Session Title:Session Title:Accrual Exposure Draft on “Presentation Accrual Exposure Draft on “Presentation of Financial Statements”of Financial Statements” , its objectives , its objectives and scope, Detailed discussion on the and scope, Detailed discussion on the proposed exposure draft on proposed exposure draft on “Presentation of Financial Statements”“Presentation of Financial Statements” , , Accrual Exposure draft on “ACCOUNTING Accrual Exposure draft on “ACCOUNTING POLICIES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS”.ESTIMATES AND ERRORS”. its objective its objective and scope. Detailed discussion on and scope. Detailed discussion on proposed exposure draft .proposed exposure draft .

Session overview:Session overview:► As India is in the process of migration to accrual basis As India is in the process of migration to accrual basis

accounting, many pilot studies are being undertaken at Union accounting, many pilot studies are being undertaken at Union and States. Government Accounting Standards Advisory Board and States. Government Accounting Standards Advisory Board (GASAB) issues Indian Government Financial Reporting (GASAB) issues Indian Government Financial Reporting Standards (IGFRS) on accrual basis to facilitate the migration to Standards (IGFRS) on accrual basis to facilitate the migration to accrual basis. In this direction, GASAB has proposed two Accrual accrual basis. In this direction, GASAB has proposed two Accrual Draft Exposure of IGFRS on “Presentation of Financial Draft Exposure of IGFRS on “Presentation of Financial Statements” & “ACCOUNTING POLICIES, CHANGES IN Statements” & “ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS”.ACCOUNTING ESTIMATES AND ERRORS”. The primary objective The primary objective of IGFRS-1 on “Presentation of Financial Statements” is to of IGFRS-1 on “Presentation of Financial Statements” is to prescribe the manner in which general purpose financial prescribe the manner in which general purpose financial statements should be presented to ensure comparability both statements should be presented to ensure comparability both with the entity’s financial statements of previous periods with the entity’s financial statements of previous periods and with the financial statements of other entities. To achieve and with the financial statements of other entities. To achieve this objective, this Standard sets out overall considerations for this objective, this Standard sets out overall considerations for the presentation of financial statements, guidance for their the presentation of financial statements, guidance for their structure, and minimum requirements for the content of structure, and minimum requirements for the content of financial statements prepared under the accrual basis of financial statements prepared under the accrual basis of accounting.accounting.

► The main objective of IGFRS-6 on “ACCOUNTING POLICIES, The main objective of IGFRS-6 on “ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS”. to CHANGES IN ACCOUNTING ESTIMATES AND ERRORS”. to prescribe the criteria for selecting and changing accounting prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting of changes in accounting policies, changes in accounting estimates and the corrections of errors.estimates and the corrections of errors.

Session Structure:Session Structure:

1. Accrual Exposure Draft on “Presentation 1. Accrual Exposure Draft on “Presentation of Financial Statements”, its objectives and of Financial Statements”, its objectives and scope.scope.

► 2. Detailed discussion on the proposed 2. Detailed discussion on the proposed exposure draft IGFRS-1.exposure draft IGFRS-1.

► 3. Accrual Exposure draft on “ACCOUNTING 3. Accrual Exposure draft on “ACCOUNTING POLICIES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS”, its objective and ESTIMATES AND ERRORS”, its objective and scope.scope.

► 4. Detailed discussion on proposed exposure 4. Detailed discussion on proposed exposure draft IGFRS-6draft IGFRS-6

► 5. Exercise and Group discussion. 5. Exercise and Group discussion.

PROPOSED INDIAN GOVERNMENT FINANCIAL PROPOSED INDIAN GOVERNMENT FINANCIAL REPORTING STANDARD (IGFRS-1) ON REPORTING STANDARD (IGFRS-1) ON

“Presentation of Financial Statements”“Presentation of Financial Statements”

► IntroductionIntroduction► Indian Government Financial Reporting Standard Indian Government Financial Reporting Standard

(IGFRS) 1 on Presentation of Financial Statements (IGFRS) 1 on Presentation of Financial Statements sets overall requirements for the presentation of sets overall requirements for the presentation of financial statements, guidelines for their structure financial statements, guidelines for their structure and minimum requirements for their contents and minimum requirements for their contents prepared under accrual basis accounting to prepared under accrual basis accounting to be followed in Government. The aforesaid be followed in Government. The aforesaid requirements are different from the requirements of requirements are different from the requirements of Finance Accounts as required to be prepared Finance Accounts as required to be prepared under the existing rules. Appendix B to this under the existing rules. Appendix B to this Standard contains Gap Analysis between Standard contains Gap Analysis between financial statements prepared under cash basis of financial statements prepared under cash basis of reporting and the accrual basis.reporting and the accrual basis.

ObjectiveObjective► 1. The objective of this Standard is 1. The objective of this Standard is

to prescribe the manner in which to prescribe the manner in which general purpose financial statements general purpose financial statements should be presented to ensure should be presented to ensure comparability both with the entity’s comparability both with the entity’s financial statements of previous financial statements of previous periods and with the financial periods and with the financial statements of other entities. To statements of other entities. To achieve this objective, this Standard achieve this objective, this Standard sets out overall considerations for the sets out overall considerations for the presentation of financial statements, presentation of financial statements, guidance for their structure, and guidance for their structure, and minimum requirements for the content minimum requirements for the content of financial statements prepared under of financial statements prepared under the accrual basis of accounting.the accrual basis of accounting.

ScopeScope This Standard shall be applied to all general This Standard shall be applied to all general

purpose financial statements prepared and purpose financial statements prepared and presented under the accrual basis of accounting in presented under the accrual basis of accounting in accordance with IGFRSs.accordance with IGFRSs.

► 3. General purpose financial statements are those 3. General purpose financial statements are those intended to meet the needs of users. Users of intended to meet the needs of users. Users of general purpose financial statements include general purpose financial statements include various stake holders, government and their various stake holders, government and their agencies and the public. General purpose agencies and the public. General purpose financial statements include those that are financial statements include those that are presented separately or within another public presented separately or within another public document, such as an annual report.document, such as an annual report.

► 4. This Standard should apply to all reporting 4. This Standard should apply to all reporting entities in preparing the financial statements of the entities in preparing the financial statements of the GovernmentGovernment..

► DefinitionsDefinitions► The following terms are used in this Standard with the The following terms are used in this Standard with the

meanings specified:meanings specified:► (i)Accrual basis means a basis of accounting under which (i)Accrual basis means a basis of accounting under which

transactions and other events are recognized when they occur transactions and other events are recognized when they occur (and not only when cash or its equivalent is received or paid). (and not only when cash or its equivalent is received or paid). The transactions and events are recorded in the accounting The transactions and events are recorded in the accounting records and recognized in the financial statements of the periods records and recognized in the financial statements of the periods to which they relate.to which they relate.

► (ii)Assets are resources controlled by an entity as a result of past (ii)Assets are resources controlled by an entity as a result of past events and from which future economic benefits or service events and from which future economic benefits or service potential are expected to flow to the entity.potential are expected to flow to the entity.

► (iii) Cash comprises cash on hand and demand deposits.(iii) Cash comprises cash on hand and demand deposits.► (iv) Cash equivalents are short-term, highly liquid investment (iv) Cash equivalents are short-term, highly liquid investment

that are readily convertible to know amount of cash and which are that are readily convertible to know amount of cash and which are subject to an insignificant risk of change in value.subject to an insignificant risk of change in value.

► (v) Carrying amount is the amount at which an asset is recognised (v) Carrying amount is the amount at which an asset is recognised in the balance sheet after deducting any accumulated deprecation in the balance sheet after deducting any accumulated deprecation and impairment losses there on.and impairment losses there on.

► (vi) Depreciation is the adjustment of value that reflects the (vi) Depreciation is the adjustment of value that reflects the decline of capacity and benefit of a certain asset.decline of capacity and benefit of a certain asset.

► (vii) Expenses are decreases in economic benefits or (vii) Expenses are decreases in economic benefits or service potential during the reporting period in the form of service potential during the reporting period in the form of outflows or consumption of assets or incurrence of outflows or consumption of assets or incurrence of liabilities that result in decreases in net assets/equity.liabilities that result in decreases in net assets/equity.

► (viii) Fair Value is the amount for which an asset could be (viii) Fair Value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.willing parties in an arm's length transaction.

► (ix) Impracticable Applying a requirement is impracticable (ix) Impracticable Applying a requirement is impracticable when the entity cannot apply it after making every when the entity cannot apply it after making every reasonable effort to do so.reasonable effort to do so.

► (x) Liabilities are present obligations of the entity arising (x) Liabilities are present obligations of the entity arising from past events, the settlement of which is expected to from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying result in an outflow from the entity of resources embodying economic benefits or service potential.economic benefits or service potential.

► (xi) Notes contain information in addition to that (xi) Notes contain information in addition to that presented in the statement of financial position, statement presented in the statement of financial position, statement of financial performance, statement of changes in net of financial performance, statement of changes in net assets/equity and cash flow statement. Notes provide assets/equity and cash flow statement. Notes provide narrative descriptions or disaggregation of items disclosed narrative descriptions or disaggregation of items disclosed in those statements and information about items that do in those statements and information about items that do not qualify for recognition in those statements.not qualify for recognition in those statements.

► (xii) Revenue is the gross inflow of economic benefits or (xii) Revenue is the gross inflow of economic benefits or service potential during the reporting period when those service potential during the reporting period when those inflows result in an increase in net assets/equity.inflows result in an increase in net assets/equity.

MaterialityMateriality►Materiality is a condition in which Materiality is a condition in which

information omission or misstatement information omission or misstatement could influence the decisions or could influence the decisions or assessments of users made on the basis of assessments of users made on the basis of the financial statements. Materiality the financial statements. Materiality depends on the nature or size of the item depends on the nature or size of the item or error judged in the particular or error judged in the particular circumstances of omission or misstatement.circumstances of omission or misstatement.

Net Assets/EquityNet Assets/Equity►Net assets/equity is the term used in Net assets/equity is the term used in

this Standard to refer to the residual this Standard to refer to the residual measure in the statement of financial measure in the statement of financial position (assets less liabilities). Net position (assets less liabilities). Net assets/equity may be positive or negative.assets/equity may be positive or negative.

Purpose of Financial StatementsPurpose of Financial Statements

► Financial s t a t e m e n t s a r e a s t r u c t u r e d r e Financial s t a t e m e n t s a r e a s t r u c t u r e d r e p r e s e n t a t i o n o f the financial position and p r e s e n t a t i o n o f the financial position and financial performance of an entity. The objectives of financial performance of an entity. The objectives of general purpose financial statements are to general purpose financial statements are to provide information about the financial position, provide information about the financial position, financial performance, and cash flows of an entity that financial performance, and cash flows of an entity that is useful to a wide range of users in making is useful to a wide range of users in making and evaluating decisions about the allocation of and evaluating decisions about the allocation of resources. Specifically, the objectives of general resources. Specifically, the objectives of general purpose financial reporting in the government purpose financial reporting in the government should be to provide information useful for decision should be to provide information useful for decision making, and to demonstrate the accountability of the making, and to demonstrate the accountability of the entity for the resources entrusted to it, by:entity for the resources entrusted to it, by:

► (a) Providing information about the sources, (a) Providing information about the sources, allocation, and uses of financial resources;allocation, and uses of financial resources;

► (b) Providing information about how the entity (b) Providing information about how the entity financed its activities and met its cash requirements;financed its activities and met its cash requirements;

► (c) Providing information that is useful in evaluating (c) Providing information that is useful in evaluating the entity’s ability to finance its activities and to meet the entity’s ability to finance its activities and to meet its liabilities and commitments;its liabilities and commitments;

► (d) Providing information about the financial condition (d) Providing information about the financial condition of the entity and changes in it; andof the entity and changes in it; and

► (e) Providing aggregate information useful in evaluating (e) Providing aggregate information useful in evaluating the entity’s performance in terms of service costs, the entity’s performance in terms of service costs, efficiency, and accomplishments.efficiency, and accomplishments.

Components of Financial StatementsComponents of Financial Statements A complete set of financial statements A complete set of financial statements

comprises:comprises:► (a) A statement of financial position;(a) A statement of financial position;► (b) A statement of financial performance;(b) A statement of financial performance;► (c) A statement of changes in net (c) A statement of changes in net

assets/equity;assets/equity;► (d) A cash flow statement;(d) A cash flow statement;► (e) A statement of Budget Realisation: A (e) A statement of Budget Realisation: A

comparison of budget and actual amounts comparison of budget and actual amounts either as a separate additional financial either as a separate additional financial statement or as a budget column in the statement or as a budget column in the financial statements; andfinancial statements; and

► (f) Notes, comprising a summary of (f) Notes, comprising a summary of significant accounting policies andsignificant accounting policies and

► other explanatory notes.other explanatory notes.

Overall ConsiderationsOverall Considerations► Presentation of true and fair view and Presentation of true and fair view and

Compliance with IGFRSsCompliance with IGFRSs► Financial statements shall present t r u e a n d f a i Financial statements shall present t r u e a n d f a i

r v i e w o f the financial position, financial r v i e w o f the financial position, financial performance, and cash flows of an entity. True performance, and cash flows of an entity. True and fair presentation requires the faithful and fair presentation requires the faithful representation of the effects of transactions, representation of the effects of transactions, other events, and conditions in accordance with other events, and conditions in accordance with the definitions and recognition criteria for assets, the definitions and recognition criteria for assets, liabilities, revenue, and expenses set out in liabilities, revenue, and expenses set out in IGFRSs. The application of IGFRSs, with additional IGFRSs. The application of IGFRSs, with additional disclosures when necessary, is presumed to result disclosures when necessary, is presumed to result in financial statements that achieve a presentation in financial statements that achieve a presentation of true and fair view.of true and fair view.

► An entity whose financial statements comply with An entity whose financial statements comply with IGFRSs shall make an explicit and unreserved IGFRSs shall make an explicit and unreserved statement of such compliance in the notes. statement of such compliance in the notes. Financial statements shall not be described as Financial statements shall not be described as complying with IGFRSs unless they comply with all complying with IGFRSs unless they comply with all the requirements of IGFRSs the requirements of IGFRSs

Consistency of PresentationConsistency of Presentation► The presentation and classification of The presentation and classification of

items in the financial statements shall be items in the financial statements shall be retained from one period to the next unless:retained from one period to the next unless:

► (a) It is apparent, following a significant change in (a) It is apparent, following a significant change in the nature of the entity’s operations or a review of its the nature of the entity’s operations or a review of its financial statements, that another presentation or financial statements, that another presentation or classification would be more appropriate having classification would be more appropriate having regard to the criteria for the selection and application regard to the criteria for the selection and application of accounting policies in IGFRS 6; orof accounting policies in IGFRS 6; or

► (b) An IGFRS requires a change in presentation.(b) An IGFRS requires a change in presentation.► An entity changes the presentation of its An entity changes the presentation of its

financial statements only if the changed financial statements only if the changed presentation provides information that is reliable and presentation provides information that is reliable and is more relevant to users of the financial statements is more relevant to users of the financial statements

Comparative InformationComparative Information► Except when an IGFRS permits or requires otherwise, Except when an IGFRS permits or requires otherwise,

comparative information shall be disclosed in respect of comparative information shall be disclosed in respect of the previous period for all amounts reported in the financial the previous period for all amounts reported in the financial statements. Comparative information shall be included for statements. Comparative information shall be included for narrative and descriptive information when it is relevant to an narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements.understanding of the current period’s financial statements.

► In some cases, narrative information provided in the financial In some cases, narrative information provided in the financial statements for the previous period's) continues to be relevant statements for the previous period's) continues to be relevant in the current period. For example, details of a legal dispute, in the current period. For example, details of a legal dispute, the outcome of which was uncertain at the last reporting date the outcome of which was uncertain at the last reporting date and is yet to be resolved, are disclosed in the current period. and is yet to be resolved, are disclosed in the current period. Users benefit from information (a) that the uncertainty existed Users benefit from information (a) that the uncertainty existed at the last reporting date, and (b) about the steps that have at the last reporting date, and (b) about the steps that have been taken during the period to resolve the uncertainty.been taken during the period to resolve the uncertainty.

► When the presentation or classification of items in When the presentation or classification of items in the financial statements is amended, comparative the financial statements is amended, comparative amounts shall be reclassified unless the reclassification is amounts shall be reclassified unless the reclassification is impracticable. When comparative amounts are impracticable. When comparative amounts are reclassified, an entity shall disclose:reclassified, an entity shall disclose:

► (a) The nature of the reclassification;(a) The nature of the reclassification;► (b) The amount of each item or class of items that is (b) The amount of each item or class of items that is

reclassified;reclassified;andand► (c) The reason for the reclassification.. (c) The reason for the reclassification..

► Structure and ContentStructure and Content This Standard requires particular disclosures on the face This Standard requires particular disclosures on the face

of the statement of financial position, statement of of the statement of financial position, statement of financial performance, and statement of changes in net financial performance, and statement of changes in net assets/equity, and requires disclosure of other line items assets/equity, and requires disclosure of other line items either on the face of those statements or in the notes. either on the face of those statements or in the notes. IPSAS 2 sets out requirements for the presentation of a IPSAS 2 sets out requirements for the presentation of a cash flow statement.cash flow statement.

► This Standard sometimes uses the term disclosure This Standard sometimes uses the term disclosure in a broad sense, encompassing items presented on in a broad sense, encompassing items presented on the face of the (a) statement of financial position, (b) the face of the (a) statement of financial position, (b) statement of financial performance, (c) statement of statement of financial performance, (c) statement of changes in net assets/equity, and (d) cash flow changes in net assets/equity, and (d) cash flow statement, (e) statement of Budget realizations and (f) in statement, (e) statement of Budget realizations and (f) in the notes. the notes.

► Disclosures are also required by other IGFRSs. Disclosures are also required by other IGFRSs.

Identification of the Financial Identification of the Financial StatementsStatements

► The financial statements shall be identified The financial statements shall be identified clearly, and distinguished from other clearly, and distinguished from other information in the same published information in the same published document.document.

► IGFRSs apply only to financial IGFRSs apply only to financial statements, and not to other statements, and not to other information presented in an annual report information presented in an annual report or other documents. Therefore, it is or other documents. Therefore, it is important that users can distinguish important that users can distinguish information that is prepared using IGFRSs information that is prepared using IGFRSs from other information that may be from other information that may be useful to users but is not the subject of useful to users but is not the subject of those requirements. those requirements.

Reporting PeriodReporting Period► Financial statements shall be presented Financial statements shall be presented

at least annually. When an entity’s at least annually. When an entity’s reporting date changes and the annual reporting date changes and the annual financial statements are presented for a financial statements are presented for a period longer or shorter than one year, an period longer or shorter than one year, an entity shall disclose, in addition to the entity shall disclose, in addition to the period covered by the financial statements:period covered by the financial statements:

► (a) The reason for using a longer or (a) The reason for using a longer or shorter period; andshorter period; and

► (b) The fact that comparative amounts (b) The fact that comparative amounts for certain statements such as the for certain statements such as the statement of financial performance, statement of financial performance, statement of changes in net assets/equity, statement of changes in net assets/equity, cash flow statement, and related notes are cash flow statement, and related notes are not entirely comparable.not entirely comparable.

TimelinessTimeliness► The usefulness of financial The usefulness of financial

statements is impaired if they are statements is impaired if they are not made available to users within a not made available to users within a reasonable period after the reporting reasonable period after the reporting date. An entity should be in a position date. An entity should be in a position to issue its financial statements within to issue its financial statements within three months of the reporting date. three months of the reporting date. Ongoing factors such as the Ongoing factors such as the complexity of an entity’s operations complexity of an entity’s operations are not sufficient reason for failing to are not sufficient reason for failing to report on a timely basis. More specific report on a timely basis. More specific deadlines may be dealt with by deadlines may be dealt with by legislation and regulations legislation and regulations

► Statement of Financial PositionStatement of Financial Position► Current/Non-current DistinctionCurrent/Non-current Distinction► An entity shall present current and non-current assets, and An entity shall present current and non-current assets, and

current and non- current liabilities, as separate current and non- current liabilities, as separate classifications on the face of its statement of financial classifications on the face of its statement of financial position in accordance with paragraphs 57-66.position in accordance with paragraphs 57-66.

► 55. 55. For each asset and liability line item that combines For each asset and liability line item that combines amounts expected to be recovered or settled (a) no more amounts expected to be recovered or settled (a) no more than twelve months after the reporting date, and (b) more than twelve months after the reporting date, and (b) more than twelve months after the reporting date, an entity shall than twelve months after the reporting date, an entity shall disclose the amount expected to be recovered or settled disclose the amount expected to be recovered or settled after more than twelve months.after more than twelve months.

► 56. 56. When an entity supplies goods or services When an entity supplies goods or services within a clearly identifiable operating cycle, separate within a clearly identifiable operating cycle, separate classification of current and non-current assets and liabilities classification of current and non-current assets and liabilities on the face of the statement of financial position provides on the face of the statement of financial position provides useful information by distinguishing the net assets that are useful information by distinguishing the net assets that are continuously circulating as working capital from those used continuously circulating as working capital from those used in the entity’s long-term operations. in the entity’s long-term operations.

► Current AssetsCurrent Assets► 57. An asset shall be classified as current when it satisfies 57. An asset shall be classified as current when it satisfies

any of the following criteria:any of the following criteria:► (a) It is expected to be realized in, or is held (a) It is expected to be realized in, or is held

for sale or consumption in, the entity’s normal operating for sale or consumption in, the entity’s normal operating cycle; orcycle; or

► (b) It is expected to be realized within twelve months after (b) It is expected to be realized within twelve months after the reporting date; or the reporting date; or

► (c) It is cash or a cash equivalent, unless it is restricted from (c) It is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a liability for at least twelve being exchanged or used to settle a liability for at least twelve months after the reporting date.months after the reporting date.

► All other assets shall be classified as non-current.All other assets shall be classified as non-current.► 58. This Standard uses the term non-current assets 58. This Standard uses the term non-current assets

to include tangible, intangible, and financial assets of a to include tangible, intangible, and financial assets of a long-term nature.long-term nature.

► 59. Current assets include assets (such as taxes 59. Current assets include assets (such as taxes receivable, user charges receivable, fines and regulatory receivable, user charges receivable, fines and regulatory fees receivable, inventories and accrued investment fees receivable, inventories and accrued investment revenue) that are either realized, consumed or sold, as part revenue) that are either realized, consumed or sold, as part of the normal operating cycle even when they are not expected of the normal operating cycle even when they are not expected to be realized within twelve months after the reporting date.to be realized within twelve months after the reporting date.

► Current LiabilitiesCurrent Liabilities► 60. A liability shall be classified as current when it 60. A liability shall be classified as current when it

satisfies any of the following criteria:satisfies any of the following criteria:► (a) It is expected to be settled in the entity’s normal (a) It is expected to be settled in the entity’s normal

operating cycle; oroperating cycle; or► (b) It is due to be settled within twelve months after the (b) It is due to be settled within twelve months after the

reporting date; orreporting date; or► (c) The entity does not have an unconditional right to (c) The entity does not have an unconditional right to

defer settlement of the liability for at least twelve months defer settlement of the liability for at least twelve months after the reporting date.after the reporting date.

► All other liabilities shall be classified as non-current.All other liabilities shall be classified as non-current.► 61. Some current liabilities, such as government 61. Some current liabilities, such as government

transfers payable and some accruals for employee and transfers payable and some accruals for employee and other operating costs, are part of the working capital used other operating costs, are part of the working capital used in the entity’s normal operating cycle. Such operating items in the entity’s normal operating cycle. Such operating items are classified as current liabilities even if they are due to be are classified as current liabilities even if they are due to be settled more than twelve months after the reporting settled more than twelve months after the reporting date. The same normal operating cycle applies to date. The same normal operating cycle applies to the classification of an entity’s assets and liabilities. the classification of an entity’s assets and liabilities. When the entity’s normal operating cycle is not clearly When the entity’s normal operating cycle is not clearly identifiable, its duration is assumed to be twelve months.identifiable, its duration is assumed to be twelve months.

Statement of Financial PerformanceStatement of Financial Performance► Surplus of Deficit for the periodSurplus of Deficit for the period► All items of revenue and expense recognized All items of revenue and expense recognized

in a period shall be included in surplus or in a period shall be included in surplus or deficit.deficit.

► Normally, all items of revenue and expense Normally, all items of revenue and expense recognized in a period are included in surplus or recognized in a period are included in surplus or deficit. This includes the effects of changes in deficit. This includes the effects of changes in accounting estimates. However, circumstances accounting estimates. However, circumstances may exist when particular items may be excluded may exist when particular items may be excluded from surplus or deficit for the current period. from surplus or deficit for the current period. IGFRS 6 deals with two such circumstances: IGFRS 6 deals with two such circumstances: the correction of errors and the effect of changes the correction of errors and the effect of changes in accounting policies.in accounting policies.

► The Statement of Financial Performance will at The Statement of Financial Performance will at least present the following accounts:least present the following accounts:

► a) Revenues from operational activities;a) Revenues from operational activities;► b) Expenditures based on classification of function b) Expenditures based on classification of function

and economy;and economy;► c) Surplus or deficit.c) Surplus or deficit.

► Cash Flow StatementCash Flow Statement Cash flow information provides users of Cash flow information provides users of

financial statements with a basis to assess financial statements with a basis to assess (a) the ability of the entity to generate (a) the ability of the entity to generate cash and cash equivalents, and (b) the cash and cash equivalents, and (b) the needs of the entity to utilize those cash needs of the entity to utilize those cash flows.flows.

► The Statement of Cash Flow presents The Statement of Cash Flow presents information concerning sources, usages, information concerning sources, usages, changes in cash and cash equivalent during changes in cash and cash equivalent during one accounting period, and the balance of one accounting period, and the balance of cash and cash equivalent on the reporting cash and cash equivalent on the reporting date.investing, financing, and non-date.investing, financing, and non-budgeting activities budgeting activities

Disclosure of Accounting PoliciesDisclosure of Accounting Policies An entity shall disclose in the summary of An entity shall disclose in the summary of

significant accounting policies:significant accounting policies:► (a) The measurement basis (or bases) (a) The measurement basis (or bases)

used in preparing the financial used in preparing the financial statements;statements;

► (b) The extent to which the entity has (b) The extent to which the entity has applied any transitional provisions in any applied any transitional provisions in any IGFRS; andIGFRS; and

► (c) The other accounting policies (c) The other accounting policies used that are relevant to an used that are relevant to an understanding of the financial statements.understanding of the financial statements.

Key Sources of Estimation Key Sources of Estimation UncertaintyUncertainty

► An entity shall disclose in the notes An entity shall disclose in the notes information about (a) the key assumptions information about (a) the key assumptions concerning the future, and (b) other key concerning the future, and (b) other key sources of estimation uncertainty at the sources of estimation uncertainty at the reporting date, that have a significant risk reporting date, that have a significant risk of causing a material adjustment to the of causing a material adjustment to the carrying amounts of assets and carrying amounts of assets and liabilities within the next financial year. liabilities within the next financial year. In respect of those assets and liabilities, the In respect of those assets and liabilities, the notes shall include details of:notes shall include details of:

► (a) Their nature; and(a) Their nature; and► (b) Their carrying amount as at the (b) Their carrying amount as at the

reporting date. reporting date.

Transitional ProvisionsTransitional Provisions► All provisions of this Standard shall be All provisions of this Standard shall be

applied from the date of first adoption of applied from the date of first adoption of this Standard, except in relation to items this Standard, except in relation to items that have not been recognized as a result that have not been recognized as a result of transitional provisions under another of transitional provisions under another IGFRS. The disclosure provisions of this IGFRS. The disclosure provisions of this Standard would not be required to Standard would not be required to apply to such items until the apply to such items until the transitional provision in the other IGFRS transitional provision in the other IGFRS expires. Comparative information is not expires. Comparative information is not required in respect of the financial required in respect of the financial statements to which accrual accounting is statements to which accrual accounting is first adopted in accordance with IGFRSs first adopted in accordance with IGFRSs

Effective DateEffective Date► This Indian Govern men t Financial This Indian Govern men t Financial

Reporting Standard shall b e Reporting Standard shall b e recommendatory in nature. It shall be recommendatory in nature. It shall be mandatory for financial reports covering mandatory for financial reports covering period s subsequent to the date o f period s subsequent to the date o f notification by Government.notification by Government.

PROPOSED INDIAN GOVERNMENT FINANCIAL PROPOSED INDIAN GOVERNMENT FINANCIAL REPORTING STANDARD (REPORTING STANDARD (IGFRS 6 – ACCOUNTING IGFRS 6 – ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES POLICIES, CHANGES IN ACCOUNTING ESTIMATES

AND ERRORSAND ERRORS

ObjectiveObjective► 1.1. The objective of this Standard is to The objective of this Standard is to

prescribe the criteria for selecting and changing prescribe the criteria for selecting and changing accounting policies, together with the accounting accounting policies, together with the accounting treatment and disclosure of changes in accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and the policies, changes in accounting estimates and the corrections of errors. This Standard is intended to corrections of errors. This Standard is intended to enhance the relevance and reliability of an entity’s enhance the relevance and reliability of an entity’s financial statements, and the comparability of those financial statements, and the comparability of those financial statements over time and with the financial statements over time and with the financial statements of other entities.financial statements of other entities.

► 2.2. Disclosure requirements for accounting Disclosure requirements for accounting policies, except those for changes in accounting policies, except those for changes in accounting policies, are set out in IGFRS 1policies, are set out in IGFRS 1

ScopeScope► 3.3. This Standard shall be applied in selecting and This Standard shall be applied in selecting and

applying accounting policies, and accounting for applying accounting policies, and accounting for changes in accounting policies, changes in changes in accounting policies, changes in accounting estimates and corrections of prior period accounting estimates and corrections of prior period errors.errors.

► 4.4. The tax effects of corrections of prior The tax effects of corrections of prior period errors and of retrospective adjustments period errors and of retrospective adjustments made to apply changes in accounting policies, though made to apply changes in accounting policies, though relevant, are not considered in this Standard. There is relevant, are not considered in this Standard. There is a separate standard for Tax Treatment.a separate standard for Tax Treatment.

► 5.5. This Standard does not apply to Government This Standard does not apply to Government Business Enterprises (GBE) i.e., Public Sector Business Enterprises (GBE) i.e., Public Sector Enterprises like Indian Oil Corporation, BHEL etc. Enterprises like Indian Oil Corporation, BHEL etc. GBEs are required to comply with Accounting GBEs are required to comply with Accounting Standards issued by the Institute of Chartered Standards issued by the Institute of Chartered Accountants of India and notified by Government of Accountants of India and notified by Government of India as per Companies Act.India as per Companies Act.

► 6.6. The “Preface to Indian Government Financial The “Preface to Indian Government Financial Reporting Standards issued by the GASAB explains Reporting Standards issued by the GASAB explains that Government Entities apply accounting standards that Government Entities apply accounting standards issued by the appropriate authority.issued by the appropriate authority.

► DefinitionsDefinitions► The following terms are used in this Standard with the meanings The following terms are used in this Standard with the meanings

specified: Accounting policies are the specific principles, bases, specified: Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and conventions, rules and practices applied by an entity in preparing and presenting financial statements.presenting financial statements.

► Accrual basis means a basis of accounting under which transactions, Accrual basis means a basis of accounting under which transactions, other events and conditions are recognized when they occur (and not other events and conditions are recognized when they occur (and not only when cash or its equivalent is received or paid). Therefore, the only when cash or its equivalent is received or paid). Therefore, the transactions, other events and conditions are recorded in the accounting transactions, other events and conditions are recorded in the accounting records and recognized in the financial statements of the periods to records and recognized in the financial statements of the periods to which they relate. The elements recognized under accrual accounting which they relate. The elements recognized under accrual accounting are assets, liabilities, net assets/equity, revenue and expenses.are assets, liabilities, net assets/equity, revenue and expenses.

► A change in accounting estimate is an adjustment of the carrying A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations present status of, and expected future benefits and obligations associated with, assets and liabilities. Changes in accounting estimates associated with, assets and liabilities. Changes in accounting estimates result from new information or new developments and, accordingly, are result from new information or new developments and, accordingly, are not correction of errors.not correction of errors.

► Impracticable applying a requirement is impracticable when the Impracticable applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do entity cannot apply it after making every reasonable effort to do so. For a particular prior period, it is impracticable to apply a so. For a particular prior period, it is impracticable to apply a change in an accounting policy retrospectively or to make a change in an accounting policy retrospectively or to make a retrospective restatement to correct an error if:retrospective restatement to correct an error if:

► (a) The effects of the retrospective application or (a) The effects of the retrospective application or retrospective restatement are not determinable;retrospective restatement are not determinable;

► (b) The retrospective application or retrospective restatement (b) The retrospective application or retrospective restatement requires assumptions about what management’s intent would have been requires assumptions about what management’s intent would have been in that period; in that period;

► Prospective application of a change in accounting Prospective application of a change in accounting policy and of recognizing the effect of a change in policy and of recognizing the effect of a change in an accounting estimate, respectively, are:an accounting estimate, respectively, are:

► (a) Applying the new accounting policy to (a) Applying the new accounting policy to transactions, other events and conditions occurring transactions, other events and conditions occurring after the date as at which the policy is changed; andafter the date as at which the policy is changed; and

► (b) Recognizing the effect of the change in the (b) Recognizing the effect of the change in the accounting estimate in the current and future accounting estimate in the current and future periods affected by the change.periods affected by the change.

► Retrospective application is applying a new Retrospective application is applying a new accounting policy to transactions, other events accounting policy to transactions, other events and conditions as if that policy had always been and conditions as if that policy had always been applied.applied.

► Retrospective restatement is correcting the Retrospective restatement is correcting the recognition, measurement and disclosure of recognition, measurement and disclosure of amounts of elements of financial statements as if a amounts of elements of financial statements as if a prior period error had never occurred.prior period error had never occurred.

► Terms defined in other IPSASs are used in this Terms defined in other IPSASs are used in this Standard with the same meaning as in those other Standard with the same meaning as in those other Standards, and are reproduced in the Glossary of Standards, and are reproduced in the Glossary of Defined Terms published separately.Defined Terms published separately.

MaterialityMateriality► Assessing whether an omission or Assessing whether an omission or

misstatement could influence decisions of misstatement could influence decisions of users, and so be material, requires users, and so be material, requires consideration of the characteristics of those consideration of the characteristics of those users. Users are assumed to have a users. Users are assumed to have a reasonable knowledge of the public sector reasonable knowledge of the public sector and economic activities and accounting and and economic activities and accounting and a willingness to study the information with a willingness to study the information with reasonable diligence. Therefore, the reasonable diligence. Therefore, the assessment needs to take into account how assessment needs to take into account how users with such attributes could reasonably users with such attributes could reasonably be expected to be influenced in making and be expected to be influenced in making and evaluating decisions.evaluating decisions.

► Accounting PoliciesAccounting Policies► Selection and Application of Accounting PoliciesSelection and Application of Accounting Policies► 9.9. When an IGFRS specifically applies to a transaction, other event When an IGFRS specifically applies to a transaction, other event

or condition, the accounting policy or policies applied to that item shall or condition, the accounting policy or policies applied to that item shall be determined by applying the Standard.be determined by applying the Standard.

► 10.10. IGFRS sets out accounting policies that result in financial IGFRS sets out accounting policies that result in financial statements containing relevant and reliable information about the statements containing relevant and reliable information about the transactions, other events and conditions to which they apply. Those transactions, other events and conditions to which they apply. Those policies n eed not be applied when the effect of applying them is policies n eed not be applied when the effect of applying them is immaterial. However, it is inappropriate to make, or leave uncorrected, immaterial. However, it is inappropriate to make, or leave uncorrected, immaterial departures from IGFRSs to achieve a particular presentation immaterial departures from IGFRSs to achieve a particular presentation of an entity’s financial position, financial performance or cash flows.of an entity’s financial position, financial performance or cash flows.

► 11.11. IGFRSs are accompanied by guidance to assist entities in IGFRSs are accompanied by guidance to assist entities in applying their requirements. All such guidance states whether it is an applying their requirements. All such guidance states whether it is an integral part of IGFRSs. Guidance that is an integral part of the IGFRSs is integral part of IGFRSs. Guidance that is an integral part of the IGFRSs is mandatory. Guidance that is not an integral part of the IGFRSs does not mandatory. Guidance that is not an integral part of the IGFRSs does not contain requirements for financial statements.contain requirements for financial statements.

► 12.12. In the absence of an IGFRS that specifically applies to a In the absence of an IGFRS that specifically applies to a transaction, other event or condition, management shall use its transaction, other event or condition, management shall use its judgment in developing and applying an accounting policy that results in judgment in developing and applying an accounting policy that results in information that is:information that is:

► (a) Relevant to the decision-making needs of users; and(a) Relevant to the decision-making needs of users; and► (b) Reliable, in that the financial statements:(b) Reliable, in that the financial statements:► (i)(i) Represent faithfully the financial position, Represent faithfully the financial position,

financial performance and cash flows of the entity;financial performance and cash flows of the entity;► (ii)(ii) Reflect the economic substance of transactions, other Reflect the economic substance of transactions, other

events and conditions and not merely the legal form;events and conditions and not merely the legal form;► (iii) Are neutral i.e., free from bias; (iv) Are prudent; and(iii) Are neutral i.e., free from bias; (iv) Are prudent; and► (v) Are complete in all material respects.(v) Are complete in all material respects.► In making the judgment, described in paragraph 12, In making the judgment, described in paragraph 12,

management shall refer to, and consider the applicability of, management shall refer to, and consider the applicability of, the following sources in descending order:the following sources in descending order:

► (a) The requirements and guidance in IGFRSs dealing with (a) The requirements and guidance in IGFRSs dealing with similar and related issues; andsimilar and related issues; and

► (b) The definitions, recognition and measurement (b) The definitions, recognition and measurement criteria for assets, liabilities, revenue and expenses criteria for assets, liabilities, revenue and expenses described in other IGFRS’s.described in other IGFRS’s.

►Consistency of Accounting PoliciesConsistency of Accounting Policies An entity shall select and apply its An entity shall select and apply its

accounting policies consistently for accounting policies consistently for similar transactions, other events similar transactions, other events and conditions, unless an IGFRS and conditions, unless an IGFRS specifically requires or permits specifically requires or permits categorization of items for which categorization of items for which different policies may be appropriate. different policies may be appropriate. If a Standard requires or permits such If a Standard requires or permits such categorization, an appropriate categorization, an appropriate accounting policy shall be selected accounting policy shall be selected and applied consistently to each and applied consistently to each category.category.

Changes in Accounting PoliciesChanges in Accounting Policies► An entity shall change an accounting policy only if the An entity shall change an accounting policy only if the

change: change: ► (a) Is required by an IGFRS; or(a) Is required by an IGFRS; or► (b)(b) Results in the financial statements providing Results in the financial statements providing

reliable and more relevant information about the effects reliable and more relevant information about the effects of transactions, other events and conditions on the of transactions, other events and conditions on the entity’s financial position, financial performance or cash entity’s financial position, financial performance or cash flows.flows.

► Users of financial statements need to be able to Users of financial statements need to be able to compare the financial statements of an entity over time compare the financial statements of an entity over time to identify trends in its financial position, performance to identify trends in its financial position, performance and cash flows A change from one basis of accounting and cash flows A change from one basis of accounting to another basis of accounting is a change in to another basis of accounting is a change in accounting policy.accounting policy.

► A change in the accounting treatment, recognition A change in the accounting treatment, recognition or measurement of a transaction, event or condition or measurement of a transaction, event or condition within a basis of accounting is regarded as a change in within a basis of accounting is regarded as a change in accounting policy accounting policy

► Applying Changes in Accounting Policies:Applying Changes in Accounting Policies:► (a)(a) An entity shall account for a change in An entity shall account for a change in

accounting policy resulting from the initial application accounting policy resulting from the initial application of an IGFRS in accordance with the specific of an IGFRS in accordance with the specific transitional provisions, if any, in that Standard; andtransitional provisions, if any, in that Standard; and

► (b)(b) When an entity changes an accounting policy When an entity changes an accounting policy upon initial application of an IGFRS that does not upon initial application of an IGFRS that does not include specific transitional provisions applying to include specific transitional provisions applying to that change, or changes an accounting policy that change, or changes an accounting policy voluntarily, it shall apply the change retrospectively.voluntarily, it shall apply the change retrospectively.

► For the purpose of this IGFRS, early application of a For the purpose of this IGFRS, early application of a Standard is not a voluntary change in accounting Standard is not a voluntary change in accounting policy.policy.

► In the absence of an IGFRS that specifically applies to In the absence of an IGFRS that specifically applies to

a transaction, other event or conditiona transaction, other event or condition

►Retrospective ApplicationRetrospective Application Subject to paragraph 28, when a Subject to paragraph 28, when a

change in accounting policy is applied change in accounting policy is applied retrospectively in accordance with retrospectively in accordance with paragraph 24(a) or (b), the entity shall paragraph 24(a) or (b), the entity shall adjust the opening balance of each adjust the opening balance of each affected component of net affected component of net assets/equity for the earliest period assets/equity for the earliest period presented and the other presented and the other comparative amounts disclosed for comparative amounts disclosed for each prior period presented as if the each prior period presented as if the new accounting policy had always new accounting policy had always been applied. been applied.

Limitations on Retrospective ApplicationLimitations on Retrospective Application► When retrospective application is required by When retrospective application is required by

paragraph 24(a) or (b), a change in accounting paragraph 24(a) or (b), a change in accounting policy shall be applied retrospectively except to the policy shall be applied retrospectively except to the extent that it is impracticable to determine either the extent that it is impracticable to determine either the period specific effects or the cumulative effect of the period specific effects or the cumulative effect of the change.change.

► 28. When it is impracticable to determine the 28. When it is impracticable to determine the period specific effects of changing an accounting period specific effects of changing an accounting policy on comparative information for one or more policy on comparative information for one or more prior periods presented, the entity shall apply the new prior periods presented, the entity shall apply the new accounting policy to the carrying amounts of assets accounting policy to the carrying amounts of assets and liabilities as at the beginning of the earliest and liabilities as at the beginning of the earliest period for which retrospective application is period for which retrospective application is practicable, which may be the current period, and practicable, which may be the current period, and shall make a corresponding adjustment to the shall make a corresponding adjustment to the opening balance of each affected component of net opening balance of each affected component of net assets/equity for that period.assets/equity for that period.

► 29. When it is impracticable to determine the 29. When it is impracticable to determine the cumulative effect, at the beginning of the current cumulative effect, at the beginning of the current period, of applying a new accounting policy to all period, of applying a new accounting policy to all prior periods, the entity shall adjust the comparative prior periods, the entity shall adjust the comparative information to apply the new accounting policy information to apply the new accounting policy prospectively from the earliest date practicable.prospectively from the earliest date practicable.

DisclosureDisclosure

► When initial application of an IGFRS has an effect on the When initial application of an IGFRS has an effect on the current period or any prior period, would have such an effect current period or any prior period, would have such an effect except that it is impracticable to determine the amount of except that it is impracticable to determine the amount of the adjustment, or might have an effect on future periods, an the adjustment, or might have an effect on future periods, an entity shall disclose:entity shall disclose:

► (a) The title of the Standard;(a) The title of the Standard;► (b)(b) When applicable, that the change in accounting When applicable, that the change in accounting

policy is made in accordance with its transitional provisions;policy is made in accordance with its transitional provisions;► (c) The nature of the change in accounting policy;(c) The nature of the change in accounting policy;► (d) When applicable, a description of the transitional (d) When applicable, a description of the transitional

provisions;provisions;► (e) When applicable, the transitional provisions that (e) When applicable, the transitional provisions that

might have an effect on future periods;might have an effect on future periods;► (f)(f) For the current period and each prior period For the current period and each prior period

presented, to the extent practicable, the amount of the presented, to the extent practicable, the amount of the adjustment for each financial statement line item affected;adjustment for each financial statement line item affected;

► (g)(g) The amount of the adjustment relating to periods The amount of the adjustment relating to periods before those presented, to the extent practicable; andbefore those presented, to the extent practicable; and

► (h)(h) If retrospective application required by paragraph If retrospective application required by paragraph 24(a) or (b) is impracticable for a particular prior period, 24(a) or (b) is impracticable for a particular prior period, or for periods before those presented, the circumstances or for periods before those presented, the circumstances that led to the existence of that condition and a description that led to the existence of that condition and a description of how and from when the change in accounting policy has of how and from when the change in accounting policy has been applied.been applied.

► Financial statements of subsequent periods need not repeat Financial statements of subsequent periods need not repeat these disclosures.these disclosures.

► 33. 33. When a voluntary change in accounting policy has an When a voluntary change in accounting policy has an effect on the current period or any prior period, would have effect on the current period or any prior period, would have an effect on that period except that it is impracticable to an effect on that period except that it is impracticable to determine the amount of the adjustment, or might have an determine the amount of the adjustment, or might have an effect on future periods, an entity shall disclose:effect on future periods, an entity shall disclose:

► (a) The nature of the change in accounting policy;(a) The nature of the change in accounting policy;► (b)(b) The reasons why applying the new accounting policy The reasons why applying the new accounting policy

provides reliable and more relevant information;provides reliable and more relevant information;► (c) For the current period and each prior period presented, (c) For the current period and each prior period presented,

to the extent practicable, the amount of the adjustment for to the extent practicable, the amount of the adjustment for each financial statement line item affected;each financial statement line item affected;

► (d) The amount of the adjustment relating to periods (d) The amount of the adjustment relating to periods before those presented, to the extent practicable; andbefore those presented, to the extent practicable; and

► (e) If retrospective application is impracticable for a (e) If retrospective application is impracticable for a particular prior period, or for periods before those presented, particular prior period, or for periods before those presented, the circumstances that led to the existence of that condition the circumstances that led to the existence of that condition and a description of how and from when the change in and a description of how and from when the change in accounting policy has been applied.accounting policy has been applied.

► Financial statements of subsequent periods need not Financial statements of subsequent periods need not repeat these disclosuresrepeat these disclosures..

► 34. When an entity has not applied a new IGFRS that has 34. When an entity has not applied a new IGFRS that has been issued but is not yet effective, the entity shall disclose:been issued but is not yet effective, the entity shall disclose:

► (a) This fact; and(a) This fact; and► (b)(b) Known or reasonably estimable information relevant to Known or reasonably estimable information relevant to

assessing the possible impact that application of the new assessing the possible impact that application of the new Standard will have on the entity’s financial statements in the Standard will have on the entity’s financial statements in the period of initial application.period of initial application.

► 35. In complying with paragraph 35, an entity considers 35. In complying with paragraph 35, an entity considers disclosing:disclosing:

► (a) The title of the new IGFRS;(a) The title of the new IGFRS;► (b) The nature of the impending change or changes in (b) The nature of the impending change or changes in

accounting policy;accounting policy;► (c) The date by which application of the Standard is required;(c) The date by which application of the Standard is required;► (d) The date as at which it plans to apply the Standard (d) The date as at which it plans to apply the Standard

initially; andinitially; and► (e) Either: (i) A discussion of the impact (e) Either: (i) A discussion of the impact

that initial application of the Standard is expected to have on that initial application of the Standard is expected to have on the entity’s financial statements; orthe entity’s financial statements; or

► (ii)(ii) If that impact is not known or reasonably estimable, a If that impact is not known or reasonably estimable, a statement to that effect.statement to that effect.

► Changes in Accounting EstimatesChanges in Accounting Estimates► 36. As a result of the uncertainties 36. As a result of the uncertainties

inherent in delivering services, conducting inherent in delivering services, conducting trading or other activities, many items in trading or other activities, many items in financial statements cannot be measured with financial statements cannot be measured with precision but can only be estimated. precision but can only be estimated. Estimation involves judgments based on the Estimation involves judgments based on the latest available, reliable information. For latest available, reliable information. For example, estimates may be required, of: example, estimates may be required, of:

► (a) bad debts;(a) bad debts;► (b) Inventory obsolescence;(b) Inventory obsolescence;► (c) the fair value of financial assets or (c) the fair value of financial assets or

financial liabilities;financial liabilities;► (d)(d) the useful lives of, or expected pattern of the useful lives of, or expected pattern of

consumption of future economic benefits consumption of future economic benefits embodied in depreciable assets; andembodied in depreciable assets; and

► (e) warranty obligations.(e) warranty obligations.

► DisclosureDisclosure► 43. An entity shall disclose the nature and amount of a 43. An entity shall disclose the nature and amount of a

change in an accounting estimate that has an effect in the change in an accounting estimate that has an effect in the current period or is expected to have an effect on future current period or is expected to have an effect on future periods, except for the disclosure of the effect on future periods, except for the disclosure of the effect on future periods when it is impracticable to estimate that effect.periods when it is impracticable to estimate that effect.

► 44. If the amount of the effect in future periods is not 44. If the amount of the effect in future periods is not disclosed because estimating it is impracticable, the entity disclosed because estimating it is impracticable, the entity shall disclose that fact.shall disclose that fact.

► ErrorsErrors► 45. Errors can arise in respect of the recognition, 45. Errors can arise in respect of the recognition,

measurement, presentation or disclosure of elements of measurement, presentation or disclosure of elements of financial statements. Financial statements do not comply financial statements. Financial statements do not comply with IGFRS if they contain either material errors or with IGFRS if they contain either material errors or immaterial errors made intentionally to achieve a particular immaterial errors made intentionally to achieve a particular presentation of an entity’s financial position, financial presentation of an entity’s financial position, financial performance or cash flows. Potential current period errors performance or cash flows. Potential current period errors discovered in that period are corrected before the financial discovered in that period are corrected before the financial statements are authorized for issue. However, material statements are authorized for issue. However, material errors are sometimes not discovered until a subsequent errors are sometimes not discovered until a subsequent period, and these prior period errors are corrected in the period, and these prior period errors are corrected in the comparative information presented in the financial comparative information presented in the financial statements for that subsequent period (see paragraphs statements for that subsequent period (see paragraphs 47−51).47−51).

Disclosure of Prior Period ErrorsDisclosure of Prior Period Errors► 5353 In applying paragraph 47, an entity shall In applying paragraph 47, an entity shall

disclose the following:disclose the following:► (a) The nature of the prior period error;(a) The nature of the prior period error;► (b) For each prior period presented, to the (b) For each prior period presented, to the

extent practicable, the amount of the extent practicable, the amount of the correction for each financial statement line correction for each financial statement line item affected;item affected;

► (c) The amount of the correction at the (c) The amount of the correction at the beginning of the earliest prior period beginning of the earliest prior period presented; andpresented; and

► (d)(d) If retrospective restatement is If retrospective restatement is impracticable for a particular prior period, the impracticable for a particular prior period, the circumstances that led to the existence of that circumstances that led to the existence of that condition and a description of how and from condition and a description of how and from when the error has been corrected.when the error has been corrected.

► Financial statements of subsequent periods Financial statements of subsequent periods need not repeat these disclosures.need not repeat these disclosures.

►Effective DateEffective Date An entity to which this Accounting Standard An entity to which this Accounting Standard

is applicable shall apply it for accounting is applicable shall apply it for accounting periods commencing on or after the date (to periods commencing on or after the date (to be announced separately) and will be be announced separately) and will be mandatory in nature from that date.mandatory in nature from that date.