Ifrs Over View Ca Orientation Programe March 2011


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IFRS Over View Ca Orientation Programe March 2011

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Ifrs Over View Ca Orientation Programe March 2011

  1. 1. Overview of Ind- AS(IFRS)ORIENTATION PROGRAMME FORNEWLY QUALIFIED CHARTERED ACCOUNTANTSThe Institute of Chartered Accountants of India,Bangalore, 16th March’2011CA Aditya SinghalM.Com, FCA, DISA(ICAI),CertIFRS, Six Sigma (GB & BW)+91 99728 27300Aditya.singhal@icai.orgJoin IFRS professional group for regular IFRS update:http://finance.groups.yahoo.com/group/IFRS-Professional/ 1
  2. 2. Convergence with IFRSs: Need of the Hour!!• IFRSs are increasingly being recognized as Global Financial Reporting Standards• >113 countries currently require/permit use of or have policy of convergence with IFRSs –Brazil & Canada-announced convergence from 2010 & 2011 respectively –Securities & Exchange Commission (SEC), USA has permitted filing of IFRS-compliant financial statements without requiring presentation of reconciliation statement between US GAAPs and IFRSs. –SEC roadmap permitting US domestic companies to prepare financial statements as per IFRSs: #Will examine this proposal and take a decision in 2011 #If considered fit, allow them to do so from 2014 2
  3. 3. Why IFRS ?• Globalization• Better transparency• Cost effectiveness• Scope of professional judgment• Fair valuations• Comparability 3
  4. 4. Framework for preparation andpresentation of Financial Statements 4
  5. 5. First time Adoption - 5 step process1. Identification of date of transition2. Selection of accounting policies that comply with IFRSs3. Preparation of an opening IFRS balance sheet4. Preparation of the first IFRS financial statements5. Reconciliations and disclosures 5
  6. 6. Challenges involved in first time adoptions1. Fair value override permitted under IFRS2. Retrospective application3. Barred – extraordinary items4. Impact of change in accounting policy5. The use of revaluation for fixed assets, intangibles and investment property6. Consolidation of financials – Special purpose entities7. Goodwill/negative goodwill treatment8. Revenue recognition of long term construction contract9. Impairment of non-current assets10. Classification of financial instrument 6
  7. 7. IFRS (Ind-AS) – From India perspective• Adoption Vs Adapting• Ind-AS (IFRS) would be applicable into three phases: • In phase I it would be applicable w.e.f. 1st April’2011 to: • Companies which are part of NSE- Nifty 50 & BSE- SENEX 30, • Companies whose shares or other securities are listed on stock exchanges outside India and • Companies, whether listed or not, which have a net worth in excess of Rs. 1000 Crore. • In Phase II it would be applicable w.e.f. 1st April’2013 to the companies whether listed or not, having a net worth exceeding Rs. 500 Crore but not exceeding Rs. 1000 Crore. • In Phase III it would also be applicable we.f. 1st April 2014,to all the remaining listed companies having net worth less than Rs. 500 Crore. 7
  8. 8. IFRS Vs Indian Accounting Standards (AS)• Substance over form• Fair value• Current and Non-Current Classification• Discounting (Time value of money)• Standards prevail over law 8
  9. 9. Ind- AS – Current Status• Near final drafts of Indian Accounting Standards (Ind- AS)- issued by Accounting Standard Board (ASB) on [14th Jan’2011]• Number coding is aligned with IFRS/IAS• Schedule VI is under review by MCA• Income tax Act needs to be changed 9
  10. 10. Proposed Carve outs – Ind AS Vs IFRS• Deviations from IFRS (pure carve outs)• Removal of choices under IFRS• Optional deviations from IFRS• Additional guidance under Ind AS where no current guidance is available under IFRS 10
  11. 11. Role of CAs in Industry• Preparing internal processes to meet the information compilation to meet the requirements of the IFRSs• Developing Human Resources for Adaptation• First time adoption• The Board has to approve first time adoption choices (IFRS1)• Detailed communication plan is necessary to educate stakeholders and actively manage perceptions.• Communication of key policy choices, interpretations and accounting decisions to explain the financial results.• Need for additional resources to replace those allocated to the IFRS convergence programme.• Budgets, forecasts, management accounts and KPIs need to be on IFRS basis 11
  12. 12. Role of CAs in Practice• Handholding• Consultation• Advise on internal processes on adoptation• Training HRs on IFRSs’ processes• Guidance 12
  13. 13. Questions ? 13
  14. 14. Thanks !CA Aditya SinghalM.Com, FCA, DISA(ICAI) CertIFRS, Six Sigma (GB & BW)+91 99728 27300Aditya.singhal@icai.orgJoin IFRS professional group for regular IFRS update:http://finance.groups.yahoo.com/group/IFRS-Professional/ 14