Scope of IFRS Reporting
Scope of IFRS Reporting : International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable, understandable, reliable and relevant as per the users internal or external. |San Francisco IFRS, with the exception of IAS 29 Financial Reporting in Hyper inflationary Economies and IFRIC 7 Applying the Restatement Approach under IAS 29, are authorised in terms of the historical cost paradigm. IAS 29 and IFRIC 7 are authorized in terms of the units of constant purchasing power paradigm.
IFRS began as an attempt to harmonize accounting across the European Union but the value of harmonization quickly made the concept attractive around the world. However, it has been debated whether or not de facto harmonization has occurred. Standards that were issued by IASC (the predecessor of IASB) are still within use today and go by the name International Accounting Standards (IAS), while standards issued by IASB are called IFRS. IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new International Accounting Standards Board (IASB) took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards “International Financial Reporting Standards”.
In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework.
Scope of IFRS Reporting : The Chairman of the International Accounting Standards Board (IASB), Hans Hoogervorst, has delivered a speech in Toronto, Canada, in which he presented the IFRS Foundation’s and the IASB’s newly developed mission statement and provided an update on the progress of IFRS adoption around the world.
Scope of IFRS Reporting : The new mission statement is consistent with the IFRS Foundation’s constitutional objective: to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. However, to increase understanding of the organisation’s role in, and contribution to, the global economy, a mission statement has been developed.
Scope of IFRS Reporting : Mr Hoogervorst said:
“Our mission is to develop IFRS that brings transparency, accountability and efficiency to financial markets around the world. Our work serves the public interest by fostering trust, growth and long-term financial stability within the global economy.”
Scope of IFRS Reporting : Mr Hoogervorst also talked about how IFRS continues to be adopted around the world, creating a bridge between countries with very different legal systems. The IFRS Foundation’s updated Pocket Guide, which charts the adoption of IFRS around the world, shows that adoption continues at a pace and that most countries have adopted IFRS in full and without modifications. The majority of countries surveyed require IFRS for all or most publicly listed companies, while several other countries permit the use of IFRS.
Scope of IFRS Reporting : Words said by Mr Hoogervorst
The most remarkable thing about IFRS is not so much the number of countries applying it. It is that, contrary to what many believe or would like to believe, there are so few local adaptations. Our study shows that modifications are rare. Where they exist, they are mostly transitory in nature. I know of no other international economic standard that is used so widely and consistently around the world. This is truly remarkable. The 114 countries using IFRS have among them hugely different economic and legal systems. The differences between Germany and France are bigger than the differences between the United Kingdom and the United States. Yet they both use IFRS. A rules-based environment is often seen as an insurmountable barrier to principle based accounting. I can assure you that the vast majority of IFRS-jurisdictions have a rules-based culture. Nevertheless these countries can work with IFRS perfectly well. They are living proof that it is there is no objective reason for national exceptions to international norms.
Scope of IFRS Reporting
Standard-setting The third and final topic I wanted to cover this evening is to mention a couple of major projects on the IASB’s work plan. In the last year or so we have made good progress in some key areas. We completed IFRS 9 Financial Instruments and also our new revenue recognition standard, IFRS Revenue from Contracts with Customers. With the FASB we have started a Transition Resource Group to support implementation of the Standard. We are currently working to see whether any targeted or limited adjustments are needed to IFRS.
Where clarifications are needed, we should make them. However, we need to be very careful that this process does not end up with the Boards revisiting the fundamentals that underpin the Standard. The process should not become, in effect, another round of public consultation or an opportunity for people to reopen decisions with which they disagree. Completing IFRS took more than a decade of hard work by both Boards, three formal rounds of public consultation, thousands of hours of meetings and countless outreach meetings. The perfect accounting standard does not exist. An endless process of tinkering will certainly not bring us close to perfection. We are also working hard to introduce a new Standard for insurance accounting. This is a project that has been ongoing since 1997.
It is high time that we brought it to an end. We are committed to finalising a current value standard for insurance contacts. We have been working in close co-operation with the insurance industry around the world, and especially here in Canada. We have also made good progress in March, by finding a workable solution for participating contracts, which was one of the last remaining issues. I am very optimistic that we will be able to finalise our deliberations in the coming months.
Scope of IFRS Reporting
I am well aware that Canada is in the somewhat unique position of being an IFRS jurisdiction that requires the use of quarterly reporting. This means that Canadian companies are often in the position of being the first in the world to use new IFRS standards. Because of this, we listen very carefully to your views, and take very seriously your comments on these and other major projects. Close Ladies and gentlemen, I thank you for your time. I hope I have provided enough juicy topics during these opening remarks for the panellists to get their teeth into. We really are delighted to be with you this evening in Toronto. Your views and feedback are very important to us.
You can figure it the scope of IFRS by reading the above speech of Mr Hoogervorst. and more over IFRS is rapidly growing in the industry. Be certified Be Proficient in IFRS. Best of Luck.
Scope of IFRS Reporting
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