an introduction to the ibas-ifrs course

8/10/2019 An Introduction to the IBAS-IfRS Course

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IBAS IFRS

By Jayashree P K

Director, iBAS Consulting Pvt Ltd


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Syllabus aim

To develop knowledge, understanding and

application of International Financial

Reporting Standards and the concepts and

principles which underpin them

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Learning Outcome

On completion of the course candidates should be able to:

Gain an overview of what IFRS is

Understand and explain the international regulatoryframework of financial reporting

Discuss and apply specified International AccountingStandards and International Financial ReportingStandards to practical situations and preparefinancial statements according to the standards

Understand the differences and commonalitiesbetween IFRSs and Ind Accounting Standards (IndAS)and apply the understanding in the first timeadoption of the IFRSs.

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Broad Syllabus or Course Contents

The key areas covered are:

International sources of authority

Elements of financial statements

Presentation and additional disclosures

Preparation of external financial reports for singleentities

Preparation of external financial reports forcombined entities and joint ventures.

Key differences and commonalities with IndGAAP

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1. International sources of authority

The structure of the International Accounting

Standards Board (IASB)

The Standing Interpretation Committee (SIC)

The role of the International Financial

Reporting Interpretations Committee (IFRIC)

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2. Elements of financial statements

The elements directly related to financial position (balancesheet) are:

Assets

Liabilities

Equity The elements directly related to performance (income

statement) are:

Income

Expenses The cash flow statement reflects both income statement

elements and some changes in balance sheet elements

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contd..

Assets: a resource controlled by the entity as a

result of past events and from which future

economic benefits are expected to flow to the

entity

Property, plant and equipment

Intangible assets

Goodwill

Current assets including inventories

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contd..

Liabilities: a present obligation of the entity

arising from past events, the settlement of

which is expected to result in an outflow from

the entity of resources embodying economic

benefits

Provisions and contingencies

Current and deferred tax

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contd..

Equity : the residual interest in the assets of the

entity after deducting all its liabilities

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3. Presentation and additional

disclosures

Events after the balance sheet date

Earnings per share

Related party disclosures Interim financial reporting

Effects of changes in foreign exchange rates

Segment reporting.

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4. Preparation of external financial

reports for single entities

Statement of Financial position

Income statement

Cash flow statement Statement of changes in equity

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5. Preparation of external financial

reports for combined entities and

joint ventures

Definitions of subsidiaries, investments in

associates and joint ventures Preparation of consolidated balance sheets

and income statements

Proportionate consolidation and jointventures.

Equity Accounting

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This syllabus content will be covered

through following IFRS and IFRIC/SIC:

IAS 1 Presentation of Financial Statements

IAS 2 Inventories

IAS 7 Statement of Cash Flows IAS 8Accounting Policies, Changes in

Accounting Estimates and Errors

IAS 10 Events After the Reporting Period IAS 11 Construction Contract

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IASs List Contd..

IAS 12 Income Taxes

IAS 16 Property, Plant and Equipment

IAS 17 Leases

IAS 18 The Revenue

IAS 19 Employee Benefits

IAS 20Accounting for Government Grants and

Disclosure of Government Assistance IAS 21 The Effect of Change in Foreign Exchange

Rates

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IASs List Contd..

IAS 23 Borrowing Costs

IAS 24 Related Party Disclosures

IAS 27 Consolidated and Separate Financial

Statements IAS 28 Investments in Associates

IAS 31 Interests In Joint Ventures

IAS 32 Financial Instruments: Presentation

IAS 33 Earnings Per Share

IAS 34 Interim Financial Reporting

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IASs List Contd..

IAS 36 Impairment of Assets

IAS 37 Provisions, Contingent Liabilities and

Contingent Assets

IAS 38 Intangible Assets

IAS 39 Financial Instruments: Recognition and

Measurement

IAS 40 Investment Property

IAS 41Agriculture

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IFRSs List

IFRS 1 First-Time Adoption of International

Financial Reporting Standards

IFRS 2 Share-based Payment

IFRS 3 Business Combinations

IFRS 5 Non-current Assets Held for Sale and

Discontinued Operations

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IFRSs List Contd..

IFRS 6 Exploration for and Evaluation of MineralResources

IFRS 7 Financial Instruments: Disclosure

IFRS 8 Operating Segments IFRS 9Financial Instruments

IFRS 10Consolidated Financial Statements

IFRS 11- Joint Arrangements

IFRS 12Disclosure of interest in other entities IFRS 13Fair Value Measurement

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SIC Interpretations List

SIC-12: ConsolidationSpecial Purpose

Entities

SIC-15: Operating LeasesIncentives

SIC-31: RevenueBarter Transactions

Involving Advertising Services

SIC-32: Intangible AssetsWeb Site Costs

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IFRIC Interpretations List

IFRIC-10: Interim Financial Reporting and

Impairment

IFRIC-12: Service Concession Arrangements

IFRIC-13: Customer Loyalty Programmes

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About IFRS

IFRS is a set of accounting standards publishedby the London-based International Accounting

Standards Board (IASB). It is more focused on

objectives and principles and less reliant on

detailed rules than country-specific GAAP. IFRS

is used for public reporting purposes in more

than 100 countries, ranging from Australia to

the United Kingdom, and more countries areexpected to adopt IFRS in coming years.

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Factors for adopting IFRS

Improved comparability. The investment

community is increasingly looking for high-

quality financial information. In increasing

numbers, investors perceive IFRS as anopportunity to improve the comparability of

financial information from companies across

global industries.

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Factors for adopting IFRS contd..

Improved transparency. A single global set of

accounting standards can encourage both

companies and investors to more easily access

multiple or foreign markets. In effect, this canhelp stimulate investment and enable cross-

border capital flows.

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Factors for adopting IFRS contd..

Reduced complexity. By adopting IFRS,

companies can reduce the complexity of the

operations now needed to create reports in

multiple local-country GAAPs to help savemoney and improve the accuracy and

reliability of financial and tax reporting

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What is IFRS

IFRS is an acronym for International Financial

Reporting Standardsand covers full set of

principles and rules on reporting of various

items, transactions or situations in thefinancial statements. Often they are referred

to as principles based standards, because

they describe principles rather than dictaterigid accounting rules for treatment of certain

items.

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IFRS Contd..

International Financial Reporting Standards

(IFRS)are principles-based Standards,

Interpretations and the Framework (1989)

adopted by the International AccountingStandards Board(IASB)

Many of the standards forming part of IFRS

are known by the older name of InternationalAccounting Standards(IAS)

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http://en.wikipedia.org/wiki/International_Accounting_Standards_Boardhttp://en.wikipedia.org/wiki/International_Accounting_Standards_Boardhttp://en.wikipedia.org/wiki/International_Accounting_Standards_Boardhttp://en.wikipedia.org/wiki/International_Accounting_Standards_Board


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IFRS Contd..

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 theIASC the responsibility for setting International

Accounting Standards.

During its first meeting the new Board adoptedexisting IAS and SICs. The IASB has continued to

develop standards calling the new standards IFRS.

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http://en.wikipedia.org/wiki/International_Accounting_Standards_Committeehttp://en.wikipedia.org/wiki/International_Accounting_Standards_Committeehttp://en.wikipedia.org/wiki/International_Accounting_Standards_Committeehttp://en.wikipedia.org/wiki/International_Accounting_Standards_Committee


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Components of IFRS

A) Framework for the Preparation andPresentation of Financial Statements

B) International Accounting Standards (IAS) and

International Financial Reporting Standards(IFRS)

C) Standing Interpretations Committee (SIC)

and Interpretations originated from theInternational Financial ReportingInterpretations Committee (IFRIC)

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A) Framework for the Preparation and

Presentation of Financial Statement

The Framework states the basic principles forIFRS and hence its a must-read document.

It states the following:

A.1 objective of financial statements,A.2 underlying assumptions used in IFRS,

A.3 Qualitative characteristics of financial statements,

A.4 elements of financial statements,

A.5 recognition of elements of financial statements,

A.6 measurement of elements of financial statements

A.7 concepts of capital and maintenance.

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A.1 objective of financial statements

A financial statement should reflect true and

fair view of the business affairs of the

organization.

To show results of managements

stewardship( i.e, accountability for resources

entrusted to it).

Brainstorm 1

Financial position,

performance and changes in financial position

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A.2 underlying assumptions used in

IFRS

The following are the four underlyingassumptions in IFRS:

1. Accrual basis: the effect of transactions andother events are recognized when they occur, not

as cash is gained or paid. 2. Going concern: an entity will continue for the

foreseeable future.

3. Money Measurement - stable measuring unitassumption: or traditional Historical costaccounting; and Units of constant purchasingpower:

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http://en.wikipedia.org/wiki/Accrual_basishttp://en.wikipedia.org/wiki/Going_concernhttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Historical_cost_accountinghttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Historical_cost_accountinghttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Historical_cost_accountinghttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Units_of_constant_purchasing_powerhttp://en.wikipedia.org/wiki/Historical_cost_accountinghttp://en.wikipedia.org/wiki/Historical_cost_accountinghttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Stable_measuring_unit_assumptionhttp://en.wikipedia.org/wiki/Going_concernhttp://en.wikipedia.org/wiki/Accrual_basis


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A.3 Qualitative characteristics of financial

statements

Understandability ( user has reasonable knowledge)

Reliability( free from material error; faithfulrepresentation, substance over form, neutrality, prudence,

completeness)

Comparability (users must be informed about theaccounting policies, changes in them and the effect of the changes)

Relevance ( cannot be a delay in preparation, cost ofreporting should not exceed benefit etc)

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A.4 Elements of financial statements

A.4.1 - The financial position of an enterprise isprimarily provided in the Statement of FinancialPosition

Asset: An asset is a resource controlled by theenterprise as a result of past events from which futureeconomic benefits are expected to flow to theenterprise.

Liability: A liability is a present obligation of theenterprise arising from the past events, the settlementof which is expected to result in an outflow from theenterprise' resources, i.e., assets.

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A.4 contd..

Equity: Equity is the residual interest in the

assets of the enterprise after deducting all the

liabilities under the Historical Cost Accounting

model. Equity is also known as owner's equity.Under the units of constant purchasing power

model equity is the constant real value of

shareholders equity.

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A.4 Elements of financial statements

A.4.2 The financial performance of an enterpriseis primarily provided in The Statement ofComprehensible income:

Revenues: increases in economic benefit duringan accounting period in the form of inflows orenhancements of assets, or decrease of liabilitiesthat result in increases in equity. However, it does

not include the contributions made by the equityparticipants, i.e., proprietor, partners andshareholders.

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A.4.2 contd..

Expenses: decreases in economic benefits during

an accounting period in the form of outflows, or

depletions of assets or incurrences of liabilities

that result in decreases in equity. Revenues and expenses are measured in nominal

monetary units under the Historical Cost

Accounting model and in units of constantpurchasing power (inflation-adjusted) under the

Units of Constant Purchasing Power model.

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A.5 recognition of elements of financial

statements

An item is recognized in the financial

statements when:

it is probable future economic benefit will

flow to or from an entity.

the resource can be reliably measured -

otherwise the stable measuring unit

assumption is applied under the Historical

Cost Accounting model

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A.5 contd..

Under the Units of Constant Purchasing Power

model, all constant real value non-monetary

items are inflation-adjusted during low

inflation and deflation; i.e. all items in theStatement of Comprehensive Income, all

items in shareholders equity, Accounts

Receivables, Accounts Payables, all non-monetary payables, all non-monetary

receivables, provisions, etc.

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A.6 measurement of elements of

financial statements

Measurement is the process of determining the

monetary amounts at which the elements of the

financial statements are to be recognized and

carried in the balance sheet and incomestatement. This involves the selection of the

particular basis of measurement.

A number of different measurement bases areemployed to different degrees and in varying

combinations in financial statements.

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These are

A.6 contd..

(a) Historical cost

(b) Current cost

(c) Realisable (settlement) value

Present Value ( Discounted)

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B) International Accounting Standards (IAS) and

International Financial Reporting Standards (IFRS)

Both IAS and IFRS are standards themselvesthat prescribe rules or accounting treatmentsfor various individual items or elements of

financial statements IASs are the standards issued before 2001 and

IFRSs are the standards issued after 2001

There used to be 41 standards named IAS 1, 2,etc., however, several of them weresuperseded, replaced or just withdrawn.

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C) SIC and IFRIC

SICs and IFRICs are interpretations that

supplement IAS / IFRS standards.

SIC were issued before 2001 and IFRIC were

issued after 2001.

They deal with more specific situations not

covered in the standard itself, or issues that

arose after publishing of certain IFRS.

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Adoption of IFRS

FRS are used in many parts of the world,

including the European Union, Hong Kong,

Australia, Malaysia, Pakistan, GCC countries,

Russia, South Africa, Singaporeand Turkey. Asof 27 August 2008, more than 113 countries

around the world, including all of Europe,

currently require or permit IFRS reporting

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http://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Cooperation_Council_for_the_Arab_States_of_the_Gulfhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Turkeyhttp://en.wikipedia.org/wiki/Turkeyhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Cooperation_Council_for_the_Arab_States_of_the_Gulfhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/European_Union


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Adoption of IFRS contd..

It is generally expected that IFRS adoption

worldwide will be beneficial to investors and

other users of financial statements, by

reducing the costs of comparing alternativeinvestments and increasing the quality of

information. Companies are also expected to

benefit, as investors will be more willing toprovide financing

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Adoption of IFRS in India

The Institute of Chartered Accountants of India

(ICAI) has announced that IFRS will be mandatory

in India for financial statementsfor the periods

beginning on or after 1 April 2011. This will bedone by revising existing accounting standards to

make them compatible with IFRS.

Reserve Bank of Indiahas stated that financialstatements of banks need to be IFRS-compliant

for periods beginning on or after 1 April 2011...

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http://en.wikipedia.org/wiki/Institute_of_Chartered_Accountants_of_Indiahttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Institute_of_Chartered_Accountants_of_India


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Adoption of IFRS in India contd..

The ICAI has also stated that IFRS will be applied tocompanies above Rs.1000 crore from April 2015. Phasewise applicability details for different companies inIndia:

Phase 1: Opening balance sheet as at 1 April 2015*i. Companies which are part of NSE IndexNifty 50ii. Companies which are part of BSE SensexBSE 30

a. Companies whose shares or other securities are

listed on a stock exchange outside India b. Companies, whether listed or not, having net worth

of more than INR1,000 crore

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Phase 2: Opening balance sheet as at 1 April

2016*

Companies not covered in phase 1 and having

net worth exceeding INR 500 crore

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Phase 3: Opening balance sheet as at 1 April2017*Listed companies not covered in the earlier

phases If the financial year of a company commences

at a date other than 1 April, then it shallprepare its opening balance sheet at the

commencement of immediately followingfinancial year.

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IFRS learning as a step-by-step


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IFRS learning as a step by stepprocess:

Learn the basic structure of IFRS

Read the Framework

Get some knowledge about

individual standards

Develop your knowledge and be up-to-date

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Learn the basic structure of IFRS


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Learn the basic structure of IFRS(Familiarize yourself with the basic structure and concept of

IFRS.)

IFRS is an acronym for International FinancialReporting Standards and covers full set ofprinciples and rules on accounting treatment ofvarious items or situations. This full set comprises

the following components: Framework for the Preparation and Presentation of

Financial Statements

International Accounting Standards (IAS) andInternational Financial Reporting Standards (IFRS)

Standing Interpretations Committee (SIC) andInterpretations originated from the InternationalFinancial Reporting Interpretations Committee (IFRIC)

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R d th F k


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Read the Framework

For any beginner in IFRS, the Framework is thebasic concept of IFRS and therefore it is aMUST READ document.

Its not so time consuming, as the Frameworkitself has only about 30 pages and anyexperienced accounting professional would befamiliar with many concepts in it.

For the full text of the Framework , visitwww.ifrs.org.

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Get some knowledge about individual
http://www.ifrs.org/http://www.ifrs.org/


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Get some knowledge about individualstandards

Its almost impossible and ineffective to readand study the texts of individual standards,interpretations and accompanying docsits

more than 3 000 pages! There are many possibilities how to learn

basic principles and rules in individualstandards.

2 main streams of learning IFRS are Classroomtraining (iBAS) and self-study.

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Face-to-face training


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Face to face trainingPros:

learning from experienced tutor withpersonal contact

high level of interactivityyou might ask for

additional explanations or any questions youdont understand and often you get a feedbackfrom your tutor

full focus on the topicwhen you attend a

lecture, you will not be distracted by so manythings around you and therefore, your study willbe very effective.

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F t f t i i


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Face-to-face training

Cons

time consumingface-to-face training usually

takes place during your normal working or

business hours and you must find a space in

your overloaded schedule. That might be aproblem, especially during a high or

busy season.

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iBASIFRS Courseteaching method

We help participants better understand whyIFRS and its theory looks like it does,andthe challenges of adopting accounting

standards and information given diverseneeds and stakeholders. We do thisthrough:

Critical thinking and reasoning

Using evidence; challenging status quo Speaking and presentation skills

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h h d


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iBASIFRS Courseteaching methodContd..

Conceptual knowledge of variousterminologies Research skills

Accounting standardsFinancial reporting regulationsArticles and reportsResearch studies

Logic behind the standards What to do when there is no clearguidance

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What Do We Want Participants to

Learn

Critical Thinking Role of Assumptions in Developing Accounting

Using Evidence to Develop/Support Positions Learning to Learn

Research skills

No one right answer? Judgment skills (better answers)

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Q & A

an introduction to the ibas-ifrs course

Documents