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This ppt by Jaskiran Arora, introduces IFRS, discuss its benfits and challnges in its implmentation in India, key differences between Indian GAAP and IFRS and further takes the case study of Infosys annual report where it has first time adopted IFRS
This ppt by Jaskiran Arora, introduces IFRS, discuss its benfits and challnges in its implmentation in India, key differences between Indian GAAP and IFRS and further takes the case study of Infosys annual report where it has first time adopted IFRS
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Attribution Non-Commercial (BY-NC)
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This ppt by Jaskiran Arora, introduces IFRS, discuss its benfits and challnges in its implmentation in India, key differences between Indian GAAP and IFRS and further takes the case study of Infosys annual report where it has first time adopted IFRS
Авторское право:
Attribution Non-Commercial (BY-NC)
Доступные форматы
Скачайте в формате PPT, PDF, TXT или читайте онлайн в Scribd
Monday, July 6, 2009 JK Padampat Singhania Institute, Gurgaon. Flow of the presentation What & Why IFRS? Indian Accounting standards
Benefits & Challenges for IFRS
Key differences between Indian GAAP &
IFRS Impact on IT Sector
Case-Study : Infosys Technologies Limited
Monday, July 6, 2009
What is IFRS? International Financial Reporting Standards (IFRS) are developed by IASB, private sector organization, based in London and began its operations in 2001. International Accounting Standards (IAS) issued by IASC, predecessor body of IASB, continue to be applicable. IFRS Comprises: 8 IFRSs and 31 IASs. It started of with EU making IFRS mandatory from 2005 onwards. By 2011 more than 150 countries would have adopted IFRS. Monday, July 6, 2009 Accounting Standard – Indian Background ICAI, constituted the Accounting Standards Board (ASB) on 21st April, 1977 At a meeting held in May 2006, the Council
of ICAI expressed the view to adopt IFRS.
The ASB, at a meeting held in August 2006,
considered the matter and decided to form
an IFRS Task Force. Based on the recommendation of the IFRS
Task Force, the Council of ICAI, at its 269th
meeting, decided to converge with IFRS, for accounting periods commencing on or after 1 April 2011. Monday, July 6, 2009 Benefits of IFRS Improved access to international capital markets Lower cost of capital Enable benchmarking with global peers Escape multiple reporting Reflects true value of acquisitions New opportunities Monday, July 6, 2009 IFRS Challenges Shortage of resources Training Information systems Taxes Communication Management compensation and debt covenants Distributable profits Alignment with other statutory bodies Monday, July 6, 2009 Key Difference: IGAAP & IFRS 1. Presentation of financial statements: True and fair provisions. Presentation of a statement of comprehensive income Prohibits presentation of an extraordinary items Information to evaluate the entity’s objectives, Restatement for prior period items or change in accounting policy
Monday, July 6, 2009
Key Difference: IGAAP & IFRS 1. Business Combinations: Amalgamation & Acquisitions Purchase method of accounting o Fair value of consideration, assets, liabilities and contingent liabilities acquired o Identification of intangible assets Goodwill to be tested for impairment annually. Negative goodwill to be credited to P & L a/c and not capital reserve.
Monday, July 6, 2009
Key Difference: IGAAP & IFRS 1. Financial Instruments: Financial instrument classified as liability or equity in accordance with substance i.e. Preference share Compound financial instruments to be split into liability and equity components IAS 39 prescribes detailed rules on recognition and measurement of financial instruments i.e. FVPL, AFS, HTM and L&R IAS 39 also lays the standards on derivatives Monday, July 6, 2009 Key Difference: IGAAP & IFRS 1. Income Taxes: IAS 12 is based on the balance Income Taxes sheet liability method which focuses on temporary differences whereas AS 22 Accounting for Taxes on Income is based on the income statement liability method, which focuses on timing differences Convincing evidence required that sufficient taxable profit will be available under IFRS for carrying tax losses, where as in IGAAP three should be virtual certainty. Monday, July 6, 2009 Key Difference: IGAAP & IFRS 1. Employee benefits & share based payments: Actuarial gains and losses on defined benefit plans o Actuarial Gain / loss below 10% corridor need not be recognized o Actuarial Gain / loss above 10% corridor can be deferred over remaining service period or on accelerated basis Termination benefit – constructive as against obligation legal obligation IFRS Monday, requires ESOP expense to be July 6, 2009 Key Difference: IGAAP & IFRS 1. Property, Plant & Equipment: Major repairs and overhaul expenditure capitalized under IFRS whereas, Indian GAAP requires these to be charged off to the profit and loss account as incurred. IFRS requires estimates of useful lives and residual values to be reviewed at least at each financial year-end. In Indian GAAP, there is no need for an annual review of estimates of useful lives and residual values.
Monday, July 6, 2009
Key Difference: IGAAP & IFRS 1. Revenue recognition: Measurement o Fair value / charges to customer o Discounting Multiple element contracts Embedded derivatives
Monday, July 6, 2009
Impact on IT Sector
Technology companies enter into
bundled contracts and multiple offerings. Stock options Outsourcing contracts Discounting of receivables & payables Foreign exchange derivatives Monday, July 6, 2009 Case Study – Infosys (P& L IGAAP)
Monday, July 6, 2009
Case Study – Infosys (Income Statement IFRS)
Monday, July 6, 2009
Case Study – Infosys (B/S IGAAP)
Monday, July 6, 2009
Case Study – Infosys (Balance Sheet IFRS)
Monday, July 6, 2009
Reconciliation of Indian and IFRS financial statements 2009 2008 Indian GAAP - standalone 5,819 4,470 Net profits of subsidiary companies 169 189 Minority interest - - Indian GAAP - consolidates 5,988 4,659 Amortization of Goodwill (6) (29) Share based compensation (7) (13) IFRS net income 5,975 4,617 IFRS net income (USD million) 1,281 1,163
Monday, July 6, 2009
Case Study – Infosys (Ratio Analysis) Ratio Analysis IFRS ($) Indian GAAP (Rs.) 2009 2008 2009 2008 Sales 4,663 4,176 21,693 16,692 Gross Profit 1,964 1,723 9,928 7,485 Operating Profit 1,374 1,159 6,434 4,640 Net Profit 1,281 1,163 5,988 4,659 Equity 3,784 3,916 18,254 13,795 Current Assets 3,120 3,127 16,646 13,018 Current Liabilities 537 549 3,872 4,191
Gross Profit Ratio (%) 42.12% 41.26% 45.77% 44.84%
Operating Profit Ratio (%) 29.47% 27.75% 29.66% 27.80% Net Profit Ratio (%) 27.47% 27.85% 27.60% 27.91% Return on Equity 33.85% 29.70% 32.80% 33.77%
Current Ratio (Times) 5.810056 5.695811 4.29907 3.10618
Monday, July 6, 2009 Monday, July 6, 2009 Thank You