Introduction

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In the session….
 Why IFRS

 IFRS around the world

 Organizational Structure

 Current IFRSs and IASs in issues

 Framework for preparation and Presentation of Financial Statements

 New Vision of IFRS - Fair Value Measurement

 IFRS -1 First Time Adoption

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Why IFRS?
 A single set of accounting standards would enable internationally to
standardize training and assure better quality on a global screen.

 It would also permit international capital to flow more freely,

enabling companies to develop consistent global practices on
accounting problems.

 It would be beneficial to regulators too, as a complexity associated

with needing to understand various reporting regimes would be
reduced.

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 Free capital flow
Uniform set of standards to facilitate comparison through which
company seeking capital at the lowest cost and investors seeking
opportunities all over the world.

 Reduction in reporting costs

No need to reconcile financial statements from one GAAP to
another GAAP.

 Benefits for regulators

Complexity needed to understand various reporting regimes would
be reduced.

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 Benefits for auditing firms
International auditing firms to standardize training and better
assure the quality of their work on a global scale.

 Valuations
Moving from historical cost principle to fair valuations.

The key standards that require valuations are:

IFRS-1,IFRS-2, IFRS-3, IAS-16, IAS-19, IAS-32, IAS-39, IAS-36,
IAS-38, IAS-40.

There would be massive requirements for certified valuers to carry

out various valuations required in the IFRS.

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IFRS around the world

Nearly 100 countries currently require or permit the

use of, have a policy of convergence with IFRSs.

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Organizational structure
The IASB structure has the following main
features:

IASC Foundation: An independent

organization having two main bodies - the
Trustees and the IASB

Standards Advisory Council [SAC]

International Financial Reporting

Interpretations Committee [IFRIC]

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Standard setting responsibility lies with IASB

To develop standards

To promote the use of standards

To Bring convergence

To take account of emerging Economies

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IFRS, IAS, Interpretations
Standards and interpretations issued by IASB
 International Financial Reporting Standards (IFRS)
 International Accounting Standards (IAS); and
 Interpretations

At present there are

 8 sets of IFRS (IFRS 1 To IFRS 8)
 29 sets of IAS (IAS 1 TO IAS 41)
 28 sets of Interpretation (SIC and IFRIC Interpretations)

On top of these, IASB also has a set of:

 Framework for the Preparation and Presentation of Financial Statements

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Financial statements
Framework for the preparation and presentation of financial
statements

Financial position - balance sheet

Performance - income statement and statement of changes in equity

Changes in financial position - cash flow statement

Notes and supplementary schedules

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 Elements of financial statements

The elements directly related

to financial position
(balance sheet): The elements directly related
to performance
(income statement):
Assets = Liabilities
Equity
 Income
 Expenses

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New vision of IFRS
It is a new vision of IFRS that considers fair value measurement
to be paramount.

A Balance Sheet Oriented, Fair Value Model

The accounting process will be focused extensively on the

recognition, derecognition and measurement at fair value of
companies' assets and liabilities.

The measurement of income will rely heavily on changes in the fair

value of net assets.

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 Income will be reported in a single statement of financial
performance that aggregates all accrual-based income with
all value changes, whether realized or unrealized.

 Measurement using the fair value will create big challenges

for many companies, especially in developing countries,
where the capital markets are not liquid.
 fair value estimate should be accurate
 fair value estimate should be reliable

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List of IFRS
 IFRS 1: First-time Adoption of International Financial Reporting
Standards

 IFRS 2: Share-based Payment

 IFRS 3: Business Combinations

 IFRS 4: Insurance Contracts

 IFRS 5: Non-current Assets Held for Sale and Discontinued Operations

 IFRS 6: Exploration for and evaluation of Mineral Resources

 IFRS 7: Financial Instruments: Disclosures

 IFRS 8: Operating Segments

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 IFRS -1 : FIRST TIME ADOPTION OF
IFRS

OBJECTIVE OF THE STANDARD:

 Entity’s first IFRS financial statements, and its interim financial

reports s contain high quality information that:

 it is transparent for users and comparable over all the periods presented.

 Provides a suitable starting point for accounting under International

Financial Reporting Standards (IFRS); and

 Can be generated at a cost that does not

exceed the benefits to users.

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POINTS:
An entity
 -- Prepare and Present :- Opening IFRS statement of financial position at the date
 of transition to IFRSs.

 ---Comply:- With each IFRS effective at the end of its first IFRS reporting period.

 --Recognize :- All assets and liabilities whose recognition is required by IFRSs.

 ---Not to recognize :- Assets or liabilities if IFRSs do not permit such recognition;

 ----Reclassify:-Items recognised under previous GAAP as one type of

 assets, liabilty, components of equity but are different type of
 assets, liability or component under IFRS

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 Apply IFRSs in measuring all recognized assets and liabilities.

 ---Exemptions from these requirements in specified areas where the cost of

complying with them would be likely to exceed the benefits to users of
financial statements.

 ---Disclosures:- That explain how the transition from previous GAAP to

 IFRSs affected the entities reported financial position,
 financial performance and cash flows.

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