Matching of Indian Accounting standard with International

Accounting Standard
•Accounting Standards are used as one of the main
compulsory regulatory mechanisms for preparation
of general-purpose financial reports and subsequent
audit of the same, in almost all countries of the
world.
Accounting standards are concerned with the
system of measurement and disclosure rules for
preparation and presentation of financials
statements.
They appear with a set of authoritative statements of
how particular types of transactions, events and
other costs should be recognized and reported in
the financial statements.
 Matching of Indian Accounting standard with
International Accounting Standard
Accounting standards are devised to furnish useful information to
different users of the financial statements, to such
• as shareholders,
• creditors,
• lenders,
• management,
• investors,
• suppliers,
• competitors,
• researchers,
• regulatory bodies and
• society at large and so on.
In fact, such statements are designed and prescribed
so as to improve & benchmark the activities
International Financial Reporting
Standards
• International Financial Reporting Standards
(IFRS) are principles-based Standards,
Interpretations and the Framework (1989)
adopted by the International Accounting
Standards Board (IASB)
• Many of the standards forming part of IFRS are
known by the older name of International
Accounting Standards (IAS).
International Financial Reporting
Standards
• IAS were issued between 1973 and 2001 by the
Board of the International Accounting Standards
Committee (IASC).
• On 1 April 2001, the new IASB took over from
the IASC the responsibility for setting
International Accounting Standards.
• During its first meeting the new Board adopted
existing IAS and SICs. The IASB has continued
to develop standards calling the new standards
IFRS.
International Financial Reporting
Standards
• IFRS are considered a "principles based"
set of standards in that they establish
broad rules as well as dictating specific
treatments.
 International Financial Reporting
Standards comprise of
• International Financial Reporting Standards
(IFRS)—standards issued after 2001
• International Accounting Standards (IAS)—
standards issued before 2001
• Interpretations originated from the International
Financial Reporting Interpretations Committee
(IFRIC)—issued after 2001
• Standing Interpretations Committee (SIC)—
issued before 2001
• Framework for the Preparation and Presentation
of Financial Statements (1989)
 Qualitative characteristics of
financial statements
Qualitative characteristics of
financial statements include:
• Understandability
• Reliability
• Comparability
• Relevance
• True and Fair View/Fair Presentation
 IFRS financial statements consist
of (IAS1.8)
• a Statement of Financial Position
• a Statement of Comprehensive Income or two separate
statements comprising an Income Statement and
separately a Statement of Comprehensive Income,
which reconciles Profit or Loss on the Income statement
to total comprehensive income
• a Statement of Changes in Equity (SOCE)
• a Cash Flow Statement or Statement of Cash Flows
• notes, including a summary of the significant accounting
policies
 Adoption of IFRS
• IFRS are used in many parts of the world, including the
European Union, Hong Kong, Australia, Malaysia, Pakistan,
GCC countries (Saudi Arabia, Kuwait, Bahrain, Qatar, the
United Arab Emirates, the Sultanate of Oman, and the
Republic of Yemen. Together, these countries (excluding the
Republic of Yemen) constitute the Gulf Cooperation Council
(GCC). , Russia, South Africa, Singapore and Turkey.
• As of 27 August 2008, more than 113 countries around the
world, including all of Europe, currently require or permit IFRS
reporting.
• Approximately 85 of those countries require IFRS reporting for
all domestic, listed companies.
• In addition, the US is also gearing towards IFRS.
• The SEC in the US is slowly but progressively shifting from
requiring only US GAAP to accepting IFRS and will most likely
accept IFRS standards in the longterm.
The following IFRS statements are
currently issued
• IFRS 1 First time Adoption of International
Financial Reporting Standards
• IFRS 2 Share-based Payment
• IFRS 3 Business Combinations
• IFRS 4 Insurance Contracts
• IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations
• IFRS 6 Exploration for and Evaluation of Mineral
Resources
 IFRS statements
• IFRS 7 Financial Instruments: Disclosures
• IFRS 8 Operating Segments
• IFRS 9 Financial Instruments
• IAS 1: Presentation of Financial Statements.
• IAS 2: Inventories
• IAS 7: Cash Flow Statements
• IAS 8: Accounting Policies, Changes in
Accounting Estimates and Errors
 IFRS statements
• IAS 10: Events After the Balance Sheet Date
• IAS 11: Construction Contracts
• IAS 12: Income Taxes
• IAS 14: Segment Reporting (superseded by
IFRS 8 on 1 January 2008)
• IAS 16: Property, Plant and Equipment
• IAS 17: Leases
• IAS 18: Revenue
 IFRS statements
• IAS 19: Employee Benefits
• IAS 20: Accounting for Government Grants and
Disclosure of Government Assistance
• IAS 21: The Effects of Changes in Foreign
Exchange Rates
• IAS 23: Borrowing Costs
• IAS 24: Related Party Disclosures
• IAS 26: Accounting and Reporting by Retirement
Benefit Plans
• IAS 27: Consolidated Financial Statements
 IFRS statements
• IAS 28: Investments in Associates
• IAS 29: Financial Reporting in Hyperinflationary
Economies
• IAS 31: Interests in Joint Ventures
• IAS 32: Financial Instruments: Presentation
(Financial instruments disclosures are in IFRS 7
Financial Instruments: Disclosures, and no
longer in IAS 32)
• IAS 33: Earnings Per Share
• IAS 34: Interim Financial Reporting
 IFRS statements
• IAS 36: Impairment of Assets
• IAS 37: Provisions, Contingent Liabilities
and Contingent Assets
• IAS 38: Intangible Assets
• IAS 39: Financial Instruments: Recognition
and Measurement
• IAS 40: Investment Property
• IAS 41: Agriculture
 Current Position
• Indian accounting standards will be fully in
line with the International Financial
Reporting Standards (IFRS) from April 1,
2011. This was decided by the Institute of
Chartered Accountants of India (ICAI) at
its 269th Council meeting.
 Current Position
• To begin with, these standards will apply
only to public listed companies.
• Other companies will be brought under
IFRS ambit in a phased manner. The
International Accounting Standards Board
(IASB) has come out with an exposure
draft for small and medium enterprises.
 Current Position
• Once the new norms become applicable, all
accounts prepared in India will be of uniform
global standards. Indian chartered accountants
will also be recognised world wide.
• It would ease a lot of problems faced during
cross border mergers and acquisitions.
• This will also provide the necessary impetus to
mutual recognition agreements currently under
discussion with countries like the UK and
Singapore and Australia.
 Current Position
• At present, of the 39 IASB accounting
standards, 28 are already practised by
Indian chartered accountants (CA), eight
are under preparation, one is a guidance
note already corresponding to IFRS and
two do not hold relevance in the Indian
context.
• Around 102 countries have already
converged their accounting standards.
 Current Position
• "ICAI will carry out massive training programmes
across its branches, training centres, regional
councils and chapters for all CAs to equip them
with the knowledge of all the new standards
• Experts and industrialists are discussing how to
face the challenges before harmonising the
Indian Accounting Standards with the
International Financial Reporting Standards
(IFRS).
 Current Position
• Experts are of the view that on the face of
it, Charted Accountants (CAs) should first
be well versed about the Indian accounting
standards,
• only the CAs in the multinational
companies are adept in both the IFRS and
Indian accounting standards.