International Financial Reporting Standards (IFRS)

IFRS are principles-based Standards, Interpretations and the Framework (1989) adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS . The IASB has continued to develop standards calling the new standards IFRS

1973
International Accounting
Standards Committee (IASC)

2001
International Accounting Standards Board (IASB)

2000

Future

International Accounting Standards (IAS)

IFRS series Standards

IAS

SIC Interpretations

IFRS

IFRIC Interpretations

International Financial Reporting Standards (IFRSs)

In what way does the IFRS differ from current accounting standards?

Differences due to the legal and regulatory environment: while IFRS require depreciation of all assets over their estimated useful lives, Indian GAAP mandates that the depreciation rates cannot be lower than the rates prescribed under the law; Differences due to the economic environment: several IFRS that deal with investments, derivatives, other financial instruments and business combinations extensively use the fair value concept, while corresponding Indian standards are generally based on the cost/carrying value approach Differences due to the level of preparedness: accounting for deferred taxes under IFRS is based on the balance-sheet approach, but due to the fact that the concept of deferred taxes was newly introduced in India, the current Indian standard prescribes the income statement approach, which is easier to understand and implement Conceptual differences: the Indian standard on intangible assets is based on the concept that all intangible assets have a definite life, which cannot generally exceed 10 years, while IFRS acknowledge that certain intangible assets may have indefinite lives; also, useful lives in excess of 10 years are not unusual under IFRS.
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THE Key drivers of IFRS conversion across the world

Adoption of global standards such as IFRS may reduce the risk premium and, consequently, the cost of capital. Similarly, even companies raising capital and listed only on the local exchanges in India would be able to better attract international investors and reduce risk premium, by providing financial information that is more transparent and understandable for the international investor community. Further, IFRS financial information can also result in more accurate risk evaluations by international lenders and lower risk premium for international debt offerings.

More cross-border transactions: By providing transparent and comparable financial information, IFRS reporting provides an impetus to cross-border acquisitions, enables partnerships and alliances with foreign entities, and lower the costs of integration in post-acquisition periods.

Eliminate multiple reporting: Currently, different entities within the group that reside in different jurisdictions may be required to prepare a dual set of financial statements for external financial reporting; one for local statutory financial reporting in the home country and second for reporting to the parent company (assuming that the parent company follows IFRS).

IN INDIA
The Institute of Chartered Accountants of India (ICAI) has announced that IFRS will be mandatory in India for financial statements for the periods beginning on or after 1 April 2011. This will be done by revising existing accounting standards to make them compatible with IFRS. Reserve Bank of India has stated that financial statements of banks need to be IFRS-compliant for periods beginning on or before 1 April 2011.