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Ifrsconvergence 121009062713-phpapp02
 

 

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    Ifrsconvergence 121009062713-phpapp02 Ifrsconvergence 121009062713-phpapp02 Presentation Transcript

    • Convergence with IFRS – Opportunities for CA’s CA. K.Raghu Central Council Member Member - Accounting Standards Board
    • Convergence with IFRSs: Need ofConvergence with IFRSs: Need of the Hour!!!the Hour!!! • IFRSs are increasingly being recognised as Global Financial ReportingIFRSs are increasingly being recognised as Global Financial Reporting StandardsStandards • >>122 countries , such as countries of European Union, Australia, New122 countries , such as countries of European Union, Australia, New Zealand and Russia currently require/permit use of or have policy ofZealand and Russia currently require/permit use of or have policy of convergence with IFRSsconvergence with IFRSs – Brazil & Canada-announced convergence from 2010 & 2011Brazil & Canada-announced convergence from 2010 & 2011 respectively.respectively. – China and Canada have announced their intention to adopt IFRSChina and Canada have announced their intention to adopt IFRS – Securities & Exchange Commission (SEC), USA has permitted filing ofSecurities & Exchange Commission (SEC), USA has permitted filing of IFRS-compliant financial statements without requiring presentation ofIFRS-compliant financial statements without requiring presentation of reconciliation statement between US GAAPs and IFRSs.reconciliation statement between US GAAPs and IFRSs. – SEC roadmap permitting US domestic companies to prepare financialSEC roadmap permitting US domestic companies to prepare financial statements as per IFRSs:statements as per IFRSs: Will examine this proposal and take a decision inWill examine this proposal and take a decision in 20112011 If considered fit, allow them to do so fromIf considered fit, allow them to do so from 20142014
    • Financial Reporting Standards • Sound financial reporting structure is imperative to the economic development and effective functioning of capital markets in emerging economies. • It helps in mitigating risks, building investor confidence and putting scarce economic resources to their best use. • High Quality Financial Reporting Standards is a pillar on which the financial reporting structure of an economy stands.
    • Financial Reporting Standards • Historically, various countries in Asia and countries with developing economies were developing their own national accounting standards. • In some countries, the standard-setters were professional bodies while in others, they were governments and regulators. • Accordingly there was diversity among the Standards developed by various countries • These Standards reflected the culture, history, and the characteristics of accounting problems facing the country concerned.
    • Key Challenges in Adopting/ Adapting IFRSs in Emerging Economies • Accounting Standard-setters in emerging Economies are facing various challenges in adopting/ adapting IFRSs such as the following:  Non-compatible legal and regulatory environment  Concerns over SMEs  Economic Environment  Level of preparedness  Education Needs of Preparers/Auditors
    • ICAI’s Decision to ConvergeICAI’s Decision to Converge with IFRSwith IFRS • In view of global developments and expected benefits ofIn view of global developments and expected benefits of convergence with IFRS, in 2007, ICAI decided to convergeconvergence with IFRS, in 2007, ICAI decided to converge with IFRSwith IFRS • The Ministry of Corporate Affairs, Govt. of India, alsoThe Ministry of Corporate Affairs, Govt. of India, also supported the initiative of ICAI to converge with IFRSsupported the initiative of ICAI to converge with IFRS • Roadmap for implementation of IFRS-convergedRoadmap for implementation of IFRS-converged standards in phase-wise manner, beginning fromstandards in phase-wise manner, beginning from accounting periods commencing on or after 1st Aprilaccounting periods commencing on or after 1st April 2011, has been laid down by the MCA2011, has been laid down by the MCA
    • ICAI’s initiatives to achieve Convergence • Formulation of IFRS-converged Accounting StandardsFormulation of IFRS-converged Accounting Standards is the most significant milestoneis the most significant milestone to achieve convergence – Accounting Standards corresponding to all IAS/IFRS areAccounting Standards corresponding to all IAS/IFRS are being formulatedbeing formulated – This process is nearing completionThis process is nearing completion – Status of preparation of IFES-converged Standards is givenStatus of preparation of IFES-converged Standards is given in subsequent slidesin subsequent slides – It is expected that all the Standards would shortly be readyIt is expected that all the Standards would shortly be ready for notification by the Government.
    • ICAI’s initiatives to achieve Convergence (Contd…) • Process followed in formulation of IFRS-convergedProcess followed in formulation of IFRS-converged StandardsStandards – IFRS are reviewedIFRS are reviewed – As far as possible, no change is made unless absolutelyAs far as possible, no change is made unless absolutely essential keeping in view the Indian conditions andessential keeping in view the Indian conditions and circumstancescircumstances – Optional treatments prescribed under IFRS are removedOptional treatments prescribed under IFRS are removed keeping in view Indian environment to bring aboutkeeping in view Indian environment to bring about comparabilitycomparability – Conceptual issues, if any, are identified and taken up withConceptual issues, if any, are identified and taken up with the IASBthe IASB
    • ICAI’s initiatives to achieve Convergence (Contd…) S No. Standards Status 1. Standards cleared by Council 36 2. Exposure Drafts issued Nil 3. Standards before ASB 2 Total 38 Status of preparation of IFRS converged standards as far as ICAI is concerned
    • ICAI’s initiatives to achieve Convergence (Contd…) S No. Standards Status 1. Standards cleared by NACAS 23 2. Standards considered by NACAS and specific issues to be resolved 9 3. Standards to be placed before NACAS at its next meeting 4 Total 36 Status of preparation of IFRS converged standards as far as NACAS is concerned All IFRICs and SICs contained in the above Standards will be considered by NACAS separately.
    • MCA’s Initiatives for ConvergenceMCA’s Initiatives for Convergence • Press Release issued by MCA indicating:  Two separate sets of Accounting Standards u/s section 211(3C) of the Companies Act, 1956. • Indian Accounting Standards converged with IFRS applicable to the specified class of companies in three phases • Existing notified Accounting Standards applicable to companies not coved by above including Small and Medium Companies (SMCs).  Roadmap for application of IFRS converged Accounting Standards  Roadmap for Banking and Insurance companies
    • MCA’s Initiatives for ConvergenceMCA’s Initiatives for Convergence • Constitution of following Core Group and Sub Groups: – Core Group headed by Secretary, MCA – Sub-group 1 headed by Mr. Y.H. Malegam • to finalise the roadmap for achieving convergence • to get the changes in laws and regulations – Sub-group 2 headed by Mr. Mohandas Pai to address industry-specific issues
    • Phase-wise Roadmap for application of IFRS converged Accounting Standards for Companies • Phase-I:- Following categories of companies will prepare opening balance sheets as per IFRS converged Standards as at 1st April, 2011, if the financial year commences on or after 1st April,2011 a. NSE – Nifty 50 b. BSE - Sensex 30 c. Whose shares or other securities are listed on stock exchanges outside India d. Whether listed or not, which have a net worth in excess of Rs.1,000 crores. ( Phase-1 implementation has been deferred by the Ministry of Corporate Affairs)
    • Phase-wise Roadmap for application of IFRS converged Accounting Standards for Companies • Phase-II :- 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 1st April, 2013, if the financial year commences on or after 1st April, 2013
    • Phase-wise Roadmap for application of IFRS converged Accounting Standards for Companies • Phase-III :- Listed companies which have a net worth of Rs. 500 crores or less will convert their opening balance sheet as at 1st April, 2014, if the financial year commences on or after 1st April, 2014, whichever is later,
    • Roadmap - applicability of notified accounting standards which are not converged with the IFRS • companies which fall in the following categories will need to follow only the notified accounting standards which are not converged with the IFRS. These companies are: - (a) 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. (b) Small and Medium Companies (SMCs). (though they may voluntarily opt to follow the notified accounting standards which are converged with the IFRS)
    • ROADMAP FOR INSURANCE COMPANIES, BANKING COMPANIES AND NON-BANKING FINANCE COMPANIES
    • Insurance companies All insurance companies will convert their opening balance sheet as at 1st April, 2012 in compliance with the converged Indian Accounting Standards.
    • Banking companies Converged Indian Accounting Standards. • All scheduled commercial banks and those urban co- operative banks (UCBs) which have a net worth in excess of Rs. 300 crores will convert their opening balance sheet as at 1st April, 2013 • (b) Urban co-operative banks which have a net worth in excess of Rs. 200 crores but not exceeding Rs. 300 crores will convert their opening balance sheets as at 1st April, 2014
    • Banking companies Existing notified Indian Accounting Standards which are not converged with IFRSs • Urban co-operative banks which have a net worth not exceeding Rs. 200 crores and Regional Rural banks (RRBs) (though they may voluntarily opt to follow converged Indian Accounting Standards do so)
    • Non-Banking Financial companies • Following NBFCs will convert their opening balance sheet as at 1st April, 2013 if the financial year commences on 1st April (or if the financial year commences on any other date, then on the date immediately following 1st April, 2013) (a) NSE – Nifty 50 (b) BSE - Sensex 30 (c) Companies, whether listed or not, which have a net worth in excess of Rs.1,000 crores
    • Non-Banking Financial companies • All listed NBFCs and those unlisted NBFCs which do not fall in the categories (in last slide) and • which have a net worth in excess of Rs. 500 crores will convert their opening balance sheet as at 1st April 2014 if the financial year commences on 1st April (or if the financial year commences on any other date, then on that date following 1st April 2014)
    • Non-Banking Financial companies • Unlisted NBFCs which have a net worth of Rs. 500 crores or less – need to follow only the notified Indian accounting standards which are not converged with the IFRSs. – though they may voluntarily opt to (i.e the converged Indian accounting standards), do so, but
    • Recent developments to achieve Convergence • IFRS-compliant Schedule VI to the Companies Act hasIFRS-compliant Schedule VI to the Companies Act has been formulated and approved by NACAS.been formulated and approved by NACAS. • Draft of Schedule XIV to the Companies Act is underDraft of Schedule XIV to the Companies Act is under preparation and the draft is likely to be finalised shortly.preparation and the draft is likely to be finalised shortly. • Scheme of numbering of IFRS converged IndianScheme of numbering of IFRS converged Indian Accounting Standards has been finalised.Accounting Standards has been finalised.
    • ICAI’s other initiatives to achieveICAI’s other initiatives to achieve ConvergenceConvergence • Another significant role of the ICAI is to provide education andAnother significant role of the ICAI is to provide education and training to all the concerned stakeholders for propertraining to all the concerned stakeholders for proper implementation of IFRSsimplementation of IFRSs – Certificate course on IFRSs has been launchedCertificate course on IFRSs has been launched – Around 2000 members have undergone this courseAround 2000 members have undergone this course – IFRS e-learning course has been startedIFRS e-learning course has been started – in collaboration with the MCA, a large-scale IFRS awareness drive toin collaboration with the MCA, a large-scale IFRS awareness drive to hold workshops at various places in the country has been startedhold workshops at various places in the country has been started – As a part of this IFRS awareness drive, 14 workshops have beenAs a part of this IFRS awareness drive, 14 workshops have been organised which have been attended by more than 850 delegates.organised which have been attended by more than 850 delegates.
    • ICAI’s other initiatives to achieveICAI’s other initiatives to achieve ConvergenceConvergence • Taking up issues with IASB where there are conceptualTaking up issues with IASB where there are conceptual differencesdifferences • Participation in IFRS development processParticipation in IFRS development process 1)1) Participation in the IFRS formulation from an early stageParticipation in the IFRS formulation from an early stage – Sending comments to IASB on various discussion papers, exposureSending comments to IASB on various discussion papers, exposure drafts, etc.drafts, etc. – Participation in World Standards-setters meetings with IASBParticipation in World Standards-setters meetings with IASB 2)Participation in Regional Standards-setters meetings with IASB2)Participation in Regional Standards-setters meetings with IASB 3)3)Enhancing relations and communication with other standard settersEnhancing relations and communication with other standard setters 4)Participation in international round-tables4)Participation in international round-tables before the finalisation ofbefore the finalisation of IFRSIFRS