Recent Change in Accounting
Journey from AS to Ind -AS
What are IFRS/US GAAP/AS
• Like we are governed by our Core Values….. Accounting is Governed by
Accounting Standards (i.e AS)
• Accounting Standards are the guidelines as to :-
• Recognition
• Measurement and
• Disclosures
Of Income, Expenditure, Assets and Liabilities
Globally Acceptable Accounting Formats
IFRS •UK and Europe Based
US •Applicable in
GAAP USA
Indian • Applicable
AS in India
Why IFRS?
Globally accepted Accounting Standards
In case of any company doing International Listing or raising
funds overseas, accounts were to be restated under IFRS/US
GAAP.
Considered to be superior in terms of the guidance available
with respect to the recognition and measurement principles
while recording the financial / non financial transactions
impacting the relevant entity.
Helps in comparison of results with companies around the
Globe
IFRS - Now a truly global standard
International Financial Reporting Standards (IFRS) is viewed as a global standard with more than 100 countries
having already converged/ adopted IFRS
Recent Adopters of IFRS
Japan
China
Canada
IASB-FASB convergence While the joint project is on-going for certain critical topics, the future
program meme of further convergence remains uncertain.
India on the move !
• Indian regulatory and reporting framework has seen a host of changes in the recent times.
• 2014 to 2017 – years of change – impacting all aspects
Companies Act 2013 •Largely effective from 1st April 2014
In effect
Indian Accounting Standards •Mandatory from 2016-17 for certain categories of
converged with IFRS (‘Ind AS’) companies
Income Computation and
•Final ICDS notified on 31st March 2015
Disclosure Standards (‘ICDS’)
Goods and Services Tax (GST) •Expected to be implemented from 1st Oct 2016
On the
anvil
Companies Act 2013 – remaining
•Expected to be implemented in the coming months
sections
Requires implementation and transition efforts over many years
AS and Ind AS
• Difference between AS & Ind –AS :- Where as AS were formulated in India, Ind-AS
are adoption of IFRS ( International Financial Reporting Standards) with some
“Carve Outs”
32 Standards under AS 39 Standards under Ind (AS)
Ind AS implementation in India: Story so far
Previous plan– 1 April 2011
Finance minister’s speech in July 2014
January 2015 – press release on revised roadmap
issued by the MCA
February 2015 – roadmap for transition to Ind AS notified
and 39 converged (final) standards issued
March 2015 - Tax issues addressed separately through issuance of
Income Computation and Disclosure Standards (ICDS)
Way forward?
Companies Act, 2013 and ICDS – steps in the right direction
IFRS Convergence in India: Implementation roadmap
GHCL is covered in
Phase I
Phase I Phase II Voluntary adoption
Year of adoption FY 2016 - 17 FY 2017 - 18 FY 2015 -16 or thereafter
Comparative year FY 2015 - 16 FY 2016 - 17 FY 2014 - 15 or thereafter
Covered companies
(a) Listed All companies with net worth >= All companies listed or in
companies INR500 crore the process of being listed Any company could
(b) Unlisted All companies with net worth >= Companies having a net voluntarily adopt Ind AS
companies INR500 crore worth >= INR250 crore
Applicable to holding, subsidiaries, joint ventures, or associates of
(c) Group
companies covered in (a) and (b) above. This may also impact fellow
companies
subsidiary companies while preparing CFS of the holding company.
• The Ind AS would apply to stand-alone and consolidated • No roll back is permitted.
financial statements.
• Banks, NBFCs and Insurance companies may be
• The net worth for implementation of Ind AS calculated required to prepare Ind AS financials for consolidation by
based on the stand-alone financial statements as on 31 covered group entity.
March 2014.
First time implementation:
When and how to start
Mandatory implementation
First Ind AS financial statements
Date of transition
Ind AS opening
balance sheet
1 April 2015 31 March 2016 31 March 2017
30 31 30 31
30 June 30 June
September December September December
2015 2016
2015 2015 2016 2016
For interim reporting, Ind AS may first be
applicable from quarter ending 30 June 2016
Comparative period
Reporting date
Significant carve
outs and key
impact areas
Key carve-outs
1 Mandatory deviations 2 Optional carve-outs
• Use of government bond rate for
employee benefit accounting
• Deemed cost exemption for PPE –
• Accounting for bargain purchases
carrying value as per Indian GAAP on
(acquisition of Promptec)
date of transition
• Presentation/classification of loans
• Option not to align accounting
with covenant breaches
policies for associates
• Straight lining of lease rentals in
certain situations
3 Elimination of policy 4 Additional guidance
choices
• Presentation of income statement by
nature • Specific guidance on common control
• Investment property – only cost transactions
model to be applied • Previous GAAP for the purposes of
• Option to recognize non-monetary first time adoption specifically
grants at nominal value has been identified to be Indian GAAP
removed
Law to override Ind AS – impact on court schemes and other similar
arrangements to be considered
Key impact areas
Form and Property, plant and
components of Revenue recognition equipment
financial statements
Financial Deferred taxes
Leases Instruments
Segment reporting First time adoption
Employee benefits
and transition
Key impact areas: Presentation of
financial statements
Form and components of financial
statements
• Components of financial statements include the following:
• Balance Sheet
• Income Statement
• Statement of Other Comprehensive Income
• Cash Flow Statement
• Statement of Change in Equity ( SOCIE)
• Notes to financial statements
• Ind AS requirements partly adopted by introduction of revised
Schedule VI / Schedule III of Companies Act 2013
• Draft of the new Schedule III conforming to the requirements of Ind
AS released by ICAI, comment period over on January 20, 2015
Thank You
