Institute of Chartered Accountants of India

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1 Introductory Programme on IFRS for Young Members Organised by Institute of Chartered Accountants of India Presented by Technical Directorate, Institute of Chartered Accountants of India 1

2 Copyright Recognition IFRS, IAS, SIC, IFRIC are copyright of International Accounting Standards Committee Foundation. 2

3 IFRS Foundation Discussion points History and Evolution of IFRS Structure of IFRS Foundation Monitoring Board Trustees IFRS Advisory Council IASB IFRS Interpretations Committee Standards and Interpretations Setting Process 3

4 IFRS Foundation Independent, Not-for-Profit Private Sector organisation The principalobjecti objectiveses are: to develop a singleset of highh quality IFRSs Use financial reporting needs adoption of IFRSs 4

5 History and Evolution of IFRS

6 Structure Monitoring Board Appoint / Oversight Trustees of IFRS Foundation IFRS Advisory Council Advise Appoint Report Report Appoint / Oversight International Accounting Standards Board Interprets Appoint International Financial Reporting Standards Interpretations Committee 6

7 Monitoring Board Provides a formal link between trustees and Public Authorities Members Responsible member of European Commission Chair of IOSCO Emerging Markets Committee Chair of IOSCO Technical Committee Commissioner of Japan Financial Services Agency Chair of US SEC As an observer, chair of the Basel Committee on Banking Supervision 7

8 Trustees There are currently 22 trustees Six from Asia / Oceania Region Six from Europe Six from North America One from Africa One from South America Two from any area, subject to maintaining overall geographical balance 8

9 IFRS Advisory Council At least 30 members having a diversity of geographical and professional backgrounds Appointed for renewable terms of 3 years At least three meetings a year 9

10 IASB 16 members from which 3 may bepart time t 4 from Asia/Oceania Region 4 from Europe 4 from North America One from Africa One from South America 2 from any area, subject to maintaining overall geographical balance Maximum term 5 years Quorum 60% of members of IASB 10

11 IFRS IC 14 voting members fromverities of countries and professional background Representatives of regulatory authorities appointed as non voting observers One or two IASB members to be designated as non voting observers Non voting observers to have a right to attend and speak Quorum 10 voting members 11

12 Standard Setting Process Setting the agenda Planning the project Developing and publishing the discussion paper might be omitted with reasons 9/16 Developing and publishing the exposure draft 10/16 Developing and publishing the standard 10/16 Post implementation review 12

13 Interpretations Process Public requests Analysis of requests by staff Draft Interpretation No more than 4 members of the Interpretations Committee object, by way of ballot Interpretation No more than 4 members of the Interpretations Committee object, by way of ballot Ratification by IASB requires 10/16 13

14 Introductory Programme on IFRS for Young Members Organised by Institute of Chartered Accountants of India Presented by Technical Directorate, Institute of Chartered Accountants of India 14

15 Convergence process with IFRS in India India decided to converge and not adopt IFRS Reasons: Legal & regulatory environment Economic environment Prevailing accounting practices in the country 15

16 Convergence process Process followed in formulation of IFRS-converged Standards IFRS reviewed and corresponding Indian Accounting Standard (Ind AS) formulated As far as possible, no carve-out is made unless absolutely essential keeping in view the Indian conditions and circumstances 16

17 Convergence process Optional treatments prescribed under IFRS removed in appropriate cases keeping in view Indian environment to bring about comparability Conceptual issues, if any, are identified and taken up with ihthe IASB 35 Ind ASs corresponding to IASs/ IFRSs in force on April 1, 2011 placed by the Ministry of Corporate Affairs (MCA) on its website. 17

18 Why not implemented Intention to implement on Individual Financial Statements rather than only Consolidated Financial Statements Challenges Computation ti of Income Tax Computation of Managerial Remuneration and Distributable Profits 18

19 Status of IFRS (Ind ASs) S No. Status Number 1. IFRSs/IASs issued by IASB which are applicable excluding IFRS 9 37 as in IFRS 9: Financial Instruments 1 3. New IFRSs issued by IASB (Applicable from January 1, 2013) 4 3. New IFRSs issued by IASB 2 i) (IFRS 14, Regulatory Deferral Accounts) issued by IASB (Applicable from January 1, 2016) (ii) IFRS 15, Revenue from Contracts with Customers) issued by IASB (Applicable from January 1, 2017) Total Ind ASs placed on MCAs website Ind AS corresponding to IFRS not being placed on MCA website 3 6. Drafts of new Ind AS corresponding to new IFRSs/IASs issued by IASB after Under consideration i of the ICAI (To issue Ind AS corresponding to 2 IFRS 14 &IFRS 15) CA Total Manish C. Iyer & CA Shilpi Hisaria 44 19

20 Status of IFRICs and SICs S No. Status Number 8 IFRICs with corresponding Appendices to Ind ASs 16 9 New/ amended IFRICs issued by IASB under consideration of ICAI (IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 2 4. SICs with corresponding Appendices to Ind ASs 11 20

21 Ind AS not being placed on MCA website at present Indian Accounting Standard corresponding to IFRS 9, Financial Instruments, is not being notified at present as instead of this standard, Ind AS 39 is being notified. Indian Accounting Standard corresponding to IAS 26, Accounting and Reporting by Retirement Benefit Plans, is not being notified as this Standard is not applicable to companies Indian Accounting Standard corresponding to IAS 41, Agriculture is not notified as corresponding Indian Accounting Standard CA Manish is C. being Iyer & CA Shilpi redrafted Hisaria 21

22 Drafts of Ind AS issued by ASB approved by Council Draft of Ind AS 110 corresponding to IFRS 10, Consolidated Financial Statements Draft of Ind AS 111 corresponding to IFRS 11, Joint Arrangements Draft of Ind AS 112 corresponding to IFRS 12, Disclosures of Interests in Other Entities Drafts of Ind AS 113 corresponding to IFRS 13, Fair Value Measurement 22

23 List of IFRS & Ind AS IFRS No. AS No. Name IAS 1 Ind AS 1 Presentation of Financial Statements IAS 2 Ind AS 2 Inventories IAS 7 IndAS 7 Statement t t of Cash Flows IAS 8 Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 Ind AS 10 Events after the Reporting Period IAS 11 Ind AS 11 Construction Contracts IAS 12 Ind AS 12 Income Taxes IAS 16 Ind AS 16 Property, Plant and Equipment IAS 17 Ind AS 17 Leases IAS 18 Ind AS 18 Revenue IAS 19 Ind AS 19 Employee Benefits IAS 20 Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance IAS 21 Ind AS 21 The Effects of Changes in Foreign Exchange Rates IAS 23 Ind AS 23 Borrowing manish.iyer@icai.in Costs & shilpi.hisaria@icai.in 23

24 List of IFRS & Ind AS IFRS No. AS No. Name IAS 24 Ind AS 24 Related Party Disclosures IAS 26 No Accounting and Reporting by Rti RetirementBenefit corresponding Plans Ind AS IAS 27 Ind AS 27 Separate Financial Statements (as amended) IAS 28 Ind AS 28 Investments in Associates and Joint Ventures (as amended) IAS 29 Ind AS 29 Financial Reporting in Hyperinflationary Economies IAS 31 Ind AS 31 Interests in Joint Ventures (superseded by IFRS 11) IAS 32 Ind AS 32 Financial Instruments: Presentation IAS 33 Ind AS 33 Earnings per Share 24

25 List of IFRS & Ind AS IFRS No. AS No. Name IAS 34 Ind AS 34 Interim Financial Reporting IAS 36 Ind AS 36 Impairment of Assets IAS 37 IndAS 37 Provisions, i Contingent Liabilities i and Contingent Assets IAS 38 Ind AS 38 Intangible Assets IAS 39 Ind AS 39 Financial Instruments: Recognition and Measurement IAS 40 IndAS 40 Investment tproperty IAS 41 Ind AS being Agriculture developed IFRS 1 Ind AS 101 First-time Adoption of Indian Accounting Standards IFRS 2 Ind AS 102 Share based Payment IFRS 3 Ind AS 103 Business Combinations 25

26 List of IFRS & Ind AS IFRS No. AS No. Name IFRS 4 Ind AS 104 Insurance Contracts IFRS 5 Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations IFRS 6 Ind AS 106 Exploration for and Evaluation of Mineral Resources IFRS 7 Ind AS 107 Financial Instruments: Disclosures IFRS 8 Ind AS 108 Operating Segments IFRS 9 Ind AS being Financial Instruments developed IFRS 10 Ind AS 110 Consolidated Financial Statements IFRS 11 Ind AS 111 Joint Arrangements IFRS 12 Ind AS 112 Disclosures of Interests in Other Entities IFRS 13 Ind AS 113 Fair Value Measurenment IFRS 14 Under Regulatory Deferral Accounts consideration IFRS 15 Under Revenue from Contracts with Customers consideration 26

27 List of IFRICs & SICs with corresponding Appendices to Ind ASs IFRS No. AS No. Name IFRIC 1 Appendix A to Ind AS 16 Changes in Existing Decommissioning, Restoration and Similar Liabilities IFRIC 2 Not relevant Members Shares in Co operative Entities and Similar Instruments IFRIC 4 Appendix C to Ind AS 17 Determining whether an Arrangement contains a Lease IFRIC 5 IFRIC 6 IFRIC 7 IFRIC 9 IFRIC 10 IFRIC 12 Appendix A to Ind AS 37 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Appendix B to Liabilities arising from Participating in a Specific Market Ind AS 37 Waste Electrical and Electronic Equipment Appendix A to Ind AS 29 Appendix C to Ind AS 39 Applying the Restatement Approach under Ind AS 29 Financial Reporting in Hyperinflationary Economies Reassessment of Embedded Derivatives Appendix A to Interim Financial Reporting and Impairment Ind AS 34 Appendix A to Ind AS 11 Service Concession Arrangements 27

28 List of IFRICs & SICs with corresponding Appendices to Ind ASs IFRS No.s AS No. Name IFRIC 13 Appendix B to Customer Loyalty Programmes Ind AS 18 IFRIC 14 Appendix A to Ind AS 19 The Limit on a Defined Benefit Asset, Ind AS 19 Minimum Funding Requirements and their Interaction IFRIC 15 Included in Agreements for the Construction of Real Estate Ind AS 11 IFRIC 16 Appendix D to Hedges of a Net Investment in a Foreign Operation Ind AS 39 IFRIC 17 Appendix A to Distributions of Non-cash Assets to Owners Ind AS 10 IFRIC 18 Appendix C to Transfers of Assets from Customers Ind AS 18 IFRIC 19 Appendix A to Extinguishing Financial Liabilities with Equity Instruments Ind AS 32 IFRIC 20 Under Stripping Costs in the Production Phase of a Surface Mine consideration IFRIC 21 Under Levies consideration 28

29 List of IFRICs & SICs with corresponding Appendices to Ind ASs IFRS No. AS No. Name SIC-7 Not relevant Introduction of Euro SIC-10 Appendix A to Government Assistance No Specific Relation to Ind AS 20 Operating Activities SIC-12 Appendix A to Consolidation Special Purpose Entities Ind AS 27 SIC-13 Appendix A to Ind AS 31 SIC-15 Appendix A to Ind AS 17 SIC- 21 Appendix A to Ind AS 12 Jointly Controlled Entities Non-Monetary Contributions by Venturers Operating Leases Incentives Income Taxes Recovery of Revalued Non-Depreciable Assets SIC-25 Appendix B to Income Taxes Changes in the Tax Status of an Entity or Ind AS 12 its Shareholders 29

30 List of IFRICs & SICs with corresponding Appendices to Ind ASs IFRS No. AS No. Name SIC-27 Appendix B to Evaluating the Substance of Transactions Involving the Ind AS 17 Legal Form of a Lease SIC-29 Appendix B to Service Concession Arrangements: Disclosures Ind AS 11 SIC-31 Appendix A to Revenue Barter Transactions Involving Advertising Ind AS 18 Services SIC-32 Appendix A to Intangible Assets Web Site Costs Ind AS 38 30

31 Introductory Programme on IFRS for Young Members Organised by Institute of Chartered Accountants of India Presented by Technical Directorate, Institute of Chartered Accountants of India 31

32 Conceptual Framework Discussion Points Objective of General Purpose Financial Reporting Qualitative Characteristics Underlying Assumptions Elements of Financial i Statementst t 32

33 Objective of GPFR To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity Decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit GPFR provide information about the entity s economic resources and claims against the reporting entity, effects of transactions and other events that change a reporting entity s economic resources and claims 33

34 Qualitative Characteristics Fundamental qualitative characteristics Relevance Faithful Representation Enhancing qualitative characteristics Comparability Verifiability Timeliness Understandability Pervasive cost constraint 34

35 Underlying Assumptions Going Concern Accrual 35

36 Elements of Financial Statements Assets Liabilities Income Expense Equity 36

37 37