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.