Theme: Lead Corporate India - Role of Company Secretary 37 th National Convention of Company Secretaries Overview of IFRS & opportunities for Company Secretaries Rammohan Bhave & th November 2009 Speakers logo

37 th National Convention of Company Secretaries 1 IFRS OVERVIEW Overview of IFRS and opportunities for Company Secretaries Session: Best Practices in Financial / Non-Financial Disclosures IFRS OVERVIEW & OPPRTUNITIES FOR CS PROFESSIONALS OR SHOULD IT BE Session: Practices in Financial / Non-Financial Disclosures/ Best Non-disclosures

37 th National Convention of Company Secretaries 2 COMPLIANCES / DISCLOSURES WHOSE RESPONSIBILITY? OF COURSE COMPANY SECRETARIES IT’S HISTORICAL CHALLENGE & OPPORTUNITY WITH HUGE FINANCIAL DISCLOSURES AND MORE SO NON-FINANCIAL DISCLOSURES SOMEBODY ASKED ME WHAT IS NOT TO BE DISCLOSED?????

37 th National Convention of Company Secretaries 3 Disclosures – dilemma world over Creative Accounting Corporate Governance 3

37 th National Convention of Company Secretaries 4 disclosures Reopen Prior period adjustments Huge number Direct resp. e.g. valuer name PROBABLE 4

37 th National Convention of Company Secretaries 5 Creative accounting VS IFRSIFRS Securitisation of ofdebts Revenue recognition Prior period items Controlled entities JVs & associates Unlisted & private subsidiaries Historicalcosts NPATREATMENTS 5

37 th National Convention of Company Secretaries 6 Form vs substance: revenue recognition Legal contract Substantially Consumed 6

37 th National Convention of Company Secretaries 7 FINANCIAL INSTRUMENTS SMEs 2 classes only classes only Available For sale Held to maturity Fair value Thru P & L Loans & receivables 7

37 th National Convention of Company Secretaries 8 Why M & A do not happen thru balance-sheets? WHY VALUATIONS ARE REQUIRED AT ALL? BECAUSE

37 th National Convention of Company Secretaries 9 OLD DEFINITION OF BALANCE-SHEET Shee(i)t of Balances from LEDGER IFRS takes journey to Financial reporting (IFRS)

37 th National Convention of Company Secretaries 10 DUE DILIGENCE & VALUATIONS GETTING SUBSTITUTED BY IFRS CONVERGED ACCOUNTS

37 th National Convention of Company Secretaries 11 WHAT IS AUTHENTICATION? WITNESSING COMPANY BILL WILL REMOVE THIS AFTER ONE OR TWO YEARS

37 th National Convention of Company Secretaries 12 MAJOR OPPORTUNITIES FAIR VALUE CONSOLIDATIONS – RELATED PERSON – CONTROLLED ENTITY HUGE DISCLOSURES – 70 TO 90% UP EUROPE EXPERIENCE, INDIA EXPECTED TO BE 2.5 TIMES UP FINANCIAL INSTRUMENTS – 4 CATEGORIES SUBSTANCE OVER FORM – LOANS, LEASES, USEFUL LIFE (PPE), WARRANTIES, ESOP, EXTENDED CREDIT TERMS, OFF-BALANCE-SHEET ITEMS

37 th National Convention of Company Secretaries 13 COMPANY Vs ENTITY ICSI OR IGESI INSTITUTE OF COMPANY SECRETARIES OF INDIA INSTITUTE OF GROUP ENTITIES SECRETARIES OF INDIA COMPANY SECRETARY OR GROUP ENTITIES SECRETARY

37 th National Convention of Company Secretaries 14 APPROACH CHANGES PROFIT AS A CENTER FIGURE TO EQUITY WORTH AS A CENTER FIGURE

37 th National Convention of Company Secretaries 15 OLD CONCEPT PREPARE PROFIT AND LOSS CARRY BALANCE TO BALANCE-SHEET BALANCE-SHEET MUST TALLY PREPARE BALANCE-SHEET (SOFP) CARRY DIFFERENCE TO P & L (SOCI) – SEE IF IT TALLIES

37 th National Convention of Company Secretaries 16 IFRS KNOWLEDGE not to be few people's monopoly ICSI ALREADY SPREADING THRU E-LEARNING SHOULD GET INTO E-LEARNING MODE QUICKLY ON IFRS KNOWLEDGE BANK VC – WEBINARS ARE GREAT TOOLS

37 th National Convention of Company Secretaries 17 WHOSE BABY? SO WHO SHOULD DO THIS OF COURSE WE ALL, WITH OUR LEADERS SPREAD (TOTAL COMPLIANCE) IFRS TO MASSES – INCLUDING SMALL CITIES SURPRISED???

37 th National Convention of Company Secretaries 18 STORY OF RAJUs vs RAJUs 18 LET ME SHARE 2 RAJUs did not follow corporate governance, transparency IFRS & OTHER LAWS are tools for Our 2 RAJUs to implement it (President Datla RAJU & Vice-president RAJU Khanvalkar)

37 th National Convention of Company Secretaries 19 SO DEAR LEADERS BOTH THE RAJUS MY APPEAL TO PRESIDENT AND VICE-PRESIDENT IS OUR INSTITUTE ICSI A PUBLIC INTEREST ENTITY? YES CERTAINLY LET US SET EXAMPLE BY CONVERTING INSTITUTE ACCOUNTS TO IFRS CONVERGED ACCOUNTS

37 th National Convention of Company Secretaries 20 Opportunites for company secretaries CRO – CHIEF RISK OFFICER CCO – CHIEF COMPLIANCE OFFICER CDO – CHIEF DISCLOSURE OFFICER CTO – CHIEF TRANSPARENCY OFFICER CGO – CHIEF GOVERNANCE OFFICER

37 th National Convention of Company Secretaries 21 2 nd NOV JAIPUR STORY ONE MORE LAW SAFETY LAWS ADDED TO ECONOMIC LEGISLATION PAPER WHAT IS IMPACT OF IOC MISHAP AND ROLE OF CS?

37 th National Convention of Company Secretaries 22 NON-FINANCIAL DISCLOSURES Statement of legal position – SOLP Statement of compliance position – SOCP Statement of Ecological position – SOEP Statement of Governance position - SOGP

37 th National Convention of Company Secretaries 23 WHAT ARE THE NUMBER OF LAWS IN INDIA?

37 th National Convention of Company Secretaries 24 ANY QUESTIONS OR HAVE I CONFUSED YOU ENOUGH ? 24

37 th National Convention of Company Secretaries 25 Thank you RAMMOHAN BHAVE