1. IFRS CHAPTER 1 International Financial Reporting standards.

2. Meaning:
The International Financial Reporting Standards, usually called the IFRS Standards, are standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB) to provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
Origin: It began as an attempt to harmonize accounting across European union between the IFRS started namely as IAS (International Accounting Standards) set up by the committee IASC (International Accounting Standard Committee).
In 1st April 2001 the IASC was took over by IASB and named it has IFRS. IASB (International Accounting Standard Board). More than 120 countries adopted IFRS.

3. How it is introduced? In Common Language Standards.
To whom it was introduced? International Shareholders, traders and companies who are dealing outside the country.
Why it was introduced? To provide a common language all over the global boundaries so that International Shareholders, traders and companies can make a business in a comfortable, reliable and understandable.

4. Objectives of IFRS:
To develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles.
To ensure high quality, transparent and comparable information in financial statements and other financial reporting to help investors, other participants in the world’s capital markets and other users of financial information make economic decisions.
To promote the use and rigorous application of those standards.
To promote and facilitate adoption of International Financial Reporting Standards (IFRSs), issued by the IASB, through the convergence of national accounting standards and IFRSs.

5. 5.To make a common platform for better understanding of accounting internationally. 6. Synchronization of accounting standards across the globe. 7. To facilitate greater cross border capital raising and trade. 8. To create comparable reliable & transparent financial statements. 9. To having company wide one accounting language which has subsidiaries in different countries.

6. Challenges of convergence with IFRS. 1
Challenges of convergence with IFRS. 1. Difference in GAAP and IFRS: (wide Gap) Adoption of IFRS means that the entire set of financial statements will be required to undergo a drastic change. The differences are wide and very deep routed. It would be a challenge to bring about awareness of IFRS and its impact among the users of financial statements. 2. Training and Education: Lack of training facilities and academic courses on IFRS will also pose challenge in India. There is a need to impart education and training on IFRS and its application. 3. Legal Consideration: Currently, the reporting requirements are governed by various regulators in India and their provisions override other laws. IFRS does not recognize such overriding laws. The regulatory and legal requirements in India will pose a challenge unless the same is been addressed by respective regulatory.

7. 4. Taxation EFFECT :
IFRS convergence would affect most of the items in the financial statements and consequently the tax liabilities would also undergo a change. Thus the taxation laws should address the treatment of tax liabilities arising on convergence from Indian GAAP to IFRS. 
5. Fair value Measurement:
IFRS uses fair value as a measurement base for valuing most of the items of financial statements. The use of fair value accounting can bring a lot of instability and prejudice to the financial statements, i.e., unrealized gains and losses.
6.Reporting systems:
The disclosure and reporting requirements under IFRS are completely different from the Indian reporting requirements. Companies would have to ensure that the existing business reporting model is amended to suit the reporting requirements of IFRS.

8. 7. Management compensation plan The terms and conditions relating to management compensation plans would also have to be changed. This is because the financial results under IFRS are likely to be very different from those under the Indian GAAP. The contracts would have to be re-negotiated which is also a big challenge.

9. Advantages of IFRS:
To remove the cross border takeovers & acquisitions by investors.
Enhances corporate governance
True & fair view of their co’s transaction
IFRS balance sheet is closer to economic value.
Reduces the risk for new or small investors while trading professional investors cannot take advantage as it is simple to understand financial statements.
It helps new or small investors, as reporting standards are simple and make easy to understand, it put new or small investors in a same position with professional investors.
Informative: IFRS tends to be more understandable for investors as they can understand the financial statements without the necessity of other resources.

10. 8. The market as expanded globally, the convergence benefits the economy by increasing growth of its international business and increase in capital formation.
9. Convergence with IFRS contributes to investors understanding & confidence in high quality financial statements.
10. Industries are able to raise capital from foreign markets at lower cost & creates confidence in the minds of foreign investors.

11. Process of setting IFRS:
International Financial Reporting Standards (IFRSs) are developed through an international consultation process, the “due process", which involves interested individuals and organisations from around the world.
The due process comprises six stages, with the Trustees of the IFRS Foundation having the opportunity to ensure compliance at various points throughout:
1. Setting the agenda
2. Planning the project
3.Developing and publishing the discussion paper
4. Developing and publishing the exposure draft
5. Developing and publishing the standard
6. After the standard is issued

12. Need for convergence
The convergence of Accounting Standards is gaining importance among accounting circles. There are pressures in favor of accounting convergence. The main objective is arriving uniform set of accounting standards. The main reasons for the development of convergence are
International of national business concerns
Need of increased foreign capital.
Growth of international markets.
Business Process Outsourcing. (BPO)
Growth of international audit firms.

13. 1. Setting the agenda
The IASB, by developing high quality financial reporting standards, seeks to better quality information that is of value to those users of financial reports. IASB considers:
The relevance to users of the information and the reliability of information that could be provided,
Existing guidance available,
The possibility of increasing convergence,
The quality of the IFRS to be developed,
Resource constraints.

14. To help the IASB in considering its future agenda, its’ staff raised new issues may also arise from a change in the IASB’s Conceptual Framework for Financial Reporting.
The IASB discusses potential agenda from other standard setters and other interested parties, the IFRS Advisory Council and the IFRS Interpretations Committee, and staff research and other recommendations.
The IASB’s approval to add agenda items, as well as its decisions on their priority, is by a simple majority vote at an IASB meeting.

15. 2. Planning the project
When adding an item to its active agenda, the IASB decides whether to conduct the project alone or jointly with another standard-setter.
The IASB access the issue against criteria such as
Clarifying,
Correcting,
Well defined and sufficiently
Completed on a timely basis,
All criteria must be met to qualify for inclusion in annual improvements.

16. 3. Developing and publishing the discussion paper
A discussion paper includes a comprehensive overview of the issue, possible approaches in addressing the issue, the preliminary views of its authors or the IASB, and an invitation to comment.
All discussions of technical issues related to the draft paper take place in public sessions.
When the draft is completed and the IASB has approved it for publication the discussion paper is published to invite public comment and provides the period of 120 days for comment on a discussion paper.
After the comment period has ended the project team analyses and summarises the comment letters for the IASB’s consideration. Comment letters are posted on the IASB’s website.
If the IASB decides to explore the issues further, additional meeting will be commenced.

17. 4. Developing and publishing the exposure draft
An exposure draft is the IASB’s main vehicle for consulting the public and it is a compulsory step. After resolving the issues at its meeting the IASB instructs the staff to draft the exposure draft.
When the draft has been completed, the IASB publishes it for public comment only after getting minimum of nine votes.
An exposure draft contains an invitation to comment on a draft that proposes requirements on recognition, measurement and disclosures.
After the comment period ends, the IASB reviews the comment letters received and is required to consult IFRS Advisory council and maintains contact with various group of constituents.

18. The financial statements of those applying IFRSs, The compliance costs
Developing and publishing the standard
After resolving issues arising from the exposure draft, the IASB considers whether it should expose its revised proposals for public comment (second) i.e., re-exposure.
Then it prepares a direct feedback statement & project summary
At the same time it prepares a new IFRS which effects on:
The financial statements of those applying IFRSs,
The compliance costs
Costs of analysis
A valuation model,
Comparability of financial information
Quality of the financial information.

19. 6. After the standard is issued
When the IASB is satisfied with its exposure draft. IASB members have voted in favour of publication the IFRS is issued.
6. After the standard is issued
After an IFRS is issued, IASB members and staff hold regular meetings to help understand unanticipated issues related to the practical implementation and potential impact of its provisions.
The IASB carries out a post-implementation review of IFRS, that may be prompted by:
Changes in the financial reporting.
Comments made by the group constituents about the quality of the IFRS. It may also continue the informal consultation through the implementation of IFRS.

20. BENEFICIARIES OF CONVERGENCE WITH IFRS
Some of benefits of IFRS is discussed below..
1. The Investors: Convergence of Indian Accounting Standards with IFRS makes accounting information more reliable, relevant, timely and comparable across different legal and economic frameworks and requirements. It will also develop better understanding of financial statements worldwide which increase the confidence among the people as investors., from whole of the world.
2. The Industry: The other important is the industry which in the event of convergence with IFRS will be benefited because of some basic reasons. Firstly it will enhance confidence in the minds of the foreign investors. Secondly, it decreases the burden of financial reporting. Thirdly, it would make the process of preparing the individual and group financial statements easier and simplest.
And the last and important one is that this will reduce cost of preparing the financial statements using different sets of accounting standards.

21. 3. Accounting Professionals: However, there would be initially many problems but convergence with IFRS would surely benefit the accounting professionals and it will be helpful them to sell their talent and expertise across the globe. 4. The Economy: Convergence with IFRS would help industry grow and is beneficial to the corporate entities in the country as the international comparability is also benefiting the industrial and capital markets in the country which lead to better economy across the country.

22. The following IFRS statements are currently issued: IFRS 1 First time Adoption of International Financial Reporting Standards IFRS 2 Share-based Payment IFRS 3 Business Combinations IFRS 4 Insurance Contracts IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 6 Exploration for and Evaluation of Mineral Resources IFRS 7 Financial Instruments: Disclosures

23. IFRS 8 Operating Segments IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IFRS 14 Regulatory Deferral Accounts IFRS 15 Revenue from contracts with customers

24. IAS STANDARDS IAS 1 Presentation of Financial Statements
IAS STANDARDS IAS 1 Presentation of Financial Statements. IAS 2 Inventories IAS 3 Consolidated Financial Statements Originally issued 1976, effective 1 Jan Superseded in 1989 by IAS 27 and IAS 28 IAS 4 Depreciation Accounting Withdrawn in 1999, replaced by IAS 16, 22, and 38, all of which were issued or revised in 1998 IAS 5 Information to Be Disclosed in Financial Statements Originally issued October 1976, effective 1 January Superseded by IAS 1 in 1997 IAS 6 Accounting Responses to Changing Prices Superseded by IAS 15, which was withdrawn December 2003 IAS 7 Cash Flow Statements

25. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 9 Accounting for Research and Development Activities – Superseded by IAS 38 effective IAS 10 Events After the Balance Sheet Date IAS 11 Construction Contracts(withdrawn) IAS 12 Income Taxes IAS 13 Presentation of Current Assets and Current Liabilities – Superseded by IAS 1. IAS 14 Segment Reporting (superseded by IFRS 8 on 1 January 2008) IAS 15 Information Reflecting the Effects of Changing Prices – Withdrawn December 2003

26. IAS 16 Property, Plant and Equipment IAS 17 Leases IAS 18 Revenue IAS 19 Employee Benefits IAS 20 Accounting for Government Grants and Disclosure of Government Assistance IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 23 Borrowing Costs IAS 24 Related Party Disclosures IAS 27 Separate Financial Statements IAS 28 Investments in Associates and Joint Ventures

27. IAS 29 Financial Reporting in Hyper inflationary Economies IAS 32 Financial Instruments: Presentation IAS 33 Earnings Per Share IAS 34 Interim Financial Reporting IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 38 Intangible Assets IAS 40 Investment Property IAS 41 Agriculture

28. The following are the general features in IFRS:
Fair presentation and compliance with IFRS: Fair presentation requires the faithful representation of the effects of the transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework of IFRS.
Going concern: Financial statements are present on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so.
Accrual basis of accounting: An entity shall recognise items as assets, liabilities, equity, income and expenses when they satisfy the definition and recognition criteria for those elements in the Framework of IFRS.
Materiality and aggregation: Every material class of similar items has to be presented separately. Items that are of a dissimilar nature or function shall be presented separately unless they are immaterial.

29. Offsetting: Offsetting is generally forbidden in IFRS
Offsetting: Offsetting is generally forbidden in IFRS. However certain standards require offsetting when specific conditions are satisfied (such as in case of the accounting for defined benefit liabilities in IAS 19 and the net presentation of deferred tax liabilities and deferred tax assets in IAS 12).
Frequency of reporting: IFRS requires that at least annually a complete set of financial statements is presented. However listed companies generally also publish interim financial statements (for which the accounting is fully IFRS compliant)for which the presentation is in accordance with IAS 34
Understand ability: presentation and classification information is clear and concise to make it understandable to users.
Comparability: The comparison financial statements from one period to the next or for two companies in the same industry so that you can make informed decisions about the companies.

30. The following are the general features in IFRS:
Fair presentation and compliance with IFRS
Going concern
Accrual basis of accounting
Materiality and aggregation
Offsetting frequency of reporting
Frequency of reporting
Understandability
comparability