1. Overview of Ind- AS
(IFRS)
ORIENTATION PROGRAMME FOR
NEWLY QUALIFIED CHARTERED ACCOUNTANTS
The Institute of Chartered Accountants of India,
Bangalore, 16th March’2011
CA Aditya Singhal
M.Com, FCA, DISA(ICAI),CertIFRS, Six Sigma (GB & BW)
+91 99728 27300
Aditya.singhal@icai.org
Join IFRS professional group for regular IFRS update:
http://finance.groups.yahoo.com/group/IFRS-Professional/
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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
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5. First time Adoption - 5 step process
1. Identification of date of transition
2. Selection of accounting policies that comply with
IFRSs
3. Preparation of an opening IFRS balance sheet
4. Preparation of the first IFRS financial statements
5. Reconciliations and disclosures
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6. Challenges involved in first time adoptions
1. Fair value override permitted under IFRS
2. Retrospective application
3. Barred – extraordinary items
4. Impact of change in accounting policy
5. The use of revaluation for fixed assets, intangibles and
investment property
6. Consolidation of financials – Special purpose entities
7. Goodwill/negative goodwill treatment
8. Revenue recognition of long term construction contract
9. Impairment of non-current assets
10. Classification of financial instrument
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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.
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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
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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
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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
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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
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12. Role of CAs in Practice
• Handholding
• Consultation
• Advise on internal processes on adoptation
• Training HRs on IFRSs’ processes
• Guidance
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