International Financial Reporting Standards

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The International Financial Reporting Standards , commonly called IFRS , are the standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB) to provide a common global language for business affairs so that corporate accounts can understandable and comparable across international borders. They are a consequence of the growth of international stock ownership and trade and are very important for companies that have transactions in some countries. They are progressively replacing many different national accounting standards. They are rules to be followed by accountants to keep account logs comparable, understandable, reliable and relevant to internal or external users. IFRS, with the exception of IAS 29 Financial Reporting in Hyperinflation Economy and IFRIC 7 Applying the Disapproval Approach under IAS 29 , is authorized in terms of the historical cost paradigm. IAS 29 and IFRIC 7 are authorized in terms of units of constant purchasing power paradigms.

IFRS began as an attempt to align accounting across the EU but the value of harmonization quickly made an interesting concept worldwide. However, it has been debated whether a de facto harmonization has occurred or not. The standards issued by the IASC (the IASB predecessor) are still in use today and go by the name International Accounting Standards (IAS), while the standard issued by the IASB is called IFRS. The IAS was issued between 1973 and 2001 by the International Accounting Standards Committee (IASC). On 1 April 2001, the International Accounting Standards Board (IASB) took over from the IASC the responsibility for establishing International Accounting Standards. During the first meeting, the new Council adopted the existing standards of the IAS and Standing Interpretations Committee (SICs). The IASB continues to develop a standard called the new "International Financial Reporting Standards" standard.

Criticisms of IFRS are (1) that they are not adopted in the US (see US GAAP), (2) a number of French critics and (3) that IAS 29 Financial Reporting in Hyperinflationary Economy has no equally positive effect once for 6 years in Zimbabwe's hyperinflation economy. The IASB offers responses to the first two criticisms, but does not offer a response to recent criticism while the IAS 29 is in March 2014 being implemented in an ineffective original form in Venezuela and Belarus.

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The financial statements are a structured representation of the financial position and financial performance of an entity. The purpose of the financial statements is to provide information about the financial position, financial performance and cash flows of an entity useful for various users in making economic decisions. The financial statements also show the results of the management of the resources entrusted to them.

A To meet this objective, the financial statements provide information on entity assets and cash flows. This information, together with other information in the records, helps the users of financial statements in predicting future cash flows of the entity and, in particular, its time and certainty.

The following are common features in IFRS:

• Fair presentation and compliance with IFRS: Fair presentation requires faithful representation of the effects of transactions, events and other conditions in accordance with the definition and recognition criteria for the assets, liabilities, income and expenses set out in the IFRS Framework.
• Concern: The financial statements present on an ongoing basis unless management intends to liquidate the entity or terminate the trade, or have no realistic alternative but to do so.
• Accrual basis of accounting: An entity must recognize items as assets, liabilities, equity, income, and expenses when they meet the definition and criteria of recognition for those elements in the IFRS Framework.
• Materiality and aggregation: Each material class of similar items should be presented separately. Items that have different properties or functions should be presented separately unless not material.
• Offsetting: Offsetting is generally prohibited on IFRS. However, certain standards require compensation when specific conditions are met (as in the case of accounting for defined benefit liabilities in IAS 19 and net presentation of deferred tax liabilities and deferred tax assets in IAS 12).
• Frequency of reporting: IFRS requires that at least annually a complete set of financial statements is presented. However, the listed companies generally also publish interim financial statements (for which accounting fully meets IFRS) which is presented in accordance with IAS 34 Interim Financing Reporting .
• Comparative information: IFRS requires the entity to present comparative information in relation to prior periods for all amounts reported in the current period's financial statements. In addition, comparative information should also be provided for narrative and descriptive information if relevant to understand the financial statements of the current period. The IAS 1 standard also requires additional statement of financial position (also called third balance sheet) when the entity applies the retrospective accounting policy or makes retrospective statements of the items in its financial statements, or when reclassifying items in its financial statements. This is for example the case with the adoption of the revised standard of IAS 19 (as of January 1, 2013) or when new IFRS 10-11-12 consolidation standards are adopted (as of January 1, 2013 or 2014 for companies in the European Union).
• Consistency of presentation: IFRS requires that the presentation and classification of items in the financial statements be maintained from one period to the next unless:

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Qualitative characteristics of financial information

The fundamental qualitative characteristics of financial information include:

• Relevance
• Loyal representation

Improving qualitative characteristics include:

• Comparative
• Verifiability
• Timeliness
• Easy to understand

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Financial statement elements

The elements directly related to the measurement of the financial position statement include:

• Assets : Assets are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.
• Liability : Liability is the current obligation of the entity arising from past events, the expected settlement generates an outflow of the resource entity that embodies the economic benefit, ie the asset.
• Equity : Nominal equity is the interest of nominal residual in the entity's nominal assets after deducting all its obligations in nominal value.

The financial performance of an entity is presented in the statements of comprehensive income , which comprise income statement (Income/Loss Statement) and other comprehensive income statements (usually presented in two separate statements). Financial performance includes the following elements (as recognized in the income statement or other comprehensive income as required by applicable IFRS standards):

• Revenue : increased economic benefits during the accounting period in the form of inflows or asset increases, or decreases in liabilities that result in an increase in equity. However, that does not include contributions made by equity participants (eg owners, partners, or shareholders).
• Costs : decreased economic benefits during the accounting period in the form of an outflow, or depreciation of an asset or the incurrence of a liability resulting in a decrease in equity. However, this does not include distributions made to equity participants.

Results recognized in other comprehensive income are limited to the following specific circumstances:

• Reassessment of defined benefit assets or liabilities (as defined in IAS 19 standards)
• Add or lower the fair value of financial assets classified as available for sale (with the exception of impairment losses) (as defined in IAS 39 standards)
• Increase or decrease results from applying revaluation of properties, factories, and equipment or intangible assets
• Exchange differences resulting from translation of foreign operations (subsidiaries, associations, joint or branch arrangements of reporting entities, activities performed in countries or currencies other than reporting entities) in accordance with IAS 21 standards
• part of the gain or loss on a hedging instrument in a cash flow hedge (or hedge of net investment in a foreign operation, as this is accounted for equally) determined to be an effective hedge

The change in equity statement consists of a reconciliation of changes in equity in which the following information is provided:

• the total comprehensive income for that period, showing separately the total amount attributable to the parent owner and for non-controlling interests;
• for each equity component, the effect of a retrospective application or a retrospective re-statement recognized pursuant to IAS 8; and
• for each component of equity, a reconciliation between the carrying amount at the beginning and end of the period, separately discloses changes resulting from:
  • profit or loss;
  • other comprehensive income; and
  • transactions with owners in their capacity as owners, indicate contribution and distribution separately to owners and changes in ownership of ownership in subsidiaries that do not result in loss of control.

Statement of cash flow

• Operating cash flows : the main income generating activity of an entity and generally calculated by applying an indirect method, whereby profit or loss is adjusted for the transactional effect of a natural-case, any suspension or accrual of past or future cash receipts or payments, and items of income or expenses related to investment or funding cash flows.
• Invest cash flow : the acquisition and disposal of long-term assets and other investments not included in the cash equivalent. This represents the extent to which expenditures have been made for resources intended to generate future earnings and cash flows. Only expenditures that generate assets recognized in the statement of financial position are eligible to be classified as investment activities.
• Flow of financing funds : activities that result in changes in the size and composition of equity and loans contributed by the entity. This is important because they are useful in predicting claims on future cash flows by capital providers to entities.

Notes to the Financial Statements: This should (a) provide information on the basis of the preparation of the financial statements and the specific accounting policies used; (B) disclosing information required by IFRS not presented elsewhere in the financial statements; and (c) provide information not presented elsewhere in the Cash Flow Statement's financial statements, but it is relevant to understand one of them.

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Introduction of financial report elements

Item is recognized in the current financial statements:

• is the possibility of future economic benefits going to or from an entity.
• resources can be measured reliably

In some cases, special standards add additional conditions before recognition is possible or prohibit acknowledgment at all.

Examples are internally generated brand recognition, mastheads, publishing titles, customer lists and similar items in substance, whose claims are prohibited by IAS 38. In addition, research and development costs can only be recognized as intangible assets if they cross classified thresholds as 'development costs'.

While the standard of the provisions, IAS 37, prohibits the recognition of provisions for contingent liability, this prohibition does not apply to accounting for contingent liabilities in a business combination. In this case, the acquirer must recognize contingent liabilities although it is unlikely that an outflow of resources that embodies economic benefits will be necessary.

International Financial Reporting Standards (IFRS) are designed as a common global language for business matters so that corporate accounts can be understood and comparable across international borders. They are a consequence of international growth.

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Concept Capital and capital maintenance

Capital Concepts

Par. 102. The concept of capital finance is adopted by most entities in preparing their financial statements. Under the concept of financial capital, such as invested money or invested purchasing power, capital is identical to net assets or equity of the entity. Under the physical concept of capital, such as operating capability, capital is regarded as the productive capacity of entities based on, say, units of output per day.

Par. 103. The selection of appropriate capital concepts by an entity should be based on the needs of users of its financial statements. Thus, the concept of financial capital should be adopted if the user of the financial statements is primarily concerned with the maintenance of the nominal capital invested or the purchasing power of the invested capital. However, if the user's primary concern is with the entity's operating capabilities, the physical concepts of capital should be used. The chosen concept indicates the goal to be achieved in determining profit, although there may be some difficulty measuring in making operational concepts.

The concept of capital maintenance and profit determination

Par. 104. The concept of capital in paragraph 102 raises the following two concepts of capital maintenance:

(a) Maintenance of financial capital. Under this concept, profits are derived only if the amount (assets or money) of the net assets at the end of the period exceeds the financial (or money) amount of the net assets at the beginning of the period, after excluding distribution to, and contributions from, the owners during the period. Maintenance of financial capital can be measured in nominal monetary units or constant purchasing power units.

(B) maintenance of physical capital. Under this concept, profits are obtained only if the physical productive capacity (or operating capability) of the entity (or the resources or funds required to reach that capacity) at the end of the period exceeds the physical productive capacity at the beginning of the period, excluding the distribution to, , owners during the period.

The concept of capital in paragraph 102 raises the following three concepts of capital during inflation and low deflation:

• (A) Physical capital. See paragraphs 102 & amp; 103
• (b) Nominal financial capital. See paragraph 104.
• (c) Constant purchasing power of financial capital. See paragraph 104.

The concept of capital in paragraph 102 raises the following three concepts of capital maintenance during inflation and low deflation:

• (1) Maintenance of physical capital : options during low inflation and deflation. The current Cost Accounting Model is determined by IFRS. See Par 106.
• (2) Maintenance of financial capital in nominal monetary units (Historical cost accounting): authorized by IFRS but not specified - optional during low inflation and deflation. See Par 104 (a) Historical cost accounting. Maintenance of financial capital in nominal monetary units per se during inflation and deflation is a mistake: it is not possible to maintain the real value of the financial capital constant by measurement in nominal monetary units per se during inflation and deflation.
• (3) Maintenance of financial capital in constant purchasing power (Capital Maintenance in Constant Power Power Unit): authorized by IFRS but not specified - optional during low inflation and deflation. See Par 104 (a). Capital Maintenance in the Constant Power Buying Unit is determined during hyperinflation in IAS 29: ie restatement of Historical Costs or Current Costs on the financial statements of the end of the period in the event of a monthly ending monthly Consumer Price Index. Only the maintenance of financial capital in the constant purchasing power unit (Maintenance of Capital in a Constant Power Purchase Unit) in terms of the daily index per se can automatically maintain the real value of the constant financial capital at all levels of inflation and deflation in all entities that at least break even in value real - ceteris paribus - for an indefinite period. This will happen if these entities have fixed assets of value or not, and without the requirement of more capital or additional retained earnings to simply maintain a constant real value of the existing shareholder equity constituents. Maintenance of financial capital in a constant purchasing power unit requires the calculation and accounting of net monetary losses and gains from holding monetary items during low inflation and deflation. Calculation and calculation of net monetary losses and gains during low inflation and deflation has been approved in IFRS since 1989.

Par. 105. The concept of capital maintenance is concerned with how the entity defines the capital it wants to maintain. It provides a link between the concepts of capital and the concepts of profit because it provides a point of reference by which profits are measured; it is a prerequisite to distinguish between the entity's return on capital and its payback; only the inflows of assets that exceed the amount necessary to maintain the capital can be regarded as profit and therefore as a payback. Therefore, profit is the amount of residual remaining after cost (including adjustment of capital maintenance, if appropriate) has been deducted from the income. If expenses exceed income, the residual amount is a loss.

Par. 106. The concept of physical capital maintenance requires the adoption of current cost measurement. The concept of financial capital maintenance, however, does not require the use of a particular measurement basis. The basic selection under this concept depends on the type of financial capital the entity wants to maintain.

Par. 107. The main difference between the two concepts of capital maintenance is the treatment of the impact of changes in the price of assets and liabilities of the entity. In general, an entity has retained its capital if it has as much capital as at the end of the period as at the beginning of the period. Any amount more and more necessary to maintain capital at the beginning of the period is profit.

Par. 108. Under the concept of maintenance of financial capital where capital is defined in nominal monetary units, profit represents an increase in nominal money capital during the period. Thus, the increase in asset prices held during the period, which is conventionally referred to as holding gains, is conceptually, profit. They may not be recognized as such, however, until the asset is disposed of in an exchange transaction. When the concept of financial capital maintenance is defined in the form of constant purchasing power units, profit represents an increase in purchasing power invested during the period. Thus, only the share of asset price increases that exceeds an increase in the general price level perceived as profit. The rest of the increase is treated as a capital maintenance adjustment and, therefore, as part of equity.

Par. 109. Under the concept of physical capital maintenance when capital is defined in terms of physical productive capacity, profit represents an increase in capital over the period. All price changes affecting the entity's assets and liabilities are seen as changes in the measurement of the entity's productive physical capacity; therefore, they are treated as capital maintenance adjustments that are part of the equity and not as profits.

Par. 110. The selection of measurement bases and the concept of capital maintenance will determine the accounting model used in the preparation of financial statements. Different accounting models show different levels of relevance and reliability and, as in other areas, management should seek a balance between relevance and reliability. This framework applies to various accounting models and provides guidance on preparing and presenting financial statements built under the selected model. At this time, it is not the intention of the IASC Council to prescribe certain models other than in exceptional circumstances, such as for entities reporting in the economic currency of hyperinflation. However, this intention will be reviewed in light of the development of the world.

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Requirements

IFRS financial statements consist of (IAS1.8)

• Statement of Financial Position
• The Comprehensive Income Statement that separates the statement consisting of the Income Statement and separately is a Comprehensive Income Statement, which reconciles the Profit or Loss on the Income Statement against total comprehensive income
• Statement of Changes in Equity (SOCE)
• Cash Flow Statement or Cash Flow Statement
• record, including a summary of significant accounting policies

Comparative information is required for the previous reporting period (IAS 1.36). The entity that sets up the IFRS account for the first time should fully implement IFRS for the current and comparative periods despite transitional exemptions (IFRS1.7).

On September 6, 2007, IASB issued revised IAS 1 Presentation of Financial Statements. Major changes from previous versions require that entities must:

• presents all non-owner changes in equity (ie, 'comprehensive income') either in a Comprehensive Income Statement or in two statements (separate income statement and statement of comprehensive income). Components of comprehensive income may be not presented in the Statement of changes in equity.
• presents a statement of financial position (balance sheet) at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies the new standard.
• presents a cash flow statement.
• makes necessary disclosures by way of records.

Revised IAS 1 is effective for annual periods beginning on or after January 1, 2009. Early adoption is permitted.

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Criticism

In 2012, the staff of the Securities and Exchange Commission issued a 127-page report on potential problems with IFRS that need to be addressed before being adopted by the United States. IFRS Foundation staff provided detailed answers to key criticisms in the SEC staff report.

A number of criticisms were voiced in early 2013 in the French media where IASB Board member Philippe Danjou replied in his document 'International Financial Reporting Standards (IFRSs).'

It is widely acknowledged that the IAS 29 Financial Reporting in Hyperinflationary Economy had no positive effect during the six years it was implemented during hyperinflation in Zimbabwe. This led people to ask for the purpose of IAS 29. In March 2014, the IAS 29 was being implemented in an ineffective original form in Venezuela and Belarus. It is recommended for IASB in 2012 that the IAS 29 should be corrected to require daily indexation which will result in an effective constant purchasing power account and will stabilize the non-monetary economy during hyperinflation. The IASB has offered no response to date (March 2014) for this criticism and has not changed IAS 29 to require daily indexation.

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Adoption

IFRS is used in many parts of the world, including South Korea, the European Union, India, Hong Kong, Australia, Malaysia, Pakistan, GCC countries, Russia, Chile, Philippines, South Africa, Singapore and Turkey but not in the United States.

It is generally expected that IFRS adoption worldwide will be beneficial to investors and users of other financial statements, by reducing the cost of comparing alternative investments and improving the quality of information. Companies are also expected to benefit, as investors will be more willing to provide financing. Companies that have high levels of international activity are among the groups that will benefit from switching to IFRS. Companies involved in overseas activities and benefiting from the transition due to increased comparability of a defined accounting standard. However, Ray J. Ball has expressed some skepticism of the overall cost of international standards; he argues that enforcement of standards can be loose, and regional differences in accounting can become unclear behind the label. He also expressed concern about the emphasis on the fair value of IFRS and the influence of accountants from non-common-law areas, where losses have been recognized in an inappropriate time.

To assess progress toward the goals of a defined global accounting standard, IFRS Foundation has developed and posted profiles on IFRS usage in each jurisdiction. It is based on information from various sources. The starting point is the response provided by the standard setting and other relevant bodies to the survey conducted by the IFRS Foundation. Currently, profiles are completed for 124 jurisdictions, including all G20 jurisdictions plus 104 others. Finally, the plan is to have a profile for every jurisdiction that has adopted IFRS, or on a program toward IFRS adoption.

Australia

The Australian Accounting Standards Board (AASB) has issued 'Equivalent Australia for IFRS' (A-IFRS), which numbered IFRS standards as AASB 1-8 and IAS standards as AASB 101-141. The Australian equivalent of SIC and IFRIC Interpretations has also been published, along with a number of 'domestic' standards and interpretations. This Statement supersedes the previous generally accepted Australian accounting principles prevailing from the annual reporting period beginning on or after January 1, 2005 (ie 30 June 2006 is the first report prepared in accordance with IFRS equivalent standards for the year ending June). To this end, Australia, together with Europe and some other countries, is one of the earliest IFRS adopters for domestic use (in developed countries). It should be admitted, however, that IFRS and especially IAS have been part of the package of accounting standards in developing countries for many years since the relevant accounting bodies are more open to the adoption of international standards for various reasons including capabilities.

The AASB has made certain changes to the IASB statement in making A-IFRS, but this generally has the effect of eliminating options under IFRS, introducing additional disclosures or applying the terms for not-for-profit entities, rather than departing from IFRS for Australian entities. Thus, the nonprofit entity that prepares the financial statements in accordance with A-IFRS is able to make an unconditional IFRS compliance statement.

The AASB continues to reflect the changes made by the IASB as a local statement. In addition, over the past few years, AASB has issued so-called 'Standard Amendments' to reverse some of the initial changes made to the IFRS text for local terminology differences, to restore options and eliminate some Australian specific disclosures. There are several calls for Australians to only adopt IFRS without their 'Australianising' and this has resulted in AASB itself looking for alternative ways of adopting IFRS in Australia.

Brazil

Brazil has adopted IFRS for all companies whose securities are publicly traded and for most financial institutions whose securities are not publicly traded, both for consolidated and separate corporate (individual) financial statements.

Canada

The use of IFRS is a requirement for a reliable profit-oriented company in Canada for financial periods beginning on or after January 1, 2011. This includes public companies and "other profit-oriented companies responsible for large or diverse shareholders."

European Union

In 2002, the EU agreed that from 1 January 2005 the International Accounting Standards/International Financial Reporting Standards will apply to joint accounts of EU-registered companies.

In order to be approved for use in the EU, the standards should be endorsed by the Accounting Arrangements Committee (ARC), which includes representatives of member governments and is recommended by a group of accounting experts known as the European Financial Reporting Advisory Group. As a result, IFRS as applied in the EU may differ from those used elsewhere.

Part of the IAS standard 39: Financial Instruments: Recognition and Measurement initially not approved by ARC. IAS 39 was amended, removing the option to record financial liabilities at fair value, and ARC approved the modified version. IASB works with the EU to find acceptable ways to remove the remaining anomalies with respect to hedge accounting. The World Bank Center for Financial Reporting Reforms work with countries in the ECA region to facilitate the adoption of IFRS and IFRS for SMEs.

While the IASB establishes the effective date for IFRS new consolidation standards 10 Consolidated Financial Statements , IFRS 11 Joint Arrangement and IFRS 12 Disclosure of Interest in Other Entities at 1 January 2013, ARC decides to postpone the mandatory effective date for companies registered in the EU for one year. The standard is only effective on January 1, 2014.

The European Commission has launched a general analysis of the impact of 8 years of use of international financial reporting standards (IFRS) in the EU for authors and users of financial reports from the private sector. The study will include a comprehensive assessment of whether Regulation 1606/2002 of the European Parliament and the Council (the 'IAS Regulation') has fulfilled two initial objectives to ensure high levels of transparency and comparability of the company's financial statements and efficient market functionality compared to the situation before IFRS implementation in 2005. It will also include a cost-benefit analysis and assessment and analysis of the benefits and losses brought by the IAS Rules for various stakeholder groups.

Ghana

Ghana was transferred from the Ghanaian Accounting Standards (GAS) to adopt IFRS on 1 January 2007. In 2008 and onwards, a legislative order was enacted at Bank Ghana to prepare financial statements in accordance with IFRS; thus requiring all public entities in this country.

India

The Institute of Chartered Accountants of India (ICAI) has announced that IFRS will be required in India for financial statements for periods beginning on or after April 1, 2016 in increments. There is a roadmap issued by the MCA for IFRS adoption.

The Reserve Bank of India has stated that the bank's financial statements should be in accordance with IFRS for periods beginning on or after April 1, 2011.

ICAI has also stated that IFRS will be applied to companies above INR 1000 crore (INR 10 billion) from April 2011. Stage details of prudent application for different companies in India:

Stage 1: Opening of balance sheet as of 1 April 2011 *
I. Companies that are part of the NSE Index - Nifty 50
ii. The company that is part of the BSE Index - Sensex 30

A. Companies that are stock or other securities are listed on the stock exchanges outside India

b. The Company, whether registered or not, has a net worth of more than INR 1000 crore (INR 10 billion)

Stage 2: Opening balance as of April 1, 2012 *

Companies not covered in phase 1 and having net worth exceed INR 500 crore (INR 5 billion)

Stage 3: Opening balance as of April 1, 2014 *

Registered companies are not covered in the previous phase * If the company's financial year starts on a date other than April 1, it will prepare its opening balance at the beginning of the next financial year.

On January 22, 2010, the Ministry of Corporate Affairs issued a roadmap for the transition to IFRS. It is clear that India has delayed the transition to IFRS per year. In the first phase, companies included in Nifty 50 or BSE Sensex, and companies whose securities are listed on the stock exchanges outside India and all other companies with a net worth of INR 10 billion will prepare and present the financial statements using the Accounting Standards India united with IFRS. According to press records issued by the government, the companies will convert their first balance sheet as of April 1, 2011, implementing convergent accounting standards with IFRS if the financial year ends on March 31. This implies that the transition date will be April 1, 2011. According to the previous plan, the transition date is set on April 1, 2010.

The press notes do not clarify whether the full set of financial statements for 2011-12 will be prepared by implementing a convergent accounting standard with IFRS. The transitional delays can make the company happy, but that will undermine India's position. Presumably, the lack of readiness of Indian companies has led to the decision to delay the adoption of IFRS for a year. It is unfortunate that India, which boasts of its IT and accounting skills, can not prepare for the transition to IFRS for the past four years. But that may be the reality on the ground Transition gradually
Companies, whether registered or not, have net worth of more than INR 5 billion will convert their opening balance sheet as of April 1, 2013. Companies registered with net worth of INR 5 billion or less will convert their balance sheet as of April 1, 2014 unregistered individuals with a net worth of Rs5 billion or less will continue to apply existing accounting standards, which may be modified from time to time. The transition to IFRS gradually is a smart move The transition costs for smaller companies will be much lower because large companies will bear the initial cost of learning and smaller companies will not be required to reinvent the wheel. However, this will only happen if a large number of large companies involve Indian accounting firms to give them support in their transition to IFRS. If, for the most part, large companies, which will adhere to the convergent Indian accounting standards with IFRS in the first phase, select one of the international companies, Indian accounting firms and small companies will not benefit from learning in the first phase of the transition to IFRS.
It is likely that international companies will protect their learning to maintain their competitive advantage. Therefore, it is in the interest of the state that every company makes wise choices from accounting firms as partners without limiting its choice to international accounting firms. Public sector companies must lead and the Institute of Chartered Accountants of India (ICAI) should develop clear strategies for disseminating learning.
Company size
The government has decided to measure the size of the company in terms of net worth. This is not the ideal unit for measuring company size. Net worth in the balance sheet is determined by accounting principles and methods. Therefore, it does not include the value of intangible assets. In addition, since most assets and liabilities are measured at historical cost, net worth does not reflect the current value of those assets and liabilities. Market capitalization is a better measure of firm size. But it is difficult to estimate the market capitalization or fundamental value of unlisted companies. This may be the reason that the government has decided to use 'net worth' to measure company size. Some companies, large in terms of fundamental value or intending to attract foreign capital, may prefer to use convergent Indian accounting standards with IFRS earlier than required under the road map presented by the government. The government must provide that choice.

Japanese

The Minister of Financial Services in Japan announced at the end of June 2011 that mandatory applications from IFRS may not take place from the fiscal year ending March 2015; five to seven years must be prepared for preparation if the application must be decided; and to permit the use of US GAAP beyond the fiscal year ending March 31, 2016.

Montenegro

Montenegro gained independence from Serbia in 2006. Its accounting standards are the Institute of Accountants and the Montenegrin Auditor (IAAM). In 2005, the IAAM adopted a revised version of the "Accounting and Audit Act" 2002 which authorizes the use of IFRS for all entities. IFRS is currently required for all consolidated and independent financial statements, but its enforcement is not effective except in the banking sector. The financial statements for banks in Montenegro are generally of high quality and can be compared with the EU. Foreign companies listed on two Montenegrin stock exchanges (Montenegro and NEX Stock Exchange) are also required to apply IFRS in their financial statements. Montenegro has no national GAAP. Currently, no translation of Montenegro IFRS exists, and because of this Montenegro is valid Serbian translation from 2010. IFRS for SMEs is currently not implemented in Montenegro.

Nepal

In Nepal, the Accounting Standards Board (ASB) is responsible for setting standards. Nepal closely modeled IFRS Financial Reporting Standards (FRS), with appropriate changes made to suit the Nepalese context. It has published the Nepal Financial Reporting Standards in 2013. The 2013 version of the standard almost resembles IFRS with slight modifications.

Pakistan

All listed companies must follow all IAS/IFRS issued except for the following: IAS 39 and IAS 41: Implementation of these standards has been withheld by obedience by State Bank of Pakistan for Banks and DFIs
IFRS-1: Effective for annual periods beginning on or after January 1, 2004. This IFRS is being considered for adoption for all companies other than banks and DFI.
IFRS-9: Based on the consideration of the relevant Institution Committees (ICAP & ICMAP). This IFRS will be effective for annual periods beginning on or after January 1, 2013.

Russian

The Russian government has implemented a program to align national accounting standards with IFRS since 1998. Since then twenty new accounting standards have been issued by the Russian Federation Finance Ministry aimed at aligning accounting practices with IFRS. Despite these efforts the important difference between Russian and IFRS accounting standards persists. Since 2004 all commercial banks have been required to prepare financial statements in accordance with Russian and IFRS accounting standards. The full transition to IFRS is delayed but starting in 2012 new modifications make GAAP Russia converge to IFRS been created. They mainly include reserve reservations for bad debts and contingent liabilities and devaluation of inventories and financial assets.

However, some differences between the two sets of accounts still remain. The main reasons for deviations between Russian GAAP and IFRS/US-GAAP (eg when Russian affiliates of a larger group need to be consolidated to the parent company) are as follows:

1. Debt bookings in the general ledger in accordance with national accounting standards can only be made after receiving the actual acceptance protocol (good receipt). Indeed, in Russia, in contrast to IFRS and US-GAAP, invoices (exit or entry) are not official tax or accounting documents and do not trigger any ordering. There is also no provision for ordering in the Ledger any fees for goods and services which the contracts have accepted effectively but for documents that have not been exchanged.
2. There is no possibility under Russian GAAP to recognize goodwill as an intangible asset in the company's balance sheet. This has major consequences when a company is sold. Indeed, if a company (or part of it) is sold at a value higher than its book value (ie to account for the value of good-will), the selling party needs to pay tax at the relevant tax rate (20% in 2013) about the difference the value between the sale and the accounting value and the buyer has no possibility to amortize the cost and deduct it from current and future income.
3. Nothing is equivalent to IAS 37 in Russian GAAP. Loans and monetary effects are not discounted, so the present value of the financial asset is not discounted for the relevant interest rate on different loan maturities.

Singapore

In Singapore, the Accounting Standards Committee (ASC) is responsible for setting standards. Singapore closely modeled IFRS Financial Reporting Standards (FRS), with appropriate changes made to suit the Singapore context. Before the standard is enacted, consultations with the IASB are made to ensure consistency of core principles.

South Africa

All companies listed on the Johannesburg Stock Exchange are required to comply with the requirements of the International Financial Reporting Standards since January 1, 2005.

IFRS for SMEs can be applied by 'interest-limited companies', as defined in the South African Corporation Law Amendment Act of 2006 (ie they are not 'widely owned'), if they have no public accountability (ie, unregistered and not financial institutions). Alternatively, a company may choose to apply the full GAAP or IFRS Statement of South Africa.

The South African GAAP Statement is fully consistent with IFRS, although there may be a delay between IFRS issuance and the equivalent SA Statement of GAAP (may affect early adoption voluntarily).

The South African GAAP Statement is withdrawn by the FASC Board of Charity Accountants (SAICA) for the financial year beginning on or after December 1, 2012.

Taiwan

The scope and schedule of adoption

(1) Phase I of companies: registered companies and financial institutions overseen by the Financial Supervisory Commission (FSC), except for credit cooperatives, credit card companies and insurance brokers:

A. They will be required to prepare financial statements in accordance with Taiwan-IFRS starting from 1 January 2013.

B. Adoption of initial choice: Company that has issued securities overseas, or has registered foreign securities issuance with

FSC, or have a market capitalization greater than NT $ 10 billion, will be allowed to prepare additional consolidated financial statements in accordance with Taiwan-IFRS starting from 1 January 2012. If a company without subsidiaries is not required to prepare consolidated financial statements, it will be allowed to prepare additional individual financial statements under the above conditions.

(2) Phase II companies: unlisted public companies, credit unions, and credit card companies:

A. They will be required to prepare financial statements in accordance with Taiwan-IFRS starting from 1 January 2019

B. They will be allowed to implement Taiwan-IFRS starting from 1 January 2013.

(3) Pre-disclosure of IFRS adoption plans, and impacts of adoption

To prepare properly for IFRS adoption, domestic companies should propose IFRS adoption plans and establish specific task forces. They should also disclose related information from 2 years prior to adoption, as follows:

A. Company Phase I:

(a) They will be required to disclose the adoption plan, and the impact of adoption, in the 2011 annual financial statements, and in the interim financial statements and annual 2012.

(b) Beginning of the optional adoption:

a. Companies that adopt the initial IFRS will be required to disclose adoption plans, and the impact of adoption, in the 2010 annual financial statements, and in the interim year and yearly financial statements.

b. If the company chooses early adoption of Taiwan-IFRS after January 1, 2011, it will be necessary to disclose the adoption plan, and the impact of adoption, in the interim 2011 and annual financial statements commencing on the date of the decision.

B. Phase II companies will be required to disclose related information from 2 years prior to adoption, as stated above.

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Year Work Plan

2008

• The establishment of IFRS Taskforce

2009 ~ 2011

• Acquisition of authorization to translate IFRS
• Translation, reviews and publishing of IFRS
• Analysis of possible IFRS implementation issues, and their resolution
• Proposals for related regulatory modifications and monitoring mechanisms
• Improved publications and related training activities

2012

• The IFRS application is allowed for Stage I companies
• Learn possible IFRS implementation issues, and resolutions
• Enhanced amendments to related rules and oversight mechanisms
• Improved publications and related training activities

2013

• IFRS implementation required for Phase I companies, and allowed for Phase II companies
• Follow-up analysis of IFRS adoption status, and impact

2014

• Follow-up analysis of IFRS adoption status, and its impact

2015

• IFRS applications required for Phase II companies

Expected benefit

(1) More efficient formulation of domestic accounting standards, enhancement of their international image, and enhancement of global rankings and international competitiveness of our local capital markets;

(2) Better comparison between financial statements of local and foreign companies;

(3) There is no need for restatement of financial statements when a local firm wishes to issue foreign securities, thereby reducing the cost of capital increase overseas;

(4) For local companies with overseas investment, the use of a set of accounting standards will reduce the cost of account conversion and improve the efficiency of the company.

The above is quoted from the Research and Development Accounting Foundation, with the original "here" (PDF) . Ã, (18.9 KB) .

Turkish

The Regulatory and Supervisory Board of the Banking and Turkish Capital Market Board translated IFRS into Turkey in 2002. Turkish banks and companies listed on the Istanbul Stock Exchange are required to prepare IFRS reports from then on. The Turkish Accounting Standards Board (called the Public Oversight Authority after 2011) also translated IFRS in 2005. The new Commercial Code comes into effect in 2012. The Public Supervisory Authority is the only authorized body on auditing standards and financial reporting. Most businesses authorized by the Council of Ministers alongside Turkish banks and companies listed on the Istanbul Stock Exchange are required to prepare IFRS reports since 2012.

Zimbabwe

Zimbabwe has also adopted IFRS.

src: guardian.ng

See also

• List of International Financial Reporting Standards
• Nepal Financial Reporting Standards
• Chinese accounting standards
• Accounting Philosophy
• International Public Sector Accounting Standards
• Indian Accounting Standards
• Generally Accepted Accounting Principles (Canada)
• Generally Accepted Accounting Principles (France)
• Generally Accepted Accounting Principles (English)
• Generally Accepted Accounting Principles (United States)
• Capital (economy)
• Audit Quality Center (CAQ)
• Accounting for Constant Purchasing Power

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References

src: i.ytimg.com

Further reading

• International Accounting Standards Board (2007): International Financial Reporting Standards 2007 (including International Accounting Standards (IAS (tm)) and Interpretations as of January 1, 2007) LexisNexis, ISBN 1 - 4224-1813-8
• The original text of IAS/IFRS, SIC and IFRIC was adopted by the European Community Commission and published in the Official Journal of the European Union https://web.archive.org/web/20061020223959/http://ec. europa.eu/internal_market/accounting/ias_en.htm#adopted-commission
• Case studies of IFRS implementation in Brazil, Germany, India, Jamaica, Kenya, Pakistan, South Africa and Turkey. Prepared by the United Nations Intergovernmental Working Group on International Accounting Standards and Reporting (ISAR).
• Wiley's Guide to Fair Value Below IFRS [5], John Wiley & amp; Boys.
• Perramon, J., & amp; Amat, O. (2006). Introduction of IFRS and its influence on companies registered in Spain. Economic Working Paper 975, Department of Economics and Business, Universitat Pompeu Fabra. Available on SSRN 1002516 .

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External links

• International Accounting Standards Board - Free access to all IFRS standards, news and ongoing project status
• PwC IFRS page with downloadable and downloadable documents
• Latest IFRS news and resources from the Institute of Chartered Accountants in England and Wales (ICAEW)
• Early publication of International Accounting Standards in EU Official Journal PB L 261 13-10-2003
• The EU's Internal Market Directorate about IAS implementation in the European Union
• Deloitte: An Overview of International Financial Reporting Standards
• The American Institute of CPA (AICPA) in partnership with a marketing and technology subsidiary, CPA2Biz, has developed the IFRS.com website.
• RSM Richter IFRS page with downloadable and downloadable documents related to IFRS Conversion in Canada
• US. Securities and Exchange Commission Proposal for the First Implementation of International Financial Reporting Standards by listed foreign private issuers in the SEC
• IFRS for SMEs Spoken by Michael Wells, Director of the IFRS Education Initiative at the IASC Foundation
• Country map of Pricewaterhousecoopers applying IFRS
• the IFRS EY page with insight into IFRS Standards

Source of the article : Wikipedia