TCS adopts IFRS9
Mumbai, April 4, 2014: Tata Consultancy Services (BSE: 532540, NSE: TCS), a leading IT services, consulting and business solutions organization, announced today that it has elected to apply International Financial Reporting Standard 9 (referred to as IFRS 9), Financial Instruments, from April 1, 2013, in accordance with the transition provisions set out in this standard. IFRS 9 will be applicable to the (i) classification and measurement of financial assets and financial liabilities (referred to as Phase 1); and (ii) hedge accounting (referred to as Phase 3).
Prior to the adoption of Phase 1 and Phase 3 of IFRS 9, the Company followed IAS 39, Financial Instruments: Recognition and Measurement, for classification and measurement of financial assets and liabilities, and hedge accounting.
The hedge accounting requirements in IFRS 9 align more closely with the Company’s risk management policy. This change will reduce the volatility in the Company’s reported quarterly profit or loss, resulting from the change in the time value of hedging instruments. In accordance with IFRS 9, the change in the time value will be accumulated under ‘Other Comprehensive Income’ (OCI) in the balance-sheet until the forecasted cash flow occurs, whereupon the accumulated balance will be transferred to the profit & loss account.
Exhibits A and B contain the net foreign exchange gains / losses as reported in the last eleven quarters under IAS 39 and the corresponding numbers as per IFRS 9.
In Indian GAAP, the cumulative effect of such change will be given effect to in the quarter ending March 31, 2014.