1.History of Accounting Standards.pdf

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ACCOUNTING STANDARDS

The forming of the International Accounting Standards Committee in 1973 was the

organized accounting profession`s most important and enduring response to thegrowing internationalization of capital markets following the Second World War.

The IASC was the brain child of Sir Henry Benson, one of the leading lights of the

British Accountancy Profession. With the rise of multinational enterprise in the

1960s and the consequent need to compare financial statements from different

parts of the world, he realized that an effort had to be launched to harmonize the

vastly different accountancy practises across countries.

IASC - History of International Accounting Standards

International Accounting Standards Committee (IASC) was founded in June

1973 in London. It was responsible for developing the International Accounting

Standards and promoting the use and application of these standards.

The IASC was founded as a result of an agreement between accountancy bodies in

the following countries:

Australia - Institute of Chartered Accountants in Australia (ICAA) and the CPA

Australia

Canada - Canadian Institute of Chartered Accountants (CICA)

France - Ordre des Experts Comptable et des Comptables Agrees (Order of

Accounting Experts and Qualified Accountants)

Germany - Institut der Wirtschaftsprüfer in Deutschland (IDW) (Institute of

Auditors in Germany) and the Wirtschaftsprüferkammer (WPK) (Chamber of

Auditors)

Japan - Nihon Kouninkaikeishi Kyoukai Japanese Institute of Certified Public

Accountants, (JICPA)

http://en.wikipedia.org/wiki/France

http://en.wikipedia.org/wiki/Germany

http://en.wikipedia.org/wiki/Germany

http://en.wikipedia.org/wiki/France





Mexico - Instituto Mexicano de Contadores Publicos (IMCP) (Mexican

Institute of Public Accountants)

Netherlands - Nederlands Instituut van Registeraccountants (NIVRA)

(Netherlands Institute of Registered Auditors)

United Kingdom and Ireland –

a) Institute of Chartered Accountants in England and Wales (ICAEW),

b) Institute of Chartered Accountants of Scotland (ICAS),

c) Institute of Chartered Accountants in Ireland (ICAI),

d) Association of Chartered Certified Accountants (ACCA),

e) Chartered Institute of Management Accountants (CIMA), and

f)

Chartered Institute of Public Finance and Accountancy (CIPFA)

United States of America - American Institute of Certified Public

Accountants (AICPA)

The Institute of Chartered Accountants of Pakistan and the Pakistan Institute of

Industrial Accountants both became associate members in 1974.

The Institute of Chartered Accountants of India (ICAI) became an associate

member in 1974 and joined the board in 1993. In 1995, India began sharing the

delegation with the Institute of Chartered Accountants of Sri Lanka.

http://en.wikipedia.org/wiki/Mexico

http://en.wikipedia.org/w/index.php?title=Instituto_Mexicano_de_Contadores_Publicos&action=edit&redlink=1



http://en.wikipedia.org/wiki/Republic_of_Ireland

http://en.wikipedia.org/wiki/Republic_of_Ireland







Standards issued by IASC

The following are the Standards issued by IASC from 1975 to 2001. Some of them

were withdrawn and some were revised

# Name Issued

IAS 1 Presentation of Financial Statements 2007

IAS 2 Inventories 2005

IAS 3

Consolidated Financial Statements

Superseded in 1989 by IAS 27 and IAS 28 1976

IAS 4

Depreciation Accounting

Withdrawn in 1999

IAS 5

Information to Be Disclosed in Financial Statements

Superseded by IAS 1 effective 1 July 1998 1976

IAS 6

Accounting Responses to Changing Prices

Superseded by IAS 15, which was withdrawn December 2003

IAS 7 Statement of Cash Flows 1992

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 2003

IAS 9

Accounting for Research and Development Activities

Superseded by IAS 39 effective 1 July 1999

IAS 10 Events After the Reporting Period 2003





IAS 11 Construction Contracts 1993

IAS 12 Income Taxes 1996

IAS 13

Presentation of Current Assets and Current Liabilities

Superseded by IAS 39 effective 1 July 1998

IAS 14

Segment Reporting

Superseded by IFRS 8 effective 1 January 2009 1997

IAS 15

Information Reflecting the Effects of Changing Prices

Withdrawn December 2003 2003

IAS 16 Property, Plant and Equipment 2003

IAS 17 Leases 2003

IAS 18 Revenue 1993

IAS 19

Employee Benefits (1998)

Superseded by IAS 19 (2011) effective 1 January 2013 1998

IAS 19 Employee Benefits (2011) 2011

IAS 20

Accounting for Government Grants and Disclosure of Government

Assistance 1983

IAS 21 The Effects of Changes in Foreign Exchange Rates 2003







Superseded by IFRS 11 and IFRS 12 effective 1 January 2013

IAS 32 Financial Instruments: Presentation 2003

IAS 33 Earnings Per Share 2003

IAS 34 Interim Financial Reporting 1998

IAS 35

Discontinuing Operations

Superseded by IFRS 5 effective 1 January 2005 1998

IAS 36 Impairment of Assets 2004

IAS 37 Provisions, Contingent Liabilities and Contingent Assets 1998

IAS 38 Intangible Assets 2004

IAS 39

Financial Instruments: Recognition and MeasurementSuperseded by IFRS 9 where IFRS 9 is applied

2003

IAS 40 Investment Property 2003

IAS 41 Agriculture 2001

Red Colour indicates standards which are applicable and not withdrawn by IASB





IASB & IFRS Foundation

It was felt in late 90`s that IASC was not independent of its member bodies and

each member has its own interest and it was difficult to accommodate all. So a

committee was formed to issue a report for restructuring IASC. The committeeissued its report in 2000. Based on the recommendations of the report

“Recommendations on Shaping IASC for the future”, International Accounting

Standards Board (IASB) was formed to replace IASC and assumed standard

setting responsibilities.

The IASB is the independent standard setting body of the IFRS foundation.

The IFRS foundation is an independent, not-for-profit private sector organisation

working in the public interest.

Its principal objectives are

to develop a single set of high quality, understandable, enforceable and

globally accepted international financial reporting standards (IFRSs)

through its standard-setting body, the IASB

to promote the use and rigorous application of those standards

to take account of the financial reporting needs of emerging economies andsmall and medium-sized entities (SMEs)

to promote and facilitate adoption of IFRSs, being the standards and

interpretations issued by the IASB, through the convergence of national

accounting standards and IFRSs.

On Apr 18, 2001 The IASB approved the following resolution: “All Standards and

Interpretations issued under previous constitutions continue to be applicable unless

and until they are amended or withdrawn. The IASB may amend or withdrawInternational Accounting Standards and SIC Interpretations issued under previous

constitutions of IASC as well as issue new Standards and Interpretations.” The

effect of this resolution is that all IASC Standards and SIC Interpretations in effect

as of 1 April 2001 (the date on which the IASB assumed its duties) remain in effect

until they are amended or withdrawn by the IASB.







basis widespread accounting issues that have arisen within the context of current

IFRSs and to provide authoritative guidance (IFRICs) on those issues.

TRUSTEES

The Trustees promote the work of the International Accounting Standards

Board (IASB)and the rigorous application of IFRSs but are not involved in anytechnical matters relating to the standards. Trustees are appointed for a renewableterm of three years.

Trustee responsibilities

appointing members of the IASB, the IFRS Interpretations

Committee and the IFRS Advisory Council;

establishing and amending the operating procedures, consultative

arrangements and due process for the IASB, the InterpretationsCommittee and the Advisory Council;

reviewing annually the strategy of the IASB and assessing its

effectiveness;

ensure the financing of the IFRS Foundation and approve annually its

budget.

Monitoring Board

The Monitoring Board's main responsibilities are to ensure that the Trusteescontinue to discharge their duties as defined by the IFRS Foundation Constitution,

as well as approving the appointment or reappointment of Trustees

Advisory Bodies

The IASB's formal advisory bodies provide an important channel for the IASB to

receive input on its work and to consult interested parties from a broad range of backgrounds and geographical regions in a transparent manner.

CONSITUTION

The Constitution was approved in its original form by the Board of the former

International Accounting Standards Committee (IASC) in March 2000 and by

the members of the IASB at a meeting in Edinburgh on 24 May 2000 .

Constitution is the major document the IFRS Foundation and the IASB derive their

powers. The Constitution is reviewed for every 5 years





STANDARD STETTING PROCESS

IFRSs are developed through an international consultation process called “the due

process”. It involves interested parties around the world.

The Due Process comprises 6 stages

Setting the Agenda

Planning

Developing and publishing the discussion paper, the exposure draft, the

standard

After the standard is issued





SETTING THE AGENDA

The IASB evaluates the merits of adding a potential item to its agenda mainly by

reference to the needs of investors. The IASB considers

the relevance of the information to the users and the reliability that could be

provided

whether existing guidance available

the possibility of increasing convergence

the quality of standard to be developed

resource constraints

PROJECT PLANNING

When adding an item to its active agenda, the IASB also decides whether to

conduct the project alone

jointly with another standard setter

A team is selected for the project by the two most senior members of the technical

staff. The project manager draws up a project plan under the supervision of thosedirections

DEVELOPING & PUBLISHING THE DISCUSSION PAPER

A discussion paper includes

a comprehensive overview of the issue

possible approaches in addressing the issue

the preliminary views of its authors or the IASB

an invitation to comment

Although a discussion paper is not mandatory the IASB normally publishes it to

explain the issue and solicit early comments





DEVELOPING & PUBLISHING THE EXPOSURE DRAFT(ED )

An Exposure Draft is the IASB`s main vehicle for consulting the public. An ED

sets out a specific proposal in the form of a proposed standard. The development of

an ED begins with the IASB considering

issues on the basis of staff research & recommendations

comments received on any discussion paper

suggestions made by the interested parties

When the issues concerning are resolved at meeting the IASB instructs the staff to

draft the Exposure Draft.

The IASB publishes the Exposure Draft for public comment when

the draft has been completed

the IASB has balloted on it

DEVELOPING & PUBLISHING THE STANDARD

The development of an IFRS is carried out when the IASB considers the comments

received on the Exposure Draft. After resolving issues arising from the Exposure

Draft, the IASB considers whether it should expose its revised proposals for public

comment by publishing the second Exposure Draft. In considering the need for re-

exposure, the IASB

identifies substantial issues that emerged during the exposure period that it

had not previously considered

assesses the evidence it has considered

evaluates whether it has sufficiently understood the issues and activelysought the views of constituents

considers whether the various viewpoints were aired in the ED and

adequately discussed and reviewed in the basis for conclusions





When the IASB is satisfied that it has reached a conclusion on the issues arising

from the Exposure Draft, it instructs the staff to draft the IFRS

Ballot: Finally, after the due process is completed, all outstanding issues are

resolved and the IASB members have balloted in favor of publication, the IFRS isissued.

AFTER AN IFRS IS ISSUED

The staff and the IASB members hold regular meetings with interested parties to

help understand unanticipated issues related to the practical implementation and

potential impact of its proposal

After a reasonable time, the IASB may consider initiating studies in the light of

its review of the IFRS application

changes in the financial & regulatory environment

comments by the interested parties about the quality of the IFRS

These studies may result in a new agenda.





List of IFRS Issued by IASB

Standards Originally

Issued

Effective Date

IFRS 1 First time adoption of IFRS 2003 January 1 2004

IFRS 2 Share based Payments 2004 January 1 2005

IFRS 3 Business Combinations 2004 April 1 2004

IFRS 4 Insurance Contracts 2004 January 1 2005

IFRS 5 Non-current Assets held for sale &

Discontinuing operations

2004 January 1 2005

IFRS 6 Exploration for & Evaluation of

Mineral Resources

2004 January 1 2006

IFRS 7 Financial Instruments: Disclosure 2005 January 1 2007

IFRS 8 Operating Segments 2006 January 1 2009

IFRS 9 Financial Instruments 2009 January 1 2015

IFRS 10 Consolidated Financial Statements 2011 January 1 2013

IFRS 11 Joint Arrangements 2011 January 1 2013

IFRS 12 Disclosure of Interests in OtherEntities 2011 January 1 2013

IFRS 13 Fair Value Measurement 2011 January 1 2013





Convergence – The move towards global standards

General Term – Convergence means to achieve harmony with IFRSs

Precise Term – Convergence means to design and maintain national accounting

standards in a way that financial statements prepared in accordance with national

accounting standards draw unreserved statement of compliance with IFRSs

The goal of the IFRS Foundation and the IASB is to develop, in the public

interest, a single set of high-quality, understandable, enforceable and globally

accepted financial reporting standards based upon clearly articulated

principles.

In pursuit of this goal, the IASB works in close cooperation with stakeholders

around the world, including investors, national standard-setters, regulators,

auditors, academics, and others who have an interest in the development of high-

quality global standards.

Progress toward this goal has been steady. All major economies have established

time lines to converge with or adopt IFRSs in the near future.

IFRS in EUROPEAN UNION

In June 2002, the European Union adopted an IAS Regulation requiring European

companies listed in an EU securities market, including banks and insurance

companies, to prepare their consolidated financial statements in accordance with

IFRSs starting with financial statements for financial year 2005 onwards.

The following table gives the status of IFRS in various countries.

Country Status for listed companies as of December 2012

Argentina Required for fiscal years beginning on or after 1 January2012

AustraliaRequired for all private sector reporting entities and as the

basis for public sector reporting since 2005

Brazil Required for consolidated financial statements of banks





and listed companies from 31 December 2010 and for

individual company accounts progressively since January

2008

CanadaRequired from 1 January 2011 for all listed entities and permitted for private sector entities including not-for-

profit organizations

China Substantially converged national standards

GermanyRequired via EU adoption and implementation process

since 2005

ItalyRequired via EU adoption and implementation process

since 2005

JapanPermitted from 2010 for a number of international

companies

Mexico Required from 2012

Republic of Korea Required from 2011

Russia

Following the formal adoption of IFRSs in Russia during

2011, public interest entities (PIEs) are now required to prepare consolidated financial statements under IFRS

Saudi ArabiaRequired for banking and insurance companies; full

convergence with IFRSs currently under consideration

South Africa Required for listed entities since 2005

United KingdomRequired via EU adoption and implementation process

since 2005

United States

Allowed for foreign issuers in the US since 2007; US SEC

committed to global accounting standards and IFRS best

placed to meet that need in the US awaiting decision

regarding use of IFRSs for domestic companies





Convergence between IFRSs and US GAAP

The IASB and the US Financial Accounting Standards Board (FASB) have been

working together since 2002 to achieve convergence of IFRSs and US generally

accepted accounting principles (GAAP). A common set of high quality global

standards remains a priority of both the IASB and the FASB.

In September 2002 the IASB and the FASB agreed to work together, in

consultation with other national and regional bodies, to remove the differences between international standards and US GAAP. This decision was embodied in a

Memorandum of Understanding (MoU) between the boards known as the Norwalk

Agreement. The boards' commitment was further strengthened in 2006 when theIASB and FASB set specific milestones to be reached by 2008 (A roadmap for

convergence 2006 - 2008).

In the light of the progress achieved by the boards and other factors, the USSecurities and Exchange Commission (SEC) removed in 2007 the requirement fornon-US companies registered in the United States to reconcile their financial

reports with US GAAP if their accounts complied with IFRSs as issued by the

IASB. At the same time, the SEC also published a proposed roadmap on adoptionof IFRSs for domestic US companies.

In 2008 the two boards issued an update to the MoU , which identified a series

of priorities and milestones, emphasising the goal of joint projects to produce

common, principle-based standards.

The Group of 20 Leaders (G20) called for standard-setters to re-double their effortsto complete convergence in global accounting standards. Following this request,

in November 2009 the IASB and the FASB published a progress report describingan intensification of their work programme, including the hosting of monthly joint

board meetings and to provide quarterly updates on their progress on convergence

projects.

In April 2012 the IASB and FASB published a joint progress report in which theydescribe the progress made on financial instruments, including a joint expected

loss impairment ('provisioning') approach and a more converged approach to

classification and measurement.In February 2013 the IASB and FASB published a high-level update on the status

and timeline of the remaining convergence projects. The report includes an update

on the impairment phase of the joint project on financial instruments.

http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Documents/Norwalk_agreement.pdf




http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Documents/MoU.pdf




http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Documents/Memorandum_of_Understanding_progress_report_and_timetable.pdf


http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Documents/JointCommunique_October2009FINAL4.pdf



http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Documents/r_120420d.pdf



http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Documents/IASB-FASB-G20-Update-February-2013.pdf


















List of Accounting Standards issued by ASB of ICAI

AS 1 Disclosure of Accounting Policies

AS 2 Valuation of Inventories

AS 3 Cash Flow Statements

AS 4 Contingencies and Events Occurring after the Balance Sheet Date

AS 5 Net Profit or Loss for the period, Prior Period Items and Changes in

Accounting Policies

AS 6 Depreciation Accounting

AS 7 Construction Contracts (revised 2002)

AS 9 Revenue Recognition

AS 10 Accounting for Fixed Assets

AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003),

AS 12 Accounting for Government Grants

AS 13 Accounting for InvestmentsAS 14 Accounting for Amalgamations

AS 15 Employee Benefits (revised 2005)

AS 16 Borrowing Costs

AS 17 Segment Reporting

AS 18 Related Party Disclosures

AS 19 Leases

AS 20 Earnings Per Share

AS 21 Consolidated Financial Statements

AS 22 Accounting for Taxes on Income.AS 23 Accounting for Investments in Associates in Consolidated Financial

Statements

AS 24 Discontinuing Operations

AS 25 Interim Financial Reporting

AS 26 Intangible Assets

AS 27 Financial Reporting of Interests in Joint Ventures

AS 28 Impairment of Assets

AS 29 Provisions, Contingent Liabilities and Contingent Assets

AS 30 Financial Instruments: Recognition and Measurement

AS 31 Financial Instruments: PresentationAS 32 Financial Instruments: Disclosures




I t ti l Fi i l R ti St d d i it t ti d l

Convergence in India:

After going through various legal procedures and consultation, the Ministry of

Corporate Affairs has notified 35 accounting standards called as IND AS for the

purpose of convergence.

Phases of Convergence

Phase 1: Companies forming part of Nifty & Sensex, whose securities are listed

outside India, whose Net worth > Rs 1000 crores

Phase 2: Companies whose Networth > Rs 500 Crores

Phase 3: Listed Companies whose Networth< 500 crs

Present Position of Convergence

The present position is that standards that would be applicable are notified.

The date of applicability is yet to be notified.

Finance Minister Shri Arun Jaitley in his Budget Speech in July said "There is an

urgent need to converge the current Indian accounting standards with the

International Financial Reporting Standards (IFRS)."

“Based on the international consensus, the regulators will separately notify the date

of implementation of Ind AS for the banks, insurance companies, etc. Standards for

the computation of tax would be notified separately,” he added.

From his speech we can understand that IFRS is the order of the day and those

working in Accounting and Finance Sector need to know IFRS to move further in

their career.