IFRS in India - jb nagar cpe study circle of wirc of icai

Transitioning to IFRSIFRS across the worldTop 10 Global Capital MarketsUSJapanUKFranceCanadaGermanyHong KongSpainSwitzerlandAustraliaConverging to IFRSConverging to IFRSIFRSIFRSConverging to IFRSIFRSIFRSIFRSIFRS or US GAAPIFRSRakesh AgarwalSlide 3

IASC Constitution – The Current International FinancialReporting StructureSlide 4

The Preface and The FrameworkPreface to IFRS1. Objectives• A single set of high quality, enforceable global accounting standards• Work with various national standard Setters for convergence2. Scope and Authority of IFRS• Designed for profit oriented enterprises• General purpose financial statements• Bold and plain type, have equal authority3. Due Process4. English LanguageFramework for Preparation and Presentation of Financial Statements1. Objectives of Financial Statements; includes cash flows2. Underlying assumption3. Qualitative characteristics of financial statementsRakesh Agarwal4. Elements of financial statements, recognition and measurementSlide 5

The different levels of IFRSSTANDARDSInternational Financial ReportingStandards (IFRS) andInternational AccountingStandards (IAS)International Financial ReportingInterpretations Committee (IFRIC)And Standing Interpretationcommittee (SIC)Exposure Drafts andDraft InterpretationSlide 6www.iasb.orgwww.cfodirect.comRakesh AgarwalAlmost 3,000pages andincreasing !!!TypeNumberIFRS 9 (9)IAS 41 (27)IFRIC 19 (16)SIC 33 (7)Exposure draftsandInterpretationAround 15

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaApplicability of IFRS in IndiaOpening balance sheet as at April 1* using IFRS-converged accounting standards2011 2012 2013 2014• NSE - Nifty 50 companies,• BSE - Sensex 30companies,• Companies whose sharesor other securities listedoutside India;• Companies listed or not,having a net worth inexcess of Rs. 1,000 crores[Note 1]• All insurance companies• Companies listed or not,having a net worth betweenRs.500 crores and Rs.1000crores [Note 1]• All scheduled commercialbanks• Urban co-operative bankshaving a net worth in excessof Rs. 300 crores• NBFCs - Nifty 50 or Sensex30• NBFCs listed or not, having anet worth > Rs.1,000 crores• Listed companies having anet worth of less thanRs.500 crores [Note 1]• Urban co-operative bankshaving net worth betweenRs. 200 to Rs. 300 crores• NBFCs (all other Listed)• NBFCs (other Unlisted)having net worth betweenRs. 500 to Rs. 1000 croresNote 1: Companies not covered in the above chart will apply ‘existing Indian accounting standards’ OR voluntarily opt toapply the ‘IFRS-converged accounting standards’.Slide 7

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaMapping IFRS and CIAS (Converged Indian Accounting Standards)Std. No.Name of the standardCorresponding to standards issued byIASBIAS/IFRS IFRIC SICWhethersignificantdifferencesbetween CIAS andIFRSCIAS 01 Presentation of financial statements IAS 1 NoCIAS 02 Inventories IAS 2 NoCIAS 03 Statement of Cash Flows IAS 7 NoCIAS 04 Events after the Reporting Period IAS 10 IFRIC 17 NoCIAS 05Accounting Policies, Changes in Accounting Estimates andErrorsIAS 8NoCIAS 07 Construction Contracts IAS 11 IFRIC 12 NoCIAS 09 Revenue IAS 18IFRIC 13, 15,18NoCIAS 10 Property, Plant and Equipment IAS 16 IFRIC 1 NoCIAS 11 The effects of changes in Foreign Exchange Rates IAS 21 NoCIAS 12Accounting for Government Grants and Disclosure ofGovernment AssistanceIAS 20NoCIAS 14 Business Combinations IFRS 3 NoCIAS 15 Employee Benefits IAS 19 IFRIC 14 NoCIAS 16 Borrowing Costs IAS 23 NoCIAS 17 Operating Segments IFRS 8 NoCIAS 18 Related Party DisclosureIAS 24NoCIAS 19 Leases IAS 17 IFRIC 4 SIC 15, 27 NoCIAS 20 Earnings Per Share IAS 33 NoCIAS 21 Consolidated and Separate Financial Statements IAS 27 NoCIAS 22 Income Taxes IAS 12 NoSlide 8

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaMapping IFRS and CIAS (Converged Indian Accounting Standards)Std. No.Name of the StandardCorresponding to standards issued byIASBIAS/IFRS IFRIC SICWhethersignificantdifferencesbetween CIAS andIFRSCIAS 23 Investments in Associates IAS 28 NoCIAS 24Non-Current Assets Held-For-Sale and DiscontinuedOperationsCIAS 25 Interim Financial Reporting IAS 34 IFRIC 10 NoCIAS 26 Intangible Assets IAS 38 SIC 32 NoCIAS 27 Interest in Joint Ventures IAS 31 SIC 13 NoCIAS 28 Impairment of Assets IAS 36 NoCIAS 29 Provisions, Contingent Liabilities and Contingent Assets IAS 37 IFRIC 5,6 NoIFRS 5NoCIAS 30 Financial Instruments: Recognition and Measurement IAS 39 IFRIC 9,16,19 NoCIAS 31 Financial Instruments: Presentation IAS 32 IFRIC 2 NoCIAS 32 Financial Instruments: Disclosures IFRS 7 NoCIAS 33 Share-based payment IFRS 2 NoCIAS 34 Financial Reporting in Hyperinflationary economies IAS 29 IFRIC 7 NoCIAS 35 Exploration for and Evaluation of Mineral Resources IFRS 6 NoCIAS 36 Accounting and Reporting by Retirement Benefit Plans IAS 26 NoCIAS 37 Investment Property IAS 40 NoCIAS 38 Agriculture IAS 41 NoCIAS 39 Insurance Contracts IFRS 4 NoCIAS 40 Financial Instruments IFRS 9 NoCIAS 41 First time adoption of Indian Accounting Standards IFRS 1 NoSlide 9

Broad understanding ofIFRS impact on IndiaInc.

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaPotential Impact of IFRS on consolidated financial statements ofABC Limited for the Y.E. March 31, 2010AreasImpactA Select Components of Financial Statements Net worth Net Income Disclosures Efforts1Consolidation(SIC 12, DT on outside basis)Medium – High Medium - High Low Medium2Business Combinations(common control transactions, Fair value vs. Book value, Merger – Scopeexemption presumed)Nil - Low Low Nil Low34Property, Plant and Equipment(See sample list of applicable GAAP differences)Share based paymentse.g. Fair value accounting vs. Book value.Medium - High Medium - High Low HighNil-Low Low-Medium Nil High5Financial Instrumentse.g. Forward contracts, IFRS 7 disclosureLow-Medium Medium High High6Employee Benefitse.g. Policy of actuarial gains and losses. VRS.Low Low Low Low7Revenue RecognitionIFRIC 13, Multiple Elements, etc.Low Low Low MediumRakesh Agarwal Slide 11

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaPotential Impact of IFRS on consolidated financial statements ofABC Limited for the Y.E. March 31, 2010AreasImpactA Select Components of Financial Statements Net worth Net Income Disclosures Efforts8Taxes on Income(B/S Approach, IFRS Adjustments, Defferred Tax on Outside basis etc.)Medium – High Medium – High Medium Medium910Foreign Currency Transactions(Functional Currency determination of foreign branches, Cost plus contracts)First Time Adoption(Selecting exemptions and exceptions, 1) FV of Fixed Assets, 2) BusinessCombinations and Mergers, 3) Actuarial Gains and Losses)Low Low Low MediumMedium – High Medium - High High High11 Restructuring and Discontinued Operations Low-Medium Low-Medium Low Low12EPS(Impact of IFRS adjustments, Dilution option in subsidiary, if any.)Nil Nil Low Low13Operating Segment(MIS data vs. Audited Segmental information)Nil Nil High Low14Presentation of Financial Statements(Making policy choices of format and benchmarking, Fixed deposits)Nil Nil High High15New Businesses/Transactions/ Others(New Acquisitions, Dividend)Future Future Future FutureRakesh Agarwal Slide 12

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaPotential Impact of IFRS on consolidated financial statements ofABC Limited for the Y.E. March 31, 2010ImpactOther NotesProperty, Plant and Equipment ( PP & E)Net worth P&L Disclosures Effort Work StreamASignificant areas1 IFRS 1 - Deemed Fair Value, Event Driven Organisation High High Low High Policy Decision2 Revaluation Model High High Medium High Policy Decision3 Fair Value at time of Business Combinations Low Low Low Low Policy Decision4 Exchange of Assets Low Low Low LowIdentifying +ValuationBDifferences in Indian Accounting Standards for earlier periods5 Asset Retirement Obligation Nil – Low Nil - Low Low LowValuation +Data capturing6 Capitalisation of Borrowing Costs Low Low Low Low Data Capturing7 Indirect expenditure during trial run Low Low Low Low Data Capturing8IFRIC - 4; Capital leasing arrangement within ServiceContractsLow-High Low-High Low HighRenewal ofContracts9 Leased Assets acquired before April 1, 2000 Nil Nil Nil Low N.A.10 Capitalization of Exchange Fluctuation Low Low Nil High Data capturingRakesh Agarwal Slide 13

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaPotential Impact of IFRS on consolidated financial statements ofABC Limited for the Y.E. March 31, 2010ImpactOther NotesProperty, Plant and Equipment ( PP & E)Net worth P&L Disclosures Effort Work StreamCOther matters resulting in differences in capitalization11 Assets Supplied on Deferred Credit Low Low Low Medium Data capturing12 Less than Rs.5000 assets Low Low Low Low Data capturingDYear on Year Impact - Recomputed since capitalization date for each asset13 Component Approach for Capitalization of Fixed Assets Low Low Low High Data capturing14 Depreciation Rates (Useful Life) Low Low Low LowManagementAssessment15 Residual Value - Revisited at each reporting date Low Low Low High Do16 Residual Life - Revisited at each reporting date Low Low Low High Do17 Recoup of Depreciation on Revalued Assets Nil-Low Nil-Low Low Low Data capturing18 Profit or loss on Sale of Assets None Low Low High Data capturingRakesh Agarwal Slide 14

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaCommon Experiences (adjustments) from Indian GAAP to IFRSConsolidation• Additional entities to be consolidated• Functional currency• Deferred tax on consolidation• Fair value measurement in jointlycontrol entities• Transitional provisionProperty plant and equipment• Change in residual value• Capitalisation of exchange lossesInvestments• Change in the fair value of tradedinvestments• Change in the fair value ofinvestments classified as availablefor sale• Interest income shall be recognisedusing effective interest rate methodfor investments classified as Held tillmaturityLoans and advances - Interest free loansshall be fair valued.Amortisation of goodwill and otherintangible assetsRakesh Agarwal Slide 15

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaCommon Experiences (adjustments) from Indian GAAP to IFRSShare Capital• Redeemable preference shares to beclassified as financial liability• Cost incurred for issuance ofadditional equityDebentures - Premium on redemptionCurrent liabilities• Proposed dividend• Gratuity• Leave• Termination benefits• Accounting for forward coverOther• ESOP Scheme from Parent• Correction of errors• Change in accounting policyDeferred taxes• Recognition of deferred taxes onGAAP adjustments.• Recognition of deferred taxes onitems directly debited to reserves• Consolidation• Probability v/s Virtually certainRakesh Agarwal Slide 16

Essentials of IFRSConversion Approach

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaEssentials of IFRS Conversion ApproachRakesh Agarwal Slide 18

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaEssentials of IFRS Conversion ApproachPhased approach - TransitionIFRS methodologyIndianRakesh Agarwal Slide 19

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaEssentials of IFRS Conversion ApproachPhased approach - TransitionIFRS methodologyIndianObjectives ►Outputs ►Phase 1 Phase 2 Phase 3• Assess impact of IFRS on F/S• Assess how IFRS is currentlyimpacting the organization• Assess the financial reporting,business process and systems impact• Deploy Measurement and DisclosureChecklist• Develop informed business case andstrategy• High-level assessment of IFRS impactto F/S including financial reporting,business process and systems impact• Options for next steps includingstrategy with timeline• IFRS Workshop• Establish proper governance and project management• Complete Component Evaluation SM- Establish IFRS policies and determine adjustments- Assess impact at business unit level- Evaluate parent company policies and decisions• Develop IFRS shell F/S• Design, build and test IFRS reporting process (dualreporting period)• Prepare initial IFRS financial statements and recon(dual reporting period)• Operationalized Project Management Office (PMO)• Documented IFRS policies• IFRS adjustments• Data gaps inventory• Shell annual and quarterly IFRS F/S• IFRS reporting process and system• IFRS financial results for dual reporting period• Develop roadmap to embed IFRS asprimary reporting language• Embed IFRS into financial reportingprocesses and systems (corporate andbusiness units)• Embed IFRS into other financial andoperational processes and systems• Assess whether relevant contractualagreements and financial covenants reflecta different basis of accounting• Go live and close project• Prioritized project plan• Data and business requirements• System and configuration requirements• SOX and procedural documentation• Global Chart of Accounts (COA)• Pre- and post-implementation testingdocumentationRakesh Agarwal Slide 20

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaProject Management FrameworkA well thought out project structure on lines below ensures that an entity is able to getappropriate management focus on project and on technical front “get it right the first time” whichis very essential for a successful project.Steering CommitteeDecision MakerIssueOriginatorsTRCWork StreamsTechnical ReviewCommitteeAuditorExpertINVITEESTechnicalChampionsWS1 WS2 WS3 WS4o Loanso Investmentso Consolidationo FinancialReportingo Employeebenefitso IncomeRecognitiono DeferredTaxeso Derivativeso IFRS 1o Cash FlowsNeeds• Technical support material• Roles & Responsibilities• Timelines• Nodal officesRakesh Agarwal Slide 21

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaProject Management FrameworkRakesh Agarwal Slide 22

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaProject structureWe propose to create a TRC and Working GroupsRakesh Agarwal Slide 23

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaProject structureCentralised vs Decentralised ApproachAdvisor’s IFRS implementation servicesAdvisoryservicesLevels in IFRS implementation ServiceassistanceProvided Centralised AdditionalLocation 1-0TotalA. Base Scenario (Advisory services)TrainingYesImplementation workshopYesIFRS financial sketch for ABCYesLimited (in word file)Rs 1x N.A. Rs 1xIFRS issue log for ABC LimitedYesOngoing IFRS issue resolutionand memo’sYesB. Additional services (Blend of advisory services and reasonable involvement in actual conversion)Excel template (Broad level)Yesprepared by managementRs 2x X 1 = 2xAssisting management in projectplanYes Rs 1x Rs 2x X 0.5 = 0.5x Rs 3.9xGuidance by Advisor duringRs 2x X 0.2 = 0.4xYesexecution by managementActual implementation - Fullfledge conversion from ledger or No N.A. N.A. N.A.trail balanceTotal Rs 2x Rs 2.9x Rs 4.9xRakesh Agarwal Slide 24

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaDetailed Training ProgramSr. No.Advisor’s IFRS implementation services1TopicsOverview of IFRS (Includingpresentation of FinancialStatements)Model 4 Days IFRS Workshop (Extracts overview of Financials)TrainingLevelA to DDurationTime HrsConcepts -BasicsConceptsAdvancedIllustrationProficiency - Break upMultipleOptionsCompanySpecific(Broadly)GAAPDifferencesQ&AExtendedDiscussionB 1.50 2 Revenue recognition B 1.50 Overview of IFRSWork-stream to evaluateImplementation WorkshopRevenue recognitionDraft Accounting policies- Listing of accounting policies Draft JV Adjustments- Structure of Financial statements Update Issues Log- Reclassification of Indian GAAP Financials to IFRSOtherRemarks, ifanyConclusionRakesh Agarwal Slide 25

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaKey challenges - mitigation steps / management callsKey ChallengesVolatility due to fair valuationChange in IT systemsChange in MIS systemsMitigation steps / management callsSEC study states only 25% are total assets are fairvalued out of which for over 90% of the assetsreference price is readily available.Most IT packages are capable to respond to dualreporting.The impact with respect to IFRS 8 is manageableTaxesSome implication on MAT.Managing market, investors and analystsEarly communication – Europe experienceRegulatory uncertainty Worst case scenario, additional cost for early doing –Management to take decision based on corporatephilosophyRakesh Agarwal Slide 26

Rakesh AgarwalPreparation ofIFRS financialstatement

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaIFRS Desk Top for DiscussionABC Limited - Consolidated financial statementsIFRS Desktop for the year ended March 31, 2010Sr. No. Nature of adjustments Impact Accuracy Rs. Crs. Rs. Crs. Notes(L/M/H) Net Worth PATAmount as per Indian GAAP 558.09 116.81 Audited financial statementsA Adjustments - Indian GAAP to IFRS Computation neededAdvisor’s IFRS implementation services1 Fixed assets, intangibles and leaseaccountingM-H Gestimate (25.00) (25.00) Around 5% of the net assetbase2 Derivatives M Gestimate (70.00) (70.00) Actual loss as per the auditedfinancial statements3 Functional currency of subsidiaries, JVs andbranchesL Dummy 50.00 50.004 Dividends (net impact zero) L Actual - - Dividend for 2008-09 and2007-08 is the same5 Debt vs equity classification M Dummy (5.00) (5.00)6 Deferred taxes on above L Estimate (17.00) (17.00)B IFRS 1 (1 exemption out of 15 more relevant)7 Business combinations L Dummy - - To be concludedC Transactions with Parent/Group8 Group transactions and tax thereon L Dummy - - To be concludedTotal of all adjustments (67.00) (67.00)Amount as per IFRS 491.09 49.81Rakesh Agarwal Slide 28

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaPreparation of IFRS financial statementIssue log Template financial Sketch financialABC LimitedIssues LogAdvisor’s IFRS implementation servicesSr Type of Issue Issue Requirements under IFRS TechnicalReferenceProperty, plant and equipment1 Measurement Component Approach The Company is required to depreciate eachsignificant component of an item of PPEseparately, if they have significantly differentuseful life.2 Measurement Major overhaul expenses The cost of major overhaul occurring at regularintervals to be capitalized.3 Measurement Subsequent expenditure Subsequent costs should be capitalized, thatis recognized as an asset, only if they meetthe recognition criteria that:a) It is probable that future economic benefitsassociated with the item will flow to the entity;andb) The cost of the item can be measuredreliably4 Measurement Deferred term basis If the Company has acquired a PPE ondeferred term basis and terms are beyondnormal credit terms, PPE will be recognizedon cash price equivalent, i.e. discountedamount.5 Recognition Environmental obligation and Asset Costs of dismantling and removing the item orretirement obligationrestoring the site on which it is located berecorded when an obligation exists. A liabilityfor the present value of the costs ofdismantling, removal or restoration as a resultof a legal or constructive obligation isrecognized and the corresponding costincluded as part of the related PPE.6 Measurement Expenditure during construction Indirect expenses during construction periodperiodwhich are not required to bring the asset inthe condition for its intended use areexpensed off as incurred.7 Measurement Change in method of depreciation Change in method of depreciation isconsidered as change in accounting estimateand thereby accounted for prospectively.8 Recognition Borrowing Cost General borrowings shall include workingcapital loan amount9 Recognition Borrowing Cost The borrowing cost shall be capitalized forexchange differences on the amount ofprincipal of the foreign currency borrowings tothe extent of difference between interest onlocal currency borrowings and interest onforeign currency borrowings.10 Classification Leasehold land The land is normally classified as anoperating lease unless title passes to thelessee at the end of the lease term.Accordingly leasehold land is classified asoperating lease and disclosed as prepaidassets.11 Measurement Periodic Review Residual value, residual life and method ofdepreciation of the asset is required to beassessed at each balance sheet.Requirements under Indian Priority Enquiries / Discussion withGAAP(H, M, L) management during the workshopIAS 16 There is no specific requirement. H To assess whether any significantcomponent of an item of PPE havingsignificantly different useful life.IAS 16 The cost of major overhaulM Subsequent expenditure incurred for everyoccurring at regular intervals isseven years in rayon plant (spinningcharged to Profit and loss A/cmachine) needs to capitalisedIAS 16 Subsequent maintenanceL No such cases were reportedexpenditure will be capitalized aspart of PPE, if they increase the lifeof the plant or increase capacity orhas a benefit for more than a year.IAS 16 PPE is recorded on purchase price. L No, any purchases are done on deferredterm basisIAS 16 No provision has been made for L As discuss the amount is not materialenvironment and asset retirementobligation.IAS 16 Indian GAAP allows pre-operative L No such cases were reportedexpenses to be generallycapitalized as part of PPE.IAS 16 Change in depreciation method is L The Company has not changed its methodconsidered as change inof depreciation in past.accounting policy, the impact ofchange in depreciation method isdetermined retrospectively;computing depreciation under thenew method.IAS 23R Similar to IFRS L To assess whether working capital loan hasbeen included in the general borrowing forthe purpose of calculation of WACC.IAS 23R Similar to IFRS L To assess whether difference in exchangefluctuation of foreign currency borrowingcost has been capitalized.IAS 17 Leasehold land is classified as a M To assess whether the title would pass topart of fixed assetsthe company at the end of the lease term.Cost of leasehold land is amortised over thelease period.IAS 16 No specific requirement. M Whether the current SLM reflects the usefullife of the assets?There are some PPE which are still in usebut they are fully depreciated viz. cementplant, paper plant etc.To assess further any such case where thelife of the PPE has been fully depreciatedABC Limited -

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaCarve Outs in CIAS from IFRSIFRSED AS 1(R) Presentation of Financials Statements• Required that the components of profit or loss andstatement of other comprehensive income shall bepresented in a two statement.ED AS 3(R) Statement of Cash Flows• Provide an option to other than financial entities toclassify the interest paid and interest and dividendsreceived as an item of operating cash flows also.• Provide an option to classify the dividend paid as anitem of operating cash flows also.ED AS 15(R) Employee Benefits• Permits various options for treatment of actuarial gainsand losses• Does not provide guidance about the interval foractuarial valuation of defined benefit obligation• Rate of government bond can be used as a discountrate only where there is no deep market of high qualitycorporate bonds.Converged Indian Accounting Standard• Required that the components of profit or loss andstatement of other comprehensive income shall bepresented in a single statement of profit or loss.• Have to classify the interest paid and interest anddividends received as an item of financing and investingcash flows activity.• Have to classify the dividend paid as an item offinancing activity.• Requires immediate recognition of actuarial gain andloss in profit or loss• Provide guidance about the actuarial valuation ofdefined benefit obligation may be made at interval notexceeding three years• Rate of government bond shall be used to discount postemployment benefits obligation.Slide 30

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaCarve Outs in CIAS from IFRS, Contd…….IFRSED AS 18(R) Related Party Disclosures• Does not have such disclosure.• Does not specifically include such members.• Does not have such disclosure.• Does not have such guidance.ED AS 20(R) Earning per share• When an entity presents both consolidated financialstatements and separate financial statements, it maygive EPS related information in consolidated financialstatements onlyTerminology Difference• Statement of financial position• Statement of comprehensive incomeED AS 41(R) First time adoption of Indian accounting standard• Detail covered in the IFRS 1presentationConverged Indian Accounting Standard• Disclosures which conflict with confidentialityrequirements of statute/regulations are not required tobe made since Accounting Standards can not overridelegal/regulatory requirements.• Definition of the ‘close members of the family of aperson’ ,father, mother, brother and sister are included.• Provides for additional disclosure requirements withrespect to related parties, if required by any statute.• Provides additional clarificatory guidance regardingaggregation of transactions for disclosure• Required to disclose EPS related information in bothconsolidated financial statements and separate financialstatements.• Balance Sheet• Statement of profit and lossSlide 31

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaCarve Outs in CIAS from IFRS, Contd…….Comparison between CIAS andIFRS issued by IASBPublicationSource: PwC Publication Moving Towards Future........Indian GAAP.Exposure Draft issued by ICAISlide 32 Slide 32

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaImpact – Indian ExperienceTransitional experience by India Inc. - Common IFRS AdjustmentsName of the entitiesInfosys Technologies LimitedWipro LimitedTata Motors LimitedDabur India LimitedRolta India LimitedNoida Toll Bridge Co LtdTotalNo. ofIFRS adj.15105105StatisticsHigh adjustment(>20% impact on net-worth / net income)Medium adjustment(5% - 20% impact on net-worth / netincome)No. ofIFRS adj.Low adjustment(1% - 5% impact on net-worth / net30income)Total 36High impact adjustments Medium impact adjustments Low impact adjustments• Foreign Exchange Gain or loss ofFCCB liability long term foreigncurrency monetary items36Nature of adjustment identified by India Inc. in their Financial Statement (Publiclyavailable)• Deferred tax• Gain on repurchase of FCCB• Imputed Interest on FCCB• Reversal of Amortised Goodwilland intangibles• Share Based Payment• Difference in revenue recognitionnorms18Slide 33

Annexure 1: Concepts relativelynew in Indian GAAP• Presentation of financial statement• Consolidation• Business combination• Leases• Functional currency• Deferred taxes• Employee benefits (includingESOP)• Financial instruments• First time adoption of IFRSRakesh AgarwalSlide 34

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPPresentation of financial statementFree form presentationA complete set of financial statementscomprises:(a) a statement of financial position as at the end ofthe period;(b) a statement of comprehensive income for theperiod;(c) a statement of changes in equity for the period;(d) a statement of cash flows for the period;(e) notes, comprising a summary of significantaccounting policies and other explanatoryinformation; andAn entity may use titles for the statementsother than those prescribed in IAS 1R,however the titles used shall not bemisleading.

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPConsolidation - Special Purpose Entities – SIC 12ActivitiesActivities of the SPE are beingconducted on behalf of the entityaccording to its own specificbusiness needsBenefitsRights to obtainthe majority ofthe benefits ofthe SPE andtherefore therisks incident tothe activities ofthe SPE;CIRCUMSTANCESINDICATING THAT AN ENTITYCONTROLS AN SPEAN SPE SHOULD BETREATED AS A SUBSIDIARYMajority of theresidual orownership risksrelated to theSPE or its assetsretained by thecontrolling entityRisksDecision-making powers to obtainthe majority of the benefits of theactivities of the SPE are controlledby the enterprise directly orthrough an autopilot mechanismDecision -makingRakesh Agarwal Slide 36

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPConsolidationKey GAAP differencesUniform accounting policyMore entities are required to be consolidated under IFRSRakesh Agarwal Slide 37

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPConsolidationOur experienceCompanies need to develop group accounting manual and reporting packages forpreparation of consolidated financial statement with uniform accounting policy andIFRS compliant figuresEnsuring uniform accounting policy for all the consolidating entity is difficultDetermination of functional currency is complex under certain situationRakesh Agarwal Slide 38

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPBusiness combinationAsset or business acquisition?What is a business?IFRS 3 (R) defines it as:“ an integrated set of activities and assets conducted and managed forproviding….return to investor or economic benefit to stakeholders….generally consistsof inputs and processes applied to those inputs , and resulting in outputs that are, orwill be used to generate revenues”.If goodwill is present in a transferred set of activities and assets, the transferred setshall be presumed to be a business.Rakesh Agarwal Slide 39

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPBusiness combinationAsset or business acquisition?YESIs it abusiness?NODo we havecontrol?NORelevant specificstandard e.g. IAS28, IAS 31Relevant specificstandard e.g. IAS 16.YESIFRS 3R (andother standards!)Rakesh Agarwal Slide 40

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPBusiness combinationPurchase Price AllocationalmostFair value everything!Areas to watch out for!Consequences of fair valuingOnce we have determinedthe cost of a businesscombination we need toallocate the cost to theidentifiable assets,liabilities and contingentliabilities acquired.Rakesh Agarwal Slide 41

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPBusiness combinationKey GAAP differencesAssets and liabilities are recognised based on fair valueAmortisation of Goodwill is prohibitedAdditional Intangible assets to be recognised on business combinationsDate of acquisition - Transfer on control vs high court ordersBusiness combination are accounted using purchase method onlyContingent liabilities to be recognised to Income statementContingent considerationReverse acquisitionsRakesh Agarwal Slide 42

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPBusiness combinationOur experienceIFRS 1 - Optional exemption for Business combination has been applied by most ofthe companiesValuation experts with IFRS experience are necessary for purchase price allocationIssues like reverse merger, merger of entities under common control are verycommon under Indian scenarioRakesh Agarwal Slide 43

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPLeasesApplication Of IFRIC - 4IFRIC 4 impact is generally observed where there are Job work arrangements, outsourcingcontracts, power purchase agreements, etcRakesh Agarwal Slide 44

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFunctional currencyFunctional currency - Primary indicatorsThe currency that mainly influencessales prices for goods and services(generally in which sales prices aredenominated and settled)The currency of the country whosecompetitive forces and regulationsdetermines the sales price of itsgoods and servicesFunctional CurrencyThe currency that mainlyinfluences labour, material andother costs of providing goodsand servicesRakesh Agarwal Slide 45

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPDeferred taxesTemporary differenceAll of the temporary differences will give rise to deferred tax balancesException: Some are specifically exempted from recognition in the standardTemporaryDifferencesTAXABLE TEMPORARY DIFFERENCEgive rise to future taxable amountsDEDUCTIBLE TEMPORARY DIFFERENCEgive rise to future tax deductible amountsRakesh Agarwal Slide 46

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPDeferred taxesDeferred Tax Asset RecognitionSufficient DTL availablerelating to same tax authorityand same entityin same periodnoProbable sufficient taxable profitto same tax authorityand same entityin period of DTA reversalyesyesRecognise DTAnoTax planning opportunitiesavailable to create taxable profits?yesnoNo recognition of DTARakesh Agarwal Slide 47

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPDeferred taxesDeferred Tax journal entriesSituationGeneral ruleAdjustment to FV on acquisitionTransaction or event recognised in equityWhere deferred tax is recordedIncome statementAdjust goodwillEquityRakesh Agarwal Slide 48

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPDeferred taxesKey GAAP differencesBalance sheet approach Vs Income statement approachDeferred tax shall be recognised on following temporary differences• Revaluation of PPE• Foreign currency translation• Consolidation adjustments• Unrealised gains/ losses of subsidiaries, associates or joint ventureDeferred tax assets shall be recognised based on probability criteriaRakesh Agarwal Slide 49

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPEmployee benefitsKey GAAP differencesOption for recognition of actuarial gain or losses to income statement or Othercomprehensive income or corridor approachFair value method shall be applied for ESOP accountingRakesh Agarwal Slide 50

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFinancial instrumentsClassification - Financial assetsFinancial AssetAt fair value throughprofit or lossOriginated Loansand receivablesHeld to maturityAvailable for saleHeld fortradingDesignatedat inceptionRakesh Agarwal Slide 51

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFinancial instrumentsClassification – Financial Liabilities (Two categories)1. At fair value through profit or lossHeld for tradingDesignated atinceptionIntention of short term profit;Derivatives – unless if hedgesVoluntary designation subjectto Certain conditions;Irrevocable – cannot be moved2. Other financial liabilitiesRakesh Agarwal Slide 52

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFinancial instrumentsSubsequent measurementAssets/Liabilities at fair value through profitor lossAt FV through profitor lossLoans and receivablesHeld to maturityAt amortised costAvailable for saleAt FV through equityOther liabilitiesRakesh Agarwal Slide 53

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFinancial instrumentsFinancial assetsAt fair value through profit or lossInitialmeasurementFair valueTransactioncostsCharge toIncomeStatementSubsequentmeasurementFair valueRecognitionof gain / lossIncomestatementFair valueHeld to maturity Capitalise Amortised cost Not applicableLoans and receivablesFair valueCapitaliseAmortised costNot applicableAvailable for sale financial assetsFair value Capitalise Fair valueOthercomprehensiveincomestatementRakesh Agarwal Slide 54

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFinancial instrumentsOur experienceUse of experts required to handle complex areasInvolvement of treasury professionals is crucialVolatility in Income statement due to accounting of embedded derivativeDocumentation for hedge accountingRakesh Agarwal Slide 55

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFirst time adoption of IFRSOptional ExemptionsBusiness combinationsProperty, plant and equipment,investment properties, intangiblesEmployee benefitsCumulative translation differencesTransition date for subsidiaries,associates and joint venturesLeasesBorrowing costStandardsin force atreporting dateInvestments in subsidiaries,associates and joint control entities.Compound instrumentsFair value measurement of financialInstruments on initial recognitionDesignation of financial assets andFinancial liabilitiesShare-based paymentsDecommissioning liabilitiesInsurance contracts*Service concessions arrangementsRakesh Agarwal Slide 56

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 1: Concepts relatively new in Indian GAAPFirst time adoption of IFRSMandatory ExceptionsEstimatesNon controlling interest*Standardsin force atreporting dateHedge accounting*applicable on or after 1 st July 2009,can be early adoptedRakesh Agarwal Slide 57

Annexure 2Common adjustmentsfrom Indian GAAP toIFRS

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSConsolidated Financial Statementa. Entities to be consolidated – ESOPQ The ESOP trust has XX shares aggregating to USD 50 MQ The interest on loan given for financing stocks amounted to USD 3 MAnswerA – Dr NW 53, Dr NI 3Rakesh Agarwal Slide 59

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSConsolidated Financial Statementb. Functional CurrencyQ The amount are recorded In Indian Rupees. Exchange loss alreadybooked on transaction from USD to INR is (say)10 USD. Had thetransactions been recorded in USD (being its functional currency) thegains on transaction would have been 15 USD.AnswerA Cr NI 25, Cr NW - 25Rakesh Agarwal Slide 60

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSConsolidated Financial Statementc. Deferred Tax on ConsolidationQ Company intends to realize the undistributed profits of the Joint venture byway of liquidation through cash dividends in foreseeable future. In previousyear company estimated a notional liability of 30 which increased to 35 atyear end.AnswerA Dr NW 35, Dr NI 5Rakesh Agarwal Slide 61

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSConsolidated Financial Statementd. Fair Value measurement in Jointly Control EntitiesQ Company has recorded its investment in JCE at Book value. The net fairvalue of all adjustments (excluding goodwill of 100) has the impact ofincrease by 50. The depreciation on such increase in FV is 5AnswerA Dr NW 5, Dr NI 5.Rakesh Agarwal Slide 62

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSConsolidated Financial Statemente. Transitional ProvisionsQ The impact of transitional provisions under Indian GAAP is Dr NW 20AnswerA. Cr NW 20, NI 0Rakesh Agarwal Slide 63

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSProperty Plant and EquipmentGiven,1. Method adopted SLM2. Life 10 years3. Salvage value zero unless stated otherwisea. Residual ValueQ The residual value taken under Indian GAAP is 5 for an asset, the originalcost of which is 105. At the beginning of the sixth year, the residual value isre-estimated and the same asset is expected to have 45 at the end of itslife. The depreciation of 10 was provided during the sixth year under IndianGAAP. What shall be impact under IFRS for the sixth yearAnswerA Cr NW 8, Cr NI 8Rakesh Agarwal Slide 64

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSProperty Plant and EquipmentGiven,1. Method adopted SLM2. Life 10 years3. Salvage value zero unless stated otherwiseb. Exchange gains and lossesQ Exchange loss capitalized 20 as at the beginning of the yearAnswerA Dr NW 18, Dr NI 18Rakesh Agarwal Slide 65

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSIntangible Assetsa. AmortisationQ Amortisation of Brands 10Q Amortisation of goodwill 15AnswerA Cr NW 25, Cr NI 25Rakesh Agarwal Slide 66

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSInvestmentsa. Trading CategoryQ The fair market value was higher than it books value by 20 and 35 as atthe beginning and as at the end of the year respectively.AnswerA. Cr NW 35, Cr NI 15Rakesh Agarwal Slide 67

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSInvestmentsb. Available for SalesQ The fair market value was higher than it books value by 5 and 10 as at thebeginning and as at the end of the year respectively.AnswerA. Cr NW 10, Cr NI 0Rakesh Agarwal Slide 68

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSInvestmentsc. Held till MaturityQ Company has fully realized the investment at year end by way ofredemption. The interest in effective yield has been 12 where as percoupon rate is 11AnswerA. Cr NW 0, Cr NI 1Rakesh Agarwal Slide 69

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSLoans and Advancesa. Present ValuesQ Fair value of interest free loan aggregating to 100 was 70 at the beginningof the year which increased to 80 during the yearAnswerA. Dr NW 20, Dr NI 10Rakesh Agarwal Slide 70

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSShare Capitala. Redeemable Preference SharesQ The aggregate of redeemable preference shares aggregates to 200AnswerA. Dr NW 200, Dr NI 0Rakesh Agarwal Slide 71

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSShare Capitalb. The Initial Cost on account of issuance of additional Equity SharesQ The initial cost of equity issued during the year is 20. As the same was notallowed to be carried forward under Indian GAAP (AS 26, intangible asset),it was expensed off.AnswerA. Dr NW 0, Cr NI 20Rakesh Agarwal Slide 72

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSDebenturea. Premium on redemptionQ It is the contention of the company that the redemption of premiumaggregating to 50 shall be debited to share premium at the end of the loandebenture term i.e. 5 years. This is the second year closing.AnswerA NW Dr 20, NI Dr 10Rakesh Agarwal Slide 73

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSCurrent Liabilitiesa. Dividend - NewQ Proposed dividend at year end is 20AnswerA Cr NW 20, Dr NI 0Rakesh Agarwal Slide 74

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSCurrent Liabilitiesb. GratuityQ The actuarial loss during the year is 6. The accumulated actuarial loss atthe beginning of the year is us 0. Presume that these numbers remainedsame both under Indian GAAP and IFRS. However, the company hasadopted corridor approach under IFRSAnswerA Cr NW 0, Cr NI 6Rakesh Agarwal Slide 75

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSCurrent Liabilitiesc. LeaveQ The Company provides for leave accruals on basis of its Basic Pay + DAwhich constitutes 50 % of the CTC. The leave accruals increased from 20to 25 during the period. Presume that company follows FIFO method ofleaveAnswerA Dr NW 25, Dr NI 5Rakesh Agarwal Slide 76

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSCurrent Liabilitiesd. Termination benefitsQ The expected cost of VRS (not accepted) by employee is 40AnswerA Dr NW 40, Dr NI 40Rakesh Agarwal Slide 77

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSCurrent Liabilitiese. Accounting of Forward Cover – NewQ The company has entered into forward contracts having its gross premium20 for a period of 6 months. As on the year end 3 months has expired, thecompany amortized Rs.10 under Indian GAAP, it also obtained Mark toMarket on the said forward cover for the remaining term of maturity wherethe Market Value is Rs.16.AnswerA Cr NW 6, Cr NI 6Rakesh Agarwal Slide 78

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSRevenuea. Entitlement basisQ Oil Extracted but another venturer at MV 100. The company shall lift theextra quantities in subsequent month. Presume impact of depletion andother operating cost as 20AnswerA Cr NW 80, Cr NI 80Rakesh Agarwal Slide 79

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSRevenueb. Production Testing Revenue – Oil and GasQ Production testing revenue taken to income 10. Net margin is 80 %AnswerA Cr NW 0, Dr NI 8Rakesh Agarwal Slide 80

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSExpensesa. ESOP Scheme from ParentQ The value of stock options granted and vested during the period by parentco. to employees of the co is 80AnswerA Cr NW 0, Dr NI 80Rakesh Agarwal Slide 81

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSExpensesb. Leave – As aboveDone in current liabilitiesRakesh Agarwal Slide 82

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSExpensesc. Gratuity – Actuarial Gains and LossesDone in current liabilitiesRakesh Agarwal Slide 83

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSExpensesd. Correction of ErrorsQ Included in Income statement are errors of prior period charged to P& Laggregating to 8AnswerA Cr NW 0, Cr NI 8Rakesh Agarwal Slide 84

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSExpensese. Changes in Accounting PolicyQ The cumulative catch up adjustments for a change in accounting policy(depreciation) is reduction in depreciation by 16AnswerA Cr NW 0, Dr NI 16Rakesh Agarwal Slide 85

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSDeferred TaxGiven - The tax rate is 30 %a. GAAP Adjustments from Indian GAAPQ How do you work out the DT impact of US GAAP ADJUSTMENTSAnswerA Balance Sheet ApproachRakesh Agarwal Slide 86

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSDeferred TaxGiven - The tax rate is 30 %b. Items debited to reservesQ An item of expenditure amounting to 30 was debited to reserves.AnswerA Cr NW 9, Cr NI 0Rakesh Agarwal Slide 87

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSDeferred TaxGiven - The tax rate is 30 %c. ConsolidationQ List of inter-company profits getting eliminated on consolidation 20AnswerA Cr NW 6, Cr NI 6Rakesh Agarwal Slide 88

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSDeferred TaxGiven - The tax rate is 30 %d. Outside BasisDone in ConsolidationRakesh Agarwal Slide 89

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 2: Common adjustments from Indian GAAP to IFRSDeferred TaxGiven - The tax rate is 30 %e. Probable v/s Virtually certainQ The unabsorbed losses c/f from earlier period reduced from 200 to 150.The was not recognized under Indian GAAP as the Company was notvirtually certain though it was probableAnswerA Cr NW 45, Dr NI 15Rakesh Agarwal Slide 90

Annexure 3Select IFRS tools andpublications

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 3: Select IFRS tools and publicationsPricewaterhouseCoopers has a range of tools and publications to help companies apply IFRS“Similarities and Differences:A Comparison of IFRS, US GAAP and Indian GAAP.”This new edition has been completely redesigned tomake it user-friendly and the key features of the newpublication are:1) Provides insight as to the impact of key differencesbetween IFRS, US GAAP and Indian GAAP,2) Provides context of how the conversion to IFRS hasramifications far beyond the accounting department, and3) Encourages early consideration of what IFRS means toyour organisation.This publication is available on www.pwc.com/indiaRakesh Agarwal Slide 92

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 3: Select IFRS tools and publicationsPricewaterhouseCoopers has a range of tools and publications to help companies apply IFRSA practical guide to share-based paymentsAnswers the questions we have been asked by entitiesand includes practical examples to help managementdraw similarities between the requirements in thestandard and their own share-based paymentarrangements. November 2008.IFRS 3R: Impact on earnings – the crucial Q&A fordecision-makersGuide aimed at finance directors, financial controllersand deal-makers, providing background to thestandard, impact on the financial statements andcontrols, and summary differences with US GAAP.A practical guide to new IFRSs for 200940-page guide providing high-level outline of the keyrequirements of new IFRSs effective in 2009, inquestion and answer format.IFRS disclosure checklist 2009Outlines the disclosures required by all IFRSspublished up to October 2009.A practical guide to capitalisation of borrowingcostsGuidance in question and answer format addressing thechallenges of applying IAS 23R, including how to treatspecific versus general borrowings, when to startcapitalisation and whether the scope exemptions aremandatory or optional.IFRS pocket guide 2009Provides a summary of the IFRS recognition andmeasurement requirements. Including currencies,assets, liabilities, equity, income, expenses, businesscombinations and interim financial statements.IAS 39 – Derecognition of financial assets inpracticeExplains the requirements of IAS 39, providing answersto frequently asked questions and detailed illustrationsof how to apply the requirements to traditional andinnovative structures.IFRS newsMonthly newsletter focusing on the businessimplications of the IASB’s proposals and newstandards. Subscribe by emailingcorporatereporting@uk.pwc.com.Rakesh Agarwal Slide 93

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 3: Select IFRS tools and publicationsPricewaterhouseCoopers has a range of tools and publications to help companies apply IFRSA practical guide to segment reportingProvides an overview of the key requirements of IFRS8, ‘Operating Segments’ and some points to consideras entities prepare for the application of this standardfor the first time. Includes a question and answersection. Also available: Eight-page flyer on high levelmanagement issues.Illustrative consolidated financial statements• Banking, 2009• Insurance, 2009• Investment property, 2009• Private equity, 2009• Investment funds, 2009Realistic sets of financial statements – for existingIFRS preparers in the above sectors – illustrating therequired disclosure and presentation.Adopting IFRS – A step-by-step illustration of thetransition to IFRSIllustrates the steps involved in preparing the first IFRSfinancial statements. It takes into account the effect onIFRS 1 of the standards issued up to and includingMarch 2004.Financial instruments under IFRSHigh-level summary of the revised financial instrumentsstandards issued in December 2003, updated to reflectIFRS 7 in September 2006. For existing IFRS preparersand first-time adopters.Understanding financial instruments –A guide to IAS 32, IAS 39 and IFRS 7Comprehensive guidance on all aspects of therequirements for financial instruments accounting.Detailed explanations illustrated through workedexamples and extracts from company reports.SIC-12 and FIN 46R – The substance of controlHelps those working with special purpose entities toidentify the differences between US GAAP and IFRSin this area, including examples of transactions andstructures that may be impacted by the guidance.IAS 39 – Achieving hedge accounting in practiceCovers in detail the practical issues in achieving hedgeaccounting under IAS 39. It provides answers tofrequently asked questions and step-by-stepillustrations of how to apply common hedgingstrategies.Acquisitions – Accounting and transparencyunder IFRS 3RdAssesses the impact of the standard, highlighting thekey issues for management and raising questions forthe BoardRakesh Agarwal Slide 94

IFRS in India – Its Status, Overview of Concepts and Impact in IndiaAnnexure 3: Select IFRS tools and publicationsPricewaterhouseCoopers has a range of tools and publications to help companies apply IFRSIFRS manual of accounting 2010Global guide to IFRS providing comprehensive practicalguidance on how to prepare financial statements inaccordance with IFRS. Includes hundreds of workedexamples and extracts from company reports. TheManual is a three-volume set comprising:• Manual of accounting – IFRS 2010• Manual of accounting – Financial instruments 2010• Illustrative IFRS corporate consolidated financialstatements for 2010 year endsComperio Your path to knowledgeOnline library of financial reporting and assurance literature. Provides the full text of IASB International Auditing Practice Statements andIPSAS. Also contains PwC’s IFRS and corporate publications, and Applying IFRS. For more information, visit www.pwc.com/comperioMaking the change to IFRSThis 12-page brochure provides a high-level overview of the key issues that companies need to consider in making the change to IFRSIFRS for SMEs – Is it relevant for your business?It outlines why some unlisted SMEs have already made the change to IFRS and illustrates what might be involved in a conversion process.Rakesh Agarwal Slide 95

Thank YouRakesh AgarwalAssociste Director, PricewaterhouseCoopersE-mail : rakesh.r.agarwal@in.pwc.comMobile : +91 9820273458