The international financial environment is constantly changing ever since the International Financial Reporting Standards [International Financial Reporting Standards] (IFRS) have been implemented. Moreover, the unprecedented financial scandals of recent years have further accelerated the process. The main objective was to enable an accurate comparison of the systematic financial statements produced by companies around the world. These standards set out the requirements for the recognition, evaluation, presentation and the information processing of transactions in the general purpose financial statements.
Therefore, it is legitimate to question this heavy task, and inquire about the advantages and the inconveniences generated by adherence to a common repository. But this study does not focus entirely on this aspect. All companies are not yet ready to follow the new standards, even though the accounting changes are made gradually. For now, these are all listed companies publishing consolidated accounts which are responsible for preparing financial statements as of January 1, 2005. In France, groups that are not listed may also choose to opt for maintaining the standards or rules applicable to the consolidated nation.
This major project represents a significant step forward in the field of accounting and finance, but it is doubtful if such a goal can really improve the financial statements. We will see at first the concrete steps made by the establishment of a common reference, and then we will analyze the accounting differences that have already been identified.
It seems important to recall how IFRS was created. The International Accounting Standards Board [International Accounting Standards Board] (IASB) was established in 2001 as part of the Foundation of International Accounting Standards Committee[International Accounting Standards Committee Foundation] (IASC).The objectives of IASC and IASB are:
- Develop unique understandable accounting records around the world with high quality, transparent to help the various economic players in their financial decision-making
- Promote the use and rigorous application of these standards
- Convergence of IAS, IFRS and national standards with respect to quality solutions
The leadership of the IASC is composed of twenty two directors known as "Trustees" who are responsible for identifying members of the IASB, the boards and committees related to purchase and the financing of the organization.
The IASB is the standard setters and the IASC Foundation has twelve members. It is the responsibility of approving the IASB International Financial Reporting Standards and related documents such as paper sand Interpretations of IFRS. Before the creation of the IASB, International Accounting Standards (IAS) and related documents were prepared by the IASC Board, on June 29, 1973.
The application of financial reporting became mandatory from 1 January 2005 and 1 January 2007 for companies with only listed securities other than shares. This adoption also had a rippled effect because many countries in the image of Armenia, Egypt, and the Ukraine were already using in whole or in part the international benchmark. In France, groups that were not listed also chose to opt for standards.
Tags: International Financial Reporting Standard, systematic financial statements, The International Accounting Standards Board, economic players, financial reporting, international benchmark.
[...] Does IFRS enhance the presentation of financial statements? Overview Introduction Part I Advances of international financial reporting standards 1. Introduction and Scope History Scope 2.General concepts and principles Objective of financial statements Characteristics of the information in the financial statements 3.IAS Standard for the Presentation of Financial Statements Presentation of IAS 1 Other guidelines Key Benefits Effectiveness and Transparency Improvement commercially Part two Difficulties: The issues of IFRS 1. The first confusion Cultural Perspective Restructuring Emergence of new computer equipment 2. [...]
[...] However, the fact remains that, behind the efforts of presentation, it remains an important work of substance and form to meet the requirements of IFRS. Entities applying these new standards face significant costs incurred by this implementation. Thus, this calls into question the reliability, or rather the obsolescence of information systems. The staff needs to be formed in its entirety, including both the new accounting policies and the language used. Added to this are any financial difficulties created by changes in the presentation of summary statements, such as the volatility of earnings. [...]
[...] Specifically, a document of financial statements includes the following elements: a balance sheet, income statement, a statement of changes in equity, a cash flow table, and appendices containing a summary of the particular accounting methods used by the entity in question. These documents are therefore intended to present the true position and the financial performance of an entity. This requires an accurate representation of all transactions and other economic and financial operations defined in the "Framework for the Preparation and Presentation of Financial Statements". [...]
[...] Below are the results of a study on the changes in presentation and management that were necessary to meet the accession of the new common repository in the case of acquisitions. We find that in 60% of the responses, the package of property is the first that companies consider appropriate. This is because of differences between the IFRS and the current French rules. The assets represent a position where opinions differ greatly, and the evaluation depends on whether one is under GAAP , IFRS accounting or French accounting. Again, this change can bring a certain amount of vagueness in terms of understanding financial statements. [...]
[...] Celerity To be classified as relevant, financial information must be able to assist users in making economic decisions. Speed appears to be a significant link in the flow of information. The latter may lose its relevance if it is provided too late. Cost / benefit The benefits derived from information should exceed the cost of producing it. In addition, costs are not necessarily borne by the users who benefit from these advantages. Financial documents which have all these qualities will enable users to optimize their decision making. [...]
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