Accounting Standards

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A Brief Discussion on Accounting Standards & IFRS
Article in SSRN Electronic Journal · January 2016

DOI: 10.2139/ssrn.2848715
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A Brief Discussion
on
ACCOUNTING STANDARDS & IFRS
Prepared by
Prof. (Dr.) SISIRA KANTI MISHRA
Electronic copy available at: http://ssrn.com/abstract=2848715

CONTENT
1. INTRODUCTION
2. ACCOUNTING : Measurement vs. Valuation vs. Estimation
3. FRAMEWORK OF ACCOUNTING
 The Conceptual Framework
 The Legal and Regulatory Framework
 The Institutional Framework
4. ACCOUNTING STANDARDS (AS)

 Accounting Standards in Indian Context (list of Indian AS)
 Concluding Remarks on Indian Accounting Standards
5. INTERNATIONAL ACCOUNTING STANDARDS (IAS)

 List of IAS
 Concluding Remarks on International Accounting Standard
6. ACCOUNTING STANDARDS & ROLE OF AUDITORS
7. JOURNEY OF IAS TO IFRS
8. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

 IFRS – A Broad Framework
 International Financial Reporting Interpretations Committee (IFRIC)
 Genesis of IFRS
 Advantages of Adopting IFRS
 IFRS Perspective in India
 List of IFRS
9. IFRS vs. GAAP vs. ACCOUNTING STANDARDS
10. CONCLUSION

INTRODUCTION
In modern times, accounting is an effective measurement system of financial information relating to
economic and non-economic activities which can be made available to interested parties for
decision-making. So, in a nutshell, it is an information system for bringing efficiency and
effectiveness in the overall operation of the business organisation from time to time. Throughout
history, accounting profession has continued to grow in response to the “financial information
needs” of individuals and needs.
Accounting is developed in response to the need to keep a record of transactions between the
organisation and various parties, which take place during a specified time period. But, for many
years, the practice of financial accounting lacked a generally accepted theory that could clearly
enunciate the objective of financial reporting of the required qualitative features of financial
information or provided clear guidance as to when and how to recognise and measure the various
elements of accounting. Over the years, a set of rules were developed as generalisations of existing
practices. But, in absence of an accounting theory, accounting Standards were evolved in an ad-hoc
manner with numerous inconsistencies among them.
Accountants are the practitioners of accountancy. They are information specialists who collect,
process, and report economic information about specific financial events for business and non-
business activities. Today, we observe several million individuals engaged in professional accounting
activities and several billions depend on such information. Thus, accounting has a wide scope in the
spectrum of economic and social development of any country, be it developed, developing or
backward. Accountants are professionally liable to clients and third parties. Therefore, they need to
follow the principles and practices which are in conformity with some “body of knowledge
recognisable as accounting theory”. Even the courts insist on practices based on conceptual frame of
reference. Needless to say, accounting theory is a coherent set of hypothetical, conceptual and
pragmatic principles forming a general frame of reference for enquiring into the nature of
accounting. It is also believed that it consists of systematic statement of principles and methodology
as distinct from practice.
Accounting theory has responded to changing times and progressed from stewardship accounting to
environmental accounting. The classification based on time takes into consideration on changing
economic, social, legal and other environments as the time passes. Since accounting covers entire
administration and management of information for socio-economic activities and conditions in both
micro and macro economic sectors, covering internal and external information needs of interested
ones, a clear analysis and assessment of this accounting environment is of prime importance.
Accounting practices differ from country to country because various factors such as culture,
economic development, level of inflation and legal systems. Countries that are exposed to rapid
price changes are more receptive to departure from historical cost and financial reporting, where as
countries that witness complexities in economic activities faster than other countries are quicker in
responding by developing accounting Standards to meet the challenges. Quality accounting

Standards become necessary in a sound capital market system as they reduce uncertainties,
enhance the confidence of investors and increase overall efficiency of the business enterprise as well
as the user of the financial settlements was limited to the country’s vicinity but it now extends to
other countries because of liberalisation, privatisation and globalisation. This has necessitated India
to develop quality accounting Standards, so that it will have universal acceptability at par with
International Accounting Standards.
ACCOUNTING : Measurement vs. Valuation vs. Estimation

Before looking forward on the subject, it is of utmost importance to focus a light on three important
accounting aspects which always create confusions on their technicality reasons. Very often, these
three instruments are perceived as alike but there exists a big gap in between. It is y felt quite
necessary to bring a line of difference among them so that their conceptual understanding would be
more meaningful and purposeful in due course of discussing and understanding entire accounting
framework and Accounting Standards,
It is a common understanding in accounting that transactions are measured and compared in terms
of money. Measurement is always supported by three basic elements such as (i) identification of
objects to be measured, (ii) selection of Standard or scale to be used, and (iii) evaluation of
dimension of measurement Standard or scale. In accounting, money is the scale of measurement (as
per money measurement concept of accounting), although now-a-days quantitative information is
also communicated along with monetary information. Money, as a measurement scale, has no
universal denomination. It takes the shape of currency rulling in a country. Also, there is no constant
exchange relationship among the currencies. So, money as a unit of measurement lacks universal
applicability across the boundary of a country unless a common currency is in vogue. Since the rate
of exchange fluctuates between two currencies over the time, money as a measurement scale also
volatile. But it is strongly believed that an ideal measurement scale should be stable over the time.
So, it is taken for granted that all transactions are to be recorded in terms of money only.
Quantitative information is also required in many cases but such information is only supplementary
to monetary information.
Value relates to the benefit to be derived from objects, abilities or ideas. To the economist, value is
the utility (in terms of satisfaction) of an economic resource to the person contemplating or enjoying
its use. In accounting, a monetary surrogate is used to mean value of an object, abilities or ideas.
That is to say, value is indicated by measurement and measured in terms of money. There are four
generally accepted measurement bases or valuation principles such as (i) Historical Cost, (ii) Current
Cost, (iii) Realisable Value, and (iv) Present Value. Here, historical cost means acquisition price and
current price relates to the amounts or proceeds received / paid in exchange for any obligation. As
per realisable value, assets are carried at the amount of cash or cash equivalents that could currently
be obtained by selling the assets in an “orderly disposal”. Last but not the least, present value of an
asset is carried at the present discounted value of the future net cash inflows that the item is
expected to generate in the “normal course of the business”. But, truly speaking accounting system
uses all types of measurement bases although under the traditional system, most of the transactions
and events are measured in terms of historical cost.
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There are certain items in accounting (for example, provision for doubtful debts) which are not
occurred, therefore, can not be measured using valuation principles, still they are necessary to
record in the books of account. In such a situation, reasonable estimates based on the existing
situation and past experiences are made. So, measurement of certain assets and liabilities is based
on estimates of uncertain future events. Many financial statement items can not be measured with
precision but can only be estimated because of the fact that uncertainties inherent in business
activities. The management makes various estimates and assumptions of assets, liabilities, incomes
and expenditures as on the date of preparation of financial statements. Such estimates are made in
connection with the computation of depreciation, amortisation and impairment losses as well as
accruals, provisions and employee benefit obligations. Also, estimates may be required in
determining the bad debts, useful life and residual value of an item of plant & machinery and
inventory obsolescence. Broadly speaking, the process of estimation involves judgements based on
the latest information available.
Sometimes, a wrong or inappropriate treatment is adopted for items in Balance Sheet, or Profit &
Loss Account, or other statements. Disclosure of the treatment adopted is necessary in any case but
disclosure can not rectify a wrong or inappropriate treatment. Therefore, characteristics which are
considered for the purpose of selection and application of accounting policies are based on
prudence, substance over form and materiality. Unless the effect of any change in accounting policy
is quantified the financial statements may not help the users of accounting information. This reason
simulates a strong accounting framework supported by structured accounting Standards.
FRAMEWORK OF ACCOUNTING
Accounting is viewed as a system, which provides data to the users to permit informed judgement
and decisions. Development of the systems of recording, classifying and summarising transactions
and events, harmonising the systems by uniform rules and communicating the data are essentially
strong requisite areas of accounting. If the practice of financial reporting is to be developed logically
and consistently, it is felt important on the following points :
1. Develop consensus on issue like meaning and scope of financial reporting,

2. Objective of financial reporting,
3. Qualitative features that financial information should possess,
4. Elements of financial reporting, and
5. Measurement rules to be employed in relation to various elements of accounting.
There is a necessity of undisputed views on the above fundamental issues; else developed
accounting Standards will be in an ad-hoc or piecemeal manner. Keeping all the parameters under
consideration, accounting framework is created not only to make sure the right formulations of
various accounting Standards but also their right implementations and regulation. The broad
accounting framework consists of following pillars :
The Conceptual Framework : the conceptual framework is a coherent system of inter-related

objectives and fundamentals that is expected to lead to consistent Standards. It provides a theory of
accounting which is structured in nature. It is based on the normative theory and prescribes the
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nature, function and limits of financial accounting and reporting. It helps in removing the
inconsistencies and differences between the various Standards.
The Legal and Regulatory Framework : The legal framework is the requirement as per law with
respect to the maintenance of books, records and system of internal controls to be maintained by
the companies. And the regulatory framework oversees all the requirements and disclosures as
demanded by the authorities in preparing and presenting the financial statement. These include
directives under companies act 1956, income tax act 1969, SEBI Guideline, Reserve bank of India
rules. The various regulatory authorities are NACAS , ASB, ICAI, MCA etc .
The Institutional Framework : This refers to the apex body that develops Standards keeping in
mind the conceptual framework which at present is International Accounting Standards Boards (
IASB ) in London. IASB is committed to ‘a single set of high quality global accounting Standards
resulting in transparent and comparable information for one global capital market.”
ACCOUNTING STANDARDS (AS)

Accounting Standards are policy documents in writing issued by the concerned authorities like
Accounting Standards Committee, government or other regulatory bodies, covering the aspects of
recognition, measurement, treatment, presentation and disclosure of accounting transactions in the
financial statements. The purpose of developing accounting Standards is to :
1. Standardise the diverse accounting policies and practices,

2. Ensure comparability of financial statements,
3. Establish reliability to financial statements,
4. Ensure confidence in the users of information, and
5. Ensure universal acceptance of financial statements.
Objectives of preparation and disclosure of financial statement is for the overall benefit of various
stakeholders who have keen interest over the operation of the enterprise. This largely depends on a
structured and systematic financial accounting process which accommodates undisputed accounting
principles and practices. If the financial accounting process is not properly regulated, there is every
possibility of financial statement being misleading, tendentious, and providing a distorted picture of
the business, rather than its true state of affairs. In order to ensure transparency, consistency,
comparability, adequacy and reliability of financial reporting it is essential to standardise the
accounting principles and policies. Accounting Standards provide structured framework and
Standard policies of accounting so that the financial statements of different enterprises become
comparable.
The ostensible purpose of the Standard setting bodies is to promote the dissemination timely and
useful financial information to investors and certain other parties having an interest in the
company’s economic performance. Honestly speaking, accounting Standards focus on the issues
relating to :
 Recognition of events and transactions in the financial statements;

 Measurement of these events and transactions;
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 Presentation of these events and transactions in the financial statements meaningfully and
purposefully;
 Disclosure requirements to enable the shareholders, potential investors in particular and
public at large to get an insight into the facts and figures in the financial statements to take
prudent investment decision.
The whole idea of accounting Standards is centered on harmonisation of accounting policies and
practices followed by various business entities so that diverse accounting practices can very well be
standardised. The reasons are to :
 Eliminate the non-comparability of financial statements and thereby improving the reliability
of financial statements; and
 Provide a set of Standard accounting policies, valuation norms and disclosure requirements.
Therefore, Accounting Standards reduce the accounting alternatives in the preparation of financial
statements within the purview of rationality, thereby ensuring comparability of financial statements
of different enterprises. These Standards broadly prescribe the basis for presentation of general
purpose financial statements to ensure comparability both with the entity’s financial statements of
previous periods and with the financial statements of other entities.
Accounting Standards in Indian Context

Indian Accounting Standards is an instrument before the business entities to records every eligible
financial transaction in the books of accounts in a most scientific manner during a stipulated time
period as per the accounting principles. A set of designed rules and regulations with regard to
accounting principles and practices is ensured of bringing transparencies in the accounting process
so as to make it fit to be disclosed before the parties, having a keen interest over the operations of
the business activities. Therefore, business enterprises record business data chronologically, classify
the data to convert them into information, refine the information to prescribed format and prepare
the financial statements to be presented to the users of information. The practice of converting the
raw data into information is discussed in Accounting Standards by explaining the method of
preparation and presentation of financial statements by laying greater emphasis on analysis and
interpretation if the information to highlight the decision usefulness.
In India, the Institute of Chartered Accountants of India (ICAI), being a premier accounting body in
the country, constituted the Accounting Standard Boards (ASB) on 21st April 1977 to formulate
Accounting Standards to be established in India by the council of the ICAI. The council of the ICAI, so
far, has issued 32 (Thirty-two) Accounting Standards (AS) as per the list given below. However, AS – 8
on “Accounting for Research & Development” has been withdrawn consequent to the issuance of AS
– 26 on “Intangible Assets” thus effectively, there are 31 Accounting Standards at present. These
Standards issued by the ASB establish Standards which have to be complied by the business entities
so that the financial statements are prepared in accordance with Generally Accepted Accounting
Principles (GAAP). These Standards set out overall requirements for the presentation of financial
statements, guidelines for their structure and minimum requirements for their content. A brief
overview of the Accounting Standards is discussed here :
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Details of Indian Accounting Standards
Accounting
Title of the Indian Date of Applicability Enterprise Category to which
Sl. No. Standard
Accounting Standard (AS) (Accounting period commencing on or after)* AS is applicable
(AS) No.
1st 1st April991 for companies governed by
the Companies Act, 1956 as well as for
Disclosure of Accounting For all enterprises :
1 AS – 1 enterprises other than specified in Note 1.
Policies Level – I, II, & III
1st 1st April993 for all enterprises including
those specified in Note 1.
AS – 2
2 Valuation of Inventories 1st 1st April999 For all enterprises
(Revised)
AS – 3
3 Cash Flow Statements 1st April 2001 See Note 2
(Revised)
Contingencies and Events
AS – 4 For all enterprises :
4 occurring after the Balance 1st 1st April995
(Revised) Level – I, II, & III
Sheet date
Net Profit or Loss for the
5 period, Prior-period Items & 1st 1st April996
Changes in Accounting Policies
6 Depreciation Accounting 1st 1st April995
AS – 7 Accounting for Construction For all enterprises :
7 1st 1st April995
(Revised) Contracts Level – I, II, & III
6
AS – 8**
(withdrawn
in pursuant Accounting for Research & For all enterprises :
8 As in the case of AS – 1 above
to AS – 26 Development Level – I, II, & III
becoming
mandatory)
For all enterprises :
9 AS – 9 Revenue Recognition As in the case of AS – 1 above
Level – I, II, & III
10 AS – 10 Accounting for Fixed Assets As in the case of AS – 1 above
AS – 11 The Effects of Changes in For all enterprises :
11 1st 1st April995
(Revised) Foreign Exchange Rates Level – I, II, & III
Accounting for Government For all enterprises :
12 AS – 12 1st 1st April994
Grants Level – I, II, & III
13 AS – 13 Accounting for Investments 1st 1st April995
14 AS – 14 Accounting for Amalgamation 1st 1st April995
15 Employee Benefits 1st 1st April995
16 AS – 16 Borrowing Costs 1st April 2000
st
17 AS – 17 Segment Reporting 1 April 2001 See Note 2, Level – II
st
18 AS – 18 Related Party Disclosures 1 April 2001 See Note 2, Level – II
In respect of all assets leased during
19 AS – 19 Leases accounting periods commencing on or before
1st April 2001
20 AS – 20 Earnings per Share 1st April 2001 (See also Note 4) See Note 4, Level – I
7
Consolidated Financial
21 AS – 21 1st April 2001 (See also Note 5) See Note 5***
Statements
1st April 2001 See Note 2,
Accounting for Taxes on st
22 AS – 22 1 April 2002 For listed companies and
Income st
1 April 2003 other enterprises
st
Accounting for Investments in 1 April 2002
See Note 7,
23 AS – 23 associates in Consolidated 1st April 2004
Mandatory
Financial Statements 1st April 2005
24 AS – 24 Discontinuing Operations 1st April 2004 See Note 8, Level – I
st
25 AS – 25 Interim Financial Reporting 1 April 2002 See Note 9, Level – I
st
26 AS – 26 Intangible Assets 1 April 2003 See Note 10, Level – I, II, & III
Financial Reporting of
27 AS – 27 1st April 2002 See Note 11
Interests in Joint Ventures
1st April 2004

28 AS – 28 Impairment of Assets 1st April 2006 See Note 12, Level – I, II & III
st
1 April 2008
Provisions, Contingent
29 AS – 29 Liabilities and Contingent 1st April 2004 See Note 13, Level – I, II, & III
Assets
Financial Instruments : 1st April 2009
30 AS – 30 See Note 14, Level – I
Recognition & Measurement 1st April 2011
Presentations 1st April 2011
Disclosure 1st April 2011
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* Reference may be made to the forgoing announcement for a detailed discussion on implications of mandatory status of an AS.
** AS – 8 would stand withdrawn with effect from the date AS – 26 : “Intangible Assets” , becomes mandatory (See Note 10 to this Table)
*** Mandatory if an enterprise presents consolidated financial statements.
Note 1 :
1. Sole proprietary concern / individuals
2. Partnership firm
3. Societies registered under the societies Registration act
4. Trusts
5. Hindu undivided families
6. Associations of persons
Note 2 : AS – 3, AS – 17 and AS – 18 have been made mandatory in respect of the following enterprise :
1. Enterprises whose equity or debt securities are listed on a recognized stock exchange in India, and enterprise that are in the
process of issuing equity or debt securities that will listed in the recognizes stock exchange in India as evidence by the board of
directors’ resolution in this regard.
2. All other commercial, industrial & business reporting enterprises, with a turnover for the accounting period Rs. 50 crore or more.
Note 3: This standard has been revised as AS – 7 : Constructing Contracts. The revised standards would come into effect in respect of all
st
contracts entered into during accounting periods commencing on or after 1 April 2003 and will be mandatory in nature from that
date. Accordingly, AS – 7 : Accounting for Constructions Contracts, issued by the institute in December 1983 , will not be applicable
in respect of such contracts .
Note 4: AS – 20 is mandatory in nature in respect of enterprises whose equity shares or potential equity shares are listed on a recognized
stock exchange in India. An enterprise which neither has equity shares nor potential equity shares which are so listed but which
discloses earnings per share, should calculate and disclose earnings per share in accordance with AS – 20 . It has been clarified that
every company , which is required to give information under part IV of Schedule VI of Companies Act, 1956, should calculate and
disclose earnings per share in accordance with AS – 20, whether its equity shares or potential equity shares are listed on a
recognized stock exchange in India or not.
Note 5: AS – 21 is mandatory if an enterprise presents consolidates financial statements. In other words, the AS does not mandate an
enterprise to present consolidate financial statement but if the enterprise presents consolidated financial statements for
complying with the requirements of any statue or otherwise, it should prepare and present consolidation financial statements in
accordance with AS – 21.
9
Note 6 : AS – 22 comes into effect in respect of accounting periods commencing on or after 1st April 2001. It is mandatory in nature for:
st
1. All the accounting periods commencing on or after 1 April 2001, in respect of the following:
(a) Enterprises whose equity or debt securities are listed on a recognized stock exchange in India and enterprises that are in
process of issuing equity or debt securities that will be listed in a recognized stock exchange in India as evidenced by the
board of directors’ resolution in this regard.
(b) All the enterprises of the group, if the parent presents consolidated financial statements and the accounting standard is
mandatory in nature in respect of any of the enterprise of that group in terms of (i) above.
st
2. All the accounting periods commencing on or after 1 April 2002, in respect of companies not covered by 1 above.
st
3. All the accounting periods commencing on or after 1 April 2003, in respect of all other enterprises.
st
Note 7 : AS – 23 comes into effect in respect of accounting periods commencing on or after 1 April 2002. AS – 23 is mandatory for
enterprises presenting consolidated financial statements. in other words , if an enterprise presents consolidated financial
statements, it should account for investments in associates in consolidated financial statements in accordance with AS – 23 from
st
the date of it coming into effect , i.e. 1 April , 2002.
Note 8: AS – 24 will be mandatory in nature in respect of accounting periods commencing on or after 1st April 2004 for the following;
1. Enterprises whose equity or debt securities are listed on a recognized stock exchange in India, and enterprises that are in the
process of issuing equity or debt securities that will listed on a recognised stock exchange in India as evidence by the board of
directors’ resolution in this regard
2. All other commercial, industrial & business reporting enterprises, with a turnover for the accounting period Rs. 50 crore or
more.
In respect of all other enterprises, the accounting standards will be mandatory in nature in respect of accounting periods
st
commencing on or after 1 April, 2005
Note 9: AS – 26 comes into effect in respect of accounting periods commencing on after 1st April 2002. This accounting standard does not
mandate which enterprise should present interim period. If an enterprise is required or elects to prepare and present an interim
financial report, it should comply with this accounting standard.
Note 10: AS – 26 will come into effect in respect of expenditure incurred on intangible items during accounting periods commencing on or
st
after 1 April 2003 and will be mandatory in nature from that date for the following :
1. Enterprises whose equity or debt securities are listed on a recognised stock exchange in India, and enterprises that are in the
process of issuing equity or debt securities that will be listed on a recognised stock exchange in India as evidence by the board
of directors’ resolution in this regard.
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2. All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs. 50
crore.
In respect of all other enterprises the accounting standard will come into effect in respect of expenditure incurred on intangible
st
items during accounting periods commencing on or after 1 April 2004 and will be mandatory in nature from that date.
st
In respect of intangible items appearing in the balance sheet as on aforesaid date, i.e., 1 April 2003 or 1st April 2004, as the case
may be, AS – 26 has limited application as stated in paragraph 99 of this standard.
st
Note 11: AS – 27 comes into effect in respect of accounting periods commencing on or after 1 April 2002. In respect of separate financial
statements of an enterprise, this accounting standard is mandatory in nature from that date. In respect of consolidated financial
statements of an enterprise, this standard is mandatory in nature where the enterprise prepares and presents the consolidated
st
financial statements in respect of accounting periods commencing on or after 1 April 2002.
Note 12: AS – 28 will come into effect in respect of accounting period commencing on or after 1st April 2004 and will be mandatory in
nature from that date from the following;
1. Enterprises whose equity or debt securities are listed on a recognised stock exchange India and enterprises that are in the
process of issuing equity or debt securities that will be listed in a recognised stock exchange in India as evidence by the board
of directors’ resolution in this regard.
2. All other commercial, industrial and business reporting enterprises, whose turnover for the period exceeds Rs. 50 crore.
In respect of all other enterprises the accounting standard will come into effect in respect of accounting commencing on or after
st
1 April 2005 and will be mandatory in nature from that date.
st
Note 13: AS – 29 will come into effects in respect of accounting periods commencing on or 1 April, 2004 and will be mandatory in nature
from that date.
st
Note 14: AS – 30, AS – 31 and AS – 32 will come into effect in respect of accounting period commencing on or after 1 April 2009 and will
be recommendatory in nature for an initial period of two years. It becomes mandatory in respect of accounting periods
st
commencing on or after 1 April 2011 for all commercial, industrial, and business enterprises except for SMEs.
11
AS – 1 : Disclosure of Accounting Policies (Issued 1979) : This Standard is related with
presentation / disclosure requirements of the significant accounting policies followed in
preparing financial statements. The areas in which different accounting policies can be followed
are accounting for depreciation, revaluation of inventories, valuation of fixed assets etc. The
disclosure of the significant accounting policies should form part of the financial statement and
any change in the accounting policies which has a material effect in the current period or which is
reasonably expected to have a material effect in the later periods should be disclosed. If any of
the fundamental accounting assumptions like going-concern, consistency and accrual is not
followed in financial statements, the fact should be specifically disclosed.
AS – 2 : Valuation of Inventories (Revised 1999) : It is a measurement related Standard and

specifies the methods of computations of cost of inventories and the method of determination of
inventory to be shown in the financial statements. According to this Standard, the cost of
inventory should comprise of costs of purchase, costs of conversion, and other costs incurred in
being the inventories to their present location and condition. On the other hand, inventory is
valued by following conservatism principle i.e., at lower of the cost or the market price. The
revised AS – 2 drastically reduces the alternative choices in order to bring about uniformity in
inventory valuation practices by permitting the use of FIFO or weighted average cost formula,
where the specific identification of cost of inventories is not possible. The Standard also
dispenses with the direct costing method and permits only the absorption costing method for
arriving at the cost of finished goods.
AS – 3 : Cash Flow Statement (Revised 1997) : It deals with the provision of information about
historical changes in cash and cash equivalents of an entity by means of a cash flow statement
which classifies cash flows into operating, investing and financing activities. The requirement of
presentation of cash flow statement would force the management to strive to improve the actual
cash flows rather than the profits, which is ultimate goal of every business entity.
AS – 4 : Contingencies and Events occurring after the Balance Sheet date (Revised 1995) :
Pursuant to AS – 29, provisions, contingent liabilities and contingent assets becoming mandatory
in respect of accounting periods commencing on or before 1st April 2004, all paragraphs of AS – 4
dealing with contingencies stand withdrawn except to the extent they deal with impairment of
assets not covered by any other Indian AS. The project of revision of this Standard by ASB in the
light of newly issued AS – 29 are under progress. So, the present Standard (AS – 4) deals with the
treatment and disclosure requirements in the financial statements of events occurring after the
Balance Sheet. Events occurring after Balance Sheet date are those significant events (favourable
and unfavourable) that occur between the Balance Sheet date and the date on which financial
statements are approved by the approving authority (i.e., Board of Directors in case of a
company) of any entity.
AS – 5 : Net Profit or Loss for the Period, Prior-period Items & Changes in Accounting
Policies (Revised 1997) : This Standard should be applied by an enterprise in presenting profit
and loss from ordinary activities, extra-ordinary items and prior-period items in the statement of
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profit and loss in accounting for changes in accounting estimates and disclosure in changes in
accounting policies. As per AS – 5, prior-period items are income or expenses which arise in the
current period as a result of errors or omission in the preparation of financial statements of one
or more prior-periods. Extra-ordinary items are income or expenses that arise from events or
transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore,
are not expected to recur frequently or regularly. The prior-period and extra-ordinary items are
required to be disclosed in the Profit & Loss Account as part of net profit for the period with
separate disclosure of the nature and amount to show its impact on current year’s profit or loss.
AS – 6 : Depreciation Accounting (Revised 1994) : This Standard requires that the depreciable
amount of a depreciable asset should be allocated on a systematic basis to each accounting
period during the useful life of the asset and the depreciation method selected should be applied
consistently from period to period. If there is a change in the method of providing depreciation,
such a change should be treated as a change in accounting policy and its effect should be
quantified and disclosed. In case, any depreciable asset is disposed off, discarded or demolished,
the net surplus / deficiency should be disclosed separately. The depreciation method and the
depreciation rate should be clearly disclosed in the financial statements.
AS – 7 : Construction Contracts (Revised 2002) : This Standard prescribes the accounting

treatment of revenue and cost associated with construction contract by laying down the
guidelines regarding allocation of contract revenue and contract costs to the accounting periods
in which the construction work is performed, since the construction activity is generally
contacted and completed in more than one accounting period. An enterprise is required to
disclose the amount of recognised contract revenue with the methods used to determine that
revenue and the methods applied in determining the stages of completion of contracts in
progress. As per the Standard, the gross amount due from and to customers for contract work is
shown as asset and liability separately.
AS – 8 : Accounting for Research & Development : This Standard stands withdrawn w.e.f. 1st
April 2003 i.e., the date from which AS – 26 on Intangible Assets becomes mandatory.
AS – 9 : Revenue Recognition (Issued 1985) : This Standard deals with the basis for recognition
of revenue arising in the course of ordinary activities, from the sale of goods / rendering of
services and income from interest, royalties and dividends in the profit and loss statements of an
enterprise. Revenue arising from the construction contracts, hire purchase and lease agreements,
government grants and subsidies and revenue of insurance companies from insurance contracts
are outside the purview of AS – 9. This Standard requires an enterprise to disclose the
circumstances in which revenue recognition has been postponed pending the recognition of
significant uncertainties.
AS – 10 : Accounting for Fixed Assets (Issued 1985) : The Standard deals with the disclosure of
the status of the fixed asset in terms of value. The Standard does not take into consideration the
specialised aspect of accounting for fixed assets reflected with the effects of price escalation but
applied to financial statements on historical costs basis. It is important to note that from the date
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of AS – 26 on Intangible Assets, becoming applicable, the relevant paragraphs of this Standard
(AS – 10) dealing with patents and know-how have been withdrawn. An entity should disclose the
following information relating to (i) the gross and net book values of the fixed assets at the
beginning and at the end of an accounting period showing additions, disposal, acquisitions and
other movements, (ii) expenditures incurred on account of fixed assets in course of construction
or acquisition, and (iii) revalued amounts substituted for historical costs of fixed costs with the
method applied in computing the revalued amount in the financial statements.
AS – 11 : Effects of Changes in Foreign Exchange Rates (Revised 2003, Applicable w.e.f., 1 st

April 2004) : An enterprise may carry on activities involving foreign exchange in two ways- by
transacting in foreign currencies or by indulging in foreign operations. In order to include foreign
currency transactions and foreign operations in the financial statements of an enterprise,
transactions must be expressed in the enterprise’s reporting currency and the financial statement
of foreign operation must be translated into the enterprise’s reporting currency. The standard
deals with the issue involve in an accounting for foreign currency and foreign operations that is to
decide with exchange rate to us and how to recognise the financial effects to changes in
exchange rates in the financial statements. The standard requires the enterprise the disclose (i)
the amount of exchange differences included in the profit or loss for the period (ii) the amount of
exchange differences adjusted in the carrying amount of fixed asset exchanges (iii) The amount of
exchanges differences in respect of forward exchanges contracts to be recognised in the profit or
loss in one or more subsequent accounting periods (over the life of the contract).
AS – 12 : Accounting for Government Grants (Issued 1991) : AS – 12 deals with accounting for
government grants and specifies that the government grants should not be recognized until there
is reasonable assurance that the enterprise will comply with the conditions attach to them, and
the grant will be received. The standard also describes the treatment of non monetary
government grants, presentation of grants related to specific fixed assets, related to revenue,
related to promoters’ contribution, treatment for refund of government grants etc. The
enterprise are required to disclose (i) the accounting policy adopted for government grants
including the methods of presentation in the financial statements, (ii) the nature and extent of
government grants recognised in the financial statements, including non monetary grants of
assets given either at a concessional rate or free of cost .
AS – 13 : Accounting for Investments (Issued 1993) : The statement deals with accounting for
investments in the financial statements for enterprises and related disclosures requirement. The
enterprises are required to be disclosed the current investments and long term investments
distinctly in the financial statements. An investment properly should account for as long term
investments. The cost of investments should include all acquisition cost and on disposal of an
investments, the difference between the carrying amount and net disposal proceeds should be
charged or credited to profit and loss statements.
AS – 14 : Accounting for Amalgamation (Issued 1994) : AS – 14 deals with accounting for

amalgamation and treatment of any resultant goodwill or reserves and is directed principally to
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companies although some of its requirements also apply to financial statement of other
enterprise. An amalgamation may be either in the nature of merger purchased. The standard
specifies the condition to be satisfied by an amalgamation in nature of merger is accounted for as
per pooling of interests method and in nature of purchased is dealt under purchased method.
The standard also describes the disclosure requirements for both types of amalgamations in the
first financial statement.
AS – 15 : Employee Benefits (Revised 2005) : The standard requires enterprise to recognise (i) a
liability when an employ has provided services in exchange for employ benefits to be paid in
future, (ii) an expense when an enterprise consumes the economic benefit arising from services
provided by an employ in exchange of employee benefits. Employee benefits can be classified
under (i) short term employee benefits (ii) post employment benefits (iii) long-term employee
benefits (iv) termination benefits the standard lays down and measurement criteria and
disclosure requirement for all the four types of employee benefits.
AS – 16 : Borrowing Costs (Issued 2000) : The standard prescribe the accounting treatment for
borrowing costs incurred by an enterprise in connection with the borrowing of funds . this
standard deals with the issues related to identification of assets which qualifies capitalisation of
interests, determination of the period for which interest can be capitalised and determination of
the amount that can be capitalised. The amount of borrowing costs eligible for capitalisation
should be determine in accordance with provisions of AS – 16 and other borrowing costs should
be recognised as expenses in the period in which they are incurred .
AS – 17 : Segment Reporting (Issued 2000) : This standard requires that the accounting
information should be reported on segment basis. AS – 17 establishes principles for reporting
financial information about different types of product and services an enterprise produces and
different geographical areas in which it operates. The information helps users of financial
statements, to better understand the performance and assets the risk and returns of the
enterprise and make more inform judgement about an enterprise as a whole.
AS – 18 : Related Party Disclosures (Issued 2000) : This standards prescribe the requirements
for certain disclosures which must be made in the financial statements of reporting enterprise for
transaction between the reporting enterprise and its related parties. The requirements of the
standard apply to the financial statement of each reporting enterprise as also to consolidate
financial statements presented by a holding company. Since the standard is more subjective,
particularly with respect to identification of related parties, obtaining corroborative evidence
becomes very difficult for the auditors. Thus successful implementation of AS 18 is dependent
upon how transparent the management is and how the auditors are.
AS – 19 : Lease (Issued 2001) : AS – 19 prescribes the accounting and disclosers requirements for
both finance leases and operating leases in the book of the lessor and lessee. The classification of
leases adopted in this standard is based on the extent to which risks and rewards incident to
ownership of a lease asset lie with the lessor and the lessee. A lease is classified as a finance lease
if it transfers substantially all the risks and rewards incident to ownership. An operating lease is a
15
lease other than finance lease. At the inception of the lease, assets under finance leased are
capitalised in the books of lessee with corresponding liability for lease obligations as against the
operating lease, wherein lease pavements are recognised as an expense in profit and loss account
on a systematic basis over the lease term without capitalising the asset. The lessor should
recognise receivables at an amount equal to net investment in the lease in case of financial lease,
whereas under operating lease, the lesser will present the leased asset under fixed assets in his
Balance Sheet decides recognising the lease income on a systematic basis over lease term. The
person the presenting the leased asset in his Balance Sheet should also consider the additional
requirements of AS – 6 & AS – 10.
AS – 20 : Earnings per Share (Issued 2001) : The objective of this standard is to describe the
principles for determination and presentation of earnings per share (EPS) which will improve
comparison of performance among different enterprises for the same period and among
different accounting periods for the same enterprise. EPS is a financial ratio indicating the
amount of profit or loss for the period attributable to each equity share and AS – 20 gives
computational methodology for determination and presentation of basic and diluted earnings
per share
AS – 21 : Consolidated Financial Statements (Issued 2001) : AS – 21 deals with preparation and

presentation of consolidated financial statement with an intention to provide information about
the activities of group. Consolidated financial statements are presented by a parent to provide
financial information about the economic activities of the group as single economic entity. A
parent which presents consolidated financial statements should present their statements in
accordance with this standard but in its separate financial statements, investment in subsidiaries
should be accounted as per AS – 13.
AS – 22 : Accounting for Taxes on Income (Issued 2001) : AS – 22 seeks to reconcile the taxes
on income calculated as per the books of account with the actual taxes payable on the taxable
income as per the provisions applicable to the entity for the time being in force. This standard
prescribes the accounting treatment of taxes on income and follows the concept of matching
expenses against revenue for the period. The concept of matching is more peculiar in cases of
income taxes since in a number of cases, the taxable income may be significantly different from
the income reported in the financial statements due to difference in treatment of certain items
under taxation laws and the way it is reflected in accounts.
AS – 23 : Accounting for Investments in Associates in Consolidated Financial Statements

(Issued 2001) : AS – 23 describes the principles and procedures for recognising investments in
associates in the consolidated financial statements of the investor. An investor which presents
consolidated financial statements should account for investments in associates as per equity
method in accordance with this standard but in its separate financial statements, AS – 13 will be
applicable.
AS – 24 : Discontinuing Operations (Issued 2002) : The objective of this principle is to establish

principles for reporting information about discontinuing operations, thereby enhancing the ability
16
of the users of financial statements to make projections of an enterprise’s cash flow, earnings,
generating capacities, and financial position by segregating information about discontinuing
operations from information about continuing operations. This standard is applicable to all
discounting operations, representing separate major line of business or geographical area of
operations of an enterprise.
AS – 25 : Interim Financial Reporting (Issued 2002) : An enterprise may be required or may

elect to present information at interim dates as compared with its annual financial statements
due to timelines and cost considerations. The standards prescribe the minimum contents of an
interim financial report and require that an enterprise which elects to prepare and present
interim financial report, should comply with this standard. It also lays down the principles for
reorganisation and measurement in a complete financial statement for an interim period.
AS – 26 : Intangible Assets (Issued 2002) : The standard prescribe the accounting treatment for
intangible asset that are not deal with specifically under other accounting standards and requires
an enterprise to recognise an intangible asset if, and only if, certain criteria are met. The standard
specifies how to measure the carrying amount of intangible assets and requires certain disclosers
about intangible assets. The standard should be applied by all enterprises in accounting
intangible assets, except (a) intangible assets that are covered by another AS, (b) financial assets,
(c) rights and expenditures on the exploration for or development of minerals, oil, natural gas and
similar non regenerative resources, (d) intangible assets arising in insurance enterprise from
contracts with policy holders (e) expenditure in respect of termination benefits.
AS – 27 : Financial Reporting of Interests in Joint Ventures (Issued 2002) : AS – 27 sets out

principles and procedures for accounting of interests in joint ventures and reporting of joint
venture assets, liabilities, income and expenses in the financial statement of venture and
investors regardless of the structure of the structures or forms under which the joint venture
activities take place. The standard deals with three types of joint ventures, such as jointly
controlled operations, jointly controlled assets and jointly controlled entities. An investor in joint
venture, which does not have joint control, should report its interests in joint ventures in its
consolidated financial statements in accordance with AS – 13, AS – 21 and AS – 23.
AS – 28 : Impairment of Assets (Issued 2002) : AS – 28 prescribes the procedure to be applied to

ensure that the assets of an enterprise are carried at an amount not exceeding their recoverable
amount. The standard also lays down principles for reversal of impairment losses and prescribes
certain disclosures in respect of impairment asset. An enterprise is required to asses at each
balance sheet date whether there is an indication that an enterprise may be impaired. If such an
indication exists, the enterprise is required to estimate the recoverable amount and the
impairment losses if any, should be recognised in the profit and loss account.
AS – 29 : Provisions, Contingent Liabilities and Contingent Assets (Issued 2003) : The

objective of AS – 29 is to ensure that appropriate recognition criteria and measurement bases are
applied to provisions and contingent liability and sufficient information is disclosed in the notes
to the financial statements to enable users to understand their nature , timing and amount. This
17
standard applies in accounting for provisions and contingent liabilities and contingent assets
resulting from financial instruments and insurance enterprises. The standard will not apply to
provisions / liabilities resulting from executing controls and those covered under any other
accounting standard.
AS – 30 : Financial Instruments : Recognition & Measurements (Issued 2008) : Accounting

Standard – 30 is issued by the council of the ICAI, which comes into effect in respect of
accounting periods commencing on or after 1st April 2009and will be recommendatory in nature
for an initial period of two years. The preparers of financial statements are encouraged to follow
the principles enunciated in the accounting treatment contained in the standard. The objective of
this standard is to establish principles for recognising and measuring financial assets, financial
liabilities and some contracts to buy or sell non-financial items.
AS – 31 : Financial Instruments : Presentation (Issued 2008) : Accounting Standard – 31 is

issued by the council of ICAI, which comes into effect in respect of accounting periods
commencing on or after 1st April 2009 and will be recommendatory in nature for an initial period
of two years. The preparers of financial statements are encouraged to follow the principles
enunciated in the accounting treatment contained in the standard. The objective of this Standard
is to establish principles for presenting financial instruments as liabilities or equity and for
offsetting financial assets and financial liabilities.
AS – 32 : Financial Instruments : Disclosure (Issued 2008) : Accounting standard – 32 is issued

by the council of ICAI, which comes into effect in respect of accounting periods commencing on
or after 1st April 2009 and will be recommendatory in nature for an initial period of two years.
The preparation of financial statements is encouraged to follow the principles enunciated in the
accounting treatment contained in the standard. The objective of this standard is to require
entities to provide disclosures in their financial statements that enables users to evaluate the
significance of financial instruments for their entity’s financial position and performance and the
nature and extent of risks arising from financial instruments to which the entity is exposed during
the period and the reporting date, and how the entity manages those risks.
Concluding Remarks on Indian Accounting Standards

A discussion on the above different ASs gives clarity of understanding for efficient and effective way
of maintaining the books of accounts. Needless to say, these Standards are tools for financial
measurements and disclosures, which are used in producing a set of fairly presented financial
statements. In this respect, Accounting Standards can be thought of as a system of measurements
and disclosures. They also draw the boundaries within which acceptable conduct lies and in many
other aspects that are similar in nature to laws. Accounting Standards have evolved to curb the
abuse of flexibility in adoption of accounting policies by business enterprises. Standards help
accounting practitioners to apply these practices as the most suitable for the circumstances covered.
Further, it is helpful for entities and the management to justify the adoption of certain practices in
due course of dealing with financial statements. Accounting Standards ensures consistency, and
comparability in place of uniformity in financial reporting to permit better comparisons in
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profitability, financial position, future prospects and other performance indictors associated with
different business firms. Management’s basic purpose is to opt for the method (Standards) available.
Accounting Standards, in this direction, significantly reduces the amount of manipulation of reported
net profit that is likely to occur in the absence of Standards.
INTERNATIONAL ACCOUNTING STANDARDS (IAS)

The need and necessity of the concept of a structured accounting Standard was felt in the 1950s
during the time of post-World War- II economic integration followed by increases in cross-border
capital flows. Initial attempts to converge focused on harmonization, or reducing differences among
the accounting principles used in major countries throughout the world. By the 1990s,
harmonization was replaced with convergence — the development of a unified set of high-quality,
international accounting Standards used in all major countries and elsewhere. The International
Accounting Standards Committee, formed in 1973, was the original organization setting
international Standards. The body was reorganized in 2001 and became an independent
international Standard setter, called as the International Accounting Standards Board. A list of
International Accounting Standards (IAS) is given below.
List of International Accounting Standards (IAS)
IAS Details
IAS – 1 Presentations of Financial Statements
IAS – 2 Inventories
IAS – 7 Cash Flow Statements
IAS – 8 Accounting Policies, Changes in Accounting Estimates & Errors
IAS – 10 Events after the Reporting Period
IAS – 11 Construction Contracts
IAS – 12 Accounting Treatments for Income Taxes
IAS – 16 Property, Plant and Equipment
IAS – 17 Accounting for Leases
IAS – 18 Revenue
IAS – 19 Employee Benefits
IAS –20 Accounting for Government Grants
IAS – 21 The effects of changes in foreign exchange rates
IAS – 23 Accounting for Borrowing Costs
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IAS – 24 Related Party Disclosure
IAS – 26 Accounting and Reporting by Retirement Benefit Plans
IAS – 27 Consolidated and Separate Financial Statements
IAS – 28 Investment in Associates
IAS – 31 Investment in Joint Ventures
IAS – 32 Financial Instruments – Presentation
IAS – 33 Earnings per Share
IAS – 34 Interim Financial Reporting
IAS – 36 Impairment of Assets
IAS – 37 Provisions, Contingent Liabilities and Contingent Assets
IAS – 38 Intangible Assets
IAS – 39 Financial Instruments – Measurements and Recognitions
IAS – 40 Investment Property
IAS – 41 Agriculture
Detailed discussion on IAS is as per the following.
IAS – 1 : Presentation of Financial Statement : As per this Standard, a complete set of financial
statements comprises :
1. A statement of financial position as at the end of the period,

2. A statement of comprehensive income for the period,
3. A statement of changes in equity for the period,
4. A statement cash flows for the period,
5. Notes, comprising a summary of significant accounting policies and other explanatory
information, and
6. A statement of financial position as at the beginning of the earliest comparative period
when an entity applies an accounting policy retrospectively or makes a restatement of
items in its financial statements, or when it classifies items in its financial statements.
Certain important parameters of this IAS – 1 includes going-concern, materiality, offsetting, and
time period concepts. Specific points on such parameters are :
 As per this Standard, an entity prepares financial statements on a going-concern basis

unless managements either intends to liquidate the entity or to cease trading or has no
realistic alternative but to do so.
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 An entity presents each material class of similar and dissimilar items separately either
on the face of the income statement or in the “notes” to the financial statement.
 An entity is not required to offset assets and liabilities or income and expenses unless
required or permitted by an IFRS.
 An entity has to present a complete set of financial statements (including comparative
information) at latest annually, when it is relevant to an understanding of the current
period.
As stated above, the “notes” (i) presents information about the basis of preparation of the
financial statements and the specific accounting policies used; (ii) disclose the information as
required by IFRS that is not presented elsewhere in the financial statements; and (iii) provide
information that is not presented elsewhere in the financial statements, but is relevant to an
understanding of any of them.
Format for the Income Statement
Year – 2015 Year – 14

Particulars
Amount (Rs.) Amount (Rs.)
Revenue XXXX XXXX
Less, Cost of Sales XXXX XXXX
GROSS PROFIT XXXX XXXX
Less, Distribution Costs XXXX XXXX
Less, Administrative Expenses XXXX XXXX
PROFIT FROM OPERATION XXXX XXXX
Investment Cost
Less, Finance Cost XXXX XXXX
PROFIT BEFORE TAX XXXX XXXX
Less, Tax Expense XXXX XXXX
PROFIT AFTER TAX XXXX XXXX
Format for Position Statement
Year – 2015 Year – 14

Particulars
Amount (Rs.) Amount (Rs.)
Assets
Non-Current Assets XXXX XXXX
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Current Assets XXXX XXXX
TOTAL ASSETS XXXX XXXX
Equity and Liabilities
Equity attributable to the holders XXXX XXXX
Share Capital Retained Earnings XXXX XXXX
Non-Current Liabilities XXXX XXXX
Current Liabilities XXXX XXXX
TOTAL EQUITY & LIABILITIES XXXX XXXX
It is desired that each entity discloses information that enables users of its financial statements to
evaluate the entity’s objectives, policies and processes for managing capital.
IAS – 2 : Inventories : the objective of this Standard is to prescribe the accounting treatment for
inventories. A primary issue in accounting for inventories is the amount of cost to be recognised
as an asset and carried forward until the related revenues are recognised. This Standard provides
guidance on the determination of cost and its subsequent recognition as an expense including
written-down amount to net realisable value. It also provides guidance on the cost formula that is
used to assign costs to inventories.
As per this Standard, cost of inventories comprises of all costs of purchases, cost of conversion
and other costs incurred in bringing the inventories to their present location and condition. On
the other hand, it is measured at the lower of cost and net realisable value. Here, net realisable
value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs incurred in bringing the inventories to their present location
and condition. The cost of inventories is assigned by using the first-in-first-out (FIFO) or weighted
average cost method. An entity uses cost method for all inventories having a similar nature and
use to the entity. For inventories with a different nature or use, different cost methods may be
justified. However, the cost of inventories of items that are not ordinarily inter-changeable and
goods or services produced and segregated for specific projects is assigned by using specific
identification of their individual costs.
IAS – 7 : Cash Flow Statements : The objective of this Standard is to require the provision of
information about the historical changes in cash and cash equivalents by means of a cash flow
statement that classifies cash flows during the period from operating, investing and financing
activities. As per the Standard, cash flows are inflows and outflows of cash and cash equivalents.
Cash comprises of cash-on-hand and demand deposits. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amount of cash and which are subject to
an insignificant risk of changes in value.
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Operating activities are the principal revenue-generating activities of an entity and other
activities that are not investing or financing activities. Therefore, they generally result from
the transactions and other events that enter into the determination of profit or loss. The
amount of cash flows from operating activities is a key indicator of the extent to which
operations of the entity have generated sufficient cash flows to repay loans, maintain
operating capability of entity, pay dividends and make new investments without resource to
external sources of financing.
Investing activities are acquisitions and disposal of long-term assets and other investments not
included in cash equivalents. The separate disclosure of cash flows arising from investing
activities is important because the cash flows represent the extent to which expenditures
have been made for resources intended to generate future income and cash flows. The
aggregate cash flows arising from acquisitions and from disposals of subsidiaries or other
business units is presented separately and classified as investing activities.
Financing activities are the results in changes in the size and composition of the contributed
equity and borrowings of the equity. The separate disclosure of cash flows arising from
financing activities is important because it is useful in predicting claims on future cash flows by
providers of capital to the entity. Such entities are required to disclose major classes of gross
cash receipts and gross cash payments, arising from investing and financing activities.
Last but not the least, an entity discloses the components of cash and cash equivalents and
presents a reconciliations of the amounts in its cash flow statement with the equivalent items
reported in the balance sheet. Also, an entity discloses together with a note by management, the
amount significant cash and cash equivalent balances held by the entity that are not available for
use by the group.
IAS – 8 : Accounting Policies, Changes in Accounting Estimates & Errors : The objective of this
Standard is to prescribe the criteria for selecting and changing accounting policies, together with
the accounting treatment and disclosure of changes in accounting policies, changes in accounting
estimates and rectifications of errors. The Standard is intended to enhance the relevance and
reliability of an entity’s financial statements and the comparability of those financial statements
over time and with the financial statements of other entities.
As per the Standard, accounting policies are the specific principles, bases, conventions, rules and
practices applied by an entity in preparing and presenting financial statements. When a Standard
or an interpretation specifically applies to a transaction, event or condition, the accounting policy
or policies applied to that item shall be determined by applying the Standard or interpretation
and considering any relevant “Implementation Guidelines” issued by the IASB for the Standard or
interpretation.
The use of reasonable estimates is an essential part of the preparation of the financial statements
and does not undermine their reliability. A change in accounting estimates is an adjustment of
the carrying amount of an asset or a liability, or the amount of a periodic consumption of an
asset, that results from the present status of, and expected future benefits and obligations
23
associated with, assets and liabilities. The effect of a change in an estimate shall be recognised
prospectively by including it in profit or loss in the period of the change, if the change affects that
period only; or the period of the change and future periods, if the change affects both.
Prior-period errors are omissions from and misstatements in, the entity’s financial statements for
one or more prior-periods arising from a failure to use, or misuse of, realisable information that
(i) was available when financial statements for those periods were authorised for issue; and (ii)
could reasonably expected to have been obtained and taken into account in the preparation and
presentation of those financial statements. Such errors include effects of mathematical mistakes,
mistakes in applying accounting policies, oversights or misinterpretations of facts, and frauds.
IAS – 10 : Events after the Reporting Period : The objectives of this Standard is to prescribe (a)
when an entity adjusts its financial statements for events after the balance sheet date; and (b)
the disclosures, that an entity should give about the date when the financial statements were
authorised for issue and about events after the balance sheet date. The Standard also requires an
entity should not prepare its financial statements on a going-concern basis if events, after the
Balance Sheet date, indicate that the going concern assumption is not appropriate.
Events after the Balance Sheet date are those events, favourable and unfavourable, that occur in
between the balance sheet date and the date when the financial statements are authorised for
issue. In this two types of events can be identified, such as :
(i) those that provide evidence of conditions that existed at the balance sheet date
(adjusting events after the balance sheet date), and
(ii) those are indicators of conditions that arose after the balance sheet date (non-adjusting
events after the balance sheet date)
An entity adjusts the amounts recognised in its financial statements to reflect adjusting events
after the balance sheet date. An entity adjusts the amounts recognised in its financial statements
to reflect non-adjusting events after the balance sheet date. If non-adjusting events after the
balance sheet date are material, non-disclosure can influence the economic decisions of users
taken on the basis of the financial statements. Accordingly, an entity discloses the followings for
each material category of non-adjusting events after the balance sheet date :
(i) the nature of the events; and

(ii) an estimate of its financial effect, or a statement that such an estimate can not be
made.
If an entity receives information after the balance sheet date about conditions that existed at the
Balance Sheet date, it updates disclosures that relate to those conditions, in the light of the new
information.
IAS – 11 : Construction Contracts : The objectives of IAS – 11 is to prescribe the criteria for the
accounting of revenue and costs in relation to construction contracts. Due to the nature of such
contracts, the commencement and completion dates are usually well separated, often crossing
24
over an accounting period. The Standard focuses on the allocation of revenue and costs to those
accounting periods in which the construction contract is executed.
Contract revenues include the amount agreed in the initial contract, plus revenue from
alterations in the original contract work plus claims and incentive payments that (a) are expected
to be collected, and (b) that can be measured reliably. Contract cost includes directly relating to
the specific contract plus costs that are attributable to the contractor’s general contacting activity
to the extent that they can be reasonably allocated to the contract, plus such other costs that can
be specifically charged to the customer under the terms of the contract.
As per the Standard, the gross amount due from customers for contract work is shown as an
asset, whereas the gross amount due to customers for contract work is treated as liability. To be
able to estimate the outcome of a contract reliably, the entity must be able to make a reliable
estimate of total contract revenue, stage of completion, and costs to complete the contract.
IAS –12 : Accounting Treatment for Income Tax : The objective of this Standard is to prescribe
the accounting treatment for income taxes. For the purpose of this Standard, income taxes
include all domestic and foreign taxes, which are based on taxable profits. Income taxes include
taxes, such as withholding taxes, which are payable by a subsidiary, associate or joint venture on
distributions to the reporting entity. The principal issues in accounting for income taxes is how to
account for the current and future tax consequences of :
(a) future recovery (settlement) of the carrying amount of assets (liabilities) that are
recognised in an entity’s balance sheet; and
(b) transactions or other events of the current period that are recognised in an entity’s
financial statements.
Current tax for current and prior-periods, to the extent, is recognised as a liability. If the amount
already paid in respect of current and prior-periods exceeds the amount due for those periods,
the excess is treated as assets. Current tax liabilities (asses) for current and prior-periods is
measured at the amount expected to be paid to (recovered from) the taxation authorities, using
tax rates (and tax laws) that have been enacted or subsequently enacted by balance sheet dates.
It is inherent in the recognition of an asset or liability that the reporting entity expects to recover
or settle the carrying amount of that asset or liability. The Standard requires an entity to
recognise a deferred tax liability (deferred tax asset), with certain limited exceptions. A deferred
tax asset is recognised for the carry forward of unused tax losses and unseen tax credits to the
extent that is probable that future taxable profit is available against which the unused tax losses
and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled,
based on tax rates (and tax laws).
IAS – 16 : Property, Plant and Equipment : The objective of this Standard is to prescribe the
accounting treatment for property, plant and equipments so that users of the financial
statements can discern information about an entity’s investment in its property, plant and
equipment are the recognition of the assets. The principal issues in accounting for property, plant
25
and equipment are the recognition of the assets, the determination of their carrying amounts
and the depreciation charges and impairment losses to be recognised in relation to them.
The Standard clearly specifies property, plant and equipment as tangible items that :
(a) are held for use in the production or supply of goods and services, for rental to other,
or for administrative purposes; and
(b) are expected to be used during more than one period.
An item of property, plant and equipment is recognised as an asset if and only if it is probable
that future economic benefits associated with the asset will flow to the entity; and the cost of the
item can be measured reliably. The current Standard states that in case of any replacements or
major inspections, the carrying amount of the item of property, plant and equipment replaced
should be de-recognised and the cost of the replacement are added.
The entity can either select the cost model or the revaluation model as its accounting policy to
apply entire class of property, plant and equipment. After recognition as an asset, property, plant
and equipment is carried at its cost less any accumulated depreciation and any accumulated
losses. Revaluation is made with sufficient regularity to ensure that the carrying amount does not
differ from that which can be determined using fair value at the Balance Sheet. These assets are
exposed to an extent of depreciable amount over its useful life, what is referred in terms of
depreciation. The depreciation method always reflects the pattern in which the asset’s future
economic benefits are expected to be consumed by the entity.
IAS – 17 : Leases : The objective of this Standard is to prescribe, lessees and lessors, the
appropriate accounting policies and disclosure to apply in relation to leases. The Standard is
applied in accounting for leases other than :
(a) leases to explore for or use non-regenerative resources such as oil, natural gas and so
on; and
(b) licensing arrangements for motion pictures, video recordings, music and so on.
The Standard is restricted not to be applied in the measurement of :
(a) property held by lessees that is an investment property (IAS – 40)

(b) investment property provided by lessors under operating leases (IAS – 40)
(c) biological assets held by lessees under finance leases (IAS – 41)
(d) Biological assets provided by lessors under operating leases (IAS – 41)
The classification of leases adopted in this Standard is based on th extent to which risks and
rewards incidental to ownership of a leased asset lie with the lessor or the lessee. A lease is
classified as finance lease if it transfers substantially all the risks and rewards incidental to
ownership. A lease is an operating lease if it does not transfer substantially all the risks and
rewards incidental to ownership.
Lessor presents assets subject to operating leases in their Balance Sheets according to the nature
of the asset. The depreciation policy for depreciable leased assets is consistent with the lessor’s
normal depreciation policy for similar assets, and depreciation is calculated in accordance with
26
IAS – 16 and IAS – 38. Lessor recognises assets held under a finance lease in Balance Sheet by
presuming them as a receivable at an amount equal to the net investment in the lease.
IAS – 18 : Revenue Recognition : The primary issue in accounting for revenue is determined when
to recognise revenue. It is recognised when it is probable that future economic benefits will flow
to the entity and these benefits can be measured reliably. This Standard identifies circumstances
in which these criteria will be met and, therefore, revenue will be recognised. It also provides
that accounting treatment for revenue arising from sales of goods, rendering of services and from
interest, royalties and dividends.
The requirements of IAS – 18 are to be applied in accounting for revenue arising from :
(a) Sale of goods

(b) Rendering of services, and
(c) The use by others of the entity’s assets, thus yielding interest, royalties, or dividends.
The Standard does not deal with revenue arising from the following items, as they are dealt with
by other Standards :
(a) Leases (IAS – 17)

(b) Dividends from investments accounted under the equity method (IAS- 28)
(c) Insurance contracts (IAS – 4)
(d) Changes in fair values of financial instruments (IAS – 39)
(e) Changes in the value of current assets
(f) Initial recognition and changes in the value of biological assets (IAS- 41)
(g) Initial recognition of agricultural produces (IAS – 41)
(h) Extraction of minerals
The recognition criteria in this Standard are usually applied separately to each transaction.
However, in certain cases, it is necessary to apply recognition criteria to separately identifiable
components of a single transaction in order to reflect the substance of the transaction. Here,
revenue is measured at the fair value of the consideration received or receivable. Fair value is the
amount for which an asset can be exchanged, or a liability settled between knowledgeable,
willing parties in an arm’s length transaction. Revenue, here, is recognised on following bases :
(a) Interest is recognised using the effective interest method as set out in IAS – 39.
(b) Royalties is recognised on an accrual basis in accordance with the substance of the
relevant agreement, and
(c) Dividends are recognised when the shareholder’s right to receive payment is
established.
The Standard requires disclosures, such as (i) the accounting policies adopted for the recognition
of revenue, including the method for determining stage of completion for the rendering of
services, and (ii) the amount of each significant category of revenue recognised during the period,
including sale of goods, rendering of services, interest, royalties and dividends.
27
IAS – 19 : Employee Benefits : These are all forms of consideration given by an entity in exchange
of services rendered by employees. The objectives this Standard is to prescribe the accounting
and disclosure for employee benefits. The Standard requires an entity to recognise :
(a) a liability when an employee has provided service in exchange for employee benefits to
be paid in the future; and
(b) an expenses when the entity consumes the economic benefit arising from service
provided by an employee in exchange for employee benefits.
The cost of providing employee benefits is recognised in the period in which the benefit is earned
by the employee than when it is paid or payable. This Standard is applied by an employer in
accounting for all employee benefits, except to those which IFRS – 2 (Share-based Payments)
applies. Here in this Standard, employee benefits are of short-term benefits and post-employee
benefits. Short-term employee benefits fall due wholly within twelve months after the end of the
period in which the employees render the related service. When an employee has rendered
service during an accounting period, the entity recognises the undiscounted amount of short-
term employee benefits expected to be paid in exchange for that service.
(a) As a liability (accrued expense), after deducting any amount paid. If the amount already
paid exceeds the undiscounted amount of the benefits, an entity recognises that excess
as an asset (prepaid expense) to the extent that the payment leads to a reduction in
future payments or a cash refund, and
(b) As an expense, unless another Standard requires or permits the inclusion of the
benefits in the cost of an asset.
Post-employee benefits are employee benefits (other than termination benefits) which are
payable after the completion of employment. Post-employment Benefit Plans are formal or
informal arrangements under which an entity provides these benefits after the completion of
employment. Such benefits are classified as either defined contribution plans or defined benefit
plans, depending on the economic substance of the plan as derived from its principal terms and
conditions. Other long-term employee benefits do not fall due wholly within twelve months after
the end of period in which employees render the related service.
IAS – 20 : Accounting for Government Grants : This Standard prescribes the accounting for, and
in the disclosure of, government grants and in the disclosure of other forms of government
assistance. It deals with the accounting treatment and disclosure requirements of grants received
by entities from government. It also mandates disclosure requirements of other items of
government assistance. The Standard provides four exclusions :
(a) Special provisions arising in reflecting effects of changing prices on financial statements
or similar supplementary information.
(b) Government assistance provided in the form of tax benefits (including income tax
holidays, investment tax credits, accelerated depreciation allowances, and concessions
in tax rates).
28
(c) Government participation in the ownership of the entity.
(d) Government grants covered by IAS – 41.
As per the Standard, government grants are assistance by government in the form of transfers of
revenues to an entity in return for past or future compliance with certain conditions relating to
the operating activities. They exclude those forms of government assistance that can not
reasonably have a value placed upon them and transactions with government, which can not be
distinguished from the normal trading transactions of the entity. In this Standard, government
assistance does not include the provision of infrastructure by improvement to the general
transport and communication network and the supply of improved facilities such as irrigation or
water reticulation which is available on an ongoing indeterminate basis for the benefit of an
entire community. A government may take the form of a transfer of a non-monetary asset, such
as land or other resources for the use of an entity.
Government grants, including non-monetary grants at fair value, shall not be recognised until
there is reasonable assurance that :
(a) the entity will comply with the conditions attaching to them, and
(b) the grants will be received.
Government grants are recognised as income over the periods necessary to match them with the
related costs which they are intended to compensate on a systematic basis. So far as disclosure is
concerned, the matters are related to :
(a) the accounting policy adopted for government grants, including the methods of
presentation adopted in the financial statements;
(b) the nature and extent of government grants recognised in the financial statements and
an indication of other forms of government assistance from which the entity has
directly benefited; and
(c) unfulfilled conditions and other contingencies attaching to government assistance that
has been recognised.
IAS – 21 : The Effect of Changes in Foreign Exchange Rates : an entity may carry on foreign
activities in two ways. It may have transactions in foreign currencies or it may have foreign
operations. In addition, an entity may present its financial statements in a foreign currency the
objective of this Standard is to prescribe how to include foreign currency transactions and foreign
operations in the financial statements of an entity and how to translate financial statements into
a presentation currency. The principal issues of exchange rate(s) are to use and to report the
effects of changes in the financial statements.
The Standard does not apply to the presentation in a cash flow statement of cash flows arising
from transactions in a foreign currency, or to the translation of cash flows of a foreign operation.
On the other hand, functional currency is the currency of the primary economic environment in
which the entity operates. The primary economic environment in which an entity operates is
normally the one in which it primarily generates and expends cash. An entity considers the
following factors in determining its functional currency :
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(a) the currency :
 that mainly influences sales prices for goods and services; and
 of the country whose competitive forces and regulations mainly determine the sales
prices of its goods and services
(b) the currency that mainly influences labour, material and other costs of providing goods
and services.
The Standard permits an entity to present its financial statements in any currency. For this
purpose an entity can be a stand-alone entity, a parent preparing consolidated financial
statements or a parent, an investor or a venture preparing separate financial statements in
accordance with IAS – 27. If the presentation currency differs from entire functional currency it
translates its results and financial position into the presentation currency. Therefore, at each
Balance Sheet date :
(a) foreign currency monetary items is translated using the closing rate;
(b) non-monetary items, that are measured in terms of historical cost in a foreign currency,
are translated using the exchange rate at the date of the transaction; and
(c) non-monetary items, that are measured at fair value in a foreign currency, are
translated using the exchange rate at the date when the fair value is determined.
IAS – 23 : Borrowing Costs : The objective of this Standard is to prescribe the accounting
treatment for borrowing costs. It highlights the criteria for determining whether borrowing costs
can be capitalised as part of the cost of acquiring, constructing, or producing a “qualifying asset”.
Borrowing costs are interest and other costs incurred by an entity in connection with the
borrowing of funds. Interest includes amortisation, of discount / premium on debt. Other costs
include amortisation of debt issue costs and certain foreign exchange differences that are
regarded as an adjustment of interest cost. With regard to “qualifying asset”, it is an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale. It can be
property, plant & equipment, investment property during the construction period, intangible
assets during development period.
The Standard prescribes two alternative treatments for recognising borrowing costs. The
capitalisation of borrowing costs into the cost of a qualifying asset is an “allowed alternative
treatment” while the benchmark treatment is to expense borrowing costs when incurred. Under
the “benchmark treatment”, the borrowing costs are recognised as an expense in the period in
which they are incurred. Under “allowed alternative treatment”, the borrowing cost is the
borrowing costs are recognised as an expense in the period in which they are incurred, except to
the extent they are capitalised.
The capitalisation of borrowing costs as part of a qualifying asset commences when :
(a) expenditures for the asset are being incurred;

(b) borrowing costs are being incurred; and
(c) activities that are necessary to prepare the asset for its intended use or sale are in
progress.
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The capitalisation of borrowing costs are suspended during extended periods in which
development is interrupted. It ceases when substantially all the activities necessary to prepare
the qualifying asset for its intended use or sale are complete. In this context, the financial
statement usually discloses :
(a) the accounting policy adopted for borrowing costs;

(b) the amount of borrowing costs capitalised during the period; and
(c) the capitalisation rate used to determine the amount of borrowing costs eligible for
capitalisation.
IAS – 24 : Related Party Disclosures : the objective of this Standard is to ensure that an entity’s
financial statements contains the disclosure necessary to draw attention to the possibility that its
financial position and profit or loss may have been affected by the existence of related parties
and by transactions and outstanding balances with such parties. The purpose of this Standard is
to make the reader of financial statements aware of the existence of related party relationship
and the extent to which an entity’s financial position, profitability, or cash flows may have been
affected by transactions with such parties.
A party is related to an entity if :
(a) directly or indirectly through one or more intermediaries, the party:

(i) controls, is controlled by, or is under common control with, the entity which includes
parents, subsidiaries and sub-subsidiaries;
(ii) has an interest in the entity in the entity that gives it significant influence over the
entity; or
(iii) has joint control over the entity;
(b) the party is an associate (as defined in IAS – 28) of the entity;
(c) the party is a joint venture in which the entity is a venture (as defined in IAS – 31);
(d) the party is a member of the key management personnel of the entity or its parent;
(e) the party is a close member of the family of any individual as referred in (a) or (d);
(f) the party is an entity that is controlled, or joint controlled or significantly influenced by,
or for which significant voting power in such entity resides with, directly or indirectly,
any individual referred to in (d) or (e); or
(g) the party is a post-employment benefit plan for the benefit of employees of the entity,
or any entity that is related party of the entity.
A related party transaction is a transfer of resources, services or obligations between related

parties, regardless of whether a price is charged. Close member of the family of an individual are
those family members who may be expected to influence, or be influenced by, that individual in
their dealings with the entity. An entity discloses key management personnel compensation in
total and for each of the category like (i) short-term employee benefits, (ii) post-employment
benefits, (iii) other long-term benefits, (iv) termination benefits, and (v) share-based payments.
Disclosure requirements are in addition to the requirements of the followings:
(a) the amount of the transactions;
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(b) the amount of outstanding balances; and
(i) their terms and conditions, including whether they are secured, and the nature of
the considerations to be provided in the settlement; and
(ii) details of any guarantees given or received.
(c) provisions for doubtful debts related to the amount of outstanding balances; and
(d) the expense recognised during the period in respect of bad or doubtful debts due from
related parties.
The disclosure is made separately for each the categories like (i) the parent, (ii) entities with joint
control or significant influence over the entity, (iii) subsidiaries, (iv) associates, (v) joint ventures
in which the entity is a venture (vi) key management personnel of the entity or its parents, and
(vII) other related parties. Items of similar nature may be disclosed in aggregate except when
separate disclosure is necessary for and understanding of the affects to related parties
transactions on the financial statements of the entity.
IAS – 26 : Retirement Benefit Plans : This Standard shall be applied in the financial statement of
retirement benefit plans where such financial statement are prepared. IAS – 26 deals with
accounting and reporting to all participants of a retirement benefits plan as a group, and not with
reports that might be made to individuals about their particular retirement benefits. The
standard sets out the form and the content of the general purpose financial reports of retirement
benefit plans. The Standard applies to (i) “defined contribution plans”, where benefits are
determined by contributions to plans together with investment earnings thereon, and (ii)
“defined benefit plans”, where benefits are determined by a formula based on employees’
earnings and / or years of service.
As per the Standard, retirement benefit plans are arrangements whereby an entity provides
benefits for employees on or after termination of service and is determined or estimated in
advance of retirement from the provisions of a document or from the entity’s practices. The
financial statements of a defined contribution plan contain a statement of net assets available for
benefits and a description of the funding policy. On the other hand, the financial statements of a
defined benefit plan contains either :
(a) a statement that shows :

(i) the net assets available for benefits
(ii) the actuarial present value of promised retirement benefits distinguished between
vested benefits and non-vested benefits;
(iii) the resulting excess or deficit; or
(b) a statement of net assets available for benefits including either :
(i) a note disclosing the actuarial present value of promised retirement benefits,
distinguished between vested benefits and non-vested benefits; and
(ii) a reference to this information in an accompanying actuarial report.
Actuarial present value of promised retirement benefits is the present value of the expected
future payments by a retirement benefit plan to existing and past employees, attributable to to
32
the service already rendered. Retirement benefit plan investments are carried at fair value. The
financial statements contains the following disclosures, such as :
(a) a statement of changes in net assets available for benefits;

(b) a summary of significant accounting policies; and
(c) a description of the plans and the effect of any changes in the plan during the period.
IAS – 26 is sometimes confused with IAS – 19, because both Standards address employee
benefits. But there is a difference. IAS – 26 addresses the financial reporting considerations for
the benefit plans itself, as the reporting entity. IAS – 19 deals with employer’s accounting for the
cost of such benefits as they are earned by the employees. These Standards are thus somewhat
related, but there is not any direct relationship between amounts reported in benefit plan
financial statements and amounts reported under IAS – 19 by employers.
IAS – 27 : Consolidated & Separate Financial Assets : This Standard is applied in the preparation
and presentation of consolidated financial statements for a group of entities under the control of
a parent company and in accounting for investments in subsidiaries, jointly controlled entities
and associates when an enterprise elects or is required by the local regulations to present
separate (non-consolidated) financial statements. Consolidated financial statements are
prepared using uniform accounting policies for transactions and other events in similar
circumstances. In this case, an entity combines the financial statements of the parent and its
subsidiaries, line by line, by adding together like items of assets, liabilities, equities income and
expenses. The following steps are taken in this regard :
(a) the carrying amount of the parent’s investment in each subsidiary and the parent’s
portion of equity of each subsidiary are eliminated;
(b) Minority interests in the profit or loss of consolidated subsidiaries for the reporting
period are identified;
(c) Minority interests in the net assets of consolidated subsidiaries are identified separately
from the parent shareholders’ equity in them. Minority interests in the net assets
consist of :
(i) the amount of those minority interests at the date of the original combination
calculated in accordance with IFRS – 3; and
(ii) the minority’s share of changes in equity since the date of the combination.
This Standard narrates minority interest as that portion of the profit or loss and net assets of a
subsidiary attributable to equity interests that are not owned, directly or indirectly through
subsidiaries, by the parent. The same accounting is applied for each category of investments.
Investments in subsidiaries, jointly controlled entities and associates that are classified as held for
sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS – 5
is accounted for in accordance with IFRS.
IAS – 28 : Investment in Associates : This standard is applied in accounting for investments in

associates. However, it does not apply to investments in associates held by :
(a) venture capital organisations, or

33
(b) mutual funds, unit trusts and similar entities including investment-linked insurance
funds.
In associate entity, an investor has significant influence but it is neither a subsidiary nor an
interest in joint ventures. Significant influence is power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over those policies.
An investment in an associate is accounted for using the equity method except in these
exceptional circumstances :
(a) where the investment is classified as held for sale in accordance with IFRS – 5;
(b) where a parent does not have to present consolidated financial statements because of
the exemptions in IAS – 27
(c) the investor need not use the equity method if all of these criteria apply:
(i) the investor is a wholly owned subsidiary or is a partially owned subsidiary of
another entity and its owners have been informed about and do not object to the
investor not applying the equity method. The owners in this case are all of those
entitled to vote.
(ii) the investor’s debt or equity instruments are not traded in a public market
(iii) the investor never files its financial statements with a securities commission or other
regulatory body for the purpose of issuing any class of financial instrument in a
public market.
(iv) the ultimate or any intermediate parent of the investor produces consolidated
financial statements that are available for public use.
In determining the investor’s share of profits or losses, the most recently available financial
statements of the associate re used. If the reporting dates of the investor and the associates are
different, both are required to prepare financial statements as of those of the investor unless it is
impracticable to do so. When separate financial statements are prepared, investments in
subsidiaries, jointly controlled entities and associates that are not classified as “held for sale”.
IAS – 31 : Investment in Joint Ventures : This Standard is applied in accounting for interest in
joint ventures and the reporting of joint venture assets liabilities, income and expenses in the
financial statements, regardless of the structures or forms under which joint venture activities
take place. However, it does not apply to venturers’ interest in jointly controlled entities held by :
(a) venture capital organisations, or

(b) mutual funds, unit trusts and similar entities including investment-linked insurance
funds that upon initial recognition are designated as at fair value through profit or loss
or are classified as “held for trading” and accounted for in accordance with IAS – 39.
The operation of some joint ventures involves the use of the assets and other resources of the
venturers rather than the establishment of a corporation, partnership or other entity, or a
financial structure that is separate from the venturers themselves. Each venture uses its own
property, plant & equipment and carries its own inventories. It also incurs its own expenses and
34
liabilities and raises its own finance, which represents its own obligations. In respect of its
interests in jointly controlled operations, a venturer shall recognise in its financial statements:
(a) the assets that it controls and the liabilities that it incurs; and
(b) the expenses that it incurs and its share of the income that it earns from the sale of
goods or services by the joint venture.
In respect of its interest in jointly controlled assets, a venture shall recognise in its financial
statements:
(a) its share of the jointly controlled assets, classified according to the nature of assets;
(b) any liability that it has incurred;
(c) its share of any liability incurred jointly with the other venturers in relation to the joint
venture;
(d) any income from the sale or use of its share of the output of the joint venture, together
with its share of any expenses incurred by the joint venture;
(e) any expenses that it has incurred in respect of its interest in the joint ventures.
The accounting treatment on the basis of costs or in accordance with IAS – 39 is applied for each
category of investment. Investments in jointly controlled entities and associates that are
accounted for in accordance with IAS – 39 in the consolidated financial statements is accounted
for in the same way in the investor’s financial statements.
IAS – 32 : Financial Instruments Presentation : The objective of this Standard is to establish

principles for presenting financial instruments as liabilities or equity and for offsetting financial
assets and liabilities. It applies to the classifications of financial instruments, from the perspective
of the issuer, into financial assets, liabilities and equity instruments; the classification of related
interest, dividend, losses and gains and the circumstances in which financial assets and financial
liabilities are offset. The principles in this Standard complement the principles for recognising and
measuring financial assets and financial liabilities in IAS – 39 (Financial Instruments : Recognition
& Measurement) and disclosing information in IFRS – 7 (Financial Instrument Disclosures).
The issuer of a financial instrument classifies the instrument, or its component parts, on initial
recognition as a financial liability, financial asset or an equity instrument in accordance with the
substance of contractual arrangement. The issuer of a non-derivative financial instrument
evaluates terms of the financial instrument to determine whether it contains both a liability and
an equity component. Such components are classified separately as financial liabilities, financial
assets or equity instruments.
Sometimes non-derivative financial instruments contain both liability and equity elements. In
other words, one component of the instrument meets the definition of a financial liability and
other component of the instrument meets the definition of an equity instrument, such
instruments are referred to as compound instruments.
The examples of assets that meet the definition of financial assets are cash, investments in shares
& other equity, instruments issued by other entities, receivables, loans to other entities,
35
investment in bonds & other such debt instruments, and derivative financial assets. Examples of
liabilities that meet the definition of financial liabilities are trade payables, loans from other
entities, issued bonds and other such instruments, derivative financial liabilities, obligations to
deliver own shares, and some derivatives on own equity. Examples of equity instruments include
ordinary shares, preference shares (that can not be redeemed by the holder), warrants or written
call options.
A financial asset and a financial liability are offset and the net amount presented in the Balance
Sheet when an entity :
(a) currently has a legally enforceable right to offset the recognised amount; and
(b) intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
IAS – 33 : Earnings Per Share : The objective of this Standard is to prescribe principles for the
determination and presentation of earnings per share (EPS), so as to improve performance
comparisons between different entities in the same reporting period and between same
reporting periods for the same entity. The focus of this Standard is on the denominator of the EPS
calculation. This Standard is applied whose ordinary shares, or potential ordinary shares are
publicly traded and in the process of issuing in public markets. An entity that discloses EPS,
normally calculates and discloses in accordance with this Standard.
Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the
parent entity (the numerator) by the weighted average number of ordinary shares outstanding
(the denominator) during the period.
ℎ
=
ℎ ℎ
If the number of ordinary or potential ordinary shares outstanding increases as a result of a
capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the
calculation of EPS for all period is adjusted retrospectively. Basic EPS is also adjusted for the
effects of errors and adjustments resulting from changes in accounting policies retrospectively.
IAS – 34 : Interim Financial Reporting : The objective of this Standard is to prescribe the
minimum content of an interim financial report and to prescribe the principles for recognition
and measurement in complete or condensed financial statements for an interim period. Timely
and reliable interim financial reporting improves the ability of investors, creditors, and others to
understand equity’s capacity to generate earnings & cash flows and its financial condition &
liquidity. This Standard applies if an entity is required or elects to publish an interim financial
report in accordance with IFRS.
Interim financial report means a financial report containing either a complete set of financial
statements (as described in IAS – 1 : Presentation of Financial Statement) or a set of condensed
financial statement (as described in this Standard) for an interim period. Interim period is a
financial reporting period shorter than a full financial period. This report is intended to provide an
36
update on the latest complete set of annual financial statement. Accordingly, it focuses on new
activities, events, and circumstances and does not duplicate information previously reported.
IAS – 34 does not detail which entity should publish interim financial reports how frequently they
should be published after the end of the interim period. The Standard applies where an entity is
required or elects to publish an interim financial report. The International Accounting Standard
Board (IASB) encourages publicly traded entities to provide such reports at least at the end of the
half year and such reports are to be made available not later than 60 days after the end of the
interim period.
IAS – 34 requires this information to be presented :
(a) Balance Sheet as at the end of the current interim period and a comparative Balance
Sheet as at the end of the preceding financial year.
(b) Income statement for the current interim period and for the current financial year to
date, with comparative income statements for te comparable interim periods (current
and year-to-year) of the preceding financial year.
(c) Statement showing changes in equity for the current financial year to date, with a
comparative statement for the comparable year-to-dae period ofthe preceding financial
period.
(d) Cash flow statement for the current financial year to date, with a comparative
statement for the comparable year-to-date period of the preceding financial year,
An interim financial report includes, at a minimum, the components like condensed Balance
Sheet, condensed income statement, condensed statement showing either (i) all changes in
equity, or (ii) changes in equity other than those arising from capital transactions, condensed
cash flow statement, and selected explanatory notes.
IAS – 36 : Impairment of Assets : The objective of this Standard is to prescribe the procedures
that an entity applies to ensure that its assets are carried at no more than their recoverable
amount if its carrying amount exceeds the amount to be covered through use or sale of the asset.
If this is the case, the asset is described as impaired and the Standard requires the entity to
recognise an impairment loss. The Standard also specifies when an entity should reverse an
impairment loss and prescribes disclosures.
Certain assets are not covered by this Standard, such as inventories (IAS – 2), assets arising from
insurance contracts (IAS – 4), assets arising from construction contracts (IAS – 11), deferred tax
assets (IAS – 12), assets arising from employee benefits (IAS – 19), financial assets dealt with
under IAS – 39, investment property dealt with fair value under IAS- -40, biological assets carried
at fair value under IAS – 41, and assets that are “held for sale” (IFRS – 5).
An entity assesses at each reporting date whether there is any indication that an asset may be
impaired, if such an indication exists, the entity estimates the recoverable amount of the
individual asset. If it is not possible to estimate the recoverable amount, the entity determines
the amount of the cash-generating units to which the asset belongs. A cash-generating unit is the
37
smallest identifiable group of assets that generates cash inflows that are largely independent of
the cash inflows from other assets or group of assets,
The recoverable amount of an asset or a cash-generating unit is the higher of its “fair value less
costs to sell” and its “value in use”. Here, “fair value less costs to sell” is the amount obtainable
from the sale of an asset or cash-generating units in an arm’s length transaction between
knowledgeable, willing parties, less the costs of disposal. On the other hand, “value in use” is the
present value of future cash flows expected to be derived from an asset or cash-generating unit.
The following elements are reflected in the calculation of an asset’s “value in use” :
(a) An estimate of the future cash flows, the entity expects to derive from the assets;
(b) Expectations about possible variations in the amount or timing of those future cash
flows;
(c) The time value of money, represented by the current market risk-free rate of interest;
(d) The price for bearing the uncertainty inherent in the asset; and
(e) Other factors such as liquidity, that market participants to reflect in pricing the future
cash flows, the entity expects to derive from the asset.
Future cash flows are estimated for the asset in its current conditions. An estimate of future cash
flows never includes estimated future cash inflows or outflows that are expected to arise.
Another aspect in this Standard relates to goodwill, which is allocated to each of the acquirer’s
cash-generating units in case of business combination process. The Standard permits the most
detailed calculation made in a preceding period of the recoverable amount of a cash-generating
unit (or units) to which goodwill has been allocated to be used in the impairment test in the
current period, provided specified criteria are met. An impairment of loss recognised for goodwill
is reversed in a subsequent period.
IAS – 37 : Provisions, Contingent Liabilities and Contingent Assets : The objective of this
Standard is to ensure that appropriate recognition criteria and measurement bases are applied to
provisions, contingent liabilities and contingent assets and that sufficient information is disclosed
in the notes to enable users to understand their nature, timing and amount. IAS – 37 prescribes
the accounting and disclosure for all provisions, contingent liabilities and contingent assets,
except :
(a) Those resulting from executor contracts, except where the contract is onerous.
Executor contracts are contracts under which neither party has performed any of its
obligations or both parties have partially performed their obligations to an equal extent;
(b) Those covered by another Standard.
It is worth noting that previously the term “provisions” was used very casually in financial
reporting. With the enactment of IAS- 37, rules with respect to recognition and measurement of
provisions, contingent liabilities and contingent assets have been codified, since then, entities,
preparing financial statements in accordance with the IFRS, started using those terms seriously.
Furthermore, this Standard also has clarified certain misconceptions about the term provision.
For instance, provisions that are envisioned by this Standard are now “liabilities” (of uncertain
38
timing or mount). The provision for depreciation and the provision for doubtful debts are really
not provisions according to this Standard but are contra accounts or adjustments to the carrying
value of assets.
Not all obligations make it incumbent upon an entity to recognise a provision. Only present
obligations resulting for a past obligating event give rise to a provision. An obligation can either
be legal or constructive. A legal obligation is an obligation that can be contractual; or arise due to
legislation; or result from other operation of law. However, a constructive obligation results from
an entity’s actions where by an established pattern of past practice, published policies or specific
current statement; or valid expectations.
The amount recognised as a provision is the “best estimate of the expenditure required to settle
the present obligation” at the Balance Sheet date. The best estimate of the expenditure required
to settle the present obligation is the amount that an entity would rationally pay to settle the
obligation at the Balance Sheet date. Risk & uncertainties, surroundings events & circumstances
are considered in arriving at the best estimate of a provision.
An entity never recognises a contingent liability, but the Standard allows it to disclose unless the
possibility of an outflow of resources embodying economic benefit is remote. As per the
Standard, contingent liability is :
(a) A possible obligation that arises from past events and whose existence is confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the entity; or
(b) A present obligation that arises from past events but is not recognised because :
(i) It is not probable that an outflow of resources embodying economic benefits is
required to settle the obligation; or
(ii) The amount of obligations can not be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence is
confirmed only by the occurrence or non- occurrence of one or more uncertain events not wholly
within the capacity of the entity. Like contingent liability, contingent asset is never recognised by
an entity. However, when the realisation of income is virtually certain, then the related asset is
not a contingent asset and its recognition is appropriate.
IAS – 38 : Intangible Assets : The objective of this Standard is to prescribe the accounting
treatment for intangible assets that are not dealt with specifically in another Standard. This
Standard requires an entity to recognise an intangible asset if specified criteria are met. It also
specifies how to measure the carrying amount of intangible assets and requires specified
disclosures about intangible assets.
The recognition of an item as intangible asset requires an entity to demonstrate that the item
meets the definition of an intangible asset, and the recognition criteria. This requirement applies
to costs incurred initially to acquire or internally generate an intangible asset and those incurred
subsequently to add to, replace part of, or service it. An asset meets the identifiability criteria in
the definition of an intangible asset when it :
39
(a) is separable, i.e., is capable of being separated or divided from the entity and sold,
transferred, licensed, rented or exchanged, either individually or together with a related
contract, asset or liability; or
(b) arises from contractual or other legal rights, regardless of whether those rights are
transferable or separable from the entity or from other rights and obligations.
An intangible asset is always recognised if it is probable that the expected future economic
benefits are attributable to the asset; and the cost of the asset can be measured reliably. The
probability recognition criterion is always considered to be satisfied for intangible assets that are
acquired separately or in a business combination. More specifically, the Standard clarifies that
internally generated goodwill is not recognised as an asset. Furthermore, no intangible assets
arising from research is recognised but expenditure on research is recognised as an expense
when it is incurred. An intangible asset arising from development phase of an internal project is
recognised, only if :
(a) the technical feasibility of completing the intangible assets is available for use or sale;
(b) its intention to complete the v and use or sell it;
(c) its ability to use or sell the intangible assets;
(d) how the intangible assets generate the probable future economic benefits;
(e) the availability of adequate technical, financial and other resources to complete the
development to use or sell the intangible assets; and
(f) its ability to measure reliably the expenditure attributable to the intangible assets
during its development.
An entity selects either cost model or revaluation model as its accounting policy. After initial
recognition, an intangible asset is carried at its cost less any accumulated amortisation and any
accumulated impairment losses. Otherwise, after initial recognition, an intangible asset is carried
at a revalued amount, being its fair value at the date of revaluation less any subsequent
accumulated amortisation and any subsequent accumulated impairment losses.
IAS – 39 : Financial Instruments – Measurement & Recognition : The objective of this Standard
is to establish principles for recognising and measuring financial assets, financial liabilities and
some contracts to buy or sell non-financial items. Requirements for presenting information about
financial instruments are in IAS – 32. The requirements for disclosing information about financial
instruments are in IFRS – 7. An entity recognises a financial asset or a financial liability on its
Balance Sheet when the entity becomes a party to the contractual provisions of the instruments.
An entity can remove a financial liability from its Balance Sheet only when it is extinguished, i.e.,
when the obligation specified in the contract is discharged or cancelled or expires.
When a financial asset or financial liability is recognised initially, an entity measures it at its fair
value plus, transaction costs that are directly attributable to the acquisition or issue of the
financial asset or financial liability. Fair value is the amount for which an asset can be exchanged
or a liability settled between knowledgeable, willing parties in an arm’s length transaction. An
entity assesses at each Balance Sheet date whether there is any objective evidence that a
40
financial asset or a group of financial assets is impaired. For financial assets and financial liabilities
carried at amortised cost, a gain or loss is recognised in profit or loss when the financial asset or
financial liability is derecognised or impaired, and through the amortisation process. However, for
financial assets and financial liabilities can be hedged in the accounting for the gain or loss.
Hedging relationships are of three types, such as :
(a) Fair value hedge is the exposure to changes in fair value of a recognised asset or
liability;
(b) Cash flow hedge is the exposure to variability in cash flows that (i) is attributable to a
particular risk associated with a recognised asset or liability, (ii) could affect profit or
loss; and
(c) Hedge of a net investment in a foreign operation as defined in IAS – 21.
IAS – 40 : Investment Property : This Standard is applied in the recognition, measurement and
disclosure of investment property. The objective of this Standard is to prescribe accounting
treatment for investment property and related disclosure requirements. Investment property is
recognised as an asset when :
(a) it is probable that the future economic benefits that are associated with the investment
property flows to the entity; and
(b) the cost of the investment property is measured reliably.
An investment property is measured initially at its cost. Transaction costs are included in the
initial measurement. The Standard permits entities to choose either :
(a) a fair value method, under which an investment property is measured at fair value with
changes in fair value recognised in profit or loss; or
(b) a cost model, which is specified in IAS – 16 and requires an investment property to be
measured after initial measurement at depreciated cist.
The entity, that chooses the cost model, discloses the fair value of its investment property. The
fair value of the investment property is the price at which the property is exchanged between
knowledgeable, willing parties in an arm’s length transaction. An investment property is
derecognised (eliminated from Balance Sheet) on disposal or when the property is permanently
withdrawn from the use and no future economic benefits are expected from its disposal.
IAS – 41 : Agriculture : The Standard applies to biological assets, agricultural produce at the point
of harvest, and government grants. The Standard does not apply to land related to agricultural
activity, which is covered by IAS – 16 and IAS – 40, or the intangible assets related to agricultural
activity, which are covered by IAS – 38. The objective of this Standard is to prescribe the
accounting treatment and disclosures related to agricultural activity.
Biological assets or agricultural produces are recognised only when the enterprise :
(a) controls the assets as a result of past events; and

(b) it is probable that future economic benefits will flow to the business. Additionally, the
fair value or the cost of the assets is able to be measured reliably.
41
These biological assets are initially measured at each Balance Sheet date, at its fair value less
estimated point-of-sale costs. The only exception to this is where the fair value can not be
measured reliably. This Standard requires that a change in fair value less estimated point-of-sale
costs of a biological asset is included in profit or loss for the period in which it arises.
Concluding Remarks on International Accounting Standard

The use of different accounting framework in different countries, which require inconsistent
treatment and presentation of the same underlying economic transactions, creates confusion for
users of financial statements. This confusion leads to inefficiency in the capital market across the
world. Therefore, increasing complexities of business transactions and globalisation of capital
markets call for a single set of high quality accounting standards. High standard of financial reporting
underpin the trust investors place in financial and non-financial information. Hence, the need for a
set of globally accepted accounting standards is of greater significance. So far as investors are
concerned, they want the information that is more relevant, reliable, timely and comparable across
the jurisdictions. Financial statements, prepared using a common set of accounting standards help
investors better understand investment opportunities as opposed to financial statements prepared
using a different set of national accounting standards. Sound financial reporting structure is, thus,
imperative for economic well-being and effective information source.
ACCOUNTING STANDARDS & ROLE OF AUDITORS

The mandatory status of the Accounting Standards implies that it is the duty of the auditors to
examine whether the Accounting Standards are complied with, in the presentation of financial
statements covered by their audit. In the event of any deviation from the Accounting Standards, the
auditors have the duty to make “adequate disclosers” in their audit reports, so that the users of
financial statements may be aware of such deviations. Again, it is the responsibility of the
management of the enterprise to ensure compliance with and disclosure of Accounting Standards
while preparing and presenting the financial statements. It is the auditor’s responsibility to form
his/her opinion and report on such financial statements.
As Accounting Standards are issued for use in the presentation of general purpose accounting
statements issued to the public, their compliance is the responsibility of the auditors under their
attest function. Hence, compliance with Accounting Standards is required to be examined by the
auditors irrespective of organisation, such as Corporate Enterprise, Sole Proprietorship, Partnership,
Societies, Trusts, Hindu Undivided Families and Association of Persons.
JOURNEY OF IAS TO IFRS

International Accounting Standards (IAS) started in mid-1960s precisely 1966 with an initial proposal
to enact institution and organisation like ICAEW for England and Wales; AICPA for the United States;
CICA for Canada to evolve Accounting Standards. Consequently, Accounts International Study Group
(AISG) was founded in 1967 which aggressively championed for a single international body for
evolving Accounting Standards. As a result in 1973, an agreement was reached to establish an
international body with the sole purpose of drafting Accounting Standards to be used
internationally.
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In mid-1973, IASC was established as an agreement between the professional accounting bodies in
nine countries for releasing new International Standards that would be rapidly accepted and
implemented worldwide. The objectives, as stated in its constitution, were to :
(a) formulate and publish in public interest Accounting Standards to be observed in the
presentation of financial statements and to promote their worldwide acceptance and
observance.
(b) work generally for the harmonisation of important regulation, Accounting Standards
and procedures relating to the presentation of financial statements.
Since 1982, members of ISAC consisted of all those professional accounting bodies that were
members of International Federation of Accounts (IFAC) i.e., professional accounting bodies in more
than 100 countries.
The members of IASC delegated the responsibility for all IASC activities, including standard-setting
activities to IASC board, which consisted of 13 body delegations representing members of IASC and
upto four other organisations appointed by the board.
In 2000, the IASC received support from the International Corporation of Securities Commissioners
(IOSCO), the primary forum for International Corporation among securities regulator. The IOSCO
recommended its members to permit multinational companies (MNCs) to use IASC Standards along
with the reconciliation to national GAAP.
IASC issued 41 numbered Standards, known as International Accounting Standards (IAS) as well as
framework for the preparation and presentation. A few of these Standards have been withdrawn
and many are still in force. In addition, some of the interpretations issued by the IASC’s Standards
Interpretive Committee (SIC) are still in force.
In 2001, fundamental changes were made to strengthen the independence and quality of the
international standard-setting process. And so, IASC was replaced by the International Accounting
Standards Board (IASB) as the body in charge of setting the International Standards. The imperative
body of IASC i.e., Standards Interpretation Committee (SIC) has been replaced by International
Financial Reporting Interpretation Committee (IFRIC).
The organisation that comprises both IASB and its trustees is the International Accounting Standards
Committee Foundation (the IASC Foundation). The objectives of this foundation as stated in its
constitutions are :
(a) to develop in the public interest a single step of high quality understandable and
enforceable global accounting standards that require high quality transparent and
comparable information in financial statements and other financial reporting to help
participants in the various capital markets of the world and users of the information to
make economic decisions.
(b) To promote the use and rigorous application of those standards, and
(c) In fulfilling the above objectives, to take account of, as appropriate the special needs of
small and medium sized entities and emerging economies; and
43
(d) To bring about the convergence of national accounting standards and international
financial reporting standards to high quality solutions.
In 2001, IASB adopted all IAS issued by IASC as its own standards after some revisions. All these
standards and further new standards issued by IASB are known as IFRS. These Standards are known
as International Financial Reporting Standards (IFRS). The main constituents are :
1. International Financial Accounting Standards ( IFAS )

2. International Accounting Standards ( IAS )
3. International Financial Reporting Interpretation Committee ( IFRIC )
4. Standing Interpretation Committee ( SIC )
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

In the present era of globalisation and liberalisation, the world has become an economic village. The
globalisation of the business world and the attendant structure along with regulations, which
support it, as well as the development of e-commerce makes it imperative to have a single globally
accepted financial reporting system. A number of multinational companies are establishing their
businesses in various countries with emerging economies and vice-versa. The entities in emerging
economies are increasingly accessing the global markets to fulfil their capital needs by getting their
securities listed on stock exchanges outside their country. Therefore, while preparing and reporting
accounting statements, an enterprise is expected to follow moral principles, called as ethics.
Accounting practice of an enterprise is based on the accounting standards prevailing in the country.
IFRS is a step forward in this direction to make these financial reports globally accepted without any
degree of confusions and confrontations.
IFRS – A Broad Framework

Every Standard under IFRS has certain sections to facilitate reading, interpretation, and application.
These are: Introduction (a brief highlight); Standards (the main content); Basic of conclusion
(the reasons of conclusion); Implementation guideline (the rules and guideline); and Illustrative
examples (examples of illustrate implementation dissenting opinions of board members, if any).
Every Standard, before being finalized, has to pass through the following six stages .
Stage – 1 : On the very onset, it is required to identify the various important accounting issues
that need a Standard for its proper regulations. This is known as the agenda setting stage.
Stage – 2 : The second stage is that of project planning. It includes taking into account the various
important elements relating to selected agenda
Stag – 3 : After earmarking various elements to be considered, the next step by the members is
to develop and publish a discussion paper. A discussion paper highlights the broad framework
of the Standard and the issues and their conclusions undertaken for discussion.
Stage – 4 : The next stage is to prepare an exposure draft and make it open to the general Public
for comments on it.
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Stage – 5 : After incorporating the valid comments on the exposure draft, the next step is to
develop and publish the Standards.
Stage – 6 : Once the Standards have published, the final stage is of reviewing it.
International Financial Reporting Interpretations Committee (IFRIC)

Apart from the basic Standards, IFRS also includes interpretations issued by IFRIC. These are
interpretations of the reporting Standards (IASs and IFRSs) and developed by the IFRS Interpretation
committee. The interpretations committee replaced the former standing interpretation committee
(SIC) in March 2002. The interpretations committees mission ( from the IASCF constitution ) is to
interpret the application of international accounting Standards ( IAS ) and IFRS and provide times
guidance on financial reporting issues not specifically addressed in IASs and IFRSs , in the context of
the IASB framework, and undertake other tasks at the request of the IASB. There are at present 16
IFRICSs. These interpretations tend to deal with reporting issues where unsatisfactory practice has
arisen or where the Standards lack guidance in particular business circumstances
Genesis of IFRS
Initially, all multinational and global companies were required to prepare separate financial
statement for each country in which they did business, in accordance with each country‘s GAAP
evolved from International accordance Statement (IASC) from1973 to 2001 . During this period, a
serious of Accounting standard (AS) were released which were numbered numerically starting from
IAS41 in December 2001.
IAC lasted for 27 years 2001 when it was restructured to become International Accounting Standard
board (IASB). At the time of establishment of IASB, they agreed to adopt the revised set of standards
issued by IASC, i.e., IAS – 1 to 41, but any standard to be published after that would follow a series
known as IFRS . In 2002, the European Union (EU) adopted legislation that required listen companies
in European to apply IFRS in their consolidated financial statement w.e.f. 2005. This applied to more
than 8000 companies in 30 countries. Outside Europe many other countries have also been adopting
IFRS .It has become mandatory in Africa, Asia and Latin America. In addition, countries such as
Australia, Hong Kong, New Zealand, Philippines, and Singapore etc. have adopted national
accounting standards that mirror IFRS.
IFRS are increasingly becoming the set of globally accepted accounting standard that meet the needs
of the worlds increasingly integrated global capital market .The adoption of standards that required
high-quality, transparent, and comparable information is welcomed by investors, creditors financial
analysts and other user of financial statement. This enable comparability of financial information
prepared by entities located in different parts of the world. A use of a single set of accounting
standards facilities investments and economic decision across borders, increases market efficiency
and reduces the cost of raising capital.
Advantages of Adopting IFRS

Common Basis of Comparison : Most of the countries of the European Union have switched over to
IFRS, it makes transaction and dealings with companies of other countries who operate under
45
IFRS much easier. It also gives stock holders and others interested parties a common basis of
comparability. Adopting a global financial reporting basis enables the company to understand in
the global market place. It allows company to be perceived as an international player.
Clarity and Production: Under IFRS, financial marker uses their own professional judgment as to how
to handle a specific transaction. This leads to less time being spent trying to follow all rules
/complications that are coupled with rule-based accounting. It also allows financial information
to keep in statement on a simplistic and understandable forms for investors and other companies
interested in the company‘s financial statements.
Consistent Financial Reporting Basis : A consists financial reporting basis allows a multinational
company to apply common accounting standards with its subsidiaries worldwide, which improves
internal communications, quality of reporting and group decision–marking .
Improved Access to International Capital Market : Many Indians entities are expending and marking
significant acquisition in the global arena for which large amount of capital is required. Majority
of the stock exchanges require financial information, prepared under IFRS. Migration to IFRS
enables Indian entities to have access to international capital market, reducing the risk premium
that is added to those reporting under India GAAP.
Lower Cost of Capital : Migration to IFRS lowers the cost of raising funds as it eliminates the need for
preparing dual sets of financial statements. It also reduces accountants’ fees, abolish risk
premium and enables access to all major capital market as IFRS is globally acceptable.
Escape Multiple Reporting : Convergence to IFRS by all group entities will enable company
management to view all components of the group on one financial reporting platform .This will
eliminate the need for multiply reports and significant adjustment for preparing consolidated
financial statements or filling financial statement in difference stock exchanges.
Reflects True Value of Acquisition : In Indian GAAP, business combinations (with few exceptions)
are recorded a as carrying value rather than fair value of net assets in the acquires book is usually
not reflected separately in the financial statements, instead the amount gets added to the
goodwill. Hence, the true value of the business combination is not reflected in the financial
statements. IFRS overcomes this flow as it mandates accounting of net assets taken over in a
business combination at fair value. It also requires recognition of intangible assets, even if they
have not recorded in the acquirer’s financial statements.
Benchmarking with Global Peers : Adoption of IFRSs enables companies to gain a broader and
deeper understanding of the entity’s relative standing by looking beyond country and regional
milestones. Further, adoption of IFRS facilitates companies to set targets and milestones based
on global business environment, rather than merely local ones.
IFRS Perspective in India

The decision to converge with IFRS is certainly to go a long way in the history of the accounting
profession in India. While it has its own challenges, it is a global opportunity for the profession to
rise to the occasion and make it a mark for the time to come. The companies may come across with
46
some emerging issues of new accounting practicing issues, in context to IFRS, like (i) Present Status
of Indian Accounting Standards, (ii) Indian convergence to IFRS, (iii) Meaning of Convergence to IFRS,
(iv) IFRS Reporting in India, and (v) Entities covered under convergence strategy in India. Keeping this
in mind, a clarification for better practice of this new culture is suggested by ICAI for its use :
(a) The format of IFRS to be adopted for public interest entities is the same as that of
Indian AS, including their numbers.
(b) The number of existing accounting standards may be given in brackets for the purpose
of easier identification.
(c) Whenever required, a section may be at the end of the adopted IFRS indicating the
Indian legal and regulatory position
(d) The IFRS when adopted takes into account of the interpretation issued by IASB.
More precisely, a clear-cut instruction is in picture for Small and Medium-sized entities (SMEs) to
facilitate them in adopting IFRS as the base of their accounting activities. They are:
(a) SMEs need not adopt all the IFRS as it is of too voluminous for them.
(b) A separate standard for SMEs is formulated, based on the IFRS for SMEs which is still in
exposure draft stage.
(c) The proposed standard represents a simplified set of standards for SMEs with
recognition and measurement simplified and not relevant to SMEs eliminated.
(d) Compliance with IFRS for SMEs is not necessary to make India IFRS-compliant.
ICAI has categorised IFRS in five categories based on the extent of changes and support required
from the legal and regulatory authorities.
Category – 1 IFRS :
Category – 1 (A) Category – 1 (B)
IFRS which do not have any differences IFRS which have minor differences
with the corresponding Indian with the corresponding Accounting
Accounting Standard Standards
IAS – 2 : Inventories
IAS – 7 : Cash flow Statements
IAS – 20 : Accounting for
Government Grants and
IAS – 11 : Construction Contract
Disclosure of Government
IAS – 23 : Borrowing Cost Assistance
IAS – 33 : Earnings per Share
IAS – 36 : Impairment of Assets
IAS – 38 : Intangible Assets
47
IFRS which may require sometime to reach a level of preparedness by industry and professionals in
view of existing economic environment and other feature :
IAS – 18 : Revenue
IAS – 21 : The Effects of Changes in Foreign Exchange Rates
IAS – 26 : Accounting and Reporting by Retireent Benefit Plans
IAS – 40 : Investment Property (corresponding IAS is under preparation)
IFRS – 2 : Share-based Payments (corresponding IAS is under preparation)
IFRS – 5 : Non-current Assets held for sale & discontinued operations (corresponding IAS is
under preparation)
Category – 3 (A) Category – 3 (B)
IFRS which have minor differences

IFRS which do not have any differences with corresponding Accounting
with corresponding Indian Accounting Standards and need o be examined
Standard that should be taken up with to determine whether these should
IASB be taken with IASB or should be
removed by ICAI itself
IAS – 17 : Leases IAS – 12 : Income Tax

IAS – 19 : Employee Benefit IAS – 24 : Related Party Disclosures
IAS – 27 : Consolidated & Separate IAS – 41 : Agriculture (corresponding
Financial Statements IAS is under preparation)
IAS – 28 : Investment in Associates IFRS – 3 : Business Combinations
IAS – 31 : Interest i Joint Ventures IFRS – 6 : Exploration of & Evaluation
IAS – 37 : Provisions, Contingent of Mineral Resources
Liabilities and Contingent Assets IAS – 8 : Operating Segments
IFRS, the adaption of which requires changes in laws / regulation because compliance with them is
not possible until regulation / laws are amended :
IAS – 1 : Presentation of Financial statements
IAS – 8 : Accounting Policies
IAS – 10 : Events after the Reporting Period
IAS – 16 : Property, Plant & Equipment
IAS – 32 : Financial Statements : Presentation
48
IAS – 34 : Interim Financial reporting
IAS – 39 : Financial Instruments : Measurement & recognition
IFRS – 1 : First time adoption of IFRS
IFRS – 4 : Insurance Contracts
IFRS – 7 : Financial Instruments : Disclosure
IFRS, corresponding to which no Indian Accounting Standards is required for the time being:
IAS – 29 : Financial reporting in Hyper=Inflationary Economies
List of IFRS
IFRS – 1 : First Time Adoption of International Financial Reporting Standards : The objective
of this IFRS is to ensure that an entity’s first IFRS financial statements, and its interim financial
reports for part of the period covered by those financial statements, contain high quality
information that :
(a) is transparent for users and comparable over all periods presented;
(b) provides a suitable starting point for accounting under IFRS; and
(c) can be generated at a cost that does not exceed the benefits to users.
IFRS – 1 applies to an entity that presents its first IFRS financial statements and sets out ground
rules that an entity needs to follow when it adopts IFRS for the first time as the basis for
preparing its general purpose financial statements. In other words, it applies to all those entities
that present for the first time their financial statements under IFRS. The Standard refers to such
entities as “First-Time Adopters of IFRS”, furthermore, according to IFRS financial statements but
also in each interim financial report. An entity’s first IFRS financial statements are those that are
the first annual financial statements in which the entity adopts IFRS by an explicit and unreserved
statements in those financial statements) of compliance with IFRS. In general, the IFRS requires
an entity to comply with each IFRS effective at the end of its first IFRS reporting period. In
particular, the IFRS requires the entity to do the following in the opening IFRS statement of
financial position that it prepares as a starting point for its accounting under IFRS :
(a) recognise all assets and liabilities whose recognition is required by IFRS;
(b) not recognise items as assets and liabilities if IFRS do not permit such recognitions;
(c) reclassify items as one type of assets and liabilities or components of equity but are a
different type of asset, liability or component of equity under IFRS; and
(d) apply IFRS in measuring all recognised assets and liabilities.
IFRS – 1 requires that in preparing an “Opening IFRS Balance Sheet”, the first-time adopter uses
the same accounting policies as it has used throughout all periods presented in its first IFRS
financial statements. The IFRS grants limited exemptions from these requirements in specified
areas where the cost of complying with them would be likely to exceed the benefits to user of
49
financial statement. The IFRS also prohibits retrospective application of IFRSs in some areas,
particularly where retrospective application would require judgements by management about
past condition after the outcome of a particular transaction is already know.
List of the exemptions from fully retrospective application
Items Details
Business Combinations The rules in IFRS 3 can be applied from any previous business
combination as long as all since that date follow the rules.
Without any retrospective application, positive goodwill is
frozen and subject to annual impairment review and negative
goodwill must be written back to retained earnings.
Employee Benefits On transition any actuarial gains and losses can be recognised
within the pension asset or liability even if a spreading policy
is adopted for those that arise after the transition date.
Exchange Difference Reserve It is not required to recognised exchange differences arising

before transition as a separate reserve if they were not
recognised separately under previous GAAP. The exchanges
differences would not be recycled on disposal of the foreign
subsidiary.
Financial instruments Very complex rules, but the main issued is that IASs 32 and 39
do not need to be followed in the comparative periods for
first – time adopters in 2005.
Any estimates made under previous GAAP should be brought forward into the first IFRS
financial statements without adjustment unless they are so incorrect as to make the account
not show a fair presentation.
The IFRS requires disclosures that explain how the transition from previous GAAP to IFRSs
affected the entity’s reported financial position, financial performance and cash flows.
IFRS – 2 : Share based Payments : The objective of IFRS is to specify the financial reporting by an
entity when it undertakes a share-based payment transaction. In particular, it requires an entity
to reflects in its profits and loss and financial position the effects of share-based payment
transactions including expenses associated with transaction in which share options are granted to
employee. The IFRS requires an entity to recognise share-based payment transactions in its
settled in case, other assets or equity instruments of the entity. There are no transactions to
which other standards apply. This also applies to transfer of equity instruments of the entity’s
parents, or equity as the entity in the same group as the entity to parties that have supplied
goods or services to the entity. The IFRS sets out measurements principal and specific
requirements for three types of share-based payment transactions :
(a) equity-settled share-based payment transactions, in which the entity receives good or
services as consideration for equity instruments of the entity (including shares or shares
options);
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(b) cash-settled share-based payments transactions, in which the entity acquires good or
services by incurring liabilities to the supplier of those or services for amount that are
based on the price (or value ) of the equity shares or others equity instruments of the
entity; and
(c) transaction in which the entity receives or acquires good or services and the term of the
arrangement provide either the entity or the supplier if those goods or services with a
choice of whether the entity settles the transaction in cash or by issuing equity
instruments.
To be precise, share-based payment is one in which the entity receives or acquires goods and
services for equity instruments of the entity or incurs a liability for amounts that are based on the
prices of the entity’s shares or other equity instruments of the entity. For equity-settled share-
based payment transactions, the IFRS requires an entity to measure the goods or services
received, and the corresponding increase in equity, directly, at the fair value of the goods or
services received, unless that fair value can not be estimated reliably. If the entity can not reliably
estimates the fair value of the goods and services received, the entity is required to measure
their value, and the corresponding increase in equity, indirectly, by reference to the fair value of
the equity instruments granted.
The IFRS provides various disclosure requirements to enable users of financial statements to
understand :
(a) the nature and extent of share-based payments arrangements that existed during the
period;
(b) how the fair value of the goods or services received, or the fair value of the equity
instruments granted, during the period is determined;
(c) the effects of share-based payment transactions on the entity’s profit or loss for the
period and its financial positions.
IFRS – 3 : Business Combinations : The objective of this IFRS is to specify the financial reporting by
an entity when it undertakes a business combinations. Literally, a business combination is the
bringing together of separate entities or businesses into one reporting entity. The result of almost
all business combinations is that one entity, the “acquirer”, obtains control of one or more other
businesses, called as “the acquiree”. This IFRS :
(a) requires all business combinations within its scope to be accounted for by applying the
purchase method. (Purchase method looks at the business combinations from
perspectives of the acquiring company. It measures the cost of the acquisitions and
allocates the cost of acquisitions to the net assets acquired.)
(b) requires an acquirer to be identified for every business combination within its scope.
(c) Requires an acquirer to measure the cost of a business combinations as the aggregate
of the fair value at the date of exchange of assets give, liabilities incurred or assumed,
and equity instruments issued by the acquirer in exchange for control of the acquiree;
plus any costs directly attributable to combinations.
51
(d) Requires the identifiable assets, liabilities and contingent liabilities that satisfy the
above recognition criteria to be measured initially by the acquirer at their fair values at
the acquisition date.
(e) Requires disclosure of information that enables users of an entity’s financial statements
to evaluate changes in the carrying amount of goodwill during the period.
IFRS is applied to all business combinations except combinations of entities under common
control, combinations of mutual entities, combinations by contract without exchange of any
ownership interest and any joint venture operations. A business may involve more than one
exchange transaction. If so, each exchange transaction has to be treated separately by the
acquirer, using the cost of transaction and fair value of information to determine any amount of
goodwill involved.
IFRS – 5 : Non-Current Assets held for Sale and Discontinued Operations : The objective of
this IFRS is to specify the accounting for assets held for sale, and the presentation and disclosure
of discontinued operations. In particular, IFRS requires :
(a) Assets that meet the criteria to be classified as held for sale to be measured at the
lower of the carrying amount and fair value less costs to sell, and depreciation on such
assets to cease; and
(b) Assets that meet the criteria to be classified as held for sale to be presented separately
on the face of the Balance Sheet and the results of discontinued operations to be
presented separately in the income statements.
The IFRS, by adopting the classification of “held for sale”, introduces the concept of a disposal
group, being a group of assets to be disposed off, by sale or otherwise, together as a group in a
single transaction, and liabilities directly associated with those assets that will be transferred in
the transaction. This IFRS also classifies an operation as discontinued at the date of operation
meets the criteria to be classified as “held for sale” or when the entity has disposed of the
operation. In “held for sale”, the carrying amount of a non-current asset is recovered mainly
through selling the asset rather than through usage. A discontinued operation is a component of
an entity that either has been disposed of, or is classified as under “held for sale”, and :
(a) represents a separate major line of business or geographical areas of operation;

(b) is a subsidiary acquired exclusively with a view to resale.
A component of an entity comprises operations and cash flows that can be clearly distinguished,
operationally and for financial reporting purposes, from the rest of the entity. In other words, a
component of an entity is a cash-generating unit or a group of units while being “held for sale”.
An entity is not allowed to classify a non-current asset that is to be abandoned as “held for sale”.
This is because its carrying amount is likely to be recovered through continuing use.
IFRS – 7 : Financial Instruments and Disclosure : The objective of this IFRS is to require entities
to provide disclosures in their financial statements that enable users to evaluate :
52
(a) the significance of financial instruments for the entity’s financial position and
performance; and
(b) the nature and extent of risks arising from financial instruments to which the entity is
exposed during the period and at the reporting date, and how the entity manages those
risks.
The qualitative disclosures describe management’s objectives, policies and processes for
managing those risks. On the other hand, the quantitative disclosures provide information about
the extent to which the entity is exposed to risk, based on information provided internally to the
entity’s key management personnel. Together, these disclosures provide an overview of the
entity’s use of financial instruments and the exposures to risk, they create.
The IFRS applies to all entities, including entities that have few financial instruments and those
that have many financial instruments. When this IFRS requires disclosures by class of financial
instrument, an entity groups every financial instrument into classes that are appropriate to the
nature of information disclosed and that take into account the features of those financial
instruments. An entity provides sufficient information to permit reconciliation to the line items
presented in the Balance Sheet.
The principles in this IFRS complement the principles for recognising, measuring and presenting
financial assets and financial liabilities in IAS – 37 and IAS – 39.
IFRS – 8 : Operating Segments : The core principle of this IFRS is to disclose information to enable
users of its financial statements to evaluate nature and financial effects of the business activities
in which it engages and the economic environment in which it operates. This IFRS is applied to :
(a) the separate or individual financial statements of an entity :

(i) whose debt or equity instruments are traded in a public market (a domestic or
foreign stock exchange or an over-the-counter market, including local and regional
market), or
(ii) that files, or is in the process of filing, its financial statements with a securities
commission or other regulatory organisation for the purpose of issuing any class of
instruments in a public market;
(b) the consolidated financial statements of a group with apparent :
(i) whose debt or equity instruments are traded in a public market (a domestic or
foreign stock exchange or an over-the-counter market, including local and regional
market), or
(ii) that files, or is in the process of filing, its financial statements with a securities
commission or other regulatory organisation for the purpose of issuing any class of
instruments in a public market.
The IFRS specifies the mode of reporting information about its operating segments in annual
financial segments and as a consequential amendment to IAS – 34. Interim financial reporting
requires an entity to report selected information about its operating segments, it also sets out
requirements for selected disclosures about products and services, geographical areas and major
53
customers. However, the IFRS does not require an entity to report information that is not
prepared for internal use if the necessary information is not available and the cost to develop it is
likely to be excessive.
Concluding Remarks on IFRS

Adoption of IFRS helps the economy at large, investors, industry as well as the accounting
professionals. It benefits the economy by increasing growth of its international business. It facilitates
maintenance of orderly and efficient capital markets and also helps to increase the capital
information and thereby economic growth. It encourages international investing and thereby leads
to more foreign capital flows to the country.
IFRS vs. GAAP vs. ACCOUNTING STANDARDS

IFRS refers to the entire body of IASB pronouncements including Standards and interpretations
approved by IASB and IAS and SIC interpretations approved by predecessor International Accounting
Standards Committee (IASC). The paper issued by ICAI has given a green signal to convergence of the
present Indian Accounting Standards to IFRS / GAAP.
Comparative Issues of IFRS, GAAP & AS
Sl.
Basis IFRS / IAS Accounting Standards – India
No.
1 General Differences / Similarities
IFRS requires financial statements

to be prepared on a modified
historical cost basis, with a growing
emphasis on fair value. The carrying
amounts of the following assets
and liabilities are based on fair
value subsequent to initial
recognition :
 All derivatives, financial assets Indian GAAP requires financial
and financial liabilities held for statement to be prepared on
trading. historical cost but fixed assets,
Basis of
a.  Provisions are measured at fair other than intangibles may be
Accounting
value, which is derived by revealed. Discounting and value-
discounting estimated future cash based measurements are
flows. required in impairment testing.
 Whole classes of PPE may be
revealed to fair value, subject to
certain conditions.
 Investment property may be
measured at fair value.
 Cash-settled share-based
payment awards are revealed to
fair value until settlement.
Additionally, discounting and
54
value-based measurements are in
integral part of financial reporting
under IFRS in some areas,
including impairment testing.
The overriding requirement of IFRS

is for the financial statements to
give a fair presentation (true & fair
view) compliance with IFRS, with
additional disclosure when
necessary is presumed to result in a
fair presentation when compliance The Companies Act, 1956
with a Standard or interpretation requires statements to give a true
would be misleading. An entity and fair view of the state of
departs from the required affairs and its profit and loss. The
treatment in order to give a fair Act also requires compliance with
presentation, if the relevant accounting Standards, as per ICAI,
regulator does not prohibit the any material departure from
override. accounting Standards would
True & Fair
b. result in an audit qualification,
Presentation The overriding requirement of IFRS implying that no departure from
is for the financial statements to accounting requirements of a
give a fair presentation (true & fair mandatory Standard is permitted.
view) compliance with IFRS, with Where there is a conflict between
additional disclosure when an accounting Standard and the
necessary is presumed to result in a Companies Act or other
fair presentation when compliance regulatory requirements, the Act
with a Standard or interpretation prevails.
would be misleading. Ana entity
departs from the required
treatment in order to give a fair
presentation, if the relevant
regulator does not prohibit the
override.
Transactions should be accounted Like IFRS, transactions should be

for in accordance with their accounted for in accordance with
c. Substance
substance, rather than only their their substance, rather than only
over form
legal form. their legal form.
Two years’ Balance Sheets, profit

and loss accounts, accounting
policies and notes. Listed entities
are required to give their
Two years’ Balance Sheets, income
Contents of consolidated financial statements
statements, cash flow statements,
d. Financial and the related notes along with
changes in equity, accounting
Statements the standalone financial
policies and notes.
statements. (Financial
Statements should also include
cash flow statements in certain
cases.)
55
Requires the measurement of using
Schedule VI to the Companies
Reporting the functional currency. Entities
e. Act, 1956 specifies Indian Rupees
Currency may, however, present financial
as the reporting currency.
statements in a different currency.
IAS – 1 : Presentations of Financial AS – 1 : Disclosure of Accounting

2
Statements Policies
AS – 1 is currently under revision

to bring it in line with the current
IAS – 1. The exposure draft of the
IAS – 1 was revised by IASB in 2007
a. Preparation revised AS – 1 is being finalised
w.e.f 1st January 2005
on the basis of the comments
received on its limited exposure
among specified bodies.
A complete set of financial The components of financial

statements under IFRS are : statements are :
 Statement of Financial position  Balance Sheet
Components  Statement of comprehensive  Statement of Profit & Loss
b. of Financial income  Cash flow statement (not
Statements  Statement of Cash flows mandatory for SMEs)
 Statement of changes in Equity  Explanatory notes including
 Notes including summary of summary of accounting
accounting policies. policies.
In India, the laws governing the

Does not prescribe any particular
companies, banking and
format. Generally, an entity must
insurance enterprises prescribe
present its Balance Sheet items as
detailed formats for the financial
current and non-current items. An
statements to be followed by
entity can also use a liquidity
c. Balance Sheet respective enterprises. So, to
presentation when it provides more
make the accounting Standards
reliable and relevant information.
acceptable to regulators, ASB has
There are certain minimum items
provided formats (horizontal and
to be presented on the face of the
vertical) for financial statements
Balance Sheet.
for companies in an appendix.
Does not prescribe a particular

The Companies Act also does not
format. However, an analysis of
prescribe a particular format. The
expenses is presented using a
Income company law and accounting
d. classification based on either the
Statement Standards, however, prescribe
nature of expenses or their function
certain disclosure norms for
whichever provide information that
income and expenditure.
is reliable and more relevant.
Different Basis IAS -1 requires that if different AS – 1 does not require separate
e. of measurement basis are used, then presentation of such assets on
Measurement they should be presented as the Balance Sheet. Rather, it
separate item on the face of the requires separate presentation in
56
Balance Sheet. the schedule and notes.
3 IAS – 2 : Inventories AS – 2 : Valuation of Inventories
IAS – 2 has been revised in 2003 as AS – 2 is based on IAS – 2 revised

a. Preparation
part of IASB’s improvement project. in 1993.
IAS – 2 specifically deals with cost Revised AS – 2 excludes from its

b. Scope of inventories of an enterprise scope the work-in-progress of
providing services. service providing enterprises.
It provides that the formula used

in determining the cost of an
item of inventory needs to be
It requires for the same cost selected with a view of providing
formula to be used for all fairest possible approximation to
c. Cost Formula
inventories having similar nature the cost incurred in bringing the
and use to the entity. item to its present location and
condition. However, there is no
stipulation for the use of same
cost formula in AS – 2.
AS – 2 specifically exclude selling

and distribution costs from the
Excluded IAS – 2 excludes only selling costs cost of inventories and provides
d.
Costs and not distribution costs. that it is appropriate to recognise
them as expense in the period in
which they incurred.
There are certain additional

requirements in IAS – 2 which are
not contained in IAS – 2 :
 In case of inventories purchased
on deferred terms, the excess
Additional over normal price is to be
e. accounted as interest over the ---
Requirements
period of financing.
 Exchange differences are not
includable in inventory valuation.
 Inventory pledged as security for
liabilities requires separate
disclosure.
4 IAS – 7 : Cash flow Statements AS – 3 : Cash flow statements
It is included as cash and cash

Bank equivalents if they, from an integral There is no stipulation regarding
a.
Overdraft part of an entity’s cash treatment of bank overdrafts.
management.
b. These may be classified as For Financial Enterprises :

Interest and
operating investing or financing
57
Dividend activities in a manner consistent “Interest paid” and “interest
from period to period. received” are to be classified as
operating activities, dividend paid
is to be classified as financing
activity.
For Other Enterprises :
Interest and dividend received
are required to be classified as
investing activities. Interest and
dividend paid are required to be
classified as financing activities.
Cash flows arising out of

The cash flow statement does not operating, financing & investing
Extra-ordinary
c. reflect any items of cash flow as activities, classified as extra-
Items
extra-ordinary. ordinary, are separately
disclosed.
AS – 6 was formulated on the basis of IAS – 4 on Depreciation accounting, has been withdrawn.
This matter is now covered by IAS – 16 and IAS – 38. The corresponding accounting Standard to
this is AS – 10 on Accounting for fixed assets, which is being revised to bring it in line with IAS –
16. Upon the issuance of revised AS – 10, AS – 6 would also be withdrawn.
IAS – 8 : Accounting Policies, AS – 5 : Net Profit & Loss for the

5 Changes in Accounting Estimates period, prior-period items and
and Errors Changes in Accounting Policies
Changes in accounting policy

Requires retrospective application
should be made only if required
of changes in accounting policies by
“by statue” or for more
Changes in adjusting the opening balance of
appropriate presentation of
a. Accounting the affected item and other
financial statements on a
Policies comparative amounts as if the new
prospective basis together with
accounting policy had always been
proper disclosure if its impact is
applied.
material.
Applied prospectively by including

Changes in in the profit or loss in the period of
b. Accounting change and if it affects future Similar to IFRS.
Estimate periods, in profit or loss of these
periods.
Errors are corrected by

retrospective restatement of prior AS – 5 requires prior-period items
period figures by restatement of to be included in determination
c. Errors
opening balance of assets, liabilities of net profit or loss for current
and equity for the earliest period period.
possible.
IAS – 10 : Events after the reporting AS – 4 : Contingencies and Events

6
period occurring after the Balance Sheet
58
date
Dividends are recognised as an

appropriation from profits and
It should not be shown as a liability recorded as liability if proposed
Proposed
a. and recognised only in the period in or declared subsequent to the
Dividend
which it is declared. reporting period but before
approval of the financial
statements.
Non-adjusting events which are

Non-adjusting items, which are material should be disclosed in
Non-adjusting
b. material, are required to be the report of the approving
Events
disclosed in the final statements. authority and not in the financial
statement.
IAS – 16 : Property, Plant & AS – 10 : Accounting for Fixed Assets

7
Equipments AS – 6 : Depreciation Accounting
If subsequent costs are incurred for

AS – 10 provides that only that
replacement of a part of an item of
expenditure which increases the
Replacement fixed asset, then such costs should
a. future benefits is included in the
Costs be capitalised and simultaneously
accounting book e.g., Increase in
the replaced part to be de-
capacity.
capitalised.
PPE are componentised and

b. Depreciation No such provision.
depreciated.
Cost of major inspection and

Inspection Costs of major inspection are
c. overhauls recognised in the Balance
Costs expensed when incurred.
Sheet.
Revaluations are required to be

made frequently to ensure that the No specific requirement with
d. Revaluation carrying amount does not relation to frequency of
materially differ from the amount revaluation.
determined using fair value.
Estimates of residual value needs to

Estimates are not required to be
e. Residual Value be reviewed at least at the end of
update at the end of every year.
every year.
Method of depreciation includes The permitted methods are

straight line, diminishing value, straight line and diminishing
Change in the units of production method. value method. AS – 10 requires
f. Method of Change in depreciation method is retrospective computation in
Depreciation treated as change in accounting case of change in methods. Any
estimate and is accounted for excess / deficit on such re-
prospectively. computation are required to be
adjusted in the period in which
59
change is required.
8 IAS – 17 : Lease AS – 19 : Leases
The initial direct costs incurred by

The initial direct cost are incurred
the lessor to be included in the
by the lessor to be either charged
lease receivable amount in case of
off at the time of incurrence or to
finance lease and in the carrying
a. Direct Costs be amortised and requires
amount of the asset in case of
disclosure for accounting policy in
operating lease and does not
the financial statements of the
mandate any accounting policy
lessor.
related disclosure.
In composite leases, land and

building are considered separately.
Land is normally an operating lease
Composite AS – 19 excludes composite
b. (if there is no transfer of
Leases leases and land arrangements.
ownership) and buildings are
treated as operating or finance
lease as the case may be.
Schedule VI of the Companies

IAS – 17 does not require any
Act, 1956 requires separate
separate disclosure for assets
c. Disclosure disclosure for assets acquired
acquired under finance lease
under finance lease separately
separately from assets owned.
from assets owned.
9 IAS – 18 : Revenue AS – 9 : Revenue
It is the gross benefit of economic

benefits arising in the course of It is the gross inflow of cash,
ordinary activities of an entity receivables and other
a. Definition resulting in increase in equity. consideration arising in the
Amount collected on behalf of third ordinary activities from sale of
parties such as sales, sales tax, VAT goods and rendering of activities.
are excluded from revenues.
Fair value of revenues from sale of

goods and rendering of services
Revenue is recognised at the
when inflow of cash and cash
b. Measurement nominal amount of consideration
equivalents is deferred is
receivable.
determined by discounting all
future receipts.
It requires effective interest

method prescribed in IAS – 39 to be Interest is recognised on time
c. Interest
followed for interest income proportion basis.
recognition.
10 IAS – 19 : Employee Benefits AS – 19 : Employee Benefits
a. Recognition It provides an option to recognise Exposure draft on revised AS – 15
60
actuarial gain and losses either by does not admit “corridor
following “corridor approach” or approach”
immediately in P & L Account.
The liability termination benefits

Termination has to be recognised on Exposure draft requires an entity
b.
Benefits constructive basis e.g., to flow AS – 29 in this regard.
Announcement of formal plan.
IAS – 20 : Accounting for

AS – 12 : Accounting for
11 Government Grants & Disclosure of
Government Grants
Government Assistance
It requires disclosure of
government grants for financial
Extra Ordinary Extra ordinary items are not
a. support / compensations for
Items considered at all under IFRS.
losses as extra ordinary items in
income statement.
Accounting
Basis for Non- IAS – 20 permits accounting either It requires accounting only at
b.
monetary at fair value or acquisition cost. acquisition cost.
Assets
Requires separate disclosure of

unfulfilled conditions and other
c. Disclosures No such disclosure required.
contingencies if grant has been
recognised.
IAS – 21 : The Effects of Changes on AS – 11 : The Effects of Changes

12
Foreign Exchanges Rates on Foreign Exchanges Rates
It is based on the integral and

non-integral foreign operation
It is based on “Functional Currency” approach.
Approach. Functional currency is
Under AS – 11, foreign currency is
the currency of the economic
a currency other than reporting
a. Approach environment, where an entity
currency.
operates. Foreign currency is a
currency other than functional Reporting currency is the
currency. currency in which the financial
statements are prepared and
presented.
Change in reporting currency is

Changes in
Changes in functional currency are not dealt in AS – 11, though
b. Financial
applied prospectively. reason for change is to be
Currency
disclosed.
Exchanges Recognised in the profit and loss Similar to IFRS, except change
c. Rates account in the period in which they differences upto 31st March 2004
Differences arise. towards acquisition of fixed
61
assets are capitalised.
13 IAS – Borrowing Costs AS – 16 : Borrowing Costs
These costs are required to be

capitalised if these costs are
attributable to the acquisition,
a. Treatment These are expensed as incurred. construction or production of a
qualifying asset. Recognising
them as expense, when incurred,
is not permitted.
14 IAS – 24 : Related Party Disclosures AS – 18 : Related Party Disclosures
Related party includes post

employment benefit plans (e.g.,
AS – 18 does not include this in
a. Definition gratuity, pension fund) if the
the context of related party.
enterprise or of any entity, which is
related party of the enterprise.
Key It excludes non-executive

It includes executive and non-
b. Management directors from the definition of
executive directors.
Personal key management persons.
Compensation of key management Compensation of key

personnel is disclosed in total and management personnel is
separately for : disclosed in total as an aggregate
 Short-term Employee Benefits of all items of compensation
c. Disclosures
 Post Employment Benefits except when a separate
 Long-term Benefits disclosure is necessary for
 Termination Benefits understanding of the related
 Share-based payments party transaction.
IAS – 26 : Accounting and Reporting

15 There is no equivalent Standard.
by Retirement Benefit Plan
IAS – 27 : Consolidated & Separate AS – 21 : Consolidated Financial

16
Financial Statements Statements
AS – 21 does not specify entities

A parent company is required to that are required to present
prepare consolidated financial consolidated financial statement.
statement to consolidate all its This Standard is to be followed if
a. Scope subsidiaries. A subsidiary is an consolidated financial statements
entity that is controlled by another are presented. SEBI requires
entity (known as the parent entities “listed” and “to be listed”
company). to present consolidated financial
statements.
Definition of Control is the power to govern the Control is the ownership of more
b. financial and operating policies of than one-half of the voting power
Control
an enterprise so as to obtain of an enterprise or as control
62
benefits from its activities. over the composition of the
governing body of an enterprise
so to obtain economic benefits.
Goodwill / capital reserve on

Goodwill / capital reserve on
Computation consideration is computed on the
c. consideration is computed on fair
of Goodwill basis of carrying value of assets /
values of assets / liabilities,
liabilities.
It does not require additional It requires disclosures of list of all

disclosures of list of all the the subsidiaries including name,
subsidiaries including name, country of incorporation
d. Disclosures
country of incorporation proportion proportion of ownership interest
of ownership interest and and proportion of voting power
proportion of voting power held. held.
17 IAS – 28 : Investment in Associates Investments in Associates in
consolidates financial statements
Associates are generally accounted

for using equity method except
where :
Associates generally are
 Investment in associate held for accounted for using the equity
Method of sale is accounted in accordance method except when investment
a. with IFRS – 5.
Accounting is acquired and held exclusively
 The reporting entity is also a with a view of subsequent
parent and is exempt from disposal in the near feature .
preparing CFS under IAS – 27.
 Where the reporting entity is not
a parent.
The difference between the

Reporting reporting dates of the associate and There is no limit of three months
b.
Dates that of the investor shall be not between the reporting dates
more than three months.
Goodwill or capital reserve within Goodwill or capital reserve within

Goodwill or
the investment amount is not the investments amount is
c. Capital
required to be separately required to be separately
Reserve
identified. identified.
IAS – 29 : financial reporting in

18 There is no equivalent Standard.
Hyper-inflationary Economics
AS – 27 : Financial Reporting of
19 IAS – 31 : interests in joint venture.
interests in joint venture .
A joint venture is a contractual Unlike IFRS, sometimes though a

a. Meaning arrangement whereby two or more contractual arrangement may
parties undertake an economic suggest a joint venture, the
63
activity that is subject to joint investee is accounted as a
control. subsidiary if the investor’s share
in the investee’s equity is greater
than 50 %.
Jointly These may be accounted for by These are accounted for only by
b. Controlled proportionate consolidation or using the proportionate
Entities equity method. consolidation method.
20 IAS – 33 : Earnings per Share AS – 20 : Earnings per Share
Disclosure be made only in the

Requires disclosures of basic and
consolidated financial statements
diluted EPS information both in
of the parent company ie. Parent
a. Disclosure the separate and consolidated
company can elect not to make
financial statement of the parent
disclosure in the separate financial
company.
statement
Extra-ordinary No items is to be presented as extra EPS with or without extra-

b.
Items ordinary ordinary items is to be presented
21 IAS – 34 : Interim Financial Reporting AS – 25 : Interim Financial Reporting
Does not require presentation of

condensed statement of changes
in equity. But, due to revision in
Minimum components of interim AS – 1, limited revision to AS – 25
a. Components financial report include statement has also been proposed. This
showing changes in equity. requires company to present
condensed statement of changes
in equity as a part of financial
statements.
In case of change in accounting

policies, figures of prior interim
Changes in Requires statements of figures of
periods of current financial year
b. Accounting prior interim period of current
and comparable figures of
Policies financial period only.
corresponding previous year to be
restarted .
IAS – 36 : Impairment of Accounting

22 AS – 28 : Impairment of Assets
Asset : Goodwill
For determining net selling price, For determining net selling price,
Determination
cost of disposal to be reduced only cost of disposal to be reduced
a. of Net Selling
in cases where asset is intended to from fair value of assets in all
Price
be disposed off. cases
Impairment It does not permit reversal of It permits reversal of impairment

b.
Losses impairment of losses losses
c. Allocation of It recommends only bottom up It allows both bottom up and top
64
Goodwill approach for allocation of goodwill down methods
IAS – 37 : Provisions, Contingent AS – 29 : Provisions , Contingent

23
Assets and Contingents Liabilities Assets and Contingent Liabilities
Provisions not recognised on

basis of construction obligations
Recognised when an entity has a
except in a few cases e.g.,
a. Recognition present obligation as a result of a
obligation arising out of normal
past event.
custom, desire to maintain good
business relations.
b. Discounting It permits discounting of provisions. It doesn’t permit any discounting.
It requires disclosure of contingent It allows disclosures only in the

c. Disclosures
assets in financial statements. approving authority report.
It provides certain basis and

statistical methods to be followed It does not contain any guidance
d. Methods for arising at the best estimate of and relies on judgement of
the expenditure for which provision management.
is recognised.
24 IAS – 38 : Intangible Assets AS – 26 : Intangible Assets
It is measured either at cost or

a. Measurement It is measured only at cost.
revalued amounts.
Useful life can not be indefinite.

There is a rebuttable
Usual life may be finite or presumption that useful life of an
b. Usual Life
indefinite. intangible asset will not exceed to
years from the date it is available
for use.
Goodwill arising out of

It is not amortised but to annual amalgamation is amortised over
c. Goodwill impairment test or whenever five years. Goodwill arising out of
required. acquisition is not amortised but
tested for impairment.
There is no equivalent Standard.

25 IAS – 40 : Investment Property At present, this is covered by AS –
13 : Accounting for Investment
26 IAS – 41 : Agriculture There is no equivalent Standard.
There is no equivalent Standard.

But ICAI has issued a guideline
27 IFRS – 2 : Share-based Payment note on Accounting for Employee
Share-based payments. SEBI has
also issued the SEBI (Employee
65
Stock Option Scheme and
employee stock purchase scheme)
Guidelines, 1999.
It recognises as an expense over

a. Recognition Similar to IFRS.
the vesting period.
It permits the use of fair value

Different valuation technique may method on the intrinsic value
b. Valuation
be required. method. But it gives preference
to fair value method.
28 IFRS – 3 : Business Combinations
Amalgamation
It permits purchase method for Amalgamations, in the nature of

accounting all business purchase, are accounted for
a. Method combinations other than entities either at fair value or book value.
under common control. Pooling of Pooling of interest method is
interest method is prohibited. acceptable.
Goodwill is valued as a difference

between aggregate of : Any excess amount of
consideration over the value of
 Fair value of consideration net assets of the transferor
Valuation of transferred
b. company is goodwill. If the
Goodwill  Amount of non-controlling amount is less, than the
interest and fair value of the difference is the capital reserve, a
identifiable assets acquired and component of equity.
liabilities presumed.
Goodwill is not amortised but

Treatment of tested for impairment on an annual Goodwill is amortised over a
c.
Goodwill basis or more frequently, if period not exceeding five years.
required.
29 IFRS – 4 : Insurance Contracts No equivalent Standard.
IFRS – 5 : Non-current Assets held for AS – 24 : Discontinuing Operations

30
sale and discontinued operations AS – 10 : Accounting for Fixed Assets
Non-current assets to be disposed There is no Standard dealing with

off are classified as “held for sale” this. AS – 10 deals with assets
when the asset is available for held for disposal. These are
a. Recognition immediate sale and sale is highly measured at lower of book value
probable. They are measured at a and not realisable value and are
lower of carrying value and fair shown separately in the financial
value less selling costs. statements.
An operation is classified as An operation is considered as

b. Classification ‘discontinued” when it has been “discontinued” at the earliest of
disposed of or classified as “held for the sale agreement or approval
66
sale”. of Board of Directors of a formal
plan and its announcement.
No equivalent Standard but there

IFRS – 6 : Exploration for and
31 is a guidance note on accounting
Evaluation of Mineral Resources
for Oil & Gas producing activities
The assets are measured at cost or These are two methods for
a. Measurement revaluation less accumulated accounting; the successful efforts
amortisation and impairment Len. method and the full cost method.
IFRS – 7 : Financial Instruments : AS – 32 : Financial Instruments :

32
Disclosure Disclosures
The Standard prescribes the

disclosures that enable financial
statement users to evaluate the
No difference between AS – 32
a. General significance of financial instruments
and IFRS – 7.
to an entity, the nature and extent
of their risks and how an entity
manages these risks.
33 IFRS – Operating Segments AS – 17 : Segment Reporting
Operating segments are identified

It requires enterprises to identify
based on financial information that
a. Identification two sets of segment business and
is evaluated regularly by chief
geographical.
operating decision maker.
Segment information is prepared

Segment profit is reported on the
in confirmation with the
b. Measurement basis used by chief operating
accounting policies adopted by
decision.
the enterprise as a whole.
It requires disclosures of :
Disclosures are required on the
 External revenue from each basis of classification of segments
product and services. as primary or secondary.
c. Disclosure  Revenues from customers in Disclosure requirements for
the country foreign countries. secondary reporting are less
 Geographical information on detailed as compared to primary
non-current assets located in reporting format.
country or foreign countries.
CONCLUSION
The roots of Indian Accounting profession are found thousands of year back in Indian history.
Historians have found evidence of existence of accounting system during the pre-Indus and Indus
Valley civilisations period. One person, who is referred to in academic circles for his contribution to
several managerial concepts that are even relevant today is Chanakya (Kautilya). His treatise
“Arthasashstra” provides encompassing framework on accounting with a focus on vital concepts in
67
accounting including expenditure and profit, checks and balances, and audit practices. Since then,
recording, analysing and interpreting the financial facts and figures are in regular practice in
monetary and non-monetary terms.
With the increasing and changing concepts of business entity, the significant contribution of book-
keeping and accounting have gained momentum from time to time. Now-a-days, reliable, consistent
and uniform financial reporting is the buzz-word in the business environment, be it local or global.
Time has come to test the transparency of such financial reporting with universal acceptability
without any second thought. In the era of liberalisation, privatisation and globalisation (LPG), such
financial data and information is the centre of attraction for every economic decision.
With the passage of time, accounting practices are made more structured and scientific to meet the
requirements of each and every one, having a keen interest over the operations of the business. The
internal and external parties have every reasons to show their interest on knowing the success
stories of business enterprises. The reasons may be personal or social, but the motive behind is
definitely rational. Comment and criticism on their conclusive remarks over the business results are
backed by publicly available information resource. Therefore, such information disclosures need to
be authentic, reliable and unbiased. This can only be possible when a set of standards and principles
are exercised in due course of dealing with financial records. This has possibly given birth to the idea
of structurising the entire accounting system meaningfully and purposefully so as to enable it quite
presentable before the interested ones.
Developing accounting principles, concepts, conventions are few such steps in this direction, which
ultimately enhanced the credibility of the business houses in the eyes of everyone in general,
investors in particular. Furthermore, different countries drafted their own accounting standards for
their domestic business entities to favour anything and everything to their economy. As a result of
which, differences are noticed with regards to their universal acceptability. To narrow down such
intricacies of different opinions, various committees have been formed worldwide with a sole
responsibility of drafting universal acceptable accounting standards. In this context, International
Financial Reporting Standards are in practice in almost all countries with a clear vision and mission of
bringing transparencies in financial reporting globally.
Having regard to this and the ever growing need to implement IFRS, on 10 th July 2014, Shri Arun
Jaitley, Minister of Finance, sets the ball in motion with his budget speech, when he proposed :
“There is an urgent need to converge the current Indian accounting standards with the
International Financial Reporting Standards (IFRS). I propose for the adoption of the new Indian
Accounting Standards by the Indian Companies from the financial year 2015 – 16 voluntarily
and from the financial year 2016 – 17 on a mandatory basis. Based on the international
consensus, the regulatory will separately notify the date of implementation of Indian AS for the
Banks, Insurance Companies etc.”
68
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See discussions, stats, and author profiles for this publication at: https://www.researchgate.

A Brief Discussion on Accounting Standards & IFRS

Article in SSRN Electronic Journal · January 2016

Economy and Budget Impact View project

The user has requested enhancement of the downloaded file.

ACCOUNTING STANDARDS & IFRS

Prof. (Dr.) SISIRA KANTI MISHRA

Electronic copy available at: http://ssrn.com/abstract=2848715

2. ACCOUNTING : Measurement vs. Valuation vs. Estimation

4. ACCOUNTING STANDARDS (AS)

5. INTERNATIONAL ACCOUNTING STANDARDS (IAS)

6. ACCOUNTING STANDARDS & ROLE OF AUDITORS

7. JOURNEY OF IAS TO IFRS

8. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

9. IFRS vs. GAAP vs. ACCOUNTING STANDARDS

Electronic copy available at: http://ssrn.com/abstract=2848715

Electronic copy available at: http://ssrn.com/abstract=2848715

ACCOUNTING : Measurement vs. Valuation vs. Estimation

1. Develop consensus on issue like meaning and scope of financial reporting,

The Conceptual Framework : the conceptual framework is a coherent system of inter-related

ACCOUNTING STANDARDS (AS)

1. Standardise the diverse accounting policies and practices,

 Recognition of events and transactions in the financial statements;

Accounting Standards in Indian Context

1st April 2004

AS – 2 : Valuation of Inventories (Revised 1999) : It is a measurement related Standard and

AS – 7 : Construction Contracts (Revised 2002) : This Standard prescribes the accounting

AS – 11 : Effects of Changes in Foreign Exchange Rates (Revised 2003, Applicable w.e.f., 1 st

AS – 14 : Accounting for Amalgamation (Issued 1994) : AS – 14 deals with accounting for

AS – 21 : Consolidated Financial Statements (Issued 2001) : AS – 21 deals with preparation and

AS – 23 : Accounting for Investments in Associates in Consolidated Financial Statements

AS – 24 : Discontinuing Operations (Issued 2002) : The objective of this principle is to establish

AS – 25 : Interim Financial Reporting (Issued 2002) : An enterprise may be required or may

AS – 27 : Financial Reporting of Interests in Joint Ventures (Issued 2002) : AS – 27 sets out

AS – 28 : Impairment of Assets (Issued 2002) : AS – 28 prescribes the procedure to be applied to

AS – 29 : Provisions, Contingent Liabilities and Contingent Assets (Issued 2003) : The

AS – 30 : Financial Instruments : Recognition & Measurements (Issued 2008) : Accounting

AS – 31 : Financial Instruments : Presentation (Issued 2008) : Accounting Standard – 31 is

AS – 32 : Financial Instruments : Disclosure (Issued 2008) : Accounting standard – 32 is issued

Concluding Remarks on Indian Accounting Standards

INTERNATIONAL ACCOUNTING STANDARDS (IAS)

List of International Accounting Standards (IAS)

IAS – 1 Presentations of Financial Statements

IAS – 7 Cash Flow Statements

IAS – 8 Accounting Policies, Changes in Accounting Estimates & Errors

IAS – 10 Events after the Reporting Period

IAS – 11 Construction Contracts

IAS – 12 Accounting Treatments for Income Taxes

IAS – 16 Property, Plant and Equipment

IAS – 17 Accounting for Leases

IAS – 19 Employee Benefits

IAS –20 Accounting for Government Grants

IAS – 21 The effects of changes in foreign exchange rates

IAS – 23 Accounting for Borrowing Costs

IAS – 26 Accounting and Reporting by Retirement Benefit Plans

IAS – 27 Consolidated and Separate Financial Statements

IAS – 28 Investment in Associates

IAS – 31 Investment in Joint Ventures

IAS – 32 Financial Instruments – Presentation

IAS – 33 Earnings per Share

IAS – 34 Interim Financial Reporting

IAS – 36 Impairment of Assets

IAS – 37 Provisions, Contingent Liabilities and Contingent Assets