13. COMPARISION OF IFRS/IAS-7 WITH AS-3 IFRS/IAS-7 INDIAN GAAP/AS-3 Cash Flow statement Applicability No exemption. Cash flow is not mandatory for SME’s. Cash and Cash Equivalents Cash comprises not only cash on hand but also demand deposits with banks or other financial institutions. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent only when it has a maturity of three months or less from its acquisition date. Bank borrowings are normally part of financing activities. Nonetheless, bank overdrafts that are repayable on demand and that form an integral part of an entity’s cash management are included in cash equivalents. Cash comprises cash on hand and demand deposits with banks. There is no stipulation in AS 3 for classification of bank overdrafts. Changes in balance of cash flows are classified as short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Format and content of cash flow The cash flow statement may be prepared using either the direct method (cash flows derived from aggregating cash receipts and payments associated with operating activities) or the indirect method (cash flows derived from adjusting net income for transactions of a non-cash nature such as depreciation). The latter is more common in practice. The cash flow should be classified into operating, investing and financing cash flow. Similar to IFRS. However, in case of listed companies SEBI permits only indirect method.

14. Comparison IFRS/IAS-7 INDIAN GAAP/AS-3 Cash flow associated with extraordinary items Separate disclosure is prohibited. The concept of extra-ordinary items has been made redundant under IFRS. The cash flows associated with extraordinary items should be classified as arising from operating, investing or financing activities as appropriate and separately disclosed. Disclosure of Interest paid Operating in case of financing enterprise. For other enterprises, it should be disclosed as operating or financing Operating in case of financing enterprise. For other enterprises, it should be disclosed as financing. Disclosure of dividend paid Operating or financing Financing Disclosure of dividend/interest received Operating in case of financing enterprise. Operating or investing in case of other enterprises Operating in case of financing enterprise. Investing in case of other enterprises Disclosure of taxes paid Operating – unless specific identification with financing or investing Similar to IFRS Foreign currency transaction Cash flows denominated in a foreign currency and cash flows of a foreign subsidiary should be translated into the parent’s reporting currency using the exchange rate at the date of the cash flow or an appropriate weighted average rate, i.e. that used for income statement purposes. Unrealised gains and losses for the period on cash and cash equivalents balances denominated in a foreign currency, should be reported as a reconciling item in the cash flow statement, separate from operating, investing and financing activities. Similar to IFRS

15. Comparison IFRS/IAS-7 INDIAN GAAP/AS-3 Additional disclosures in CFS IAS 7 deals with issues relating to disclosure in cash flow statement in CFS like undistributed profits of associate and minority interests, foreign exchange cash flows of foreign subsidiary. No such requirement under AS 3 Acquisition of subsidiaries IAS 7 requires further disclosure on cash and cash equivalents of acquired subsidiary and all other assets acquired. No such requirement under AS 3 Reconciliation Requires a reconciliation of net profit or loss to net cash flows from operating activities under only the indirect method. Enterprises must reconcile the components of cash and cash equivalents to the amounts presented on the balance sheet. That requirement implies that the total of cash and cash equivalents presented in the cash flow statement need not agree to a single line item, “cash and cash equivalents,” in the balance sheet. Similar to IFRS Cash restriction Requires that an enterprise disclose “together with a commentary by management, the amount of significant cash and cash equivalent balances held by the enterprise that are not available for use by the group.” Similar to IFRS

17. KEY DIFFERENCES: IAS-7 & AS-3 (existing):- FACTORS IAS-7 AS-3 APPLICABILITY No exemption Exemption for SMEs CASH & CASH EQUIVALENT Bank overdrafts that are repayable on demand and that form an integral part of an entity’s cash management are to be treated as a component of cash/cash equivalents under IAS 7. AS 3 is silent INTEREST/ DIVIDENDS PAID/RECEIVED In case of entities whose principal activities is not financing, IAS 7 allows interest and dividend received to be classified either under Operating Activities or Investing Activities. IAS 7 allows interest paid to be classified either under Operating Activities or Financing Activities. In case of entities whose principal activities are not financing, AS 3 mandates disclosure of interest and dividend received under Investing Activities only. AS 3 mandates disclosure of interest paid under Financing Activities only. EXTRA ORDINARY ITEMS IAS 7 prohibits separate disclosure of items as extraordinary items in Cash Flow Statements. AS 3 requires disclosure of extraordinary items. CONSOLIDATED FINACIAL STATEMENTS IAS 7 deals with cash flows of consolidated financial statements. AS 3 does not deal with cash flows relating to consolidated financial statements. CASH & CASH EQUIVALENT OF SUBSIDIARY IAS 7 requires further disclosure on cash and cash equivalents of acquired subsidiary and all other assets acquired. No such requirement under AS 3.

19. THANK YOU