1. Platinum Sponsor Gold Sponsor
Partners
The Early Bird Company

2. 10:15 AM – 10:30 AM
The Future of Accounting Standards
Mr. Binod Shankar, CFA
Managing Director
Genesis Institute

3. THE FUTURE OF
ACCOUNTING STANDARDS
Binod Shankar, CFA

4. About Me
• 17+ years in project appraisal, audit, financial due
diligence, financial feasibility, valuation and real
estate finance
• 11 years in the Middle east- Oman, Bahrain and
now Dubai
• Worked with KPMG, Arthur Andersen, Ernst &
Young. Last position as Executive Director at Gulf
Finance House, Bahrain
• Teaching advanced finance and accounting
courses since 1996
• Chartered Accountant and a CFA charterholder
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5. About Genesis
•Market leader in CFA preparatory courses in the UAE and Lower Gulf
•Diverse product portfolio of Customized Corporate Training, CFAB Review
Courses
•The only learning provider for all 3 levels of CFA in the Lower Gulf
•Authorized Distributor of Kaplan Schweser in the UAE
•Trained 1,500+ finance professionals and CFA candidates
•Approved Learning Partner of Institute of Chartered Accountants of England
and Wales
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6. Convergence
• Between IFRS and UJS GAAP
• Started in 2004
• A few projects have been selected for
convergence
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7. Convergence
• Financial instruments • Balance sheet - Netting
• Revenue recognition • Financial statement
• Leases presentation
• Statement of comprehensive • Discontinued operations
income • Financial instruments with
• Fair value measurement characteristics of equity
• Derecognition • Insurance contracts
• Consolidations • Emissions trading schemes
• Post-employment benefits
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8. The spread of IFRS
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9. From Rules to Principles
• US GAAP: Too many rules, exceptions
• Confusing and even contradictory standards
• Easier to find loopholes and “game” the
standards
• One reason why the US has the maximum
number and size of accounting scandals:
Enron, Worldcom, Global Crossing
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10. From Off to On
• Traditional off balance sheet items may end up on the
balance sheet
• The ED issued in 2010 on Leases requires same
treatment for operating leases and finance leases.
Maybe finalised in 2012
• Excludes short term leases
• Huge impact:
 Companies may end up more leveraged; Airlines, retail
 May even breach bank covenants
 Limits ability to raise finance
 Interest costs may rise; profitability may fall
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11. Public Sector Accounting
• Traditionally most Governments have followed
cash based or modified accrual accounting
• Inertia due to lack of specialists, lack of
funding and lack of experience with accrual
accounting
• There is a growing trend towards full Accrual
Accounting
• Growing adoption of International Public
Sector Accounting Standards (IPSAS)
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12. Public Sector Accounting
Source: Ernst & Young
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13. SME Standards
• SMEs make up 95% of all companies. Yet they
have to comply with some IFRSs that are
irrelevant. Effect is higher cost and workload
• IASB issued accounting standards for SMEs in
2009
• Abridged, simplified set of standards
• Makes IFRS easier to adopt. Yet another
catalyst for growth of IFRS
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14. Limiting the Choices-IFRS
Subject Option 1 Option 2
Immaterial items Part of financials Show in notes
Cash flow from operations Indirect method Direct method
Interest paid Cash flow from operations Cash flow from financing
Dividend paid Cash flow from operations Cash flow from financing
Subsequent measurement Cost model Revaluation model
of P P & E
Interest in joint ventures Proportionate Equity accounting
consolidation
Subsequent measurement Cost model Fair value model
of Investment Properties
Govt grants Deferred income Reduce from assets
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15. Clarity and Simplicity
Standard Purpose(s)
IFRS 9: Financial • Replaces the hideously complex IAS 39
Instruments • Reduces asset classification to just two
• Simplified fair value options
• Comprehensive- measurement, impairment, hedging,
disclosure
• Impairment model for assets means losses may be
recognized earlier
IFRS 11: Joint Replaces IAS 31
arrangements
IFRS 13: Fair Value • Single framework for defining & measuring FV
• Eliminates different different in different IFRSs
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16. Summary
1. Convergence
2. Spread of IFRS
3. Rules to Principles
4. Off balance sheet to on balance sheet
5. Evolution of Public Sector Accounting
6. SME standards
7. Limiting the choices
8. Clarity and Simplicity
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17. Thank you!
Binod Shankar, CFA, FCA www.genesisreview.com
Mobile: +971 50 558 2498 Genesis Institute
Email : bshankar@genesisreview.com Dubai. Abu Dhabi