International Financing Reporting Standards (Ifrs) International Financing Reporting Standards (Ifrs)
International Financing Reporting Standards (Ifrs) International Financing Reporting Standards (Ifrs)
International Financing Reporting Standards (Ifrs) International Financing Reporting Standards (Ifrs)
REPORTING
STANDARDS(IFRS)
By Sugufta M,
Anitha
Meaning
International Financial Reporting Standards (IFRS)
are a set of accounting standards developed by
the International Accounting Standards Board
(IASB) that is becoming the global standard for
the preparation of public company financial
statements. The rules to be followed by
accountants to maintain books of accounts which
is comparable, understandable, reliable and
relevant as per the users internal or external.
History
International Accounting standards (IAS) were
issued between 1973 and 2001 by the Board of
the International Accounting Standards
Committee(IASC).
On 1 April 2001, the new International
Accounting Standards Board took over from the
IASC the responsibility for setting International
Accounting Standards.
The IASB has continued to develop standards
calling the new standards International Financial
Reporting Standards (IFRS).
Why IFRS?
Investors are acting on global market!!
National Standards dont work on global
market.
Cross border business is hindered by
national standards
Small and medium-sized entities (SMEs)
that do not have public accountability
may use a simplified version of IFRS
known as IFRS for SMEs
Accounting Standard
prescribe any format
balance sheet.
do not
of
IFRS
Current and non-current assets,
and current and non-current
liabilities are to be presented
separately except when a
liquidity presentation provides
more relevant and reliable
information.
Expenses presented by either
function or nature . Portion of
profit and loss attributable to the
minority interest and to the
parent entity is separately
disclosed. Disclosure of expenses
by nature is required in footnotes
if functional presentation is used
on income statement.
Indian GAAP
IFRS
Indian GAAP
Inflow & outflow of
cash & Cash
equivalent are
reported in fund flow
statement. It can be
prepared by two ways:
Direct or indirect
methodHowever only
indirect method is
prescribed for listed
enterprises & direct for
insurance companies.
IFRS
It is similar to Indian
GAAP . However,
Indirect is more
common
ADOPTION OR CONVERGENCE
Adoption- is process of adopting IFRS as issued by
IASB, with or without modifications. Modifications
being, generally in the nature of additional
disclosures requirement or elimination of
alternative treatment.
Convergence- is harmonization of national GAAP
with IFRS through design and maintenance of
accounting standards in a way that financial
statements prepared with national accounting
standards are in compliance with IFRS.
Advantages
By adopting IFRS, a business can present
its financial statements on the same basis
as its foreign competitors, making
comparisons easier.
Companies also may need to convert to
IFRS if they are a subsidiary of a foreign
company that must use IFRS, or if they
have a foreign investor that must use
IFRS.
Disadvantage
Despite a belief by some of the inevitability of
the global acceptance of IFRS, others believe
that U.S. GAAP is the gold standard, and that a
certain level of quality will be lost with full
acceptance of IFRS. Further, certain U.S.
issuers without significant customers or
operations outside the United States may
resist IFRS because they may not have a
market incentive to prepare IFRS financial
statements. They may believe that the
significant costs associated with adopting IFRS
outweigh the benefits.
THANK YOU