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International Financial Reporting Standards(IFRS)

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are principles-based Standards, Interpretationsand the Framework (1989) adopted by theInternational Accounting Standards Board (IASB).

Many of the standards forming part of IFRS areknown by the older name of

(IAS). IAS were issued between 1973 and2001 by the Board of the International AccountingStandards Committee (IASC). On 1 April 2001, thenew IASB took over from the IASC the responsibilityfor setting International Accounting Standards.During its first meeting the new Board adopted

existing IAS . The IASB has continued to developstandards calling the new standards IFRS

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International Accounting

Standards Committee (IASC)

1973

2000

International Accounting

Standards Board (IASB)

2001

Future

InternationalAccountingStandards (IAS)

International Financial Reporting Standards (IFRSs)

IFRS seriesStandards

IAS SIC Interpretations IFRS IFRIC

Interpretations

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Differences due to the legal and regulatory environment:while IFRS require depreciation of all assets over their estimated useful lives,

Indian GAAP mandates that the depreciation rates cannot be lower than the ratesprescribed under the law;

Differences due to the economic environment:several IFRS that deal with investments, derivatives, other financial instruments

and business combinations extensively use the fair value concept, while correspondingIndian standards are generally based on the cost/carrying value approach

Differences due to the level of preparedness:accounting for deferred taxes under IFRS is based on the balance-sheet

approach, but due to the fact that the concept of deferred taxes was newly introduced inIndia, the current Indian standard prescribes the income statement approach, which iseasier to understand and implement

Conceptual differences:the Indian standard on intangible assets is based on the concept that all

intangible assets have a definite life, which cannot generally exceed 10 years, whileIFRS acknowledge that certain intangible assets may have indefinite lives; also, usefullives in excess of 10 years are not unusual under IFRS.

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Adoption of global standards such as IFRS mayand, consequently, the cost of capital. Similarly, even

companies raising capital and listed only on the local exchanges in Indiawould be able to better attract international investors and reduce riskpremium, by providing financial information that is more transparent

and understandable for the international investor community.

Further, IFRS financial information can also result in more accuraterisk evaluations by international lenders and lower risk premium forinternational debt offerings.

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By providing transparentand comparable financial information, IFRS reporting providesan impetus to cross-border acquisitions, enablespartnerships and alliances with foreign entities, and lower thecosts of integration in post-acquisition periods.

: Currently, different entitieswithin the group that reside in different jurisdictions may berequired to prepare a dual set of financial statements forexternal financial reporting; one for local statutory financial

reporting in the home country and second for reporting tothe parent company (assuming that the parent companyfollows IFRS).

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The Institute of Chartered Accountants of India (ICAI)has announced that IFRS will be mandatory in Indiafor financial statements for the periods beginning on

or after 1 April 2011. This will be done by revisingexisting accounting standards to make themcompatible with IFRS.Reserve Bank of India has stated that financial

statements of banks need to be IFRS-compliant forperiods beginning on or before 1 April 2011.

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