Académique Documents
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Introduction
Written Documents issued by Government or Regulatory Body In India, issued by ICAI on 21st April,1977 Initiated by Kumar Mangalam Birla, chairman committee of Corporate Governance for Financial Disclosures Also initiated by Chair person of NACAS
Objectives
Standardise the diverse Accounting Policies Add the reliability to the Financial Statement Eradicate baffling variation in treatment of accounting aspects Facilitate inter-firm and intra-firm comparison
2. AS 16 to AS 29
3. AS 30 to AS 32
2000 to 2007
Later part of 2007
Measurements of Inventories
Determination of Cost of Inventories Cost of purchase (Purchase price, duties & taxes, freight inwards) Cost of conversion Determination of Net realisable value Comparison of cost and net realisable
AS 7- Construction Contract
Contract specifically negotiated for construction of Asset or combination of Assets closely inter-related
AS 9- Revenue Recognition
Means gross inflow of cash and other consideration like arising out of :1. Sale of goods 2. Rendering services 3. Use of enterprise resources by other yielding interest, dividend and royalities.
1. 2. 3. 4. 5. 6.
Assets held for earning incomes like dividend, interest, rental for capital appreciation, etc It involves:Classification of Investment Cost of Investment Valuation of Investment Reclassification of Investment Disposal of Investment Disclosure of Investment in FS
1. 2. 3. 4.
Section 391 to 394 of Companies Act, 1956 governs the provision of amalgamation. Disclosures: Names and nature of amalgamating companies Effective date of amalgamation Method of Accounting used Particulars of scheme sanctioned under a statute
1. 2.
3. 4.
Financial Instruments
AS 30 Recognition and Measurement AS 31 Presentation AS 32 Disclosures Has not been made mandatory
WHY IFRS ?
India is one of the over 100 countries that have or are moving towards IFRS (International Financial Reporting Standards) convergence with a view to bringing about a uniformity in reporting systems globally, enabling businesses, finances and funds to access more opportunities.
Foreign Direct Investors (FDI), overseas financial institutional investors (FII) are more comfortable with compatible accounting standards and companies accessing overseas funds feel the need for recast of accounts in keeping with globally accepted standards.
ICAI has decided to implement IFRS in India. The Ministry of Corporate Affairs has also announced its commitment to convergence to IFRS by 2011.
Compliance with IFRS in India is restricted to Public Entities which includethose companies & entities listed on any stock exchange or have raised money from the public, or have a substantial public interest, or public sector companies. IFRS in India would cover the following public interest entities in the first phase.
Listed companies Banks, insurance companies, mutual funds, and financial institutions Turnover in preceding year > INR 1 billion Borrowing in preceding year > INR 250 million Holding or subsidiary of the above IFRS is not applicable to SMEs as of now.
IMPACT OF IFRS
IFRS implementation affects several areas of the business entity, such as presentation of accounts, the accounting policies and procedures, the way legal documents are drafted, the way the entity looks at its assets and their usage, as well as the its communications with its stakeholders and also the way it conducts its business. This fundamental and pervasive nature of impact of IFRS, makes it imperative that sufficient planning and thought is given to this aspect and choices made at the transition stage itself, as they determine the effect on the company and its operations. A detailed analysis of all aspects of impact and change as well as all legal documentation and communication becomes necessary.
There is a lack of awareness and understanding of the requirements and implications of IFRS transition and compliance. IFRS requires aligning business practices and policies to the reporting requirements (including retrospective ones)
Training the organizational components will be a huge task.
Accounting Understand of IFRS requirements Understanding of accounting systems, issues & training
IFRS CONVERSION
The conversion methodology suggested below puts a strong emphasis on planning, study, preparation for transition, evaluation, training and embedding the change.
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