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Environment
FRS Course
Dr Sudershan Kuntluru
IIM Kozhikode
Accruals-Cornerstone of Accounting
Reporting Environment
Statutory Financials Reports
What are the statutory financial reports the
companies are required to present?
Reporting Environment
Statutory Financials Reports
Financial Statements
Revised Schedule IV
Annual
Quarterly
Earnings Announcements
Other Statutory Reports
Current update
ICAI
ASB
NACAS
Ministry of Corporate Affairs
SEBI
RBI
IRDA
NEWS
No IFRS, but strict norms take over
ET Bureau, Mar 29, 2011, 03.09am IST
IFRS, has been put off for now, but the
government is pressing ahead with the reforms in
the way companies present their financials.
The Corporate Affairs Ministry has made it
mandatory for large companies to prepare their
financials as per a revised format that is expected
to provide greater clarity about their finances and
liquidity position.
Schedule VI
(see Section 211)
Government of India has notified
new format of Financial Statements
What is IFRS?
IFRS is a set of accounting standards
developed by the IASB an independent
group of 15 experts
It is the global language of business
Aprox. 120 nations require IFRS (90 made it
mandatory and for the rest it is optional
As part of commitment in the G20 summit,
India will converge in a phased manner
starting April 1, 2011
IFRS
29
IAS (revised)
+31
SICs
+13
IFRS
+19
IFRICs
IFRS
The main constituents are
International Financial Reporting Standards (IFRS):
1-13
International Accounting Standards (IAS): Till 41
International Financial Reporting Interpretations
Committee (IFRIC) 19 Interpretations
Standing Interpretations Committee (SIC): 31
Interpretations
Financial Statements
Statement of Financial Position (SFP)
Statement of Comprehensive Income and
Other Comprehensive Income (SOCI)
Statement of Changes in Equity (SOCIE)
Statement of Cash Flows (SCF)
Notes
Opening Balance Sheet
(Annual Report)
(Quarterly Report)
Prospectus)
Other
SEBI Filings
Earnings Announcements
Environmental Factors
Managers of Companies
Main
for fair &Accounting
accurate reports
Setresponsibility
by International
Applies
accounting
to reflect business
Standards
Board
activities
Not currently
accepted
in U.S.
Managerial
discretion
is necessary
in
accounting
SEC
underonpressure
to accept
Major
lobbyist
GAAP
IAS
Environmental Factors
Auditing
SEC
requires
Audit Report Accounting
Set
by International
Audit
opinion can
be:
Standards
Board
- clean (fairly presented)
Not -currently
accepted
qualified (except
for) in U.S.
Auditors
- disclaimer (no opinion)
SEC
under
pressure
to
accept
Check Auditor quality & independence
IAS
Environmental Factors
Corporate Governance
Board
oversightAccounting
Set of
bydirectors
International
Audit
committeeBoard
of the board
Standards
- oversee accounting process
Not currently
accepted in U.S.
-oversee
internal control
- oversea internal/external audit
SEC
under
pressure
to
accept
Internal Auditor
IAS
Environmental Factors
Internal Users
External Users
Managers
Officers
Internal Auditors
Sales Managers
Budget Officers
Controller
Lenders
Shareholders
Governments
Labor Unions
External Auditors
Customers
Environmental Factors
Equity Investors
Active & Speculative Investors rely on
financial reports
Creditors
Solvency & Liquidity analysis relies
on financial reports
Environmental Factors
Economic, Industry & Company News
Impacts current & future financial condition and
performance
Voluntary Disclosure
Many factors encourage voluntary disclosure by
managers
Information Intermediaries
Industry devoted to collecting, processing, interpreting
& disseminating company information
Includes analysts, advisers, debt raters, buy- and
sell-side analysts, and forecasters
Major determinant of GAAP
Reliability
Verifiable, representationally faithful and neutral
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