Introductory Programme on IFRS for Young Membersymec.in/wp-content/uploads/2014/09/Introduction-Concepts-1.pdf · IFRS 1 Ind AS 101 First-time Adoption of Indian Accounting Standards

Introductory Programme on IFRS for Young MembersOrganised by

Institute of Chartered Accountants of IndiaPresented by

CA Manish C. Iyer & CA Shilpi Hisaria

Technical Directorate, Institute of Chartered Accountants of India

CA Manish C. Iyer & CA Shilpi Hisaria [email protected] & [email protected]

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Copyright RecognitionCopyright Recognition…

IFRS, IAS, SIC, IFRIC are copyright ofIFRS, IAS, SIC, IFRIC are copyright ofIFRS, IAS, SIC, IFRIC are copyright of IFRS, IAS, SIC, IFRIC are copyright of International Accounting Standards International Accounting Standards

Committee Foundation.Committee Foundation.

22CA Manish C. Iyer & CA Shilpi Hisaria

[email protected] & [email protected]

IFRS FoundationIFRS Foundation• Discussion points

– History and Evolution of IFRS

– Structure of IFRS Foundation

– Monitoring Board

– Trustees

– IFRS Advisory Council

– IASB

– IFRS Interpretations Committee

– Standards and Interpretations Setting ProcessStandards and Interpretations Setting Process


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IFRS FoundationIndependent, Not-for-Profit Private Sector organisation

The principal objecti es are:The principal objectives are:

t d l i l t f hi h lit IFRS• to develop a single set of high quality IFRSs• Use• financial reporting needs• adoption of IFRSs


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History and Evolution of IFRSHistory and Evolution of IFRS

• 1973• 1977• 1987• 1992• 1995• 2000• 20022005• 2005

• 2007


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StructureStructureMonitoring Board Trustees of IFRS FoundationAppoint / Oversight

Appoint

ReportAppoint / Oversight

Report

IFRS Advisory Council

International Accounting Standards Board Advise

Appoint / Oversight

AppointInterprets

International Financial Reporting Standards Interpretations Committee


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Monitoring Boardg

• Provides a formal link between trustees and P bli A th itiPublic Authorities

• MembersResponsible member of E ropean Commission– Responsible member of European Commission

– Chair of IOSCO Emerging Markets Committee– Chair of IOSCO Technical CommitteeChair of IOSCO Technical Committee– Commissioner of Japan Financial Services Agency– Chair of US SEC– As an observer, chair of the Basel Committee on Banking Supervision


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Trustees

There are currently 22 trustees

• Six from Asia / Oceania Region

• Six from EuropeSix from Europe

• Six from North America

O f Af i• One from Africa

• One from South America

• Two from any area, subject to maintaining overall geographical balance


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IFRS Advisory CouncilIFRS Advisory Council

• At least 30 members having a diversity ofAt least 30 members having a diversity of geographical and professional backgrounds

• Appointed for renewable terms of 3 years• Appointed for renewable terms of 3 years

• At least three meetings a year


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IASBIASB

• 16 members from which 3 may be part‐time6 e be s o c 3 ay be pa t t e– 4 from Asia/Oceania Region– 4 from Europe– 4 from North America– One from Africa– One from South America– 2 from any area, subject to maintaining overall geographical balancegeographical balance

• Maximum term – 5 years• Quorum – 60% of members of IASBQuorum 60% of members of IASB


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IFRS ICIFRS IC

• 14 voting members from verities of countries14 voting members from verities of countries and professional background

• Representatives of regulatory authoritiesRepresentatives of regulatory authorities appointed as non‐voting observers

• One or two IASB members to be designated asOne or two IASB members to be designated as non‐voting observers– Non‐voting observers to have a right to attend and g gspeak

• Quorum – 10 voting members


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Standard Setting ProcessStandard Setting Process

• Setting the agendag g• Planning the project• Developing and publishing the discussion paper –might be omitted with reasons– 9/16

• Developing and publishing the exposure draft• Developing and publishing the exposure draft– 10/16

• Developing and publishing the standardDeveloping and publishing the standard– 10/16

• Post implementation review


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Interpretations ProcessInterpretations Process

• Public requestsPublic requests• Analysis of requests by staff• Draft Interpretation• Draft Interpretation

– No more than 4 members of the Interpretations Committee object, by way of ballotCommittee object, by way of ballot

• Interpretation– No more than 4 members of the InterpretationsNo more than 4 members of the Interpretations Committee object, by way of ballot

– Ratification by IASB requires 10/16


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1414

Convergence process with IFRS in India

India decided to converge and not adopt IFRS

Reasons:

• Legal & regulatory environment

• Economic environment

• Prevailing accounting practices in the country


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Convergence process

Process followed in formulation of IFRS-convergedStandardsStandards

• IFRS reviewed and corresponding Indian AccountingStandard (Ind AS) formulated

• As far as possible, no carve-out is made unlessAs far as possible, no carve out is made unlessabsolutely essential keeping in view the Indianconditions and circumstances


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Convergence process

• Optional treatments prescribed under IFRS removed inappropriate cases keeping in view Indian environmentto bring about comparability

• Conceptual issues, if any, are identified and taken upi h h IASBwith the IASB

35 Ind ASs corresponding to IASs/ IFRSs in force on35 Ind ASs corresponding to IASs/ IFRSs in force onApril 1, 2011 placed by the Ministry of CorporateAffairs (MCA) on its website.( )


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Why not implemented

Intention to implement on Individual FinancialIntention to implement on Individual FinancialStatements rather than only Consolidated FinancialStatements

Challenges

C t ti f I T• Computation of Income Tax

• Computation of Managerial Remuneration andDistributable Profits


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Status of IFRS (Ind ASs) Status of IFRS (Ind ASs) S No. Status Number

1. IFRSs/IASs issued by IASB which are applicable excluding IFRS 9 371. IFRSs/IASs issued by IASB which are applicable excluding IFRS 9 as in 2011

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2. IFRS 9: Financial Instruments 13. New IFRSs issued by IASB (Applicable from January 1, 2013) 43. New IFRSs issued by IASB

i) (IFRS 14, Regulatory Deferral Accounts) issued by IASB (Applicable from January 1, 2016)

2

(ii) IFRS 15, Revenue from Contracts with Customers) issued by IASB (Applicable from January 1, 2017)

Total 444 Ind ASs placed on MCAs website 354. Ind ASs placed on MCAs website 35

5. Ind AS corresponding to IFRS not being placed on MCA website 3

6. Drafts of new Ind AS corresponding to new IFRSs/IASs issued by IASB after 2011

4

7 U d id i f h ICAI (T i I d AS di 27. Under consideration of the ICAI (To issue Ind AS corresponding toIFRS 14 &IFRS 15)

2

Total 44CA Manish C. Iyer & CA Shilpi Hisaria [email protected] & [email protected]

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Status of IFRICs and SICs Status of IFRICs and SICs

S No. Status Number 8 IFRICs with corresponding Appendices to Ind ASs 168 IFRICs with corresponding Appendices to Ind ASs 16

9 New/ amended IFRICs issued by IASB under considerationof ICAI (IFRIC 20 Stripping Costs in the Production Phase

2pp g

of a Surface Mine

4. SICs with corresponding Appendices to Ind ASs 11


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Ind AS not being placed on MCA website at present Ind AS not being placed on MCA website at present

Indian Accounting Standard corresponding to IFRS 9,Financial Instruments, is not being notified at presentas instead of this standard, Ind AS 39 is being notified.

Indian Accounting Standard corresponding to IAS 26,Accounting and Reporting by Retirement BenefitPlans, is not being notified as this Standard is notapplicable to companies

Indian Accounting Standard corresponding to IAS 41,A i lt i t tifi d di I diAgriculture is not notified as corresponding IndianAccounting Standard is being redraftedCA Manish C. Iyer & CA Shilpi Hisaria


Drafts of Ind AS issued by ASB approved by Council Drafts of Ind AS issued by ASB approved by Council

Draft of Ind AS 110 corresponding to IFRS 10,Consolidated Financial Statements

Draft of Ind AS 111 corresponding to IFRS 11, Jointp g ,Arrangements

Draft of Ind AS 112 corresponding to IFRS 12,Disclosures of Interests in Other Entities

Drafts of Ind AS 113 corresponding to IFRS 13, Fairp gValue Measurement


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List of IFRS & Ind ASList of IFRS & Ind AS

IFRS No AS No NameIFRS No. AS No. Name IAS 1 Ind AS 1 Presentation of Financial StatementsIAS 2 Ind AS 2 InventoriesIAS 7 I d AS 7 St t t f C h FlIAS 7 Ind AS 7 Statement of Cash FlowsIAS 8 Ind AS 8 Accounting Policies, Changes in Accounting Estimates

and ErrorsIAS 10 Ind AS 10 Events after the Reporting PeriodIAS 11 Ind AS 11 Construction ContractsIAS 12 Ind AS 12 Income TaxesIAS 16 Ind AS 16 Property, Plant and EquipmentIAS 17 Ind AS 17 LeasesIAS 18 Ind AS 18 RevenueIAS 19 Ind AS 19 Employee BenefitsIAS 20 Ind AS 20 Accounting for Government Grants and Disclosure of

Government AssistanceGovernment AssistanceIAS 21 Ind AS 21 The Effects of Changes in Foreign Exchange RatesIAS 23 Ind AS 23 Borrowing CostsCA Manish C. Iyer & CA Shilpi Hisaria



IFRS No. AS No. Name

IAS 24 Ind AS 24 Related Party Disclosures

IAS 26 N A ti d R ti b R ti t B fitIAS 26 NocorrespondingInd AS

Accounting and Reporting by Retirement BenefitPlans

IAS 27 Ind AS 27 Separate Financial Statements (as amended)

IAS 28 Ind AS 28 Investments in Associates and Joint Ventures (as amended)amended)

IAS 29 Ind AS 29 Financial Reporting in Hyperinflationary Economies

IAS 31 Ind AS 31 Interests in Joint Ventures (superseded by IFRSIAS 31 Ind AS 31 Interests in Joint Ventures (superseded by IFRS 11)

IAS 32 Ind AS 32 Financial Instruments: Presentation

IAS 33 Ind AS 33 Earnings per ShareCA Manish C. Iyer & CA Shilpi Hisaria




IFRS No. AS No. Name IAS 34 Ind AS 34 Interim Financial ReportingIAS 36 Ind AS 36 Impairment of AssetsIAS 37 I d AS 37 P i i C i Li bili i dIAS 37 Ind AS 37 Provisions, Contingent Liabilities and

Contingent AssetsIAS 38 Ind AS 38 Intangible AssetsgIAS 39 Ind AS 39 Financial Instruments: Recognition and

MeasurementIAS 40 I d AS 40 I t t P tIAS 40 Ind AS 40 Investment PropertyIAS 41 Ind AS being

developedAgriculture

pIFRS 1 Ind AS 101 First-time Adoption of Indian Accounting

StandardsIFRS 2 Ind AS 102 Share based PaymentIFRS 2 Ind AS 102 Share based PaymentIFRS 3 Ind AS 103 Business Combinations


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IFRS No AS No Name

List of IFRS & List of IFRS & IndInd ASAS

IFRS No. AS No. Name IFRS 4 Ind AS 104 Insurance ContractsIFRS 5 Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations

dIFRS 6 Ind AS 106 Exploration for and Evaluation of Mineral ResourcesIFRS 7 Ind AS 107 Financial Instruments: DisclosuresIFRS 8 Ind AS 108 Operating SegmentsIFRS 9 Ind AS being

developedFinancial Instruments

IFRS 10 Ind AS 110 Consolidated Financial StatementsInd AS 110IFRS 11 Ind AS 111 Joint ArrangementsIFRS 12 Ind AS 112 Disclosures of Interests in Other EntitiesIFRS 13 Ind AS 113 Fair Value MeasurenmentIFRS 13 Ind AS 113 Fair Value MeasurenmentIFRS 14 Under

considerationRegulatory Deferral Accounts

IFRS 15 d R f C i h CIFRS 15 Underconsideration

Revenue from Contracts with Customers


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List of IFRICs & List of IFRICs & SICs SICs with corresponding Appendices to Ind ASs

IFRIC 1 Appendix A toInd AS 16

Changes in Existing Decommissioning, Restoration andSimilar Liabilities

IFRIC 2 Not relevant Members’ Shares in Co operative Entities and SimilarpInstruments

IFRIC 4 Appendix C toInd AS 17

Determining whether an Arrangement contains a Lease


Rights to Interests arising from Decommissioning,Restoration and Environmental Rehabilitation Funds

IFRIC 6 Appendix B to Liabilities arising from Participating in a Specific Market—Ind AS 37 Waste Electrical and Electronic Equipment


Applying the Restatement Approach under Ind AS 29Financial Reporting in Hyperinflationary Economies


Reassessment of Embedded Derivatives

IFRIC 10 Appendix A to Interim Financial Reporting and ImpairmentInd AS 34


Service Concession ArrangementsCA Manish C. Iyer & CA Shilpi Hisaria [email protected] & [email protected]

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IFRS No.s AS No. Name


IFRS No.s AS No. NameIFRIC 13 Appendix B to

Ind AS 18Customer Loyalty Programmes

IFRIC 14 Appendix A to Ind AS 19— The Limit on a Defined Benefit Asset,ppInd AS 19

,Minimum Funding Requirements and their Interaction

IFRIC 15 Included inInd AS 11

Agreements for the Construction of Real Estate

IFRIC 16 Appendix D toInd AS 39

Hedges of a Net Investment in a Foreign Operation

IFRIC 17 Appendix A to Distributions of Non-cash Assets to OwnersInd AS 10


Transfers of Assets from Customers


Extinguishing Financial Liabilities with Equity Instruments

IFRIC 20 Under Stripping Costs in the Production Phase of a Surface Mineconsideration

IFRIC 21 Underconsideration

LeviesCA Manish C. Iyer & CA Shilpi Hisaria


IFRS N AS N N



SIC-7 Not relevant Introduction of Euro

SIC-10 Appendix A to Government Assistance—No Specific Relation toSIC-10 Appendix A toInd AS 20

Government Assistance—No Specific Relation toOperating Activities

SIC-12 Appendix A to Consolidation—Special Purpose EntitiesInd AS 27

SIC-13 Appendix A toInd AS 31

Jointly Controlled Entities— Non-MonetaryContributions by Venturersy

SIC-15 Appendix A toInd AS 17

Operating Leases—Incentives

SIC- 21 Appendix A toInd AS 12

Income Taxes—Recovery of Revalued Non-DepreciableAssets

SIC-25 Appendix B to Income Taxes—Changes in the Tax Status of an Entity orSIC-25 Appendix B toInd AS 12

Income Taxes—Changes in the Tax Status of an Entity orits Shareholders


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SIC-27 Appendix B to Evaluating the Substance of Transactions Involving theInd AS 17 Legal Form of a Lease

SIC-29 Appendix B to Service Concession Arrangements: DisclosuresppInd AS 11

g

SIC-31 Appendix A to Revenue—Barter Transactions Involving AdvertisingppInd AS 18

g gServices

SIC-32 Appendix A to Intangible Assets—Web Site CostsSIC 32 Appendix A toInd AS 38

Intangible Assets Web Site Costs


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3131

Conceptual FrameworkConceptual Framework

• Discussion PointsDiscussion Points– Objective of General Purpose Financial Reporting

Qualitative Characteristics– Qualitative Characteristics

– Underlying Assumptions

El t f Fi i l St t t– Elements of Financial Statements


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Objective of GPFRObjective of GPFR

• To provide financial information about the reporting p p gentity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entityproviding resources to the entity

• Decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and p g gother forms of credit

• GPFR provide information about the entity’s economic resources and claims against the reporting entityresources and claims against the reporting entity, effects of transactions and other events that change a reporting entity’s economic resources and claims


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Qualitative CharacteristicsQualitative Characteristics

• Fundamental qualitative characteristicsFundamental qualitative characteristics– Relevance– Faithful Representationp

• Enhancing qualitative characteristics– ComparabilityComparability– Verifiability– Timeliness– Understandability

• Pervasive cost constraint


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Underlying AssumptionsUnderlying Assumptions

• Going ConcernGoing Concern

• Accrual


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Elements of Financial StatementsElements of Financial Statements

• AssetsAssets

• Liabilities

• Income

• Expense

• Equity


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Documents

Introductory Programme on IFRS for Young Membersymec.in/wp-content/uploads/2014/09/Introduction-Concepts-1.pdf · IFRS 1 Ind AS 101 First-time Adoption of Indian Accounting Standards