IBAS IFRS

By Jayashree P K
Director, iBAS Consulting Pvt Ltd

Syllabus aim
To develop knowledge, understanding and
application of International Financial
Reporting Standards and the concepts and
principles which underpin them

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Learning Outcome
On completion of the course candidates should be able to:

Gain an overview of what IFRS is

Understand and explain the international regulatory
framework of financial reporting
Discuss and apply specified International Accounting
Standards and International Financial Reporting
Standards to practical situations and prepare
financial statements according to the standards
Understand the differences and commonalities
between IFRSs and Ind Accounting Standards (IndAS)
and apply the understanding in the first time
adoption of the IFRSs.
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Broad Syllabus or Course Contents

The key areas covered are:
International sources of authority
Elements of financial statements
Presentation and additional disclosures
Preparation of external financial reports for single
entities
Preparation of external financial reports for
combined entities and joint ventures.
Key differences and commonalities with IndGAAP
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1. International sources of authority

The structure of the International Accounting
Standards Board (IASB)
The Standing Interpretation Committee (SIC)
The role of the International Financial
Reporting Interpretations Committee (IFRIC)

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2. Elements of financial statements

The elements directly related to financial position (balance
sheet) are:
Assets
Liabilities
Equity
The elements directly related to performance (income
statement) are:
Income
Expenses
The cash flow statement reflects both income statement
elements and some changes in balance sheet elements

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2. Elements of financial statements

contd..
Assets: a resource controlled by the entity as a
result of past events and from which future
economic benefits are expected to flow to the
entity
Property, plant and equipment
Intangible assets
Goodwill
Current assets including inventories
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2. Elements of financial statements

contd..
Liabilities: a present obligation of the entity
arising from past events, the settlement of
which is expected to result in an outflow from
the entity of resources embodying economic
benefits
Provisions and contingencies
Current and deferred tax

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2. Elements of financial statements

contd..
Equity : the residual interest in the assets of the
entity after deducting all its liabilities

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3. Presentation and additional

disclosures

Events after the balance sheet date

Earnings per share
Related party disclosures
Interim financial reporting
Effects of changes in foreign exchange rates
Segment reporting.

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4. Preparation of external financial

reports for single entities

Statement of Financial position

Income statement
Cash flow statement
Statement of changes in equity

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5. Preparation of external financial

reports for combined entities and
joint ventures
Definitions of subsidiaries, investments in
associates and joint ventures
Preparation of consolidated balance sheets
and income statements
Proportionate consolidation and joint
ventures.
Equity Accounting
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This syllabus content will be covered

through following IFRS and IFRIC/SIC:

IAS 1 Presentation of Financial Statements

IAS 2 Inventories
IAS 7 Statement of Cash Flows
IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
IAS 10 Events After the Reporting Period
IAS 11 Construction Contract
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IASs List Contd..

IAS 12 Income Taxes

IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 The Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance
IAS 21 The Effect of Change in Foreign Exchange
Rates
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IASs List Contd..

IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 27 Consolidated and Separate Financial
Statements
IAS 28 Investments in Associates
IAS 31 Interests In Joint Ventures
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings Per Share
IAS 34 Interim Financial Reporting
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IASs List Contd..

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
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IFRSs List
IFRS 1 First-Time Adoption of International
Financial Reporting Standards
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations

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IFRSs List Contd..

IFRS 6 Exploration for and Evaluation of Mineral
Resources
IFRS 7 Financial Instruments: Disclosure
IFRS 8 Operating Segments
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11- Joint Arrangements
IFRS 12 Disclosure of interest in other entities
IFRS 13 Fair Value Measurement
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SIC Interpretations List

SIC-12: Consolidation Special Purpose
Entities
SIC-15: Operating Leases Incentives
SIC-31: Revenue Barter Transactions
Involving Advertising Services
SIC-32: Intangible Assets Web Site Costs

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IFRIC Interpretations List

IFRIC-10: Interim Financial Reporting and
Impairment
IFRIC-12: Service Concession Arrangements
IFRIC-13: Customer Loyalty Programmes

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About IFRS
IFRS is a set of accounting standards published
by the London-based International Accounting
Standards Board (IASB). It is more focused on
objectives and principles and less reliant on
detailed rules than country-specific GAAP. IFRS
is used for public reporting purposes in more
than 100 countries, ranging from Australia to
the United Kingdom, and more countries are
expected to adopt IFRS in coming years.
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Factors for adopting IFRS

Improved comparability. The investment
community is increasingly looking for highquality financial information. In increasing
numbers, investors perceive IFRS as an
opportunity to improve the comparability of
financial information from companies across
global industries.

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Factors for adopting IFRS contd..

Improved transparency. A single global set of
accounting standards can encourage both
companies and investors to more easily access
multiple or foreign markets. In effect, this can
help stimulate investment and enable crossborder capital flows.

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Factors for adopting IFRS contd..

Reduced complexity. By adopting IFRS,
companies can reduce the complexity of the
operations now needed to create reports in
multiple local-country GAAPs to help save
money and improve the accuracy and
reliability of financial and tax reporting

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What is IFRS
IFRS is an acronym for International Financial
Reporting Standards and covers full set of
principles and rules on reporting of various
items, transactions or situations in the
financial statements. Often they are referred
to as principles based standards, because
they describe principles rather than dictate
rigid accounting rules for treatment of certain
items.
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IFRS Contd..
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)
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IFRS Contd..
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.
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Components of IFRS
A) Framework for the Preparation and
Presentation of Financial Statements
B) International Accounting Standards (IAS) and
International Financial Reporting Standards
(IFRS)
C) Standing Interpretations Committee (SIC)
and Interpretations originated from the
International Financial Reporting
Interpretations Committee (IFRIC)
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A) Framework for the Preparation and

Presentation of Financial Statement
The Framework states the basic principles for
IFRS and hence its a must-read document.
It states the following:
A.1 objective of financial statements,
A.2 underlying assumptions used in IFRS,
A.3 Qualitative characteristics of financial statements,
A.4 elements of financial statements,
A.5 recognition of elements of financial statements,
A.6 measurement of elements of financial statements
A.7 concepts of capital and maintenance.
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A.1 objective of financial statements

A financial statement should reflect true and
fair view of the business affairs of the
organization.
To show results of managements
stewardship( i.e, accountability for resources
entrusted to it).
Brainstorm 1 Financial position,
performance and changes in financial position
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A.2 underlying assumptions used in

IFRS
The following are the four underlying
assumptions in IFRS:
1. Accrual basis: the effect of transactions and
other events are recognized when they occur, not
as cash is gained or paid.
2. Going concern: an entity will continue for the
foreseeable future.
3. Money Measurement - stable measuring unit
assumption: or traditional Historical cost
accounting; and Units of constant purchasing
power:
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A.3 Qualitative characteristics of financial

statements

Understandability ( user has reasonable knowledge)

Reliability ( free from material error; faithful
representation, substance over form, neutrality, prudence,
completeness)

Comparability (users must be informed about the

accounting policies, changes in them and the effect of the changes)

Relevance ( cannot be a delay in preparation, cost of

reporting should not exceed benefit etc)

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A.4 Elements of financial statements

A.4.1 - The financial position of an enterprise is
primarily provided in the Statement of Financial
Position
Asset: An asset is a resource controlled by the
enterprise as a result of past events from which future
economic benefits are expected to flow to the
enterprise.
Liability: A liability is a present obligation of the
enterprise arising from the past events, the settlement
of which is expected to result in an outflow from the
enterprise' resources, i.e., assets.
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A.4 contd..
Equity: Equity is the residual interest in the
assets of the enterprise after deducting all the
liabilities under the Historical Cost Accounting
model. Equity is also known as owner's equity.
Under the units of constant purchasing power
model equity is the constant real value of
shareholders equity.

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A.4 Elements of financial statements

A.4.2 The financial performance of an enterprise
is primarily provided in The Statement of
Comprehensible income:
Revenues: increases in economic benefit during
an accounting period in the form of inflows or
enhancements of assets, or decrease of liabilities
that result in increases in equity. However, it does
not include the contributions made by the equity
participants, i.e., proprietor, partners and
shareholders.
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A.4.2 contd..
Expenses: decreases in economic benefits during
an accounting period in the form of outflows, or
depletions of assets or incurrences of liabilities
that result in decreases in equity.
Revenues and expenses are measured in nominal
monetary units under the Historical Cost
Accounting model and in units of constant
purchasing power (inflation-adjusted) under the
Units of Constant Purchasing Power model.
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A.5 recognition of elements of financial

statements
An item is recognized in the financial
statements when:
it is probable future economic benefit will
flow to or from an entity.
the resource can be reliably measured otherwise the stable measuring unit
assumption is applied under the Historical
Cost Accounting model
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A.5 contd..
Under the Units of Constant Purchasing Power
model, all constant real value non-monetary
items are inflation-adjusted during low
inflation and deflation; i.e. all items in the
Statement of Comprehensive Income, all
items in shareholders equity, Accounts
Receivables, Accounts Payables, all nonmonetary payables, all non-monetary
receivables, provisions, etc.
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A.6 measurement of elements of

financial statements
Measurement is the process of determining the
monetary amounts at which the elements of the
financial statements are to be recognized and
carried in the balance sheet and income
statement. This involves the selection of the
particular basis of measurement.
A number of different measurement bases are
employed to different degrees and in varying
combinations in financial statements.
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These are
A.6 contd..

(a) Historical cost

(b) Current cost
(c) Realisable (settlement) value
Present Value ( Discounted)

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B) International Accounting Standards (IAS) and

International Financial Reporting Standards (IFRS)

Both IAS and IFRS are standards themselves

that prescribe rules or accounting treatments
for various individual items or elements of
financial statements
IASs are the standards issued before 2001 and
IFRSs are the standards issued after 2001
There used to be 41 standards named IAS 1, 2,
etc., however, several of them were
superseded, replaced or just withdrawn.
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C) SIC and IFRIC

SICs and IFRICs are interpretations that
supplement IAS / IFRS standards.
SIC were issued before 2001 and IFRIC were
issued after 2001.
They deal with more specific situations not
covered in the standard itself, or issues that
arose after publishing of certain IFRS.

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Adoption of IFRS
FRS are used in many parts of the world,
including the European Union, Hong Kong,
Australia, Malaysia, Pakistan, GCC countries,
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

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Adoption of IFRS contd..

It is generally expected that IFRS adoption
worldwide will be beneficial to investors and
other users of financial statements, by
reducing the costs of comparing alternative
investments and increasing the quality of
information. Companies are also expected to
benefit, as investors will be more willing to
provide financing
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Adoption of IFRS in India

The Institute of Chartered Accountants of India
(ICAI) has announced that IFRS will be mandatory
in India for financial statements for the periods
beginning on or after 1 April 2011. This will be
done by revising existing accounting standards to
make them compatible with IFRS.
Reserve Bank of India has stated that financial
statements of banks need to be IFRS-compliant
for periods beginning on or after 1 April 2011...
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Adoption of IFRS in India contd..

The ICAI has also stated that IFRS will be applied to
companies above Rs.1000 crore from April 2015. Phase
wise applicability details for different companies in
India:
Phase 1: Opening balance sheet as at 1 April 2015*
i. Companies which are part of NSE Index Nifty 50
ii. Companies which are part of BSE Sensex BSE 30
a. Companies whose shares or other securities are
listed on a stock exchange outside India
b. Companies, whether listed or not, having net worth
of more than INR1,000 crore
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Adoption of IFRS in India contd..

Phase 2: Opening balance sheet as at 1 April
2016*
Companies not covered in phase 1 and having
net worth exceeding INR 500 crore

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Adoption of IFRS in India contd..

Phase 3: Opening balance sheet as at 1 April
2017*
Listed companies not covered in the earlier
phases
If the financial year of a company commences
at a date other than 1 April, then it shall
prepare its opening balance sheet at the
commencement of immediately following
financial year.
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IFRS learning as a step-by-step

process:
Learn the basic structure of IFRS
Read the Framework
Get some knowledge about
individual standards
Develop your knowledge and be up-to-date

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Learn the basic structure of IFRS

(Familiarize yourself with the basic structure and concept of
IFRS.)

IFRS is an acronym for International Financial

Reporting Standards and covers full set of
principles and rules on accounting treatment of
various items or situations. This full set comprises
the following components:
Framework for the Preparation and Presentation of
Financial Statements
International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS)
Standing Interpretations Committee (SIC) and
Interpretations originated from the International
Financial Reporting Interpretations Committee (IFRIC)
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Read the Framework

For any beginner in IFRS, the Framework is the
basic concept of IFRS and therefore it is a
MUST READ document.
Its not so time consuming, as the Framework
itself has only about 30 pages and any
experienced accounting professional would be
familiar with many concepts in it.
For the full text of the Framework , visit
www.ifrs.org.
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Get some knowledge about individual

standards
Its almost impossible and ineffective to read
and study the texts of individual standards,
interpretations and accompanying docs its
more than 3 000 pages!
There are many possibilities how to learn
basic principles and rules in individual
standards.
2 main streams of learning IFRS are Classroom
training (iBAS) and self-study.
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Face-to-face training
Pros:
learning from experienced tutor with
personal contact
high level of interactivity you might ask for
additional explanations or any questions you
dont understand and often you get a feedback
from your tutor
full focus on the topic when you attend a
lecture, you will not be distracted by so many
things around you and therefore, your study will
be very effective.
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Face-to-face training
Cons
time consuming face-to-face training usually
takes place during your normal working or
business hours and you must find a space in
your overloaded schedule. That might be a
problem, especially during a high or
busy season.

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iBAS IFRS Course teaching method

We help participants better understand why
IFRS and its theory looks like it does, and
the challenges of adopting accounting
standards and information given diverse
needs and stakeholders. We do this
through:
Critical thinking and reasoning
Using evidence; challenging status quo
Speaking and presentation skills
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iBAS IFRS Course teaching method

Contd..

Conceptual knowledge of various

terminologies
Research skills
Accounting standards
Financial reporting regulations
Articles and reports
Research studies
Logic behind the standards
What to do when there is no clear
guidance
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What Do We Want Participants to

Learn?
Critical Thinking
Role of Assumptions in Developing Accounting
Using Evidence to Develop/Support Positions

Learning to Learn
Research skills

No one right answer?

Judgment skills (better answers)

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Q&A

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