Overview of IFRS
&
Presentation of Financial
Statements
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
IFRS Comprises
International Accounting
Standards (IAS)
International Financial Reporting
Standards (IFRS)
Standing Interpretations
Committee (SIC)
International Financial Reporting
Interpretations Committee (IFRIC)
IAS
1
Presentation of financial statements
2
Inventories
7
Cash flow statement
8
Accounting Policies, Changes in
Accounting Estimates and Errors
10
Events after balance sheet date
11
Construction contracts
12
Income taxes
16
Property, plant, and equipment
17
Leases
18
Revenue Recognition
IAS
19
Employee Benefits
20
Accounting for Government Grants & Disclosure of Govt. Assistance
21
The Effect of Changes in Foreign Exchange Rates
23
Borrowing Costs
24
Related Party Disclosures
26
Accounting and Reporting by Retirement Benefit Plans
27
Consolidation and Separate Financial Statements
28
Investments in Associates
29
Financial Reporting in Hyperinflationary Economies
31
Joint Ventures
IAS
32
Financial Instruments: Presentation
33
Earnings per share
34
Interim Financial Reporting
36
Impairment of assets
37
Provisions, Contingent Liabilities and Contingent Assets
38
Intangible assets
39
Financial instruments: Recognition & Measurements
40
Investment Property
41
Agriculture
IFRS
1
First time adoption of IFRS
2
Share based Payment
3
Business Combination
4
Insurance Contracts
5
Non-current Assets held for Sale and Discontinued Operations
6
Exploration for and Evaluation of Mineral Resources
7
Financial Instruments: Disclosures
8
Operating Segments
9
Financial Instruments
IAS 1 : Presentation of
Financial Statements
Introduction

Issued in September 2007

Replaces the previous version of 2003

Mandatory for period starting on or after January 1, 2009

Earlier adoption permitted

Equivalent Indian GAAP
 Schedule VI
 AS 1 : Disclosure of Accounting Policies
Objective

To prescribe the basis
 for presentation of general purpose financial statements

To ensure comparability
 With entity’s own statements of previous periods
 With financial statements of other entities

To set
 Overall requirements for the presentation of financial statements
 Guidelines for their structure
 Minimum requirements for their content
Financial Statements Comprises of
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A statement of financial position as at the end of the period
A statement of comprehensive income for the period
A statement of changes in equity for the period
A statement of cash flows for the period
Notes, comprising
 A summary of significant accounting policies
 Other explanatory information
A Statement of financial position as at the beginning of the earliest
comparative period
 When an entity applies an accounting policy retrospectively
 Makes a retrospective restatement of items in its financial statements
 When it reclassifies items in its financial statements
General Features
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Fair presentation and compliance with IFRSs
Going Concern
Accrual Basis of accounting
Materiality and aggregation
Offsetting
Frequency of reporting
Comparative information
Consistency of presentation
Fair Presentation and Compliance
with IFRSs

Financial statement to comply with all the requirements of IFRSs

The application of IFRSs (with additional disclosures) when necessary is
presumed to result in fair presentation

Entity to make an explicit and unreserved statement of compliance in notes

Adoption of an inappropriate accounting policy can not be rectified by
disclosure of accounting policies, notes or explanatory material
Fair presentation and compliance
with IFRSs

When non - compliance with the requirements of IFRSs permitted
 In extremely rare circumstances
 When management considers
 While assessing a requirement in an IFRS
 That the objective of financial statement in not achieved in the particular
circumstances
 As the entity’s circumstances are different from entities complying with
that requirement
 And concludes
 That compliance with a requirement in an IFRS
 Would be so misleading
 That it would conflict
 With the objectives of the financial statements
Fair Presentation


Departure from IFRS where regulatory framework requires or does not prohibit
such a departure:
Entity to disclose – in the year of departure
 that management has concluded that the financial statements present fairly
the entity’s financial position, financial performance and cash flows
 That it has complied with applicable IFRSs, except that it has departed from
a particular requirement to achieve a fair presentation
 the title of the IFRS from which the entity has departed
 the nature of the departure, including the treatment that the IFRS would
require
 the reason why that treatment would be so misleading in the circumstances
that it would conflict with the objective of financial statements set out in the
Framework
 the treatment adopted
 for each period presented, the financial effect of the departure on each item
in the financial statements that would have been reported in complying with
the requirement.
Fair presentation and compliance
with IFRSs

Rebuttable presumption that if other entities in similar circumstances comply
with the requirement, the entity’s compliance with the requirement would not
be so misleading that it would conflict with the objective of financial
statements set out in the Framework
Going Concern
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How to assess:
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Consider all available information about the future (minimum 12 months
from the reporting date) particularly
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Current and expected profitability

Debt repayment schedules

Potential sources of replacement financing
Depends on the facts of each case
Going Concern

If management is aware
 Of material uncertainties related to events or conditions
 That may cast significant doubt
 On entity’s ability to continue as going concern
 Disclose the uncertainties

When financial statements not prepared on a going concern basis
 Disclose the fact
 Disclose the basis for preparation of financial statement
 The reasons why the entity is not a going concern
Materiality and Aggregation

Definition:

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Omissions or misstatements of items
 are material
 if they could, individually or collectively,
 influence the economic decisions that users make
 on the basis of financial statements.
Materiality depends on
 the size and nature
 of the omission or misstatement
 judged in the surrounding circumstances
The determining factor could be
 The size or nature of the item,
 or a combination of both
Offsetting
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Not to offset
 Assets and liabilities
 Income and expenses
unless permitted by an IFRS

What is not offsetting
 Measuring assets net of valuation allowances
 Obsolescence allowance on inventories
 Doubtful debts on allowances
 Gains (losses) on non-current assets less selling expenses
 Net basis (Gains less losses) arising from a group or similar transactions
unless material
Frequency

At least annually

When change in reporting period, disclose
 The period covered
 The reason for using a longer or shorter period
 The fact that amounts presented in financial statements are not entirely
comparable

May also adopt 52 week period
Comparative Information

Disclose
 comparative information in respect of the previous period for
 all amounts in current period financial statements
 Narrative and descriptive information when it is relevant to an
understanding of current period’s financial statements

Present when disclosing comparative information, as a minimum
 Two statements of financial position
 Two of each of the other statements
 Related notes
Comparative Information

Present

When an entity
 Applies an accounting policy retrospectively
 Makes a retrospective restatement of items in its financial statements
 Reclassifies items in its financial statements

disclosing comparative information, as a minimum
 Three statements of financial position
 Two of each of the other statements
 Related notes
Comparative Information


When change in presentation or classification of items in financial statements
 Reclassify comparative amounts
 Disclose
 The nature of reclassification
 The amount of each item or class of items that is reclassified
 The reason of reclassification
When reclassification of comparative amounts is not practicable
 Disclose
 The reason for not reclassifying the amounts
 The nature of adjustments that would have been made if the amounts
had been reclassified
Consistency

Retain the presentation and classification of items in the financial statements
from one period to the next unless
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
It is apparent, following a significant change in the nature of the entity’s
operations or a review of its financial statements, that another presentation
of classification would be more appropriate
An IFRS requires a change in presentation
Change only when changed presentation provides information that is
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
Reliable and more relevant to the users
Revised structure is likely to continue
Information to be presented in Statement
of Financial Position
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No prescribed format
Minimum line items prescribed
Items listed are different in nature or function
Additional line items, headings and sub-totals may be presented if relevant
Classify as
 Current assets and non-current assets
 Current liabilities and non-current liabilities
 Unless order of liquidity provides reliable and relevant information
(generally – financial institutions)
Disclose under each line item where amount expected to be recovered or settled
after more than 12 months
Information to be presented in Statement
of Financial Position
Minimum line items - assets
A Property, plant and equipment
B Investment property
C Intangible assets
D Financial assets excluding (E), (H) & (I)
E Investments accounted for using the equity method
F Biological assets
G Inventories
H Trade and other receivables
I
Cash and cash equivalents
J
The total of assets classified as held for sale and assets included in disposal
group as held for sale in accordance with IFRS 5
Information to be presented in Statement
of Financial Position
Minimum line items - Liabilities
K Trade and other payables
L Provisions
M Financial liabilities excluding (K) & (L)
N Liabilities and assets for current tax (IAS 12)
O Deferred tax liabilities and deferred tax assets (IAS 12)
P Liabilities included in disposal group as held for sale in
accordance with IFRS 5
Q Non-controlling interests, presented within equity
R Issued capital and reserves attributable to owners of the
parent
Information to be presented in Statement
of Financial Position

Additional line items to be judged on the basis of
 The nature and liquidity of assets
 The function of assets within the entity
 The amount, nature and timings of liabilities
Information to be presented in Statement
of Financial Position

Asset is classified as a current asset if it is
 Expected to be realized in the entity’s normal operating cycle; or
 Intended for sale or consumption in the entity’s normal operating cycle; or
 Held primarily for the purpose of being traded; or
 Expected to be realized within 12 months after the reporting period; or
 Cash or cash equivalent

All other assets are non-current assets

Non-current assets include tangible, intangible and financial assets of a longterm nature
Current Assets

Operating Cycle

Time between the acquisition of assets for processing & their realization in
cash or cash equivalents

If the normal operating cycle can not be identified, it is assumed to be 12
months
Information to be presented in Statement
of Financial Position


Liability is classified as a current liability if
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It is expected to be settled in the entity’s normal operating cycle; or
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It is held primarily for the purpose of being traded; or
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It is due to be settled within 12 months after the reporting period; or

The entity does not have an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
All other liabilities are non-current liabilities
Non-adjusting events in respect of
Loans classified as Current Liabilities

Refinancing on a long term basis
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Rectification of a breach of a long term arrangement

Granting by the lender of grace to rectify a breach of a long term arrangement
ending atleast 12 months after the reporting period
Information to be presented in Statement
of Financial Position

Disclose

either in the statement of financial position

or in notes

sub-classification of line items based on

Requirements of IFRSs
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Size, nature and function of the amounts involved
Information to be presented in Statement
of Financial Position

Disclose
 either in the statement of financial position
 or in the statement of changes in equity
 in the notes

Desired information for each class of share capital
 The number of authorized shares
 The number of issued and fully paid shares
 The number of issued but not fully paid shares
 Par value per share or that the shares have no par value

A description of the nature and purpose of each reserve within equity
Statement of Comprehensive Income

Option to present all items of income and expense recognized in a period
 Option 1: in a single statement
 ‘statement of comprehensive income’
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Option 2: in two statements
 ‘Separate income statement’ displaying components of profit or loss
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‘Statement of comprehensive income’ beginning with profit or loss and
displaying components of other comprehensive income
Statement of Comprehensive Income
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Minimum line items
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Revenue
Finance costs
Share of the profit or loss of associates and joint ventures accounted for using
the equity method
Tax expense
A single amount comprising the total of
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The post-tax profit or loss of discontinued operations
The post tax gain or loss recognized on the measurement to fair value less costs to
sell or on the disposal of the assets or disposed group(s) constituting the discontinued
operations
Profit or loss
Each component of other comprehensive income classified by nature
Share of the other comprehensive income of associates and joint ventures
accounted for using the equity method
Total comprehensive income
Statement of Comprehensive Income

Disclose following as allocation of profit or loss for the period
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Profit or loss for the period attributable to
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Non-controlling interests
Owners of the parent
Total comprehensive income for the period attributable to


Non-controlling interests
Owners of the parent
Statement of Comprehensive Income
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Also permitted
 Additional line items, headings and sub-totals permitted
 Amend the description of line items
 Change the order of line items
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Not permitted
 Offsetting of income and expense unless permitted by IFRSs
 To present any items of income or expense as extraordinary items either in
the
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
statement of comprehensive income
Separate income statement, if prepared, or
in notes
Statement of Comprehensive Income

Profit or loss for the period


All items of income or expense recognized in the period are included in
profit or loss unless an IFRS requires otherwise
Items not recognized in profit or loss are ‘other comprehensive income’
Statement of Comprehensive Income

Other comprehensive income
 comprises of items of income and expense
 not recognized in profit or loss as required or permitted by other IFRSs
 Includes
 Reclassification adjustments
 Effect of changes in accounting policies (IAS 8)
 Changes in revaluation surplus (IAS 16)
 Actuarial gains (losses) on defined benefit plans (IAS 19)
 Gains (losses) on translation of the financial statements of a foreign
operation (IAS 21)
 Gains (losses) on re-measuring available for sale financial assets (IAS
39)
 The effective portion of gains (losses) on hedging instruments in a cash
flow hedge (IAS 39)
Statement of Comprehensive Income

For other comprehensive income for the period

Disclose the amount of income-tax relating to each component of other
comprehensive income (including reclassification adjustments) either in the
statement of comprehensive income or in notes

May present components of other comprehensive income either

Net of related tax effects

Before related tax effects with one tax amount
Statement of Comprehensive Income

Reclassification adjustments
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May be presented

in the statement of comprehensive income or
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in notes
When presented in notes

The entity presents the components of other comprehensive income after
any related reclassification adjustments
Statement of Comprehensive Income

Presentation of expenses

Either of two method
 ‘Nature of expense’ method
 ‘Function of expense’ or ‘cost of sales’ method

Choice depends on
 Historical and industry factors
 Nature of entity

Management to select presentation that is
 Reliable
 More relevant
Statement of changes in Equity

Equity includes

Each class of contributed equity

The accumulated balance of each class of other comprehensive income

Retained earnings
Statement of changes in Equity

Changes in equity

Between the beginning of the reporting period

And the end of the reporting period

Reflects the increase or decrease

In the entity’s net assets
Statement of changes in Equity

Changes in equity of a period represent
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
The total amount of income and expense, including gains and losses,
generated by the entity’s activities of that period
Changes resulting from transactions with owners in their capacity as owners
such as

Equity contributions

Reacquisition of entity’s own equity instruments

Dividends

Transaction costs directly related to such transactions
Statement of changes in Equity

Show in the statement

Total comprehensive income for the period, showing separately the total
amounts attributable
 to owners of the parent and
 to non-controlling interests

For each component of equity,
 the effects of retrospective application or retrospective restatement
recognized in accordance with IAS 8
 A reconciliation between the carrying amount at the beginning and the
end of the period, separately disclosing changes resulting from
 Profit or loss
 Each item of other comprehensive income

Contd…
Statement of changes in Equity

Show in the statement…contd


Transactions with owners in their capacity as owners, showing separately
 contributions by and distributions to owners and
 changes in ownership interests that do not result in a loss of control
Dividends

Present either in the statement of changes in equity or in the notes
 The amount of dividends recognized as distribution to owners, and

The related amount per share
Statement of Cash Flows


Provides users of financial statements

with a basis to assess the ability of the entity

To generate cash and cash equivalents and

The needs of the entity to utilize those cash flows
IAS 7 sets out requirements for the presentation and disclosure of cash flow
information
Main differences with Indian GAAP

Treatment of bank overdrafts

Cash flows from extraordinary items

Classification of interest and dividends
Notes - Structure

Presentation
 Systematic manner
 Each item in

Statement of financial position

Statement of comprehensive income / separate income statement

Statement of changes in equity

Statement of cash flows
 Should be cross-referenced to any related information in the notes
Notes - Structure


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Order
 A statement of compliance with IFRSs
 A summary of significant accounting policies applied
 Supporting information for items presented in
 Statement of financial position
 Statement of comprehensive income / separate income statement
 Statement of changes in equity
 Statement of cash flows
 In the order in which each statement & each line item is presented
 Other disclosures including:
 Contingent liabilities and unrecognized contractual commitments
 Non-financial disclosures
Order may be varied if necessary or desirable
Information may be combined
Notes – Disclosure of Accounting Policies

To disclose and include

Measurement bases

Accounting Policies

Judgments that management has made
Notes :Sources of Estimation Uncertainty

Required

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When there are uncertainties
that have a significant risk
of causing material adjustment
To the carrying amount of assets and liabilities
Within next financial year
Disclose


Information about the key assumptions concerning the future
Other key sources of estimation uncertainty at the end of the reporting
period
Notes :Sources of Estimation Uncertainty

In respect of concerned assets and liabilities, include details of:

Their nature

Their carrying amount at the end of the reporting period
Notes – Other Disclosures

Dividends


The amounts

of dividends proposed or declared before the financial statements were
authorized for issue but not recognized as a distribution to owners
during the period and

the related amount per share
The amount of any cumulative preference dividends not recognized
Notes – Other Disclosures

Capital Disclosures - Principle
 Disclose information
 That enables users of its financial statements
 To evaluate
 The entity’s
 objectives,
 policies and
 processes
 For managing capital
Notes – Other Disclosures
Capital Disclosures – Disclose


Qualitative information about its objectives, policies and processes for
managing capital

Summary quantitative data about what it manages as capital

Any changes in above from the previous period

Whether during the period it complied with any externally imposed
capital requirements to which it is subject

When the entity has not complied with such externally imposed capital
requirements, the consequences of such non-compliances
Thank You