2. IFRS IFRS stands for “International Financial Reporting Standards” and includes International Accounting Standards (IASs). §IFRSs are developed and approved by IASB (International Accounting Standard Board). These are standards for reporting financial results and are applicable to general purpose financial statements and other financial reporting of all profit- oriented entities. IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards.International Accounting Standards Committee

3. IFRS-Introduction(Contd) International Financial Reporting Standards comprise: International Financial Reporting Standards (IFRS)— standards issued after 2001 International Accounting Standards (IAS)—standards issued before 2001 Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC)—issued after 2001 Standing Interpretations Committee (SIC)—issued before 2001

4. Why IFRS Increasingly being recognised as Global Reporting Standards for financial statements. As global capital markets become increasingly integrated, many countries are moving to IFRS More than 100 countries such as European Union, Australia, New Zealand and Russia currently permit the use of IFRS in their countries. Increased growth of international business Encourage international investing and thereby lead to more foreign capital inflows into the country IFRS would enhance the comparability between financial statements of various companies across the globe Benefit investors who wish to invest outside their own country Reduce cost of compliances by reducing different accounting requirements

5. IFRS In India Earlier it was to be implemented from 1 st April 2011 in the following manner: Phase I (opening balance sheet as at 1 April, 2011):- 1. Companies which are part of BSE - Sensex 30 and NSE - Nifty 50 2. Companies whose shares or other securities are listed outside India; 3. Companies whether listed or not, having net worth of more than Rs. 1,000 crores.

6. IFRS in India(Contd) Phase II (opening balance sheet as at 1 April, 2013):- Companies not covered in Phase 1 and having net worth exceeding Rs. 500 crores. Phase III (opening balance sheet as at 1 April, 2014):- Listed companies not covered in earlier phases But now the implementation has been deferred and the new date is not known.

7. Indian GAAP and IFRS CharacteristicIFRSIndian GAAP Comprehensive IncomeAlong with Income statement displaying profit or loss a statement of comprehensive income should be prepared Only profit and loss statement is prepared. No Comprehensive income statement. Statement of Changes in Equity Separate statement is prepared No such separate statement Extraordinary ItemsDisclosure of extraordinary items is prohibited Should be disclosed in P&L statement Historical CostWhen revaluation option is chosen regular valuations is mandatory Here there is no restriction on frequency of revaluations DepreciationDepreciation on revalued portion cannot be recouped out of revaluation reserve Depreciation on revalued portion can be recouped out of revaluation reserve

8. Indian GAAP and IFRS CharacteristicIFRSIndian GAAP Proposed dividendShould not consider proposed dividend as a liability in the balance sheet Should create a provision for proposed dividend Prior Period ErrorsPrior period errors are to be corrected retrospectively and restate the opening balances Reported as a prior period adjustments in current year results Change in depreciation method Prospective effect in current period Retrospective effect in computation of depreciation Impending ChangesIt required disclosure of any impending changes in accounting policy It does not require such disclosure

9. Indian GAAP and IFRS CharacteristicIFRSIndian GAAP Negative GoodwillAccounted as IncomeAccounted as Capital reserve GoodwillOnly tested for impairment and may have indefinite life Goodwill can be amortized

10. Benefits to India Improved access to International capital markets Reduction in Cost of capital Benchmarking with Global peers Avoidance of multiple reporting Reflecting true value of acquisitions

11. Differences- IFRS and US GAAP CharacteristicIFRSUS GAAP QualitativeRelevant and ReliableConsistent Historical CostPermits Revaluation of PPE & intangible assets Revaluation is prohibited Extraordinary ItemsProhibitedAllowed InventoriesLIFO is prohibitedLIFO is allowed Write DownsOnce inventory is written down it can be reversed if needed Write Downs are irreversible Cash And Cash Equivalents Bank overdrafts includedNot included

12. Differences- IFRS and US GAAP(Contd) Cash Flow Statement IFRSUS GAAPIndian GAAP Interest and dividends received CFO or CFICFOCFI Interest paidCFO or CFFCFOCFF Dividends PaidCFO or CFFCFF Income Taxes Related to Financial and Operating activities Inv--> CFI Fin--> CFF CFO

13. Challenges in adopting IFRS Regulatory endorsement and acceptance Shortage of skilled resources Huge cost of enhancement of IT systems Acceptance by tax authorities Business issues like management reporting system, employee benefit plan, tax planning etc.

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