Comparison of Iranian Accounting Standards with IFRSs

Accounting standards have been developed based on International Accounting Standards. National Accounting Standards (NASs) are presented in comparative form with International Accounting Standards (IAS) in the following table.
In this table :

• The first column notifies the number of NASs.
• The second column designates the subject of NASs.
• The third column presents the number of IASs which have been compared with their equivalent NASs.
• The fourth column specifies NASs which have minor departures from IASs.
  These are shown by notes presented in this column and are explained thereafter.

Explanations

• Note A (NAS # 2 and IAS # 7)
  With the exception of the following requirements, application of NAS No. 2, results into compliance with IAS No. 7:
  • “Returns on Investments, and Servicing of Finance” and “Income Tax” activities have been segregated from the other major classifications used in the cash flow statements.
  • (b) Cash equivalents have been excluded from the definition of cash.
• Note B (NAS # 10 and IAS # 20)
  With the exception of the following requirements, application of NAS No. 10 results into compliance with IAS No. 20:
  • (a) If an accounting treatment for government grants is specified in statutory regulations, the treatment should be followed by the entity.
  • (b) When the evaluation bases of non-monetary assets received, are specified in the statutory regulations, the application of these bases is acceptable provided that it does not result in reflecting the granted assets in more than the fair value at the time of transfer.
• Note C (NAS # 15 and IAS # 32 & 39)
  With the exception of the following requirement application of NAS No. 15 results into compliance with IAS No. 32, 39:
  The most current financial instruments in Iran are shares and the instruments like options, futures and forward hardly exist in Iran. Accounting Standard 15, Accounting for Investments, permits using either the fair value or cost for measuring current and long-term investments.
  
• Note D (NAS # 16 and IAS # 21)
  With the exception of the following requirements, application of NAS No. 16 results into compliance with IAS No. 21:
  • (a) Exchange differences arising on foreign currency assets and liabilities of government entities should be, according to substances of the Article 136 of the General Inspection Act approved in Sharivar 1366 (August 1987), included in the account of translation reserve of foreign currency assets and liabilities and classified as equity. If at the end of the financial period, the reserve account balance is debit, the amount will be included in loss and gain of the period. Also, net exchange differences which, in the order mentioned above, result in a change in exchange reserve during the period, should be included in comprehensive income statement of the period.
  • (b) Exchange differences arising on a monetary item that, in substance, forms part of an entity’s net investment in a foreign entity should be classified as equity in the entity’s balance sheet and be presented in comprehensive income statement until the disposal of the net investment. The differences, at the time of investment disposal, should be taken into account of accumulated loss and gain.
  • (c) Exchange differences arising on a foreign currency liability accounted for as hedge of an entity’s net investment in a foreign entity should be classified as equity in the entity’s balance sheet and be included in comprehensive income statement until the disposal of net investment. The differences, at the time of net investment disposal should be taken into account of accumulated loss and gain.
  • (d) On the disposal of a foreign entity, the cumulative amount of the exchange differences on foreign currency items which relate to that foreign entity and which have been recognized as equity, should be taken in to account of accumulated loss and gain on disposal.
• Note E (NAS # 18 and IAS # 27)
  With the exception of the requirements relating to the proper accounting treatment of the debit balance of the minority interests account, application of NAS No. 18 results into compliance with IAS No. 27:
  
  Profits or losses arising in a subsidiary should be apportioned between controlling and minority interests in proportion to their respective interests held over the period. When losses attributable to the minority interest result in debit balance, the controlling interest should be adjusted to the extent that it has any commercial or legal obligations to provide finance that may not be recoverable in respect of the accumulated losses attributable to the minority interest.
  
• Note F (NAS # 20 and IAS # 28)
  With the exception of the following requirements, application of NAS No. 20 results into compliance with IAS No. 28:
  • (a) An investment in an associate that is included in the separate financial statements of an investor that issues consolidated financial statements should be carried at cost after deduction of perpetual impairment provision or revaluation amount as an allowed alternative treatment, conforming to the investor’s accounting policies on long-term investments, according to NAS No.15, Accounting for Investments.
  • (b) When the investor does not issue consolidated financial statements, the amounts related to the associate should be presented under equity method as following:
    • (a) preparation and presentation of total financial statements, or
    • (b) disclosure of supplementary information in explanatory notes of the investor’s financial statements.
• Note G (NAS # 24)
  There currently exists no specific International Accounting Standard relating to this subject.
• Note H (NAS # 25 and IAS # 14)
  With the exception of the following requirements, application of NAS No. 25, results into compliance with IAS No. 14:
  • (a) According to IAS No. 14, the dominant source and nature of an entity’s risks and returns should govern whether its primary reporting format will be business segments or geographical segments. Detailed information is normally presented in the primary format and the secondary format contains condensed information. NAS No.25 has excluded the application of the primary and secondary format in order to narrow the extent of personal judgements and unnecessary technical complexity.
  • (b) According to IAS No. 14, segment revenue should include an entity’s share of profits and losses of associates, joint ventures, or other investments accounted for under the equity method. Such requirements do not exist in NAS No. 25.
• Note I (NAS # 26 and IAS # 41)
  With the exception of the following requirements, application of NAS No. 26 results into compliance with IAS No. 41, Agriculture:
  • (a) According to IAS No. 41, Agriculture, all biological assets should be measured at fair value less costs estimated on disposal, unless the fair value is not reliably determinable. However, according to this standard, with a reference to environmental conditions of the country and lack of an active market for biological productive assets, these assets should be measured at cost, according to NAS No. 11, Accounting for Tangible Fixed Assets.
  • (b) According to IAS No. 41, Agriculture, a government grant related to biological productive assets recognized at fair value less costs estimated on disposal, is recognized as income (if not conditioned) when it is collectible and (if conditioned) when the conditions are satisfied. However, according to this standard, all government grants related to biological productive assets are recognized according to NAS No. 10, Government Grants.