You are on page 1of 12

Convergence with

IFRS
Presented by:
Pramodkumar V. Deshani, Lecturer, Faculty of Commerce
Dipti T. Arora, Lecturer, Faculty of Commerce

D.R.Patel & R.B.Patel Commerce College


Bharthana (VESU), Surat, Gujarat.
Need for Convergence
with IFRS

Globalization of business
Increasing complexities of
economic transactions


IFRS and Countries of the
world
European union, Australia, China, New
Zealand, Russia currently require or
permit the use of IFRS
India, Japan, Srilanka, Canada and
Korea have committed to adopt IFRS
from 2011
USA will adopt from 2014

IFRS compliance for Public
Interest Entities
Whose equity debt securities are listed on any
stock exchange
Bank, Financial institution, Mutual fund or an
Insurance Companies
Turnover exceeds Rs. 100 crores in the
financial year
Public deposits or borrowings from bank or
financial institution in excess of Rs. 25 crores
in previous year
Transition to IFRS
First year of reporting 01-04-2011 to 31-03-
2012
Comparative year 01-04-2010 to 31-03-2011
Date of transition 01-04-2010 beginning of
early period
Beneficiaries of
convergence with IFRS
§ Investors
§ Industries
§ Accounting Professional
§ Corporate World
Divergences between Indian
GAAP & IFRS
§ Legal and regulatory requirement
§ Present economic condition
§ Level of preparedness

Key Divergences
All business combination shall be accounted as
per purchase method at fair values
Negative goodwill arising on business
combination shall be accounted as income
instead of capital reserve
Intangible assets can be revalued only when
there is an active market for the same

Cont…
Interest income shall be recorded after
considering their associated expenses such
as loan processing fee, agent’s commission.
Provisions shall be created only to the extent
they relate to specified risk. No provisions are
permitted for future or expected losses
Prior period items shall be adjusted in the
opening balance of assets and liabilities and
equity of the earlier year
Suggestion for increased
convergence
Ø Political pressure on IASB should be avoided
Ø IASB should publicize standard developed by it
Ø Legislation should be passed
Ø Co-operation from local stock exchange
Ø Disciplinary action in case of non-compliance of
IFRS
Conclusion

Convergence with IFRS has received a lot of
flack from Indian trade and industry.
IFRS is definitely need of hour
Transition to IFRS will not be a swift and
painless process.
All the parties concerned with financial
reporting need to share the responsibility of
international harmonization and convergence

Thank You