International Financial Reporting Standards (IFRS)
IFRS is principles based set of accounting standards developed by the International Accounting Standards Board (IASB), an independent group of 15 experts. IFRS is steadily becoming the global standard for the preparation of financial statements of public companies.
The IFRS establishes broad rules and dictate specific treatments in Financial reporting.
International Accounting Standards Board
International Accounting Standards Board (ISAB) is based at London and was founded in 2001 as a successor to the International Accounting Standards Committee (IASC). The IASB has continued to develop standards calling the new standards IFRS.
Financial Statements as per IFRS
The objective of the Financial Statements is to provide information about the financial position performance and changes in the financial position of a company or entity, which is useful for wide range of stake holders. As per the revised standrad which is known as IFRS Financial Statement, the presentation of the Financial Statements after January 1 2009 involves the following:
Balance sheet which is to be known as "Statement of Financial Position"
Income Statement which is to be known as "Statement of Comprehensive Income"
Cash Flow Statement which is to be known as "Statement of Cash Flows"
Notes: These would include a summary of the significant accounting policies.
Countries that follow IFRS:
Around 20 nations require IFRS for their domestic listed companies. Out of them, around 90 countries have made it compulsory for their domestic companies to follow IFRS, while in the rest , it is optional for companies to either follow IFRS or the domestic accounting norms.
What is position in India?
In India, the ICAI (Institute of Chartered Accountants of India, Statutory Body; Set up by Act 1949) and National Commission for Accounting Standards have affirmed that India will transit into the new IFRS soon. At present the companies in India don't require to follow the IFRS.
However, In the G-20 September 2009 summit India had already made a commitment that India will converge its domestic accounting standards with IFRS in a phased manner starting April 1, 2011.
The current position is that
All the BSE and NSE listed entities and companies which have a net-worth over ` 500 crore, are required to converge with IFRS from April 2011.
The date for the insurance companies was extended to April 1, 2012
and the date for banks was extended to April 1, 2013.