related to accounts

1. SEGMENT REPORTING
Padmini y s

2. CONCEPT:
• Diversified Company means a company which either is so managerially
decentralised, so lacks operational integration or as such diversified markets that it
may experience rates of profitability, degree of risk, and opportunities for growth
which vary within the company to such an extent that an investor requires
information about these variations in order to make informed decisions.

3. MEANING:
• Segment reporting is the reporting of the operating segments of a company in the
disclosures accompanying its financial statements.
• Segment reporting is intended to give information to investors and creditors
regarding the financial results and position of the most important operating units of a
company, which they can use as the basis for decisions related to the company.

4. BENEFITS:
• AS 17 segment information helps users of financial statements:
1. Better understand the performance of the enterprise
2. Better assess the risk and returns of the enterprises
3. Make more informed judgements about the enterprise as a whole
useful in the following respects
1. Allocation of resources
2. Investment and Credit Decisions
3. Equilibrium in share price
4. True and Fair view

5. AGAINST SEGMENT REPORTING:
• Not a relevant for investors decision
• Misleading investors and external users
• Not prepared with proper information
• High cost
• Leakage of confidential information

6. BASE OF SEGMENTATION REPORTING
• 1.Organisational Division
• 2. Basis of Business activities
a. Broad Industry grouping
b. Product line
c. Individual products and services
 3 Market structure
 4. Geographical segments

7. DISCLOSURE IN SEGMENT REPORTING:
1. Segment Revenue: It is the aggregate of
a. the portion of enterprise revenue that is directly attributable to a segment
b. the relevant of an enterprise revenue that can be allocated on a reasonable
basis to a segment
c. Revenue from transactions with other segment of the enterprise
Following items are not related in segment revenue:
1. Revenue earned at head office or corporate level
2.Income from the investment
3. Extra ordinary gains

8. • 4 Intersegment charges or other jointly incurred expenses
2. Segment Expenses: AS 17 includes
1. the expenses resulting from operating activities of
a segment
2. the relevant portion of enterprise expense that
can be allocated on a reasonable basis to the segment
It not includes:
a. Extraordinary items , net profit or loss of the period,
prior period items and changes in accounting
policies
b. Interest expenses including interest accrued on
advances from other segments
c. Loss on sale of investment

9. • d. income tax expenses
• e. general administrative expenses, head office expenses, and that other expenses
3. Segment profitability
a. Segment contribution
b. Segment net profit
4. Assets: It includes:
a. assets used by or directly associated with segment
b. assets used jointly 2 or more segments
Assets are not included:
1. assets maintained for general corporate purpose
2. Intersegment loans and advances
3. Investments accounted for by equity method

10. 5. Liabilities
6. Fund flow
7. Accounting policies
8. Inter segment transfer
9. Extra ordinary items
10. Minority interest
11.Reconciliation of the consolidated accounts
12.Additional information
13. Disclosure of Budget Data

11. DIFFICULTIES IN SEGMENT REPORTING:
• 1. Basis of segmentation
• 2. Allocation of common cost
• 3. Pricing inter segment transactions
• 4. Comparability of segment data
• 5. Degree of integration in segment activities
• 6. Cost of segment disclosure
• 7. Management conservatism

12. ACCOUNTING STANDARDS:
• Accounting standards are the written statements consisting of rules and guidelines,
issued by the accounting institutions, for the preparation of uniform and consistent
financial statements and also for other disclosures affecting the different users of
accounting information.
• Accounting standards lay down the terms and conditions of accounting policies and
practices by way of codes, guidelines and adjustments for making the interpretation
of the items appearing in the financial statements easy and even their treatment in
the books of account.

13. DEFINITION:
• Bromwich view points
• Accounting standards are uniform rules for financial reporting applicable either to all
or to a certain class of entity promulgated by what is perceived of as predominantly
an element of the accounting community specially created for this purpose.
Standard setters can be seen as seeking to prescribe a preferred accounting
treatment from the available set of methods for treating one or accounting problems.
Other policy statements by the profession will be referred to as recommendations

14. BENEFITS:
1. To improve the credibility and reliability of financial statements
2. Benefits accountants and auditors
3. Determining managerial accountability
4. Reforms accounting theory and practice

15. TYPES OF ACCOUNTING STANDARDS
• A On the basis of subject matter
• 1 Disclosure Standards:
• 2. Presentation standards:
• 3. Content standards
a. Disclosure
b. Specific construct standards
c. Conceptually

16. • 2. On the basis of method preparation and enforcement
• 1. Evolutionary and Voluntary Compliance Standards
• 2.privately set standards
• 3. Governmental Standards

17. DIFFICULTIES IN STANDARD
SETTING
• 1. Difficulties in Definition
• 2. Political bargaining in standard setting
• 3. Conflict in Accounting theories
• 4. Pluralism

18. HARMONISATION OF ACCOUNTING STANDARDS:
•Arguments for harmonisation
1. Growth of international business
2. Globalisation of capital market
3. Investors
4. Multinational companies
5. International auditing firms
6. Developing countries
7. Other interest groups
8. Provisionalism.

19. OBSTACLES IN CONVERGENCE AND
HARMONISATION
• A. Difficulties in standards
• 1. Difference in economic and social environment
• 2. Diverse accounting practices
• 3. Difference in culture
• B. Difficulties in enforcement standards.
a. Tax Laws
b. Disclosure laws
c. Existence of local market
d. Competition among standard setting agencies
e. Unhelpful corporate attitude
• D Other difficulties

20. IFRS
Meaning:
International Financial Reporting Standards (IFRS) are a set of International
Accounting standards stating how particular types of transactions and other events
should be reported in financial statements. IFRS are issued by the International
Accounting Standards Board, and they specify exactly how accountants must
maintain and report their accounts. IFRS were established in order to have a common
accounting language, so business and accounts can be understood from company to
company and country to country.

21. BENEFITS OF ADOPTING IFRS
1. Better Access to Global Capital Markets
2. Easier Global Comparability
3. Easy Cross Border Listing
4. Better Quality of Financial Reporting

22. IFRS IMPLEMENTATION CHALLENGES
• Creating awareness about international accounting practices:
• Availability of skilled staff
• Recognition of IFRS compliant financial statements by Taxation Laws
• Fair value measurement base:
• IFRS compliant financial accounting and reporting system(s):
• Training:

23. INTERNATIONAL FINANCIAL REPORTING
STANDARDS – ADVANTAGES
• Focus on investors

24. ADVANTAGES:
• 1. Focus on Investors
a. Accurate and Timely
b. Supported to Small Investors
c. Reduces the cost of Investors
d. Reducing difference in international reporting
c. Reduce the risk of Investors
• Loss recognition time lines
• Comparability
• Standardisation of accounting and financial reporting
• Better access to foreign capital markets and investments
• Improved comparability of financial information with global competitors
• Relevance

25. DISADVANTAGES
• It creates complexity
• It increases cost and time
• Regulating issues
• Monopolist in setting standards

26. SIASB- OBJECTIVES
• To conceive of and suggest areas in which Accounting Standards need to be
developed.
• To formulate Accounting Standards with a view to assisting the Council of the
ICAI in evolving and establishing Accounting Standards in India.
• To examine how far the relevant International Accounting Standard/International
Financial Reporting Standard can be adapted while formulating the Accounting
Standard and to adapt the same.
• To review, at regular intervals, the Accounting Standards from the point of view of
acceptance or changed conditions, and, if necessary, revise the same.
• To provide, from time to time, interpretations and guidance on Accounting
Standards.
• To carry out such other functions relating to Accounting Standards.