Infosys technologies LTD- it was founded

on july 2,1981 in pune by NR Narayana

Murthy and 6 other people .the company
was incorporated as private company and
went public in 1993.in its recent annual
reports , infosys technologies limited also
provides its balance sheet as per the inter
national financial reporting standards
 IFRS are standards ,interpretations and
framework adopted by the international
accounting standards board [IASB] which
was issued between 1973 and 2001 byIASC
 Structure of IFRS
 Framework
 Role of framework
 Objective of financial statement
 Assumptions
 Qualitative characteristics of financial

statement
 Elements of financial statement
 Generally accepted accounting principles is the
term used to refer to the standard framework of
guidelines for financial accounting used in any
given jurisdiction
GAAP includes the standards conventions and rules
accountants follow In recording and summarizing
transactions and in the prepration of financial
statements
 Financial accounting is information that must be
assembled and reported objectively. The third
parties who must rely on such information have a
right to be assured that the data are free from bias
and inconsistency, whether deliberate or not .for
this reason financial accounting relies on certain
standards or guides called GAAP. In any report of
financial statements [audit, compilation and review
etc] the auditor must indicate to the reader whether
or not the information contained within the
statements complies with GAAP
 PRINCIPLE OF REGULARITY – regularity can
be defined as confirmity to enforced rules
and laws
 PRINCIPLE OF CONSISTENCY- this principle

states that when a business has once fixed

a method for the accounting treatment of
an item, it will enter all similar items that
follow in exactly the same way
 PRINCIPLE OF SINCERITY- according to this

principle, the accounting unit should

reflecting good faith the reality of the
company’s financial status
 PRINCIPLE OF PERMANENCE OF METHOD –
this principle aims at allowing the
coherence and comparison of financial
information published by the company
 PRINCIPLE OF NON-COMPENSATION OF
THE COMPANY- one should show the full
details of the financial information and not
seek to compensate a debt with an asset,
a revenue with an expense etc
 PRINCIPLE OF PRUDENCE- this principle
aims at showing the reality ‘as is’ one
should not try to make things look prettier
than they are . Typically , a revenue
should be recorded only when it is certain
and a provision should be entered for an
expense which is probable
 PRINCIPLE OF CONTINUITY –when stating
financial information , one should assume
that the business will be interruped. This
principle mitigates the principle of
prudence, assets do not have to be
accounted at their disposable value ,but it
is accepted that they are their historical
value
 PRINCIPLE OF PERIODICITY- each
accounting entry should be allocated to a
given period and split accordingly if it
covers several periods . If a client prepays
a subscription the given revenue should
be split to the entire time span and not
counted for entirely on date of the
transaction
 PRINCIPLE OF FULL DISCLOSURE- all
informations and values pertaining to the
financial position of a business must be
disclosed in the records
 IFRS & Indian GAAP
• The IFRS or the International Finance Regulation Standards
are defined by the International Accounting Standards
Board. The IFRS is increasingly being adopted by
companies across the globe for preparing their financial
statements. IFRS comprises of International Financial
Reporting Standard, International Accounting Standard, and
Interpretation originated by the International Financial
Reporting Interpretations Committee.
• Indian GAAP are the standards notified by the central govt.
under the companies (Accounting Standard)Rules,2006
(applicable to all companies) vide notification G.S.R.739(E)
dated 7 Dec. 2006 and to the relevant requirements of the
companies Act,1956.
 Differences between IFRS
&Indian GAAP
IFRS
1. IAS 1 (2007)-Presentation of
Financial statements
2.Financial Statements under IFRS
comprises of
(a)A statement of financial position
(b)A statement of comprehensive
income
(c)A statement of cash-flows
(d)A statement of changes in
equity
(e)Notes including summary of
accounting policies and
explanatory notes
Indian GAAP
1.AS 1-Disclosure of accounting
policies/schedule VI to companies
act,1956.
2. The components of financial
statement are-
(a)Balance sheet
(b)Statement of profit & loss
(c)Cash flow statement.(not
mandatory for small and medium
sized companies).
(d)Explanatory notes including
summary of accounting policies
3.Omission or misstatements 3. Financial statement should
are material if individually or disclose all “material” items,
collectively they could i.e. items the knowledge of
influence the economic which might influence the
decisions of users taken on decisions of the user of the
the basis of financial financial statements.
statements.
4. An entity is required to present 4. No such classification are
current & non-current assets required
and liabilities, as separate
classifications in the statement
of financial position
5. Fair presentation requires 5. Fair presentation requires
faithful representation of the compliance with the applicable
effects of the transaction, other requirements of the companies
events and conditions in Act,1956 and the other regulatory
accordance with the definitions requirements and the application
of and recognition criteria for of the qualitative characteristics of
assets, liabilities, income and the accounting standard
expenses set out in the frame framework.
work.
 31.03.05 31.03.06 Absolute Percentage
increase/decre change
ase
Sources of fund:
Sh.holder’s fund
Capital 135 138 3 +2.22
Res. & surplus 5090 6828 1738 +34.14
Total Sh.holder 5225 6966 1741 +33.32
fund
Other L.T.Liability 94 68 -26 -27.65

C.Liabilities &
Prov.
Liabilities 656 934 278 +42.37
Provisions 777 1412 635 +81.72
Total C.L. & Prov. 1433 2346 913 +63.71
Application of
fund:

Fixed Assets
Net Gross Block 1256 1655 399 +31.76
Capital work in 318 571 253 +79.55
progress

Investments 1211 755 -456 -28.97

Deferred Tax Assets 45 65 20 +44.44

C.A.,loans & Adv.

S. Debtors 1322 1608 286 +21.63
Cash & Bank 1576 3429 1853 +117.57
balance

Loans & Advances 1024 1297 273 +26.66

Total C.Assets 3922 6334 2412 +61.49
Total Application of 6752 9380 2628 +38.92
fund
 In current Assets total increase amounts to 2412
crores (61.49%). The increase in cash was the most
i.e. Rs.1853 crores(117.57%)
 Current Liabilities increases up to Rs 913
crores(63.71%).This increase is greater than
increase in current asset that means in 05-06 the
liquidity of Infosys has decreased.
 During the yr. 05-06 reserves & surplus have
increased by Rs 1738 crores(34.14%). The Sh.
Holder fund have increased by Rs 1741 crores
(33.32%) which represent the financial soundness
of the business.
 During the year the investment has been decreased
& is used to pay off its other long term liability.
 change change

Assets:

Current Assets

Cash & cash 410 889 479 116.8%

equivalents

Investment in 278 170 -108 -38.8%

liquid mutual
fund unit

Trade account 303 361 58 19.14%

receivable

Unbilled 32 48 16 50%
revenue
Other C.A. 35 40 5 14.2%
&prepaid exp.

Total C.A. 1058 1508 450 42.5%

Property, 352 491 139 39.4%
Plant &
equipments

Goodwill 8 8 0 0%

Deferred tax 10 14 4 40%

asset

Advance _ 18 18 _
Income
Tax

Other assets 26 27 1 3.8%

Total Assets 1454 2066 612 42%

abilities &
. Holder’s
uity
rrent Liability

count 1 3 2 200%
yable
ome tax 23 _ -23 -100%
yable
ent deposits 7 2 -5 -71.4%
earned 20 44 24 120%
venue
her accrued 124 160 36 29%
bilities
tal current 175 209 34 19.4%
bilities
n-current
bility
eferred stock 21 _ -21 -100%
subsidiary
Stock holder’s
equity

Equity shares 31 31 0 0%

Additional paid 279 428 149 53.4%

in capital

Accumulated 33 9 -24 -72.7%

other
comprehensive
income
Retained 910 1369 459 50.4%
earning

Minority interest_ 15 15 _

Total Liability 1454 2066 612 42%

A/c to Indian GAAP
Deferred tax asset= Rs 65 crores
A/c to IFRS
Deferred tax asset= 14 million $
Comparing both, we get
1$=650000000/14000000
=Rs 46.42
Thus currency rate is 1 USD = Rs 46.42
 Indian GAAP has followed the Accounting
standard of India (AS1) while IFRS has
followed International Accounting Standards
(IAS1).
 A/c to IFRS total CA has increased up to

42.5 % while a/c to Indian GAAP the

increase in CA is up to 61.49%.
 IFRS has made differentiation regarding CA,

non CA, liabilities & non liabilities however

its not in Indian GAAP.