1. Overview of IFRS & Presentation of Financial Statements The Institute of Chartered Accountants of India (Set up by an Act of Parliament)

2. IFRS Comprises International Accounting Standards (IAS) International Financial Reporting Standards (IFRS) Standing Interpretations Committee (SIC) International Financial Reporting Interpretations Committee (IFRIC)

3. IAS

6. IFRS

7. IAS 1 : Presentation of Financial Statements

8. Introduction Issued in September 2007 Replaces the previous version of 2003 Mandatory for period starting on or after January 1, 2009 Earlier adoption permitted Equivalent Indian GAAP  Schedule VI  AS 1 : Disclosure of Accounting Policies

9. Objective To prescribe the basis  for presentation of general purpose financial statements To ensure comparability  With entity’s own statements of previous periods  With financial statements of other entities To set  Overall requirements for the presentation of financial statements  Guidelines for their structure  Minimum requirements for their content

10. Financial Statements Comprises of A statement of financial position as at the end of the period A statement of comprehensive income for the period A statement of changes in equity for the period A statement of cash flows for the period Notes, comprising  A summary of significant accounting policies  Other explanatory information A Statement of financial position as at the beginning of the earliest comparative period  When an entity applies an accounting policy retrospectively  Makes a retrospective restatement of items in its financial statements  When it reclassifies items in its financial statements

11. General Features Fair presentation and compliance with IFRSs Going Concern Accrual Basis of accounting Materiality and aggregation Offsetting Frequency of reporting Comparative information Consistency of presentation

12. Fair Presentation and Compliance with IFRSs Financial statement to comply with all the requirements of IFRSs The application of IFRSs (with additional disclosures) when necessary is presumed to result in fair presentation Entity to make an explicit and unreserved statement of compliance in notes Adoption of an inappropriate accounting policy can not be rectified by disclosure of accounting policies, notes or explanatory material

13. Fair presentation and compliance with IFRSs When non - compliance with the requirements of IFRSs permitted  In extremely rare circumstances  When management considers While assessing a requirement in an IFRS That the objective of financial statement in not achieved in the particular circumstances As the entity’s circumstances are different from entities complying with that requirement  And concludes That compliance with a requirement in an IFRS Would be so misleading That it would conflict With the objectives of the financial statements

14. Fair Presentation Departure from IFRS where regulatory framework requires or does not prohibit such a departure: Entity to disclose – in the year of departure  that management has concluded that the financial statements present fairly the entity’s financial position, financial performance and cash flows  That it has complied with applicable IFRSs, except that it has departed from a particular requirement to achieve a fair presentation  the title of the IFRS from which the entity has departed  the nature of the departure, including the treatment that the IFRS would require  the reason why that treatment would be so misleading in the circumstances that it would conflict with the objective of financial statements set out in the Framework  the treatment adopted  for each period presented, the financial effect of the departure on each item in the financial statements that would have been reported in complying with the requirement.

15. Fair presentation and compliance with IFRSs Rebuttable presumption that if other entities in similar circumstances comply with the requirement, the entity’s compliance with the requirement would not be so misleading that it would conflict with the objective of financial statements set out in the Framework

16. Going Concern How to assess:  Consider all available information about the future (minimum 12 months from the reporting date) particularly Current and expected profitability Debt repayment schedules Potential sources of replacement financing  Depends on the facts of each case

17. Going Concern If management is aware  Of material uncertainties related to events or conditions That may cast significant doubt On entity’s ability to continue as going concern  Disclose the uncertainties When financial statements not prepared on a going concern basis  Disclose the fact  Disclose the basis for preparation of financial statement  The reasons why the entity is not a going concern

18. Materiality and Aggregation Definition:  Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of financial statements.  Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances  The determining factor could be The size or nature of the item, or a combination of both

19. Offsetting Not to offset  Assets and liabilities  Income and expenses unless permitted by an IFRS What is not offsetting  Measuring assets net of valuation allowances Obsolescence allowance on inventories Doubtful debts on allowances  Gains (losses) on non-current assets less selling expenses  Net basis (Gains less losses) arising from a group or similar transactions unless material

20. Frequency At least annually When change in reporting period, disclose  The period covered  The reason for using a longer or shorter period  The fact that amounts presented in financial statements are not entirely comparable May also adopt 52 week period

21. Comparative Information Disclose  comparative information in respect of the previous period for all amounts in current period financial statements Narrative and descriptive information when it is relevant to an understanding of current period’s financial statements Present when disclosing comparative information, as a minimum  Two statements of financial position  Two of each of the other statements  Related notes

22. Comparative Information Present  When an entity Applies an accounting policy retrospectively Makes a retrospective restatement of items in its financial statements Reclassifies items in its financial statements  disclosing comparative information, as a minimum Three statements of financial position Two of each of the other statements Related notes

23. Comparative Information When change in presentation or classification of items in financial statements  Reclassify comparative amounts  Disclose The nature of reclassification The amount of each item or class of items that is reclassified The reason of reclassification When reclassification of comparative amounts is not practicable  Disclose The reason for not reclassifying the amounts The nature of adjustments that would have been made if the amounts had been reclassified

24. Consistency Retain the presentation and classification of items in the financial statements from one period to the next unless  It is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation of classification would be more appropriate  An IFRS requires a change in presentation Change only when changed presentation provides information that is  Reliable and more relevant to the users  Revised structure is likely to continue

25. Information to be presented in Statement of Financial Position No prescribed format Minimum line items prescribed Items listed are different in nature or function Additional line items, headings and sub-totals may be presented if relevant Classify as  Current assets and non-current assets  Current liabilities and non-current liabilities  Unless order of liquidity provides reliable and relevant information (generally – financial institutions) Disclose under each line item where amount expected to be recovered or settled after more than 12 months

26. Information to be presented in Statement of Financial Position Minimum line items - assets A Property, plant and equipment BInvestment property CIntangible assets DFinancial assets excluding (E), (H) & (I) EInvestments accounted for using the equity method FBiological assets GInventories HTrade and other receivables ICash and cash equivalents JThe total of assets classified as held for sale and assets included in disposal group as held for sale in accordance with IFRS 5

27. Information to be presented in Statement of Financial Position Minimum line items - Liabilities KTrade and other payables LProvisions MFinancial liabilities excluding (K) & (L) NLiabilities and assets for current tax (IAS 12) ODeferred tax liabilities and deferred tax assets (IAS 12) PLiabilities included in disposal group as held for sale in accordance with IFRS 5 QNon-controlling interests, presented within equity RIssued capital and reserves attributable to owners of the parent

28. Information to be presented in Statement of Financial Position Additional line items to be judged on the basis of  The nature and liquidity of assets  The function of assets within the entity  The amount, nature and timings of liabilities

29. Information to be presented in Statement of Financial Position Asset is classified as a current asset if it is  Expected to be realized in the entity’s normal operating cycle; or  Intended for sale or consumption in the entity’s normal operating cycle; or  Held primarily for the purpose of being traded; or  Expected to be realized within 12 months after the reporting period; or  Cash or cash equivalent All other assets are non-current assets Non-current assets include tangible, intangible and financial assets of a long- term nature

30. Current Assets Operating Cycle  Time between the acquisition of assets for processing & their realization in cash or cash equivalents  If the normal operating cycle can not be identified, it is assumed to be 12 months

31. Information to be presented in Statement of Financial Position Liability is classified as a current liability if  It is expected to be settled in the entity’s normal operating cycle; or  It is held primarily for the purpose of being traded; or  It is due to be settled within 12 months after the reporting period; or  The entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. All other liabilities are non-current liabilities

32. Non-adjusting events in respect of Loans classified as Current Liabilities Refinancing on a long term basis Rectification of a breach of a long term arrangement Granting by the lender of grace to rectify a breach of a long term arrangement ending atleast 12 months after the reporting period

33. Information to be presented in Statement of Financial Position Disclose  either in the statement of financial position  or in notes  sub-classification of line items based on Requirements of IFRSs Size, nature and function of the amounts involved

34. Information to be presented in Statement of Financial Position Disclose  either in the statement of financial position  or in the statement of changes in equity  in the notes Desired information for each class of share capital  The number of authorized shares  The number of issued and fully paid shares  The number of issued but not fully paid shares  Par value per share or that the shares have no par value A description of the nature and purpose of each reserve within equity

35. Statement of Comprehensive Income Option to present all items of income and expense recognized in a period  Option 1: in a single statement ‘statement of comprehensive income’  Option 2: in two statements ‘Separate income statement’ displaying components of profit or loss ‘Statement of comprehensive income’ beginning with profit or loss and displaying components of other comprehensive income

36. Statement of Comprehensive Income Minimum line items  Revenue  Finance costs  Share of the profit or loss of associates and joint ventures accounted for using the equity method  Tax expense  A single amount comprising the total of The post-tax profit or loss of discontinued operations The post tax gain or loss recognized on the measurement to fair value less costs to sell or on the disposal of the assets or disposed group(s) constituting the discontinued operations  Profit or loss  Each component of other comprehensive income classified by nature  Share of the other comprehensive income of associates and joint ventures accounted for using the equity method  Total comprehensive income

37. Statement of Comprehensive Income Disclose following as allocation of profit or loss for the period  Profit or loss for the period attributable to Non-controlling interests Owners of the parent  Total comprehensive income for the period attributable to Non-controlling interests Owners of the parent

38. Statement of Comprehensive Income Also permitted  Additional line items, headings and sub-totals permitted  Amend the description of line items  Change the order of line items Not permitted  Offsetting of income and expense unless permitted by IFRSs  To present any items of income or expense as extraordinary items either in the statement of comprehensive income Separate income statement, if prepared, or in notes

39. Statement of Comprehensive Income Profit or loss for the period  All items of income or expense recognized in the period are included in profit or loss unless an IFRS requires otherwise  Items not recognized in profit or loss are ‘other comprehensive income’

40. Statement of Comprehensive Income Other comprehensive income  comprises of items of income and expense  not recognized in profit or loss as required or permitted by other IFRSs  Includes Reclassification adjustments Effect of changes in accounting policies (IAS 8) Changes in revaluation surplus (IAS 16) Actuarial gains (losses) on defined benefit plans (IAS 19) Gains (losses) on translation of the financial statements of a foreign operation (IAS 21) Gains (losses) on re-measuring available for sale financial assets (IAS 39) The effective portion of gains (losses) on hedging instruments in a cash flow hedge (IAS 39)

41. Statement of Comprehensive Income For other comprehensive income for the period  Disclose the amount of income-tax relating to each component of other comprehensive income (including reclassification adjustments) either in the statement of comprehensive income or in notes  May present components of other comprehensive income either Net of related tax effects Before related tax effects with one tax amount

42. Statement of Comprehensive Income Reclassification adjustments  May be presented in the statement of comprehensive income or in notes  When presented in notes The entity presents the components of other comprehensive income after any related reclassification adjustments

43. Statement of Comprehensive Income Presentation of expenses Either of two method  ‘Nature of expense’ method  ‘Function of expense’ or ‘cost of sales’ method Choice depends on  Historical and industry factors  Nature of entity Management to select presentation that is  Reliable  More relevant

44. Statement of changes in Equity Equity includes  Each class of contributed equity  The accumulated balance of each class of other comprehensive income  Retained earnings

45. Statement of changes in Equity Changes in equity  Between the beginning of the reporting period  And the end of the reporting period  Reflects the increase or decrease  In the entity’s net assets

46. Statement of changes in Equity Changes in equity of a period represent  The total amount of income and expense, including gains and losses, generated by the entity’s activities of that period  Changes resulting from transactions with owners in their capacity as owners such as Equity contributions Reacquisition of entity’s own equity instruments Dividends Transaction costs directly related to such transactions

47. Statement of changes in Equity Show in the statement  Total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests  For each component of equity, the effects of retrospective application or retrospective restatement recognized in accordance with IAS 8 A reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from  Profit or loss  Each item of other comprehensive income  Contd…

48. Statement of changes in Equity Show in the statement…contd  Transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests that do not result in a loss of control Dividends  Present either in the statement of changes in equity or in the notes The amount of dividends recognized as distribution to owners, and The related amount per share

49. Statement of Cash Flows Provides users of financial statements  with a basis to assess the ability of the entity  To generate cash and cash equivalents and  The needs of the entity to utilize those cash flows IAS 7 sets out requirements for the presentation and disclosure of cash flow information

50. Main differences with Indian GAAP Treatment of bank overdrafts Cash flows from extraordinary items Classification of interest and dividends

51. Notes - Structure Presentation  Systematic manner  Each item in Statement of financial position Statement of comprehensive income / separate income statement Statement of changes in equity Statement of cash flows  Should be cross-referenced to any related information in the notes

52. Notes - Structure Order  A statement of compliance with IFRSs  A summary of significant accounting policies applied  Supporting information for items presented in Statement of financial position Statement of comprehensive income / separate income statement Statement of changes in equity Statement of cash flows  In the order in which each statement & each line item is presented  Other disclosures including: Contingent liabilities and unrecognized contractual commitments Non-financial disclosures Order may be varied if necessary or desirable Information may be combined

53. Notes – Disclosure of Accounting Policies To disclose and include  Measurement bases  Accounting Policies  Judgments that management has made

54. Notes :Sources of Estimation Uncertainty Required  When there are uncertainties  that have a significant risk  of causing material adjustment  To the carrying amount of assets and liabilities  Within next financial year Disclose  Information about the key assumptions concerning the future  Other key sources of estimation uncertainty at the end of the reporting period

55. Notes :Sources of Estimation Uncertainty In respect of concerned assets and liabilities, include details of:  Their nature  Their carrying amount at the end of the reporting period

56. Notes – Other Disclosures Dividends  The amounts of dividends proposed or declared before the financial statements were authorized for issue but not recognized as a distribution to owners during the period and the related amount per share  The amount of any cumulative preference dividends not recognized

57. Notes – Other Disclosures Capital Disclosures - Principle  Disclose information  That enables users of its financial statements  To evaluate  The entity’s objectives, policies and processes  For managing capital

58. Notes – Other Disclosures Capital Disclosures – Disclose  Qualitative information about its objectives, policies and processes for managing capital  Summary quantitative data about what it manages as capital  Any changes in above from the previous period  Whether during the period it complied with any externally imposed capital requirements to which it is subject  When the entity has not complied with such externally imposed capital requirements, the consequences of such non-compliances

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