

19.  In respect of the converged Accounting Standards, the Chairman of the Accounting Standards Board of ICAI will submit the converged version of Accounting Standards to NACAS from time to time for recommendations and onward submission to Ministry. ICAINACASMCA

20. The draft of the Companies (Amendment) Bill, proposing for changes to the Companies Act, 1956 will be prepared incorporating the recommendation of Sub-Group 1 Report.

21. Revised Schedule VI to the Companies Act, 1956 according to the converged Accounting Standards has been submitted by the ICAI to NACAS which, after review, will submit to the Ministry. Amendments to Schedule XIV will also be made in a time bound manner. Exposure drafts on most of the converged standards have been released for public comments by ICAI

22. a. Companies which are part of NSE – Nifty 50b. Companies which are part of BSE - Sensex 30 c. Companies whose shares or other securities are listed on stock exchanges outside India d. Companies, whether listed or not, which have a net worth in excess of Rs.1,000 crores.

23. The companies, whether listed or not, having a net worth exceeding Rs. 500 crores but not exceeding Rs. 1,000 crores will convert their opening balance sheet as at 1 st April, 2013 in compliance with the notified accounting standards which are convergent with IFRS.

24. Listed companies which have a net worth of Rs. 500 crores or less will convert their opening balance sheet as at 1 st April, 2014, in compliance with the notified accounting standards which are convergent with IFRS.

25. Non-listed companies which have a net worth of Rs. 500 crores or less and whose shares or other securities are not listed on Stock Exchanges outside India. Small and Medium Companies (SMCs). Companies which fall in the following categories will not be required to follow the converged accounting standards (though they may voluntarily opt to do so) but need to follow the Indian GAAP

26. Phase 2 1 st April 2011 1 st April 20131 st April 2014 Phase 3  Companies included in the Nifty 50;  Companies included in the Sensex 30;  Companies which have shares or other securities listed on stock exchanges outside India and  Companies (whether listed or not) which have a net worth in excess of Rs1,000 crores. Phase 1  All companies (whether listed or not) with a net worth in excess of Rs.500 crores but less than Rs1,000 crores.  All listed companies with net worth less than Rs.500 crores Clarifications: Non-listed companies which have a net worth less than Rs.500 crores and whose shares or other securities are not listed on stock exchanges outside India; and other defined Small and Medium Companies (SMC) will not be required to follow the IFRS converged standards. However, such entities may also voluntarily opt to follow the IFRS converged standards.

27. “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Charles Darwin

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29. The Ministry of Corporate Affairs issued clarification on the following issues in the IFRS Roadmap on 4 th May 2010: Determination of Applicability Applicability for entities that are subsidiaries, joint ventures or associates of companies covered under the convergence roadmap. Discontinuing use of the first set of Accounting Standards (Converged Accounting Standards) Calculation of net worth Removal of options 29

30. Whether companies can voluntarily opt to provide comparative figures for 2010-11 in accordance with the converged Accounting Standards? 30 MCA clarifies on: Determination of Applicability

31. Previous year figures - Clarification: Companies should show previous years’ figures as per the Financial Statements for 2010-11. Option is available to add an additional column to indicate what the figures could have been if the Converged Accounting Standards had been applied in the previous year Companies which make this additional disclosure, for this purpose, shall convert their opening balance sheet as the date on which this pervious year commences and in that case, a further conversion of the opening balance sheet for the year for which the F/S are prepared will not be necessary. 31 MCA clarifies on: Determination of Applicability

32. What is the cut-off date on which the criterion set out in the roadmap shall be applied in order to determine the companies falling in each of the four categories which will convert their opening balance sheet as at 1 st April 2011 in compliance with the converged accounting standards 32 MCA clarifies on: Determination of Applicability

33. Calculation of net-worth.. The date of determination of the criteria is the Balance Sheet as at 31 st March 2009; OR The first Balance Sheet prepared thereafter when the accounting year ends on another date. 33

34. Whether it would be permissible for the companies which are not individually covered under the phasing plan for application of the Converged Accounting Standards to voluntarily opt for application of the Converged standards even for their standalone F/s? 34 MCA clarifies on: MCA clarifies on: Status of subsidiaries, JVs and Associates of entities who are covered under roadmap

35. Clarification: Criteria to be considered for each company’s standalone accounts Companies covered in a particular phase having subsidiaries, JVs or associates not covered in those phases will prepare consolidate F/s according to Converged Accounting Standards One of more companies in a group will continue to prepare F/s in accordance with the Accounting Standards applicable to the particular phase to which it belongs but parent will need to make amendments to these accounts in order to consolidate as per Converged Accounting Standards Such subsidiaries, JVs or associates may also have the option to early adopt the Converged Accounting Standards. 35 MCA clarifies on: MCA clarifies on: Status of subsidiaries, JVs and Associates of entities who are covered under roadmap

36. Does a company have the option to go back to preparing F/s in accordance existing Indian Accounting Standards if it no longer satisfies the specified criteria in the future? 36 MCA clarifies on: MCA clarifies on: Status of subsidiaries, JVs and Associates of entities who are covered under roadmap

37. Clarification: No…! Once a company starts following the Converged Accounting Standards on the basis of the eligibility criteria, it will be required to follow such Accounting Standards for all the subsequent financial statements even if any of the eligibility criteria does not subsequently apply to it. 37 MCA clarifies on: MCA clarifies on: Status of subsidiaries, JVs and Associates of entities who are covered under roadmap

38. Clarification: Networth will be calculated as per audited balance sheet of the company as at 31 st March 2009 or first balance sheet for accounting periods which ends after that date Networth = Share Capital + Reserves – Revaluation Reserves – Miscellaneous Expenditure – Debit Balance in Profit and Loss A/c For companies which are not in existence on 31 st March 2009, networth will be calculated on the basis of the first balance sheet ending after that date. 38 MCA clarifies on: Rules for calculation of qualifying net worth

39. Clarification: Situation where Notified Converged Accounting Standards ARE NOT fully consistent with IAS / IFRS Companies will follow the first set of Accounting Standards i.e. the Converged Accounting Standards and NOT IFRS. 39 MCA clarifies on: : Removal of Options

40. The ICAI has taken the following steps for Identification of inconsistencies between various Laws and Regulations: Constitution of a Group on Liaison with Governmental and Regulatory Authorities Group has constituted separate Core Groups to identify inconsistencies between IFRSs and the following statutes: Companies Act SEBI Regulations Banking Laws & Regulations Insurance Laws & Regulations (Source: Announcement by the Technical Directorate, The Institute of Chartered Accountants of India )

41. Standard #Standard Description AS 1Corresponding to IAS 1, Presentation of Financial Statements AS 2Corresponding to IAS 2, Inventories AS 3Corresponding to IAS 7, Statement of Cash Flows AS 4Corresponding to IAS 10, Events after the Reporting period AS 5Corresponding to IAS 8, Accounting Policies and Changes in Accounting Estimates and Errors AS 7Corresponding to IAS 11, Construction Contracts AS 12Corresponding to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance AS 16Corresponding to IAS 23, Borrowing Costs AS 19Corresponding to IAS 17, Leases AS 25Corresponding to IAS 34, Interim Financial Reporting AS 34Corresponding to IAS 29, Financial Reporting in Hyperinflationary Economies AS 35Corresponding to IFRS 6, Exploration for and Evaluation of Mineral Resources

42. Standard #Standard Description AS 10Corresponding to IAS 16, Property, Plant and Equipment AS 11Corresponding to IAS 21, The Effects of changes in Foreign Exchange rates AS 18Corresponding to IAS 24, Related Party Disclosures AS 20Corresponding to IAS 33, Earnings Per Share AS 21Corresponding to IAS 27, Consolidation and Separate Financial Statements AS 23Corresponding to IAS 28, Investments in Associates AS 29Corresponding to IAS 37, Provisions and Contingent Liabilities and Contingent Assets AS 37Corresponding to IAS 40, Investment Property

43. Standard #Standard Description AS 9Corresponding to IAS 18, Revenue AS 14Corresponding to IFRS 3, Business Combinations AS 15Corresponding to IAS 19, Employee Benefits AS 17Corresponding to IFRS 8, Operating Segments AS 22Corresponding to IAS 12, Income Taxes AS 24Corresponding to IFRS 5, Non-current Assets Held for Sale and Discontinued Operations AS 26Corresponding to IAS 38, Intangible Assets AS 27Corresponding to IAS 31, Interest in Joint Ventures AS 28Corresponding to IAS 36, Impairment of Assets

44. Standard #Standard Description AS 30Corresponding to IAS 39, Financial Instruments: Recognition and Measurement AS 31Corresponding to IAS 32, Financial Instruments: Presentation AS 32Corresponding to IFRS 7, Financial Instruments : Disclosures AS 33Corresponding to 2, Share-based payment AS 36Corresponding to IAS 26, Accounting and Reporting by Retirement Benefit Plans AS 38Corresponding to IAS 41, Agriculture AS 39Corresponding to IFRS 4, Insurance Contracts AS 40Corresponding to IFRS 9, Financial Instruments AS 41Corresponding to IFRS 1, First time Adoption of International Financial Reporting Standards