Short Term Training
On
International Financial Reporting
Standards (IFRSs)
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INTRODUCTION TO
International Financial Reporting Standards (IFRSs)
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Introduction
The process of having a single set of
accounting standards began in 1973
at the time 16 professional
accountancy bodies from
the United States of America,
Australia, Canada, Mexico, the United
Kingdom, Germany, Netherlands,
Japan, and France agreed to form the
International Accounting Standards
Committee (IASC).
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Introduction (Contd…)
IASC had issued 41 international
accounting standards (IAS) during the
period of 1973 to 2000.
However, in 2000, the IASC was replaced
by International Accounting Standards
Board (IASB).
Then IASB started reviewing the IAS to
refine them and issued the first
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What are IFRSs?
1. IFRS are globally recognized set of
Accounting Standards issued for guiding
the preparation of financial statements by
business entities.
2. They are accounting rules that are
principle based, market oriented and
globally recognized and accepted, and
published to require more extensive
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What are IFRSs (Contd…)
IFRSs prescribe:
the items that should be recognized as assets,
liabilities, income and expense;
how to measure those items;
how to present them in a set of financial
statements; and
related disclosures about those items
They are issued by International Accounting Standard
Board (IASB). 6
International Accounting Standard Board
(IASB)
IFRS is developed by the IASB, which is the standard-
setting body of the IFRS Foundation, an independent,
private sector, not-for-profit.
The IASB was formed in 2001 as the successor
organization to the International Accounting Standards
Committee (IASC), which had been setting International
Accounting Standards (IAS) since 1973.
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IFRSs
The IASB is committed to developing, in the public
interest, a single set of high quality global accounting
standards that provide
high quality,
transparent and
comparable information in general-purpose financial
statements
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IFRSs Cont…
IFRS brings transparency by enhancing
the international comparability and quality
of financial information, enabling investors
and other market participants to make
informed economic decisions.
IFRS strengthens accountability by
reducing the information gap between the
providers of capital and the people to
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IFRSs
IFRS contributes to economic efficiency by
helping investors to identify opportunities
and risks across the world, thus improving
capital allocation.
Hence, for businesses, the use of a single,
trusted accounting language lowers the cost
of capital and reduces international
reporting costs
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Processes to Issue IFRS
IFRS follows a thorough, open, participatory
and transparent due process.
The due process includes:
opportunities for public comment at various
stages in the development of a Standard;
IASB deliberations at meetings that are open
to public observation and are webcast; and
public availability of all of the agenda papers
that form the basis for the IASB’s
deliberations as well as all of the comments
received from interested parties.
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Structure of the IFRS Foundation and the IASB
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The Standards development process
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IFRS Standards Setting Due Process (Contd…)
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Types of IFRS
IFRS are currently including:
International Accounting Standards
(IAS),
International Financial Reporting
Standards (IFRS) and
Interpretations of International Financial
Reporting Interpretations Committee
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Types of IFRSs (Contd...)
IASB issues two types of IFRSs
Full IFRS
IFRS for SME
IASB defines SMEs
do not have public accountability (PA)
publish general purpose financial statements
(GPFS)
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IFRS for SMEs
An entity has public accountability (PA) if:
its debt or equity instruments are traded in a public
market or it is in the process of issuing such
instruments for trading in a public market (a domestic
or foreign stock exchange or an over-the-counter
market, including local and regional markets); or
it holds assets in a fiduciary capacity for a broad
group of outsiders as one of its primary businesses.
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IFRSs Vs IFRS for SMEs
Full IFRSs
required or permitted for financial reporting
listed companies in more than 122 jurisdictions
unlisted in more than 93 jurisdictions
The IFRS for SMEs
issued in July 2009
About 70 jurisdictions# already permit or require
its use or plan to do so in the next 3 years
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IFRS for SME
Tailored for SMEs
Much smaller in size, 230 pages (divided into 35
sections vs 3,000 in full IFRSs
Organized by topic
Simplified IFRSs, but built on an IFRS foundation
Completely stand-alone
Designed specifically for SMEs
Internationally recognized
Big reduction in disclosures:
Full IFRSs – more than 3,000 items in the disclosure
checklist but IFRS for SMEs – roughly 300
disclosures.
Final standard issued 9 July 2009
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Adoption – some examples
South America: Argentina, Brazil, Chile,
Guyana. Peru, Suriname, Venezuela
Caribbean: Antigua, Barbuda, Aruba, Bahamas,
Barbados, Cayman, Dominica, Dominican
Republic, Guadeloupe, Jamaica, Montserrat, St
Kitts-Nevis, St Lucia, Trinidad
Central America: Belize, Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua, Panama
Africa: South Africa, Botswana, Egypt, Ethiopia,
Ghana, Kenya, Lesotho, Malawi, Mauritius,
Namibia, Nigeria, Sierra Leone, Swaziland,
Tanzania, Uganda, Zimbabwe
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Adoption – some examples (Contd…)
Asia: Cambodia, Fiji, Hong Kong,
Malaysia, Myanmar, Nepal, Philippines,
Singapore, Sri Lanka
Middle East: Israel, Jordan, Lebanon,
Palestine Qatar Eurasia: Azerbaijan,
Kyrgyzstan, Moldova, Turkey
Europe: Switzerland. Planned: United
Kingdom, Ireland, Denmark, Latvia. Others
studying. Note that European Commission
is currently consulting on the IFRS for
SMEs.
Available for use: United States, Canada
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Adoption Vs. Conversion
Adoption refers to taking IFRS as it is
while
Conversion refers to converting the
existing accounting standard to IFRS
For instance, Ethiopia adopted IFRS
by Proclamation No. 847/2014
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GAAPs VS IFRS
Temporal Method
.
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For more information, visit the
following website of IFRS
www.ifrs.org
End
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