Organised by:

NIRC of ICAI

ICAI Bhavan, New Delhi

May 19, 2016

India is converging to IFRS…

Meaning of Adoption and Convergence

Adoption of IFRS, in simple terms, means that the Countryapplying IFRS would be Implementing IFRS in the same manner asissued by the IASB and would be 100% compliant with theguidelines issued by IASB.

Convergence with IFRS means that the Accounting Standard Boardof the Country applying IFRS would work together with IASB todevelop high quality compatible Accounting Standards over time.Thus, Countries converging with IFRS may deviate to a certainextent from the IFRS’s as issued by the IASB

India is converging to IFRS not adopting IFRS

Some classic IFRS compliance extracted from the standards

1. All components of the financial statements are required to bepresented with equal prominence (IAS 1.11)

2. Financial statements complying with IFRSs make an explicit and unreserved statement of such compliance in the notes (IAS 1.16)

3. In following cases an additional Statement of Financial position and related notes is required as at the beginning of the earliest comparative period (IAS 1.39)

- applies an accounting policy respectively

- makes a retrospective restatement, or

- reclassifies items in its financial statements

IFRS are global, high quality standards, how ??

4. The IFRS standards which are not yet effective but earlieradoption is permitted in that standard, then an entity can adoptearlier and if not adopting than it needs to mention the impact ofthe new standards and reason for not adopting in the notes

5. For applying an accounting policy in the IFRS financial statement an entity should disclose the judgement, sources and basis for choosing such policy

6. Detailed notes and disclosures

7. Fair Value Presentations

8. Principle based standard not rule based

9. Substance over form

IFRS are global, high quality standards, how ??

Ind AS notified so far…

Ind AS notified so far…

Vide Mar 30, 2016 notifications, Ind AS 115 was removed and following standards were notified with the consequential amendments in other standards.

1. Ind AS 11 - Construction Contracts

2. Ind AS 18 - Revenue

New Standards in Ind AS which were not available in IGAAP

Ind AS 27 - Separate Financial Statements Ind AS 29 - Financial Reporting in Hyperinflationary Economies Ind AS 32 - Financial Instruments: Presentation Ind AS 41 - Agriculture Ind AS 101 - First-time adoption of Ind AS Ind AS 102 - Share-based Payments Ind AS 104 - Insurance Contracts Ind AS 106 - Exploration for and Evaluation of Minerals

Resources Ind AS 107 - Financial Instruments: Disclosures Ind AS 109 - Financial Instruments Ind AS 112 - Disclosure of Interests in Other Entities Ind AS 113 - Fair Value Measurement Ind AS 114 - Regulatory Deferral Accounts

Welcome !! to Brand New Standards

Segregation of IFRS/ Ind

AS

Assets

Reporting

IndustryDisclosure

Income, Expenses

and liabilities

Classification of Ind AS..

Ass

ets

• Ind AS 2 Inventories

• Ind AS 16 Property, Plant & Equipment

• Ind AS 40 Investment Property

• Ind AS 38 Intangible Assets

• Ind AS 32, Ind AS 109 Financial Assets

• Ind AS 41 Agriculture

• Ind AS 17 Leases

• Ind AS 105 Non Current asset held for sale and discontinued operation

Rep

ort

ing

• Ind AS 34 Interim Financial Reporting

• Ind AS 103, 110, 111, 28 Consolidated Financial Statements

• Ind AS 1,7,8,10,21,27,29, 33 Separate Financial Statements

Inco

me,

Exp

ense

s an

d L

iab

iliti

es

• Ind AS 12 Income Taxes

• Ind AS 102 Share based payment

• Ind AS 32, Ind AS 109 Financial liabilities

• Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets

• Ind AS 11 Construction Contracts

• Ind AS 18 Revenue

Details..

Dis

clo

sure

s • Ind AS 24 Related Party Disclosures

• Ind AS 108 Operating Segments

• Ind AS 112 Disclosure of Interest in Other Entities

• Ind AS 107 Financial Instruments: Disclosures In

du

stry

• Ind AS 104 Insurance Contracts

• Ind AS 106 Exploration & Evaluation of Mineral Resources

12

Details..

Bargain purchase gain arising on a business combination to be treated as Capital Reserve under Ind AS. (Ind AS 103)

Carve Outs/ removal of options

Use of carrying cost of Property, Plant and Equipment on the date of transition of First-time Adoption of Ind AS is permitted. (Ind AS 101)

Fair value model for investment property not permitted. (Ind AS 40)

Uniform accounting policies may not be used by investor of an associate in case it is impracticable. (Ind AS 28)

Classification of Foreign Currency Convertible Bonds (Ind AS 32, Financial Instruments: Presentation)

By CA. Alok Garg

Classification of a loan liability in case of breach of a loan condition (Ind AS 1, Presentation of Financial Statements)

Carve Outs/ removal of options

Permission to continue with the accounting policy adopted for amortization of intangible assets arising from service concession arrangements related to toll roads (Ind AS 101 and Ind AS 38)

Carve-out regarding recognition of lease rentals (Ind AS 17, Leases)

Permission to continue the accounting policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items (Ind AS 101 and Ind AS 21)

By CA. Alok Garg

15

Comparison – IFRS/ Ind AS Vs AS (IGAAP)

Component of Financial Statements - OCI as part of P&L & SOCIE

Points to discuss

Format of Financial Statements – Ind AS compliant Sch III notified

Minimum Line items on the face of financial Statements – Ind AS 1

No Extra ordinary Items Vs Specific disclosure in IGAAP – Ind AS 1

Explicit and unreserved statement of compliance – Ind AS 1

Requirement of presenting 3rd Balance Sheet as comparative -Ind AS 1 & 8

By CA. Alok Garg

Classification of Expenses - Nature of Expense based

Disclosure of critical judgments made by management in applying accounting policies – Ind AS 1

Change in accounting policy – Retrospective Vs Prospective – Ind AS 8

No Prior period error line item – Error corrected by adjusting opening equity and comparatives Vs single line item impact – Ind AS 1, 8

Material Non Adjusting Events – FS Disclosures Vs Board Report

By CA. Alok Garg

Points to discuss

Proposed Dividend – Non Adjusting Event Vs Current Liability* (this

item is not a difference w.e.f April 1, 2016.

Temporary differences Vs Timing differences – Ind AS 12

Balance Sheet Approach Vs P&L approach – Ind AS 12

Mandatory Standards on Financial Instruments Vs No notified standard regime – Ind AS 32, 107 and 109

Preference Share Capital/ Convertible debentures – Liability or Equity

Compound Financial Instrument – Substance over form – Liability, Equity, Liability and Equity – Ind AS 109

By CA. Alok Garg

Points to discuss

Current and Long Term Investment – Mark to Market/ Fair value as per Ind AS 109 Vs concept given in AS 13

PPE – Component based capitalisation

PPE – Cost Vs Revaluation model

Frequency of revaluation, Entire class Vs cherry pick choice

Mandatory Review of useful life, depreciation method & residual value Vs TAKE IT EASY

Subsequent cost on PPE like Major Inspections and Overhauls treated as New asset recognition

Points to discuss : Ind AS 16 and AS 10

Estimated cost of dismantling, removal and restoration cost of Asset

Asset purchased on deferred settlement terms

The above point of this slide on Ind AS 16 & AS 10 is not a difference w.e.f April 1, 2016 after release of notification on revision of existing Accounting Standard vide MCA notification dated 30.3.2016

Fair Value approach on acquisition (Ind AS 103) Vs Book value (AS 14)

Principle based Control model (Ind AS 110) Vs Rule based model (AS 21)

Equity method (Ind AS 28, Ind AS 111) Vs Proportionate consolidation for JVs (AS 27)

Points to discuss

Intangible Assets – Revaluation model permitted (Ind AS 38) vs Not permitted (AS 26)

Intangible Assets - Indefinite life (Ind AS 38) Vs Rebuttable presumption of 10 yrs (AS 26)

Goodwill arising on amalgamation –Impairment (Ind AS 36, 38, 103) Vs amortization (AS 14)

Points to discuss

Uniform accounting Policy – Associates (Carve out)

Maximum GAP in Financial Statement of Parent and Subsidiary - JUST HALF in comparison with AS (IGAAP)

Potential Voting Rights for evaluating control (Ind AS 110) Vs non consideration of PVR for evaluating control (AS 21)

Accounting for Hyperinflationary economies (Ind AS 29) – Standard Vs No guidance regime

Agriculture Accounting – Standard (Ind AS 41) Vs No Guidance regime

Share based payments – ALL (Ind AS 102) Vs Only Employee

Segment Reporting – CODM (Ind AS 108) Vs Given Concept (AS 17)

Land leases – Ind AS 17 Vs AS 19

Points to discuss

Non Current assets held for Sale and Discontinued operation – Ind AS 105 Vs AS 24 Vs AS 10 Vs AS 26

Discounting of Provision except decommissioning provision -Mandate Vs Prohibition (Ind AS 37 Vs AS 29)

As part of Ind AS transition process, companies covered in first phase will have to prepare:

Opening Ind AS Balance sheet as at 1 April 2015.

Equity reconciliation on 1 April 2015 & 31 Mar 2016.

Income Reconciliation for the year ending 31 Mar 2016

Ind AS financial statements as at and for the year

ending 31 Mar 2016 for comparatives.

Ind AS Financial statements as at and for year ending 31 Mar 2017.

Deliverables in Ind AS regime

By CA. Alok Garg

Than Q!!Presented by :

Alok Kumar Garg

CA, CS, Dip. IFRS (ACCA) UK, CIFRS (ICAI),

B.Com (Hons.)

Visiting Faculty of ICAI for IFRS/Ind-AS

(P) 999 999 1543

(E) caalokgarg@gmail.com