Presentation on

Study of convergence of IAS

and IFRS






Presented by:
Lovely
B.com{p} v
12-153.
INTRODUCTION
{convergence IAS with IFRS}

The idea of convergence of Indian GAAP with IFRS
was made by the Prime Minister of India Dr.
Manmohan Singh commencing on or after 1 April
2011.
Two sets of Accounting Standards under the
Companies Act.
The new set of standards converged with IFRS
known as Indian Accounting Standards or Ind AS.
The Ministry of Corporate Affairs has notified the 35
Ind AS on 25 February 2011.

Meaning of IAS

Indian Accounting Standards,
abbreviated as Ind AS is a set of
accounting standards notified by the
Ministry of Corporate Affairs which is
converged with International Financial
Reporting Standards(IFRS).

Formulated by Accounting Standards
Board of Institute of Chartered
Accountants of India.

Objective
To remove variations in the treatment of several
accounting aspects and to bring about
standardization in presentation.
To harmonize the diverse accounting policies
followed in the preparation and presentation of
financial statements by different reporting
enterprises so as to facilitate intra-firm and inter-
firm comparison.

Meaning of
IFRS

A set of international accounting standards
stating how particular types of transactions
and other events should be reported in
financial statements.
IFRS are issued by the International
Accounting Standards Board in 2001.
Designed as a common global language for
business affairs so that company accounts
are understandable and comparable across
international boundaries.
REVIEW OF LITERATURE
Wong and Wong(2005) examined to explore the impact
of not amortizing goodwill and identifiable intangible
assets.
Lantto (2007) examined whether IFRS improved the
usefulness of accounting information and improved the
relevance of accounting information .
Chand & White (2007) demonstrated that the influence
of Multinational Enterprises can lead to transfer of
economic resources in their favour, wherein the public
interests are usually ignored.
Paananen & Lin (2009) gave a contrary view to prior
research that IFRS adoption ensures better quality of
accounting information.


RESEARCH
METHODOLOGY
Objective of Study
To comparatively study Indian Accounting
Standards
To study the effect of IFRS on Ind ASs.
To create the global financial reporting
infrastructure.
To generate sound business senses among the
beneficiaries.
To generate the dimensions of fair presentation of
financial statement.
To maintain higher transparency of financial
statement and mobility of capital.


Type of Survey: -
Secondary Survey
Source and type of data
Secondary data Collected through
Newspapers,
Internet,
Magazines,
Books
Government Documents etc

RATIONALE BEHIND
ADOPTING IFRS
Eliminate blockades to cross border listings and
beneficial for the investors .
Enhances comparability among different sectors,
lead to more transparent financial reporting
benefiting investors, customers.
Remove multiple reporting and related costs, as
the same set of financial statements.
Likely to enhance the reliability and image of
financial reporting.
With use of a single global standard, enhance the
efficiency of capital allocation and help to diminish
the cost of capital.
CHALLENGES TO IMPLEMENT
IFRS

Lack of responsiveness to International Financial
Reporting Practices.
New Standards introduces discrepancies.
Difficult to make adjustment with Indian Taxation
law.
Volatility in Use of Fair Value as assessment
yardstick .
Harmonization and modification to the Existing
Laws becomes necessary .
Lack of properly trained up professional .
Management reporting.
IMPACT OF CONVERGENCE
OF IFRS ON FINANCIAL
RATIOS

Return on Equity defined as net income divided by
book value of equity;
Return on Assets, defined as net income divided
by total assets;
Total Asset Turnover, defined as sales revenue
divided by total assets;
Leverage, defined as total liabilities divided by
book value of equity
Net Profit ratio defined as Net income divided by
sales revenue.


CONCLUSION
Differences in accounting methods create
information costs for the preparers, auditors, and
users of financial statements.
Need to harmonize financial reporting, and to
reduce differences in the reporting of similar
transactions.
Legal and regulatory requirements related to
financial statements, the technical and accounting
professionals and the economic environment will
pose challenges to this convergence.
Given the task and challenges, all the entities
should ensure that their convergence plan are
designed in such a way as to achieve the objective
of doing it once,but doing it right.