Based on the thesis "Cash Flow Ratios to Predict Soundness of Business Investment" we've tried to see how the performance of a company might seem different financially just because of difference in accounting standards. This is also an attempt to unmask the true picture of a company's financial health from its operations alone.
Prepare Balance Sheets and Profit & Loss A/c in IFRS formatBUSYforSMEs
An introductory ebook on IFRS covering the following topics:
What if IFRS?
Why do we need it?
What's in it for us?
Comparison between IFRS and GAAP
How can you prepare IFRS compliant Balance Sheets
Prepare Balance Sheets and Profit & Loss A/c in IFRS formatBUSYforSMEs
An introductory ebook on IFRS covering the following topics:
What if IFRS?
Why do we need it?
What's in it for us?
Comparison between IFRS and GAAP
How can you prepare IFRS compliant Balance Sheets
IFRS vs FASB,GAAP, IAS1,comprehensive income,extraordinary items,IAS2,inventory cost,IAS39,hedging gain or loss,Macro hedging,derivatives,help to maturity, jose cintron, mba4help.com, advance business consulting
There is tremendous change in today's indian economy and at the same time our indian accounting system also heading to a new era i.e nothing but INDAS.
There are lots of confusion about Indian new accounting system (INDAS) even after 3 r
to 4 the implementation by various organization..
So thought to understand the root from where this INDAS arised at the same time prepared a ppt about indas roadmap
#accountingsystem
#INDAS
#INDAS ROAD MAP
International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board
IFRS vs FASB,GAAP, IAS1,comprehensive income,extraordinary items,IAS2,inventory cost,IAS39,hedging gain or loss,Macro hedging,derivatives,help to maturity, jose cintron, mba4help.com, advance business consulting
There is tremendous change in today's indian economy and at the same time our indian accounting system also heading to a new era i.e nothing but INDAS.
There are lots of confusion about Indian new accounting system (INDAS) even after 3 r
to 4 the implementation by various organization..
So thought to understand the root from where this INDAS arised at the same time prepared a ppt about indas roadmap
#accountingsystem
#INDAS
#INDAS ROAD MAP
International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board
This presentation contains author's research on significance of IND AS implementation. The author found that traditional profit measure based on PAT and IND AS based Total Comprehensive Income are not significantly different. Also impact of first time adoption of Ind AS is not significant.
Financial Reporting
Anas Alzadjali
ST10299
Roslin Lazarus
Introduction
Analysis of different regulatory framework and governance applicable GIC’s investment strategies and current market operations.
Based on the published annual report of GIC for the year 2019.
ASSUMPTION
GIC consider establishing a joint stock company as a part of its expansion plan
This presentation analysis different regulatory framework and governance applicable to GIC’s investment strategies and current market operations based on the published annual report of GIC for the year 2019, with the assumption that GIC is seriously considering establishing a joint stock company with majority controlling interest in Singapore and India as a part of its expansion plan.
2
Continuation
Financial reporting is the declaration of the financial details to the divergent stakeholders concerning the financial operation and the financial position of the firm for a specified period of time.
Financial reporting standards are the keys that defines the practice standards and financial accounting policies and performs as its basis.
Enhances the financial reporting openness in an international position.
Performs as the accounting end product.
Definition
Financial reporting : declaration of the financial details to the divergent stakeholders concerning the financial operation and the financial position of the firm for a specified period of time.
Financial reporting standards: keys that defines the practice standards and financial accounting policies and performs as its basis.
Enhances the financial reporting openness in an international position.
Performs as the accounting end product.
Components of the financial reporting include;
The Financial statement
Notes to the Financial statement
The prospectus
The Management discussion and analysis
3
Elements Of Financial Statement
The financial statement elements are;
Income Statement : Expenses, Revenues, Purchases and Sales
Balance Sheet: Assets , Liabilities and Capital
Cashflow statement: cashflow from operating activities, investment and financing.
Change in equity.
And notes
Financial statement comprise the critical report of the business that gives financial information which can be used by the stakeholders.
The financial statement elements are;
Income Statement covering expenses, revenues, purchases and sales
Balance Sheet covering assets , liabilities and capital
Cashflow statement covering cashflow from operating activities, investment and financing.
Change in equity showing any change in equity over the period
And notes that gives explanations to the statements.
4
Financial Reporting Objective
Financial statements have been prepared in accordance with: International Financial Reporting Standards (IFRSs),
Applicable disclosure requirements of the Capital Market Authority (CMA)
Relevant requirements of the Commercial Companies Law.
Their objectives are:
To provide information concerning the financial posi ...
International Financial Reporting Standards (IFRS)AbhirajSingh67
Accounting for Managers
International Financial Reporting Standards(IFRS) – Meaning or Definitions
Frameworks for IFRS
Importance
Advantages & Disadvantages
Requirements of the IFRS
BUSI 650
Integrative Learning Project – Annotated Bibliography Grading Rubric
Criteria
Levels of Achievement
Content 70%
(88 points)
Advanced
Proficient
Developing
Not present
Points Earned
Annotations
88 points
83 to 88 points
Each annotation includes all of the following: purpose of the article/study, the key findings, relevance to operations management, and what section information from the article/study informs in the final Integrative Learning Project (ILP).
72 to 82 points
Each annotation includes most of the following: purpose of the article/study, the key findings, relevance to operations management, and what section information from the article/study informs in the final Integrative Learning Project (ILP).
1 to 71 points
Each annotation includes some of the following: purpose of the article/study, the key findings, relevance to operations management, and what section information from the article/study informs in the final Integrative Learning Project (ILP).
0 points
Structure 30%
(37 points)
Advanced
Proficient
Developing
Not present
Points Earned
Sources
20 points
20 points
The annotated bibliography contains at least 15 APA formatted scholarly sources.
15 to 19 points
The annotated bibliography contains 12-14 APA formatted scholarly sources.
1 to 14 points
The annotated bibliography contains 1-11 APA formatted scholarly sources.
0 points
Word Count
17 points
17 points
Each annotation contains a minimum of 100 words.
15 to 16 points
Most annotations contain a minimum of 100 words.
1 to 14 points
Most annotations contain 50 to 99 words.
0 points
Total Points
/125
Instructor’s Comments:
Financial Reporting
Anas Alzadjali
ST10299
Roslin Lazarus
Introduction
Analysis of different regulatory framework and governance applicable GIC’s investment strategies and current market operations.
Based on the published annual report of GIC for the year 2019.
ASSUMPTION
GIC consider establishing a joint stock company as a part of its expansion plan
This presentation analysis different regulatory framework and governance applicable to GIC’s investment strategies and current market operations based on the published annual report of GIC for the year 2019, with the assumption that GIC is seriously considering establishing a joint stock company with majority controlling interest in Singapore and India as a part of its expansion plan.
2
Continuation
Financial reporting is the declaration of the financial details to the divergent stakeholders concerning the financial operation and the financial position of the firm for a specified period of time.
Financial reporting standards are the keys that defines the practice standards and financial accounting policies and performs as its basis.
Enhances the financial reporting openness in an international position.
Performs as the accounting end product.
Definition
Financial reporting : declaration of the financial details to the divergent stakeholders concerning the financial opera ...
Impact of ifrs disclosures on organizationalResearchWap
The following are the objectives of this study:
To examine the impact of IFRS disclosures on organizational performance
To examine the level of compliance with the IFRS disclosure principles by companies in Nigeria.
To identify the problems associated with IFRS disclosure in organizations in Nigeria.
What are the Differences Between US GAAP and IFRS Financial Statement.pptxjayjani123
Ultimately, the "accurate" financial statements preparation for your business would depend on your unique requirements and preferences. It's advisable to conduct research, compare offerings, and potentially consult with professionals to determine the most suitable service provider for your needs. If you want accurate US GAAP Financial Statements preparation, then you should give a thought of going for Contetra Private Limited.
They will give you the best advice in the preparation of financial statements for the year as per Ind AS/IFRS/US GAAP, which shall include the Statement of Financial Position, Statement of Profit and Loss and Other Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity for the period, Notes to accounts, Comparatives and opening balance sheet of the previous period. Contact us now to know more about our services and expertise.
Financial Standard SettingIntroductionInternational Fina.docxbryanwest16882
Financial Standard Setting
Introduction
International Financial Reporting Standards (IFRS) are guidelines and rules that are designed by the International Accounting Standards Board (IASB) that are used to provide a uniform language and platform for reporting different financial statements. The IFRS has been adopted in many countries in Europe, Asia, South America, and Australia. The most notable absentee is the United States who uses the Generally Accepted Accounting Standards (GAAP). IFRS is meant to create transparency in financial reporting so that it can assist the end-users in informative decision making. https://coolassignment.com/2021/06/01/discuss-the-importance-of-an-organization-determining-its-operational-alignment/ The IFRS improves efficiency and accountability in reporting in the global markets. The IFRS is considered as a principle based standard compared to the U.S. GAAP which is rule-based standard. Since its adoption, Australia has benefited from IFRS in various ways, such as low cost of capital and uniformity in financial reporting. This paper will focus on some of the principles of IFRS, its benefits and how it compares to the U.S. GAAP.
The International Financial Reporting Standards has been able to promote transparency in that it has encouraged firms with subsidiaries to synchronize operations of the company like auditing reporting and training standards. It will be easy to monitor the processes of the firm and its subsidiaries if there are set standards that are universal to the whole company. The format used in the business entity should be similar in all the offices so that there is consistency in accounting and reporting the company records (Devereux, 2011).
The International Financial Reporting Standards pursues to level the playing field in preparation and presentation of financial statement of a person or a business entity. It is easy to compare the performance of both the domestic and foreign business entities. The use of a common accounting dialect by the multinational corporations and the subsidiaries to use IFRS in consolidation of the financial statements helps everyone in the system to understand. The use of a similar accounting and reporting standard helps to eradicate the differences brought about by the use of different accounting modes in financial statements (Kieso, Weygandt & Warfield, 2012). https://bestofassignment.com/criminology/write-a-personal-philosophy-of-leadership-through-your-construction-of-a-persona/
The use of a similar accounting standard will eliminate unnecessary cost and time in the preparation of reporting the financial statements. The use of different regulations and the standards in a firm may prove to be costly than use of the same standards. To embed IFRS uniform accounting standards in the firm and the subsidiaries reduces the cost of preparation of financial statement. This system will provide accurate and on time statements that are critical in the decision making of th.
According to Google's research about the NextBillionUsers, every day one million new users come online for the first time in their lives, primarily through mobile phones.
Assistive technology, or what you'd typically have seen as "Accessibility" settings, at present, focuses on making technology more accessible for the differently abled. While a great place to start, the need gap is wider.
These new users want to do a lot but they have to battle multiple fears. The fear of posting something wrong unknowingly, of making a transaction by mistake, of losing face amidst their peers, just to name a few. Here are some ideas on how different stakeholders can help make digital adoption journeys smoother!
Understanding the Major Happenings in the Oil Market. A slippery path!Aakriti Agarwal
Looks at the factors that affect the demand and supply of Oil globally; understands the functioning of OPEC, and the different oil benchmarks: crude, opec basket, west texas and dubai. Understands the reasons of the major happenings such as 1973 supply shock, 1979 energy crisis, 1980s oil glut, 1990s energy crisis and the current falling price of oil.
A project that analyses the IMC strategies of Zoomcar and its competitors while considering various touchpoints, both offline and online to provide suggestions on how Zoomcar can improve its brand perception and marketing efforts.
Market Research Proposal - Capturing the Rural Market for Personal and Househ...Aakriti Agarwal
A case study on a hypothetical brand that is trying to increase its market share in the rural segment in India, facing two problems- identifying its priority markets, and deciding on its distribution networks. This case presents a proposal on how to go about the same and suggests some methods which will be looked into while conducting research.
This presentation looks into the different types of QR codes, some successful and failed campaigns that used them and tries to find best pracrtices when using them for Marketing, as well as their future possibilities.
Devised an actionable Social Media Strategy for Tata Docomo by studying the best social media practices followed by Telecom and youth-centric brands internationally.
Created a comprehensive checklist for Tata Docomo to strengthen its Brand Connect, Social Engagement, Content Crowsourcing and revolutionise its Self-Service using Social Media.
Looked at the theoretical aspects of Work Life Balance and studied the concerned PSU's HR practices. A detailed survey of 100-150 employees was undertaken to understand the organisation's WLB and suggestions were made on improving the balance
Covers legal aspects of Patenting in India.Explains the difference between Patent, Trademark and Copyright. Differentiates between patentable and non patentable inventions and explains the process of obtaining a patent, with case studies and examples.
Stress Caused by Social Networking in Organisations Aakriti Agarwal
A project on understanding the problems created by social networking for the different sections of the work force based on their age, seniority with case studies and a detailed survey, and suggesting HR practises to overcome these hurdles.
Import Substitution in India: Issues, Challenges and PromotionAakriti Agarwal
Explains the concept of Import Substitution, looks into the top imports of India, namely- Oil, Gold, Electronics and Machinery and tries to suggest methods of import substitution for the same.
The Role of Social Media in Employer Branding and Recruitment in Modern Organ...Aakriti Agarwal
This project includes understanding the concept of employer branding and it's need in today's organisations. It stresses on why social media recruitment is a preferred approach to recruiting nowadays and how mainitaing an organisation's brand image is more than just the Marketing department's onus
Stress Caused by Social Networking in Organisations Aakriti Agarwal
A project on understanding the problems created by social networking for the different sections of the work force based on their age, seniority with case studies and a detailed survey, and suggesting HR practises to overcome these hurdles.
A detailed project on how the corporate sector is employing the three major social networking giants- Facebook, Twitter, and LinkedIn, replete with infographics, statistical survey data, trends in social networking, power of visual marketing accompanied with examples for the same, tools for statistical analysis on facebook, LinkedIn's importance in the corporate circle and a conrete conclusion.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
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LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
VAT Registration Outlined In UAE: Benefits and Requirementsuae taxgpt
Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
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VAT Registration Outlined In UAE: Benefits and Requirements
Quantitative Study of Comparison between Indian GAAP and IFRS - Corporate Finance
1. CORPORATE FINANCE
INTERNAL ASSESSMENT SEM - III
Comparing Indian GAAP and IFRS using
Traditional and Cash Flow Ratios
Aakriti Agarwal (13004)
Aarushi Verma (13006)
Aditya Tanwar (13020)
Aman Budhiraja (13029)
Angad Singh(13037)
Shaheed Sukhdev College of Business Studies
2. Acknowledgement
We would like to express our heartfelt gratitude and regard for our Corporate Finance instructor, Prof.
Hamendra Kumar Porwal for letting us choose this topic and providing his valuable guidance without which this
project could not have possibly been completed. It was our professor’s thesis on Cash Flow Ratios for Predicting
Investment’s Soundness itself that inspired us to take up this topic.
His able guidance and suggestions have been the cornerstone of our project. Doing this project with Professor
Porwal was a great learning experience for us.
Thank You
Names of group members:-
Aakriti Agarwal
Aarushi Verma
Aditya Tanwar
Aman Budhiraja
Angad Singh
4. Objectives
● Compare financial statements made in compliance with IFRS vs Indian GAAP on basis of
certain ratios to highlight the difference in the supposed image of a company arising
merely due to difference in accounting principles.
● Calculate those ratios again using figures from cash from operating activities as well &
compare with those obtained from balance sheet, to see how much of the revenues are
actually because of operations.
● To understand whether there is variability in ratios when different standards are used.
● To observe the degree of variance for the traditional ratios and cash flow ratios to see
which is more stable.
5. Research Methodology
Various companies were found that made their financial statements according to both standards for the
same time period IFRS and IGAAP and their financial information was obtained using their annual
reports.
Ratio analysis was done for financial statements made according to both standards. For this traditional
ratios as well as cash flow ratios(Porwal, Jain) were used. Correlation between the ratios helped find out
the deviations in the figures.
The case of convergence to IFRS in Canada has also been considered for comparison. Apart from the
analysis, other data is secondary.
Limitations
Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some of
these are mentioned here under so that the findings of the study may be understood in a proper
perspective. The limitations of the study are:
● The primary and most pertinent limitation was that there were very few companies
making their balance sheets as per IFRS and IGAAP both and therefore limited data ends up
being a representative of the entire dataset which may not be the case.
● Also, ideally the financial data should’ve been of the same accounting period for purposeful
comparison, but this wasn’t possible due to data insufficiency.
● The study is based on the secondary data and the limitation of using secondary data may
affect the results.
● The secondary data was taken from the annual reports of the six banks. It may be possible
that the data shown in the annual reports may be window dressed which does not show
the actual position of the banks.
Ideally, we would have preferred to compare all companies for the same time period.
However, financial data wasn’t available and availability of data was the biggest limitation
for the project.
6. Introduction
Indian companies publish financial statements in a language that is foreign to overseas investors. The risk
of being materially misinformed when investing in India is therefore high.
Only three major world economies have yet to shift to International Financial Reporting Standards
(IFRS). They are the US, Japan and India. Japan effectively follows US Generally Accepted Accounting
Practice (US GAAP).
The question arises how can you invest in a company if you don’t understand their accounts? Indian
GAAP (henceforth referred to as IGAAP) allows for too much discretion and makes international peer
comparisons virtually impossible. Therefore convergence to IFRS is very crucial.
International Financial Reporting Standards (IFRS) are designed as a common global language for
business affairs so that company accounts are understandable and comparable across international
boundaries. They are a consequence of growing international shareholding and trade and are particularly
important for companies that have dealings in several countries.
IFRS began as an attempt to harmonize accounting across the European Union but the value of
harmonizaticon quickly made the concept attractive around the world. They are sometimes still called by
the original name of International Accounting Standards(IAS). IAS were issued between 1973 and 2001
by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new
International Accounting Standards Board (IASB) took over from the IASC the responsibility for setting
International Accounting Standards.
During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee
standards (SICs). The IASB has continued to develop standards calling the new standards International
Financial Reporting Standards. The aim of IFRSs is to provide "a single set of high-quality, global
accounting standards that require transparent and comparable information in general purpose financial
statements" (IFRS Handbook, Introduction).
Under Indian GAAP, profits may not be as real as they appear to be. The date for IFRS adoption by India,
originally 1 April 2011, has been repeatedly postponed over the last four years, with some experts
predicting some kind of convergence towards IFRS by 1 April 2015.
7. Comparison of IFRS and I-GAAP
The consolidated financial statements of the Group for the year ended 31 December 2012 with
comparatives as at 31 December 2011 are prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the
European Union.
IFRS differs in certain significant respects from Indian Generally Accepted Accounting Principles (GAAP).
Such differences involve methods for measuring the amounts shown in the financial statements of the
Group, as well as additional disclosures required by Indian GAAP.
Set out below are descriptions of certain accounting differences between IFRS and Indian GAAP:
Changes in accounting policy
IFRS
Changes in accounting policy are applied retrospectively. Comparatives are restated and the effect of
period(s) not presented is adjusted against opening retained earnings of the earliest year presented.
Policy changes made on the adoption of a new standard are made in accordance with that standard’s
transitional provisions.
Indian GAAP
The cumulative amount of the change is included in the income statement for the period in which the
change is made except as specified in certain standards (transitional provision) where the change during
the transition period resulting from adoption of the standard has to be adjusted against opening retained
earnings and the impact disclosed. Where a change in accounting policy has a material effect in the
current period, the amount by which any item in the financial statements is affected by such change
should also be disclosed to the extent ascertainable. Where such an amount is not ascertainable this fact
should be indicated.
Consolidation
IFRS
Entities are consolidated when the Group has the power to govern the financial and operating policies so
as to obtain benefits. Control is presumed to exist when the Group owns more than one half of an entity’s
voting power. Currently exercisable voting rights should also be taken into consideration when
determining whether control exists.
8. Indian GAAP
Similar to IFRS, except that currently exercisable voting rights are not considered in determining control.
Acquired and internally generated intangible assets
IFRS
Intangible assets are recognised if the specific criteria are met. Assets with a finite useful life are
amortised on a systematic basis over their useful life. An asset with an indefinite useful life and which is
not yet available for use should be tested for impairment annually.
Indian GAAP
Intangible assets are capitalised if specific criteria are met and are amortised over their useful life,
generally not exceeding 10 years. The recoverable amount of an intangible asset that is not available for
use or is being amortised over a period exceeding 10 years should be reviewed at least at each financial
year-end even if there is no indication that the asset is impaired.
Liabilities and equity
IFRS
A financial instrument is classified as a liability where there is a contractual obligation to deliver either
cash or another financial asset to the holder of that instrument, regardless of the manner in which the
contractual obligation will be settled. Preference shares, which carry a mandatory coupon or are
redeemable on a specific date or at the option of the shareholder, are classified as financial liabilities and
are presented in other borrowed funds. The dividends on these preference shares are recognised in the
income statement as interest expense on an amortised cost basis using the effective interest method.
Indian GAAP
Classification is based on the legal form rather than substance.
Interest income and expense
IFRS
Interest income and expense is recognised in the income statement using the effective interest method.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through
the expected life of the financial instrument. When calculating the effective interest rate, the Group
estimates cash flows considering all contractual terms of the financial instrument but does not consider
future credit losses. The calculation includes all fees and points paid or received between parties to the
contract that are an integral part of the effective interest rate, transaction costs and all other premiums or
discounts.
9. Indian GAAP
In the absence of a specific effective interest rate requirement, premiums and discounts are usually
amortised on a straight line basis over the term of the instrument.
Dividends
IFRS
Dividends to holders of equity instruments, when proposed or declared after the balance sheet date,
should not be recognised as a liability on the balance sheet date. A company however is required to
disclose the amount of dividends that were proposed or declared after the balance sheet date but before
the financial statements were authorised for issue.
Indian GAAP
Dividends are reflected in the financial statements of the year to which they relate even if proposed or
approved after the year end.
10. Key Differences in Approaches:
Substance over Form
Emphasis on Substance over Form is a common thread which runs through IFRS. While it may also be a
criteria in IGAAP and is reffered to in AS1, the emphasis is much stronger in case of IFRS i.e. while in the
Indian context, very often the legal form may influence in the accounting treatment, in IFRS, it will always
be the reality or commercial nature which will have precedence over the legal form.
Fair Value
fair value is another area where emphasis is laid in IFRS. In the Indian context, new standards such as
impairment of assets are also aligned towards fair value. This is also the case in revaluation of assets or
mark to market for investments. However, in the Indian context, this is largely applicable in case the fair
value is below the cost and is normally not applied where fair value is higher than cost as in the books
Fair value gives the readers of financial statements information which is more 'real' or more 'relevant'
than that of historical costs. However, from the point of view of the preparers of the financial statements,
historical costs provide a more stable and reliable method (reliablity stems from knowing the impact and
smoothening out of impact).
However, in most cases, IFRS gives the option of using historical costs like in case of assets, but FV is
mandatory for investments, specifically derivative based. Equally investments of the held to maturity
category can be continued to be accounted for on historical cost basis.
Time value of money is also an area where IFRS lays stress. As an example, a receivable without interest
with a time gap of,say, 15 years be subject to discounting in the accounts of the current period. In terms
of approach, IFRS is more balance sheet oriented as much as the Indian context is more P&L oriented.
Under IFRS, the approach is to get the balance sheet into correct perspective and these impacts will
reflect in the P&L as a residual effect.
11. Analysis and Major Findings
Correlation and variance has been found out for Traditional Ratios between the two standards and
likewise for Cash Flow Ratios.
12. Individual Ratio Calculations for each company have been attached in the Annexure.
As per the above findings it appears that there are substantial differences between the two accounting
standards specially when taking the cash flow ratios into consideration. The major differences between
the standards have been shown by highlighting them.
However, these variances have been largely affected by extremes, for example, the operating and
investing activity ratio for Wipro for the financial year 2010. Therefore under the Cash Flow Ratios the
Cash Operating Coverage Ratio, Operating and Financing Activity Ratio, Operating and Investing Activity
Ratio and Inventory Cash Flow Ratio have been eliminated. For the Traditional Ratios, Efficiency
Indicators (which are expressed in “times” ) and Total Assets to Debt Ratio were also excluded.
As a result, the variances obtained were much more stable and comparable; thereby being of analytical
usage.
13. For the larger part, the variance between the values has gone down significantly for the cash flow ratios,
specially for Great Eastern Energy and Wipro.
The highlighted figures show major differences in ratios for both the methods and we can see the major
differences go down when considering the Cash Flow ratios, thereby making us draw our first major
assumption that after eliminating the extreme figures, the cash flow ratios are less susceptible to
changes in accounting standards and more stable as compared to the traditional ratios.
The second major finding was that although there are various differences in IFRS and IGAAP as
mentioned above, the ratios, whether traditional or cash flow aren’t reflecting major differences.
Although there are exceptions too in certain cases like
14. ● Debtors Turnover Ratio for nearly all except Wipro
● Working Capital Turnover for Sify 2012
● Total Asset to Debt Ratio for Wipro
● Operating Ratio for all except Wipro
● Cash flow ratios that compare cash generated or used in operating activities to that for
financing and investing activities are quite volatile as well.
Lastly, we observe that the EPS for all companies analysed rose when the financial statements
were made as per IFRS.
15. The Canadian Case
January 1, 2011, IFRS replaced Canadian generally accepted accounting principles (GAAP) as the financial
reporting framework for publicly accountable enterprises and government business enterprises.
Because Canada comprises less than four per cent of world capital markets, IFRSs now provide more
opportunities for Canadian businesses and investors by reducing the cost of capital, increasing access to
international capital markets and reducing costs by eliminating the need for reconciliations.
Most of the ratios under IFRS are more volatile than those under pre-changeover Canadian GAAP
● Maximum values of several ratios are higher and minimum values are lower under IFRS, although
the effects of IFRS on means and medians of ratios related to the financial condition of companies are not
statistically significant.
● There is a significant difference in the distribution of values around medians for such ratios as
current and quick ratios, debt, alternative-debt and equity ratios, interest coverage, fixed-charge and
cash-flow coverage, return on assets (ROA), comprehensive-ROA and price-earnings related ratios.
● The exact source of the increased volatility of ratios under IFRS remains unclear. The causes may
include the incremental adjustments that are specific to IFRS, and those associated with the principle-
based approach that allows for more discretion and judgment by management.
Differences between IFRS and pre-changeover Canadian GAAP do not affect cash flows
● The cash-flow statement is less influenced by accounting methods and estimates, and serves as a
sound basis of comparison.
IFRS’ impact on financial ratios is driven by differences in application of fair value accounting and
consolidation, and several other differences
● Fair value accounting leads to adjustments in balance sheet figures, direct allocation of some
unrealized gains and losses to the income statement, as well as allocation of other unrealized gains and
losses to other comprehensive income.
● Liquidity and leverage ratios are affected by fair value accounting practices due to balance sheet
variations while profitability and coverage ratios are affected due to balance sheet variations and
recognition of unrealized gains/losses.
● The impact of consolidation on ratios is difficult to isolate as the differences are incorporated or
combined in the consolidated figures. Incorporation of minority interest in equity also has a significant
impact on financial statements, directly affecting profitability and leverage ratios.
● A number of other differences between IFRS and pre-changeover Canadian GAAP impact financial
ratios. Leverage and profitability ratios are sensitive to the differences in impairment test procedures
16. applied to long-lived assets, as well as to the impact on liabilities, expenses and equity caused by the
differences in application of standards on leases, pensions and contingencies, and share-based payments.
Specific characteristics differentiate IFRS from other accounting regimes
● IFRS is principle-based; it gives more importance to substance (over form) and allows
management to use greater discretion and flexibility in choosing accounting methods and estimates when
preparing financial statements.
● Fair value accounting responds to investors’ needs for information that reflects market-based
values, but involves varying degrees of subjectivity. Since investors need market-based values to make
decisions regarding buying or selling stocks, many items in financial statements are required or eligible
for fair value accounting under IFRS.
● Comprehensive income reflects revenues, expenses, gains and losses recognized during a specified
time period. It is summarized in a separate financial statement made up of two parts; one corresponding
to the bottom line (profit or loss) of the income statement and the other – called other comprehensive
income (OCI) – relating to fair value adjustments.
● The entity theory underlies consolidation requiring assets and liabilities of acquired subsidiaries
and minority interests to be measured at fair value. Under IFRS, the share of profit allocated to minority
interest is recognized directly in equity rather than income.
● IFRS improves transparency and completeness of financial statements, yet can lead to information
overload as accompanying notes are abundant and complex.
Recommendations
● Analysts should continue to be cautious when examining financial ratios during the transition to
IFRS in Canada.
● Financial statement users need to be aware of the main features of IFRS that differ from pre-
changeover Canadian GAAP and distinguish between reported performance changes caused by the
transition to IFRS from those caused by changes in the business.
● Relying on cash-flow analysis is recommended, particularly in cases when accounting practices
are subject to uncertainty or discretion of management. Another possible solution may lie in recalculating
ratios using IFRS retroactive information presented in the year of transition.
17. Conclusion
Firstly, India truly should take up convergence to IFRS seriously because ours is the only economy that
follows such a different accounting standard till date. Especially given its aim to promote FDI, a uniform
accounting standard hailed for Fair Value and Transparent Disclosure would give a major boost to India
as a place to invest.
The convergence to IFRS, in addition to making the financial statements better understood, would also, if
nothing, then cause a minor surge in the EPS, if the findings are to be believed. This would positively
affect the image of the company as well.
Seeing as Cash Flow Ratios are more stable, for two-three financial years after convergence to IFRS, the
cash flow ratios should be used and cash flow statement emphasised on for better picture of the
company’s finances. Pretty similar to the conclusions of the Canadian example, caution must be taken
while using traditional ratios.
Even for the traditional ratios there isn’t that much volatility in the ratios (as opposed to the case in
Canada) and although there would be significant costs associated with changeover to IFRS but the gains
to be made from the convergence are much higher.
On a more holistic note, in the long term, if all internationally traded companies and companies with
international operations report under IFRSs, the need for reconciliations between national GAAPs is
eliminated. The financial information they report will be consistent and comparable, creating new
opportunities in international financial markets, with increased access to capital.