Adoption Nepal Nepal is a little behind in adoption of IFRS Announced to be the first IFRS reporting period is 2012- 2013 (July 16th 2012 July 15th 2013) Bigger Challenge - convergence rather than adoption Biggest challenge - first time adoption 2
2. Which of the following are underlying assumptions of financial statements? (a) Relevance and reliability (b) Financial capital maintenance and physical capital maintenance (c) Accrual basis and going concern (d) Prudence and conservatism To ensure that an entitys first IFRS financial statements, and its interim financial reports contain high quality information that is: Transparent for users and comparable over all periods presented Provides a suitable starting point for accounting in accordance with IFRSs Can be generated at a cost that does not exceed the benefits
An enterprise for the first time making explicit and unreserved statement that GPFS (general purpose financial statements) comply with IFRS If enterprise in its published GPFS asserted Compliance with some but not all IFRSs GPFS included only reconciliation of selected figures from previous GAAP to IFRSs Not first time adopter if in the preceding year its published financial statements asserted Compliance with IFRSs even if auditors report contained a qualification with respect to conformity to IFRS Compliance with both previous GAAP and IFRSs
Derecognize items as assets or liabilities if IFRSs do not permit such recognition Recognise all assets and liabilities whose recognition is required by IFRSs Reclassification of items that were recognised under previous GAAP as one type of asset, liability or component of equity, which are different type of asset, liability or component of equity under IFRSs. Apply IFRSs in measuring all recognised assets and liabilities
IAS 28 prohibits recognition of expenditure on intangible assets like Research Start up, pre-operating cost Training costs Moving and relocation
Eliminate these If previous GAAP allowed recognition of reimbursements and contingent assets not virtually certain, be eliminated If previous GAAP allowed recognition of future operating losses or major overhauls as provisions, but do not meet recognition criteria per IAS -37 New Assets and Liabilities IAS - 39 - recognition of all derivative financial assets and liabilities
IAS 19 Employer to recognize liabilities under defined benefit plans (not only pensions but also obligations for medical, vacation, deferred compensation etc)
IAS 37 liabilities on onerous contract, restructuring, decommissioning, site restoration, warranties, guarantees
IAS 10 (Events after Reporting Date) Proposed Dividend not recognized as liability Reclassify as part of retained earnings Previous GAAP allowed Treasury Stock as asset, to be reclassified as component of equity IAS 32 ( Financial Instruments Presentation) Redeemable Preference Shares not part of equity but liability Offsetting or Netting of assets/ Liabilities or Income/ Expenses
Subject to certain exception to general measurement principles Measurement principles applicable on the day of adoption. If enterprises in Nepal adopts IFRS first time for year ended 15th July 2013, measurement principles applicable on that date Adjustments recognized directly in retained earnings or other apt category of equity on the date of transition . Same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its first IFRS financial statements Shall comply with each IFRS effective at the end of its first IFRS reporting period
financial assets and financial liabilities Not permitted to recognize financial assets or financial liabilities if these were de-recognized in erstwhile GAAP if a first-time adopter derecognised non-derivative financial assets or non-derivative financial liabilities in accordance with its previous GAAP as a result of a transaction that occurred before date of transition, it shall not recognise those assets and liabilities in accordance with IFRSs (unless they qualify for recognition as a result of a later transaction or event)
It is consistent with the transition provision of IAS 39
Certain IAS 27 requirements not to apply retrospectively prior to date of transition to IFRSs Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non- controlling interests having a deficit balance; The accounting of changes in the parents ownership interest in a subsidiary that do not result in a loss of control
Exception - Howsoever if first-time adopter elects to apply IFRS 3 retrospectively to past business combinations 18
Carried under Cost Model Fair Value becomes Deemed cost (including for intangibles if active market exists) Revalued under previous GAAP, revalued amount at the Revaluation Date becomes deemed cost Before date of first IFRS balance sheet, any IPO/ privatization done, and the revaluation at Fair Value done, it becomes deemed cost after initial adoption of IFRS Adjustment for subsequent depreciation, amortization and impairment required.
Selected financial data for periods before first IFRS Balance Sheet IAS 1 requires one year of full comparative financial statements If enterprise desires to disclose selected data, conformity to earlier data under IFRS optional Prominently disclose non conformity to IFRS for such select data Disclose nature of main adjustment that would make IFRS compliant Narrative disclosure - not necessarily quantified 23
In the GPFS of first time adopter To explain how the transition from previous GAAP to IFRS affected enterprises reported financial position, performance and cash flows
Reconciliations of equity on the date of transition to IFRSs, and end of latest period presented in the entitys most recent annual financial statements under previous GAAP
Reconciliations of IFRSs based profit or loss with that reported under previous GAAP recognition and reversal of any impairment loss explaining that such would have been required under IAS 36 even other wise Reconciliations should provide sufficient details to enable users to understand the material adjustments Subsidiary adopts in Enterprise Only (stand alone) GPFS, before the Group for Consolidated FS the date on which it adopted (date - not for the group) > If group adopts before subsidiary, Subsidiary has two options elect group date as its transition date or first time adopt in its enterprise only statement > If group adopts before the Parent Parents adoption date is date of Group adoption