SLFRS, TudorV, Deshapriya Senanayake

1. City Housing and Real Estate Company PLC

2.  Introduction
 Sri Lanka Accounting Standards – LKAS 1
 Sri Lanka Accounting Standards – SLFRS 1
 Disclosure Requirements
 Applicable Accounting Standards
 Assisting Transition to Sri Lanka Financial
Reporting Standards – Diagnostic Stage

4.  International Financial Reporting Standards (IFRS) is a set of accounting
standards, developed by the International Accounting Standards Board
(IASB)
 Nearly 100 countries have adapted their local accounting standards to
conform to IFRS.
 Remove some of the subjectivity from financial reporting and provide a
consistent basis for recognition, measurement, presentation and
disclosure of transactions and events in financial statements.
 Convergence of accounting standards will have the effect of attracting
investment through greater transparency and a lower cost of capital for
potential investors.
 Transitioning to IFRS would allow companies to compete for capital in
other countries, while reducing cost and complexity for companies
operating internationally

5.  Sri Lanka Financial Reporting Standards
(SLFRS) 1 to 8 8
 Sri Lanka Accounting Standards(LKAS)
1 to 41 29
 International Financial Reporting
Interpretation Committee (IFRIC)
1 to 19 19
 Standing Interpretation Committee (SIC)
7 to 32 10

6.  01st April 2011 - Transition Date (Starting
point in accordance with SLFRS)
 31st March 2012 - Comparative Period
 31st March 2013 – Reporting Period

7.  3 Statements of financial position.
 2 Statements of comprehensive income/two separate
income statements.
 2 Statements of cash flows.
 2 Statements of changes of equity and related notes.
 Reconciliation of its equity reported in accordance
with previous GAAP to its equity in accordance with
SLFRS for date of transition and end of last period
presented in accordance with previous GAAP.

9.  The complete set of financial statements
compliant with SLFRS comprises 5 elements:
 a statement of financial position as at the end of
the period
 a statement of comprehensive income for
the period
 a statement of changes in equity for the period
 a statement of cash flows for the period
 notes containing a summary of significant
accounting policies and other
explanatory information.

10.  Fair presentation and compliance with SLFRS
 Going concern
 Accrual basis of accounting
 Materiality and aggregation
 Offsetting
 Frequency of reporting
 Comparative information
 Consistency of presentation.

11.  Reporting entity
 The information whether the financial
statements are of an individual or of a group
 The date of the reporting entity and period
covered
 The presentation currency and the level of
rounding (thousands, millions…)
 LKAS1 lists the minimum content to be
presented in the financial statements, except
for the statement of cash flows (subject to
LKAS 7)

12.  Minimum Content
 ASSETS
 Property, plant and equipment
 Investment property
 Intangible assets
 Financial assets
 Investments accounted for using equity method
 Biological assets
 Inventories
 Trade and other receivables
 Cash and cash equivalents
 Totals of assets in accordance with SLFRS 5 Non-current assets
Held for Sale and Discontinued Operations
 Current tax assets
 Deferred tax assets

13.  EQUITY AND LIABILITIES
 Issued capital and reserves attributable to owners
of the parent
 Non-controlling interests
 Financial Liabilities
 Provisions
 Trade and other payables
 Totals of liabilities in accordance with SLFRS 5
Non-current assets Held for Sale and
Discontinued Operations
 Current tax liabilities
 Deferred tax liabilities

14.  LKAS1 does NOT prescribe the precise format
of the statement of financial position.
Instead, several formats are acceptable if they
fulfill all requirements outlined above.

15.  2 Basic Elements
 Profit or loss for the period: here, all items of
income and expenses must be recognized.
 Other comprehensive income: items
recognized directly to equity or reserves,
such as changes in revaluation surplus, gains
or losses from subsequent measurement of
available-for-sale financial assets, etc.

16.  PROFIT OR LOSS
 Revenue
 Gains and losses arising from the derecognition
of financial assets at amortized cost
 Finance costs
 Share of the profit or loss of associates and joint
ventures accounted for using the equity method
 Tax expense
 Post-tax profit/gain or loss of operations or
assets in accordance with SLFRS 5 (Non-current
assets Held for Sale and Discontinued
Operations)
 Profit or loss

17.  Each component of other comprehensive
income classified by nature
 Share of the other comprehensive income of
associates and joint ventures accounted for
using equity method
 Total comprehensive income

18.  Write-downs of inventories to net realizable
value or of property, plant and equipment to
recoverable amount, as well as reversals of such
write-downs
 Restructurings of the activities of an entity and
reversals of any provisions for the costs of
restructuring
 Disposals of items of property, plant and
equipment
 Disposals of investments
 Discontinuing operations
 Litigation settlements
 Other reversals of provisions

19.  total comprehensive income for the period, showing
separately amounts attributable to owners of the
parent and to non-controlling interests
 the effect of retrospective application or restatement
for each component of equity (if applicable)
 the reconciliation between the carrying amount at the
beginning and the end of the period for each
component of equity. Here, the following changes
shall be disclosed separately:
◦ those resulting from profit or loss
◦ resulting from other comprehensive income
◦ resulting from transactions with owners (contributions,
distributions and changes in ownership)

20.  Present information about the basis of preparation of the
financial statements and the specific accounting policies
used;
 Disclose any information required by SLFRSs that is not
presented on the face of the balance sheet, income
statement, statement of changes in equity, or cash flow
statement; and
 Provide additional information that is not presented on the
face of the balance sheet, income statement, statement of
changes in equity, or cash flow statement that is deemed
relevant to an understanding of any of them
 other disclosures, including:
◦ Contingent liabilities and unrecognized contractual commitments
◦ Non-financial disclosures, such as the entity's financial risk
management objectives and policies

22.  Objective
 (a) is transparent to users and comparable for
all periods presented;
 (b) provides an appropriate starting point for
accounting under SLFRS;
 (c) can be obtained at a cost not to exceed
the benefits provided to users.

23.  STEP 1
Derecognition
Ex-If the entity's previous GAAP had allowed recognition of contingent assets as defined in
LKAS 37.10, these are eliminated in the opening SLFRS balance sheet
 STEP 2
Recognition
Ex-Deferred tax assets and liabilities would be recognised in conformity with LKAS 12
 STEP 3
Reclassification
Ex-LKAS 10 does not permit classifying dividends declared or proposed after the balance
sheet date as a liability at the balance sheet date.
 Step 4
Measurement

24.  This SLFRS establishes 2 categories of
exceptions to an entities opening SLFRS
statement of Financial Position

25.  Retrospective Application: A retrospective
application is the application of a new accounting policy as
if that policy had always been applied.
 Prospective Application: A prospective application
is the application of a new accounting policy to
transactions after the date of the policy change, with
recognition of the effect of changes in accounting
estimates in the current and future periods.

26.  Two categories of exceptions are,
1. Mandotory Exceptions
2. Optional Exemptions

27.  Estimates
 Derecognition of financial instruments
 Hedge accounting
 Non-controlling interest

28.  Share-based payment transactions
 Insurance contracts
 Fair value or revaluation as deemed cost
 Leases
 Employee benefits
 Cumulative translation differences
 Investments in subsidiaries, jointly controlled entities, associates and
joint ventures Assets and liabilities of subsidiaries, associated and joint
ventures
 Compound financial instruments
 Designation of previously recognised financial instruments
 Fair value measurement of financial assets or financial liabilities at initial
recognition
 Decommissioning liabilities included in the cost of property, plant and
equipment
 Financial assets or intangible assets accounted for in accordance with
IFRIC 12 Service Concession Arrangements
 Borrowing costs

29.  at least three statements of financial position;
 two statements of comprehensive income;
 two separate income statements ( if
presented);
 two statements of changes in equity; and
 related notes, including comparative
information

30.  Reconciliations of its equity reported under
previous GAAP to its equity under SLFRS at:
 The date of transition to SLFRS; and
 The end of the latest period presented in the
entity’s most recent annual financial
statements under previous GAAP