1. An Introduction International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRSs) are the talk of the day in Europe. Every European company is coming out with guidance and effect of IFRS in its financial statements.
Case for Global Standard
Need for Global Harmonization of Accounting Standards
The idea of global harmonization of accounting standards stems from lack of comparability of financial statement across the globe. In particular, a company having presence in different countries has to prepare financial statements as per generally accepted accounting principles of the country of operation and then it is required to reconcile all such statements for the purpose of consolidation as per GAAP of the country to which the parent belongs. This increases the cost of preparing the financial statement at the same time performance measurement across the geographical region becomes difficult because of non-comparable accounting rules.
As global diversification of portfolio has become an important aspect of fund management, a uniform GAAP throught out the world would help increase understandability of financial statements as well as cross boarder raising of funds. The expanding globalization of business and investment is driving increased interest and as well as pressure, to enhance the quality of financial reporting throughout the world – to compare apples with apples, so to speak- so that effective evaluation between companies is made possible.
To achieve this objective, the International Accounting Standards are being modified to provide a stable platform for development of global accounting standards titled International Financial Reporting Standards (IFRSs). This calls for continuous improvements in the existing standards and their convergence with the other GAAPs on an ongoing basis. Further, emerging and complex issues needs to be addressed on the same platform to achieve global convergence.

2. Preparation and Presentation of Financial Statements - India
Basic Framework
Generally Accepted Accounting Practices (Accounting Standards & Guidelines) - Indian GAAP
Selected Accounting Policies
Regulatory Requirements

3. Preparation and Presentation of Financial Statements
INDIA
Basic Framework
Regulatory Requirements
Indian GAAP
Accounting Policies US
Basic Framework
Regulatory Requirements
US GAAP
Accounting Policies Vs
Differences
Impact in Financial Statements
Accounting Treatment difference
Disclosure requirements

4. Need for understanding the differences
Business going global
Consolidation of financial statements
Enhance confidence of global stakeholders
Facilitate international acquisitions
Provide Standardized Quality of MIS across global businesses
Requirement of Global Financial Reporting Language
International Accounting Standard Committee formed in (IASC)

5. Functions of IASC Issue of International Accounting Standards (IAS)
IAS 1 to IAS 41 from 1973 to 2001
Issue of Standing Interpretations Committee (SIC)
SIC 1 to SIC 32 till 1973 to 2001
Some of these IAS
considered
While framing
local Standards
IASC replaced by International Accounting Standard Board (IASB) in 2001
Issue of International Financial Reporting Standards (IFRS)
IFRS 1 to IFRS 8
Issue of International Financial Reporting Interpretation Committee (IFRIC)
IFRIC 1 to IFRIC 16

6. From IAS to IFRS International Financial Reporting Standards (IFRSs)
International Accounting
Standards Committee (IASC)
International Accounting
Standards Board (IASB)
1973
2001
2000
Future
International Accounting
Standards (IAS)
IFRS
IFRIC
IAS
SIC Interpretations : Total Issues 1 to SICs in force as on
IFRIC 1 to 5 in force as on
SIC
IFRS
International Financial Reporting Standards (IFRSs)

7. List of IAS/IFRS
IAS NO
TITLE
CORRESPONDING AS 1
Presentation of Financial Statements 2
Inventories 7
Cash Flow Statements 3 8
Net Profit or Loss for the period, Fundamental Errors and Change
in Accounting Policies 5 10
Events after the Balance Sheet date 4 11
Construction Contracts 12
Income taxes 22 14
Segmental Reporting 17 15
Information reflecting the effect of changing prices - 16
Property, Plant and Equipment
6 & 10
Leases 19 18
Revenue 9
Employees Benefits 20
Accounting for Govt Grants and Disclosure of Government
Assistance 21
The effects of changes in the foreign exchange rates
Business Combination

8. IAS NO
TITLE
CORRESPONDING AS 23
Borrowing Costs 16 24
Related Party Disclosures 18 26
Accounting and Reporting by Retirement Benefits Plan - 27
Consolidated Financial Statements and Accounting for Investments in Subsidiaries 21 28
Accounting for Investments in Associates 29
Financial Report in Hyper Inflationary Economics 30
Disclosure in the financial statements of the Banks and similar Financial Institutions 31
Financial Reporting of Interest in Joint Ventures 33
Earning per Share 20 35
Discontinuing Operations 25 36
Impairment Assets 37
Provisions, Contingent liabilities and Contingent assets 38
Intangible Assets 39
Financial Instruments : Recognition and Measurement
30 & 31 40
Investment Property 41
Agriculture
IFRS 1
First Time Adoption of IFRS
IFRS 2
Share Based Payment
IFRS 3
Business Combinations 14
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
IFRS 8
Opening Segments

9. IFRS Today and Tomorrow
Today IFRS is used in over 100 countries:
Required across all EU countries, starting in 2005
Argentina, Brazil, Canada and India have announced mandated use
By 2014, it is expected that:
All major countries will have adopted IFRS to some extent
China and Japan will be substantially converged to IFRS
U.S. public companies will begin to be required to use IFRS
Accounting Standards Used by Global Fortune 500 9

10. IFRS and India
Formulation and issue of Accounting Standard (AS) by Accounting Standard Board of the ICAI
Convergence with IFRS required
Formation of IFRS Task Force
Achieving convergence with IFRS
Laying down a road map for the above
Adoption of IFRS effectively from 1st April 2011. 10

11. Compliance with IFRS Compliance with IFRS includes:
All active standards (IASs and IFRSs)
All active interpretations (SICs and IFRICs)
IFRS requires presentation of comparative period
Must make explicit and unreserved statement of compliance 11

12. First Time Implementation (IFRS 1)
Applicable when an entity makes its first explicit and unreserved reference to IFRS
Generally apply retrospectively all IFRS effective at reporting date
Certain exemptions can be elected
Some exceptions that must be followed
Requires one year of comparative financial information
Transition adjustments recognized in retained earnings
Must explain effect of transition to IFRS

13. Key Dates 01/04/2010 01/04/2011 31/03/2012 First IFRS reporting period
01/04/ /04/ /03/2012
First IFRS reporting period
Comparative period under IFRS
Last reporting under Indian GAAP
Date of
Transition
Date of
Applicability
First IFRS
Reporting Date

14. Key Differences IFRS Vs Indian GAAP

15. Key Differences between IFRS and Indian GAAP
Inventory
Events occurring after Balance Sheet Date
Prior Period Items and changes in Accounting policies
Fixed Assets

16. Valuation of Inventories (AS 2) Vs Inventories (IAS 2)
INVENTORY
Valuation of Inventories (AS 2) Vs Inventories (IAS 2)

17. Key Differences - Inventory
Particulars
IFRS
Indian GAAP
US GAAP
Scope
IAS 2 includes provisions
relating to the work in
progress of a service
provider
AS 2 excludes work in
progress arising in the
normal course of business
of service provider. Hence
there is no guidance for the
same.
Similar to Indain GAAP
IAS 2 does not apply to
inventories held by
commodity traders
There is no scope exemption
in AS 2 for any inventory
held by commodity traders

18. Key Differences - Inventory
Particulars
IFRS
Indian GAAP
US GAAP
Inventory Valuation
Inventories are carried at the
lower of cost or net
realizable value
Lower of cost or market
subject to upper/lower limit
of NRV
Frequency of
Assessment of NRV
A new assessment of Net
Realizable Value is required
to be made in each
Reporting period
No specific guidance in
AS 2.
Write Down
Reversal is required for a
subsequent increase in
value of inventory previously
write down
Reversal of write down of
inventory is not permitted

19. Key Differences - Inventory
Particulars
IFRS
Indian GAAP
US GAAP
Cost Formula
Application
The following cost formula
allowed :
FIFO Method
Weighted Average Cost
LIFO method is not allowed
LIFO method is not allowed
LIFO Method
Consistency in cost
formula application
The same cost formula is
used for all inventories that
have a similar nature and
use to the entity
Not specified. However
consistency is a
fundamental principle

20. Key Differences - Inventory
Particulars
IFRS
Indian GAAP
US GAAP
Cost of Inventory
Cost of inventory excludes
only Selling Cost,
Not Distribution Cost
Cost of inventory does not
include
Selling & Distribution Cost
as per AS 2
Similar to AS 2
Purchase under
Deferred Settlement
Terms
Difference between the
purchase price of inventory
for normal credit terms and
the amount paid for deferred
settlement terms is
recognized as interest
Expense
Inventories purchased on
deferred settlement terms
are not explicitly dealt with
in the accounting standard
on inventories
Disclosure
Requirements
Disclosure requirements are
same except the following :
Any write down and reversal of any write down
Circumstances they led to reversal of a write down
Carrying amount of inventory that are pledged as securities
No specific requirements
for disclosure

21. EVENTS AFTER THE BALANCE SHEET DATE
Contingencies and Events occurring after the balance sheet date (AS 4) Vs Events after Reporting Period (IAS 10)

22. Key Differences – Events after Balance Sheet Date
Particulars
IFRS
Indian GAAP
US GAAP
Proposed Dividend
An Entity should not recognize
the proposed dividends as a
liability at the balance sheet
date.
Companies are required
to make provision for
proposed dividend, even
though they are proposed
after the balance sheet
date
Similar to IFRS
Date of authorization
Date of authorization for issue of
financial statements and the
authorizing authority should be
specifically mentioned in
financial statements itself
No such requirements in
AS 4
Disclosure of
Non Adjusting events
Material Non Adjusting Events
are required to be disclosed in
the financial statements
Non adjusting events are
required to be disclosed
in the report of approving
authority

23. PRIOR YEAR ITEMS
Net P & L for the period, Prior Period items and change in Accounting Policies (AS 5) Vs Accounting policies, Changes in Accounting Estimates and Errors (IAS 8)

24. Key Differences – Prior Period Items, Change in Accounting Policies
Particulars
IFRS
Indian GAAP
US GAAP
Definition
Prior Period Errors
Broad definition of Prior Period
items. It includes all the items in
the financial statements
AS 5 covers only Income
and Expenses in the
definition of prior period
items
Prior Period errors are to be
corrected retrospectively and
restate the opening balances of
assets, liability and equity
Reported as a prior
period adjustment in
current year results.
Comparatives are not
required to restate.
Similar to IFRS
Extraordinary Item
It prohibits disclosure of any
items as Extraordinary Items
Separate disclosure is
required as per AS 5
Impending Changes
It requires disclosure of any
impending change in
accounting policy
It does not require such
disclosure

25. Key Differences – Prior Period Items, Change in Accounting Policies
Particulars
IFRS
Indian GAAP
US GAAP
Absence of standard
or interpretation
It provides specific guidance on
the selection of accounting
policies where there is no IFRS
or interpretation that specifically
applies to a transaction.
No specific guidance
under AS 5

26. FIXED ASSETS
Accounting for Fixed Assets (AS 10) Vs Properly, Plant and Equipment (IAS 16)

27. Key Differences – Fixed Assets
Particulars
IFRS
Indian GAAP
US GAAP
Definition
Tangible Items that
Are held for use in the
production or supply of goods or service, for rentals to others, or for administrative purposes; and
b) Are expected to be used during more than one period
Fixed Asset is an Asset held
with the intention of being
used for the purpose of
producing or providing goods
or services and is not held for
sale in the ordinary course of
business
Initial Measurement
of cost
Initial measurement of cost
also includes
Fair value gains or losses on qualifying cash flow hedges relating to the purchase of PPE in a foreign currency
Cost of dismantling and removing the item or restoring the site on which PPE is located
No specific guideline on the
measurement of gains/losses
on qualifying cash flow
hedges and capitalization of
dismantling and site
restoration cost
Similar to IFRS except
hedge gains or losses on
qualifying cash flow
hedges are not included

28. Key Differences – Fixed Assets
Particulars
IFRS
Indian GAAP
US GAAP
Capitalization
It mandates component
Accounting. Each major part
of the plant to be
depreciated separately
AS 10 does not require full
adoption of component
accounting. It is stated that
accounting of asset may be
improved through allocation of
cost to various parts of the
asset
Does not require a
component approach for
depreciation
Determination of
Depreciation
The depreciation amount of
an item of PPE is allocated
on a systematic basis over
its useful life.
Higher of the following :
Depreciation calculated as per the rate specified in the Schedule XIV of the Companies Act.
Depreciation as determined based on estimated useful life of the assets
Similar to IFRS

29. Key Differences – Fixed Assets
Particulars
IFRS
Indian GAAP
US GAAP
Depreciation Method
A variety of depreciation
methods can be used to
allocate the depreciable
amount on systematic basis
over its useful life
Can be followed
either SLM or WDV
Similar to IFRS
Change in
Changes in the depreciation
method are considered as
change in accounting
Estimate
Prospective effect in current
period
Policies and effects to be
quantified and disclosed
Retrospective effect in
computation of depreciation
Review of Useful Life
and Residual Value
Re assessment of
useful life and residual value is
required at least at each
financial year end
AS 10 does not specify any
such requirement

30. Key Differences – Fixed Assets
Particulars
IFRS
Indian GAAP
US GAAP
Subsequent Costs
Cost of replacement is to be
capitalized
The carrying amounts of those
parts that are replaced is to be
derecognized
Replacement cost is
Expensed
No requirement for
decapitalizing the carrying
amount of replaced items
Similar to IFRS
Major inspection
cost and overhaul
expenditure
The cost of major inspection
and overhaul expenses are to
be capitalized
The expenditure that
increases the benefit over
previously assessed
capacity is capitalized.
The inspection cost and
overhaul expenses are
expensed
Purchase under
Deferred Settlement
Terms
The cost of an item of PPE is
the cash price equivalent at the
recognition date. If payment is
deferred beyond normal credit
terms, the difference between the
cash price equivalent and the
total payment is recognized as
interest over the period of credit.
No specific guideline
under AS 2 with respect
to fixed asset acquisition
under deferred
settlement scheme

31. Key Differences – Fixed Assets
Particulars
IFRS
Indian GAAP
US GAAP
Revaluation
If an entity adopts the revaluation
model, re valuation is required
to be made with regular period to
ensure that the carrying amount
does not differ materially from
that which would be determined
using fair value at the end of the
reporting period
No specific requirement
on frequency of
revaluation
Similar to IFRS
Group
If an item of PPE is revalued,
then the entire class of PPE to
which that asset belongs to be
revalued.
Revaluation Approach is
ad hoc in nature.
Depreciation on
Depreciation on revalued portion
cannot be recouped out of
revaluation reserve
Depreciation on revalued
portion can be recouped
out of revaluation reserve

32. Key Differences – Fixed Assets
Particulars
IFRS
Indian GAAP
US GAAP
Compensation
Compensation received from
third parties against loss of items
of PPE are to be included in Profit
& Loss when the compensation
becomes receivable
No specific requirement.

33. Way Forward Minutes of the meeting to be documented
Drafting the Action Plan to be taken
Mapping the differences for other areas

34. THANK YOU