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IFRS BY ICAI Comparison with existing Indian Accounting Standards

IFRS BY ICAI Comparison with existing Indian Accounting Standards

IFRS BY ICAI Comparison with existing Indian Accounting Standards: INTERNATIONAL FINANCIAL ACCOUNTING STANDARD-IFRS IFRS are accounting rules (standards) issued by the International Accounting Standard Board (IASB), an independent organisation based in London, UK. Before the inception of IASB, international standards were issued by the IASB’s predecessor organisation, the IASC, a body established in 1973 through an agreement made by professional accountancy bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland, and the United States of America. Up to 2000, the IASC’s rules were described as “International Accounting Standards” (IAS). In fact, in 1997 after nearly 25 years of achievement, IASC recognised that to continue to perform its role effectively, it must find a way to bring about convergence between national accounting standards and practices and high quality global accounting standards.

In late 1997 IASC formed a Strategy Working Party that published a discussion paper in December 1998 and final recommendations in November 1999. The IASC Board approved the proposals in December 1999, and the IASC member bodies did the same in May 2000. The new standards-setting body was named as International Accounting Standards Board (IASB) and since April 2001, it has been performing the rule-making function. Components of IASB structure contain-IASB, IASC Foundation, International Financial Reporting Interpretations Committee (IFRIC), previously Standing Interpretations Committee, SIC under IASC), Standards Advisory Council (SAC) and Working Groups. The IASB is better funded, better-staffed and more independent than its predecessor. The IASB describes its rules under the new label “International Financial Reporting Standards (IFRS), though it continues to recognize the prior rules (IAS) issued by the old standard-setter (IASC).

IFRS BY ICAI Comparison with existing Indian Accounting Standards

IFRS BY ICAI Comparison with existing Indian Accounting Standards

IFRS BY ICAI Comparison with existing Indian Accounting Standards

IFRS ADOPTION IN INDIA In India, Accounting standards are formulated by a council of the Institute of Chartered Accounts of India (ICAI). In July 2007, the Council of the Institute of Chartered Accountants of India set a target of adopting International Financial Reporting Standards (IFRS) for all listed, public interest and large-sized entities for accounting periods beginning on or after 1 April 2011. In 2007, India has decided to converge with IFRS in 2007.ICAI started the process of developing a complete set of accounting standard that are “converged with” IFRS- which will be known as Indian AS. There is a difference between adoption and convergence to IFRS. Adoption means using IFRS as issued by IASB. Convergence means that the Indian Accounting standard board and IASB would continue working together to develop high quality, compatible accounting standard over time. With an objective to ensure a smooth transition to IFRS from 1 April, 2011, ICAI is taking up the matter of convergence with IFRS with National Advisory Committee on Accounting Standards (NACAS) established by the Ministry of Corporate Affairs, Government of India and other regulators, including the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority (IRDA) and the Securities and Exchange Board of India (SEBI).

IFRS BY ICAI Comparison with existing Indian Accounting Standards

Indian Accounting StandardIAS/IFRS
Disclosures of Accounting PoliciesPresentation of financial statements
Valuation of InventoriesInventories
Cash Flow StatementsStatements of Cash Flows
Contingencies and Events Occurring after the Balance Sheet DateEvents after the Reporting Period
Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting PoliciesAccounting Policies, Changes in Accounting Estimates and Errors
DepreciationNo equivalent standard. Included in IAS 16
Constructions ContractsConstructions Contracts
Revenue RecognitionRevenue
Accounting for Fixed AssetsProperty, Plant and Equipment
The Effects of Changes in Foreign Exchanges RatesThe Effects of Changes in Foreign Exchanges Rates
Accounting for Government GrantsAccounting for Government Grants and Disclosure of Government Assistance
Accounting for InvestmentsMainly dealt with in IAS 39
Accounting for AmalgamationsBusiness Combinations
Employee BenefitsEmployee Benefits
Borrowing CostsBorrowing Costs
Segment ReportingOperating Segments
Related Party DisclosuresRelated Party Disclosures
LeasesLeases
Earnings Per ShareEarnings Per Share
Consolidated Financial StatementsConsolidated and Separate Financial Statements
Discontinuing OperationsNoncurrent Assets Held for Sale and Discontinued Operations
Interim Financial ReportingInterim Financial Reporting
Intangible AssetsIntangible Assets
Accounting for Taxes for IncomeIncome Taxes
Accounting for Investment in Associates in Consolidated Financial StatementsInvestments in Associates
Impairment of AssetsImpairment of Assets
Provisions, Contingent Liabilities and Contingent AssetsProvisions, Contingent Liabilities and Contingent Assets
Financial Instruments: Recognition and MeasurementFinancial Instruments: Recognition and Measurement
Financial Reporting of Interest in Joint VenturesInterest in Joint Ventures
1 Financial Instruments: PresentationFinancial Instruments: Presentation

IFRS BY ICAI Comparison with existing Indian Accounting Standards

The Investors

The Investors want the information that is more relevant, reliable, timely and comparable across the jurisdictions. For better understanding of financial statements, global investors have to incur more cost in terms of the time and efforts to convert the financial statements so that they can confidently compare opportunities. Investors’ confidence would be strong if accounting standards used are globally accepted. Convergence with IFRS contributes to investors understanding and confidence in high quality financial statements.

IFRS BY ICAI Comparison with existing Indian Accounting Standards

The Industry

The industry would be able to raise capital from foreign markets at lower cost if it can create confidence in the minds of foreign investors that their financial statements comply with globally accepted accounting standards. With the diversity in accounting standards from country to country, enterprises which operate in different countries face a multitude of accounting requirements prevailing in the countries. The burden of financial reporting is lessened with the convergence of accounting standards because it simplifies the process of preparing the individual and group financial statements and thereby reduces the costs of preparing the financial statements using different sets of accounting standards.

IFRS BY ICAI Comparison with existing Indian Accounting Standards

PROBLEMS AND CHALLENGES IFRS is a set of international accounting and reporting standards which will help to harmonize company financial information, improve the transparency of accounting, and ensure that investors receive more accurate and consistent reports. Despite several benefits as may be looked out by the different people, there will be several challenges that will be faced on the way of IFRS convergence.

IFRS BY ICAI Comparison with existing Indian Accounting Standards

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