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Fig. 1.3: Step by step process for issuing accoun ng standard NOTES
Iden fica on of Consulta on with Prepara on of
broad areas study groups First dra
Revised dra for
Prepara on of Feedback on first
delibera on to
exposure dra dra
various agencies
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Feedback on Finaliza on of
exposure dra standard
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CHECK YOUR PROGRESS - V
Q.1 Explore the ICAI website for the available exposure dra s.
1.8 INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) C
IFRS are envisaged as the common accoun ng language across the globe. These are
supposed to be the common standards followed by companies in many countries.
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Applica on of common standards ensures comparability, clarity and standardisa on of
accoun ng informa on.
IFRS comprises:
· Interna onal Financial Repor ng Standards issued a er 2001
· Interna onal Accoun ng Standards issued before 2001
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· Interpreta ons originated from the Interna onal Financial Repor ng
Interpreta ons Commi ee (IFRIC)- issued a er 2001
· Interpreta ons issued by Standing Interpreta on Commi ee (SIC)- issued a er
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2001
1.8.1 NEED AND RATIONALE OF IFRS
You must be wondering why we are talking about Interna onal Financial Repor ng
Standards being global language of business. Below sec on will help you in understanding
the need and ra onale of IFRS.
Standardiza on of accounts has been a constant effort and concern of the various
professional accoun ng bodies globally. Standards are a set of rules that are aimed at making
accounts consistent and comparable. ICAI envisaged elimina on of the need to prepare dual
sets of financial statement and increased creditability for Indian companies as the poten al
benefits for adop ng IFRS.
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NOTES Implementa on of IFRS is a challenging task as various studies pointed out that accoun ng
professionals were not prepared, Industry needed more me to adapt the new set of rules
and many changes were expected in the exis ng legal framework. The apex body of
accoun ng in the country, ICAI, intended to adopt IFRS from 1st April 2011, however,
implementa on was postponed to April 2016 owing to lack of preparedness. Subsequently
ICAI came out with the adapted version of IFRS known as 'Ind AS’.
1.9 INTRODUCTION OF IND AS IN INDIA
India is a country marked with diverse cultures, diverse nature of the opera ng agreements,
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diversity of legal structure of the repor ng en es, inherent accoun ng prac ces.
Therefore, in India ICAI decided to implement the IFRS with some modifica ons, these
modified standards are called as Ind AS. Ind AS are a new set of accoun ng standards which
are based on IFRS principles, designed in accordance with IFRS but tailored to suit Indian
purpose.
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The Ministry of Company Affairs has issued Companies (Indian Accoun ng Standards) Rules
2015. Ind AS are implemented in India since 2016 in a phased manner. Indian companies
with specified minimum net worth and other requirements have been mandatorily
preparing financial statements as per Ind AS.
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1.9.1 LIST OF NOTIFIED IND AS
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Let's see how Ind AS are aligned with the IFRS. Table 1.3 shows the mapping of Ind AS with
IAS, IFRS, SIC and IFRIC.
Table 1.3: Ind AS and IFRS/IAS
IFRS/IAS No Ind AS Standard
IAS 1 Ind AS 1 Presentation of Financial Statements
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IAS 2 Ind AS 2 Inventories
IAS 7 Ind AS 7 Statement of Cash Flows
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IAS 8 Ind AS 8 Accoun ng Policies, Changes in Accoun ng
Es mates and Errors
IAS 10 Ind AS 10 Events A er The Repor ng Period
IAS 11 Ind AS 11 Construction Contracts
IAS 12 Ind AS 12 Income Taxes
IAS 16 Ind AS 16 Property, Plant and Equipment
IAS 17 Ind AS 17 Leases
IAS 18 &IFRS Ind AS 18 Revenue
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IAS 19 Ind AS 19 Employee Benefits NOTES
IAS 20 Ind AS 20 Accounting for Government Grants and
Disclosure of Government Assistance
IAS 21 Ind AS 21 The Effect of Changes in Foreign Exchange Rates
IAS 23 Ind AS 23 Borrowing Cost
IAS 24 Ind AS 24 Related Party Disclosure
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IAS 26 Ind AS 26 Accoun ng and Repor ng of Re rement
Benefit Plans
IAS 27 Ind AS 27 Consolidated and Separate Financial Statements
IAS 28 Ind AS 28 Investments in Associates
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IAS 29 Ind AS 29 Financial Repor ng in Hyperinfla onary Economy
IAS 31 Ind AS 31 Interests in Joint Venture
IAS 32 Ind AS 32
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Financial Instruments: Presenta on
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IAS 33 Ind AS 33 Earnings Per Share
IAS 34 Ind AS 34 Interim Financial Repor ng
IAS 36 Ind AS 36 Impairment of Assets
IAS 37 Ind AS 37 Provisions, Contingent Liabilities and
Con ngent Assets
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IAS 38 Ind AS 38 Intangible Assets
IAS 39 Ind AS 39 Financial Instruments: Recogni on
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and Measurement
IAS 40 Ind AS 40 Investment Property
IAS 41 Ind AS 41 Agriculture
IFRS 1 Ind AS 101 First Time Adop on of Ind AS
IFRS 2 Ind AS 102 Share Based Payment
IFRS 3 Ind AS 103 Business Combina ons
IFRS 4 Ind AS 104 Insurance Contracts
IFRS 5 Ind AS 105 Noncurrent Assets held for Sale and
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NOTES IFRS 6 Ind AS 106 Explora on for and Evalua on of
Mineral Resources
IFRS 7 Ind AS 107 Financial Instruments: Disclosures
IFRS 8 Ind AS 108 Opera ng Segments
IFRS 9 Ind AS 109 Financial Instruments
IFRS 10 Ind AS 110 Consolidated Financial Statements
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IFRS 11 Ind AS 111 Joint Arrangements
IFRS 12 Ind AS 112 Consolidated Financial Statements
Disclosure Requirements
IFRS 13 Ind AS 113 Fair Value Measurement
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IFRS 14 Ind AS 114 Regulatory Deferral Accounts
IFRS 15 Ind AS 115 Recogni on of Revenue on
Contracts with Customers
1.10 LET US SUM UP
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Companies Act 2013 in conjunc on with accoun ng standards issued by ICAI provides the
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framework for the financial repor ng prac ces in India. Schedule 3 of the companies act laid
down the format to be followed by the companies in the prepara on and presenta on of
financial statements. This unit has also discussed some other legal requirements as per
companies act like submission of statements to stock exchange, internal and statutory audit,
applicability of accoun ng standards and prepara on of directors' responsibility statements
and management discussion and analysis report. Unit further discusses the need and
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ra onale for the adop on of accoun ng standards followed globally. IFRS had been
converged to Ind AS to suit as per India requirements.
1.11 KEY WORDS
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Financial Statements: Financial statements consists of the balance sheet, profit and loss
account, cash flow statement, statement of changes and equity and notes to accounts.
Companies Act 2013: Companies Act 2013 is an act issued by Parliament which lays down
the workings, opera ons and terms for the companies registered under this act.
Board of Directors: Shareholders elect group of individuals amongst themselves to
represent for the decisions and day to day working of the company.
Accoun ng Standards: Accoun ng Standards guides the applica on of a par cular
accoun ng principle in the prepara on and presenta on of the financial statements.
Ind AS: Ind AS are the accoun ng standards issued by ICAI and are applicable to companies
from 1st April, 2016. These are adapted version of IFRS to suit the requirements of India.
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IFRS: Interna onal Financial Repor ng Standards are issued by Interna onal Accoun ng NOTES
Standards Board to serve the purpose of common accoun ng language.
1.12 REFERENCES AND SUGGESTED ADDITIONAL READINGS
Naryanswamy, R., 2017, Financial Accoun ng: A Managerial Perspec ve, 6th edi on, PHI
Learning Private Ltd.
Ghosh, T.P, 2009, Financial Accoun ng for Managers, 4th edi on, Taxman Publica on Private
Ltd.
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Bha acharyya, A.K, 2016, Financial Accoun ng for Business Managers, 5th edi on, PHI
Learning Private Ltd.
h ps://www.aicpa.org/interestareas/frc/accoun ngfinancialrepor ng/pcfr/frf-smes-
faq.html
h ps://www.icai.org/
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h p://www.mca.gov.in/
h ps://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2018-
2019/annual-report-for-fy-2018-19.pdf
1.13 SELF-ASSESSMENT QUESTIONS
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Q.1 Explore the compliance requirements for companies from Bombay Stock Exchange
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website.
Q.2 With the challenging situa on of COVID-19 check out the latest requirements for
submission of financial statements on stock exchange.
Q.3 The Balance Sheet format as per Companies Act 2013 is given Schedule-
· III
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· VI
· VII
· IV
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Q4 Under which head do we classify bills receivable
· Non-current assets
· Current Assets
· Investment
· Miscellaneous Expenses
Q5 Listed companies are required to submit financial statements to:
· Ministry of Human Resource and Development
· Ins tute of Chartered Accountants of India
· Interna onal Accoun ng Standards Board
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