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Advanced Financial Reporting
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- 2. COURSE OVERVIEW • Property,Plant & Equipment (IAS 16) • Intangible Assets (IAS 38) • Investment Property (IAS 40) • Biological Assets (IAS 41) • Effect of Government Grants (IAS 20) • Effect of Borrowing Cost (IAS 23) • Impairment of Assets (IAS 36) • Leases (IAS 17) • Earning per share (IAS 33) The above are already covered in FR, and will be revised.
- 3. NEW TOPICS • Provisions,Contingent Liabilities (IAS 37) • Change in accounting policies (IAS 8) • Events after Balance Sheet date (IAS 10) • Revenue from contracts with customers (IAS 18, IAS 11 and now IFRS 15) • Deferred Taxation (IAS 12) • Cash Flows (IAS 7) • Consolidation of financial statements (IFRS 10 etc.)
- 4. FINANCIAL STATEMENTS Shareholder BODInformation 1.Annual Report 2. Half yearly financial statements (for listed cos.) 3. Quarterly financial statements (for listed cos.) Annual Report includes: • Financial Statements • Audit Report on Financial Statements • Statement of Compliance – CCG • Audit Report on SC-CCG • Financial Highlights • Organogram • CEO’s message • Shareholding Pattern • CSR report • Statement of value addition
- 5. ACCOUNTING STANDARDS (IASvs. IFRS) • IAS stands for International Accounting Standards, while IFRS refers to International Financial Reporting Standards • IAS standards were published between 1973 and 2001, while IFRS standards were published from 2001 onwards • IAS standards were issued by the IASC, while the IFRS are issued by the IASB, which succeeded the IASC • Principles of the IFRS take precedence if there’s contradiction with those of the IAS, and this results in the IAS principles being dropped
- 6. REPORTING FRAMEWORK General PurposeFinancial Statements: caters to common financial information needs of a wide range of users Special Purpose framework: caters to the special needs of specific users of financial statements i.e. financial statements prepared using cash basis, or guidelines provided by regulatory bodies under specific situations. i.e. as demanded by tax authorities or at the time of liquidation (Assets can be booked at NRV & liabilities at NSV during liquidation) IFRS is general or special purpose framework?
- 7. REVIEW • Asset isa RESOURCE: 1. Controlled by entity 2. as a result of past events 3. from which future economic benefits are expected Property Plant & Equipment IAS 16 Production / Supply / Rental (Machines) / used for more than one year Investment Property IAS 40 Land or Building only – Rentals or capital Appreciation Intangible Assets IAS 38 Non-monetary assets without physical substance Biological Assets IAS 41 Living Animal or Plant Inventory IAS 2 Assets held for sale in ordinary course of business Financial Asset IAS 32 Cash / Equity Instrument / Contractual right to receive cash or any other financial Asset
- 8. MODELS 1. Cost 2. Revaluation 3.Fair Value 4. NRV 5. PV of MLP / Net Inv. 6. Amortized Cost Property Plant & Equipment IAS 16 Cost / Revaluation Investment Property IAS 40 Cost / Fair Value Intangible Assets IAS 38 Cost / Revaluation Biological Assets IAS 41 Fair value less cost to sell Inventory IAS 2 Cost / Net Realizable value Financial Asset IAS 32 Fair value / Amortized cost Lease Accounting IAS 17 Fair value / PV of MLP / Net Investment in lease
- 9. Cost Revaluation Fairvalue N/A for PPE Historic cost Increase in value is not recorded Increase in value is recorded Increase in value is recorded Impairment is recorded Impairment is recorded Impairment is recorded Not required every year Required every year Gains are recorded as revaluation reserve through other comprehensive income Gains / losses are charged to P&L Impairment losses goes to P&L Losses goes to P&L after writing off existing revaluation reserves Models used for recognition of Assets