Read this article to learn about the concept and adoption of International Financial Reporting Standards (IFRS).
International Financial Reporting Standards are principle-based, internally consistent and internationally converged set of standards, interpretations and framework adopted by the International Accounting Standard Board (IASB).
Dictating broad rules as well as specific treatments for preparation of financial statements, International Financial Reporting Standards (IFRS) set standards for financial statements so that the financial statements speak the same language across the globe.
The basic objective of financial statement is that these should reflect true and fair view of the business affairs of the organization. As these statements are used by various constituents of the society/ regulators, they need to speak same language across the globe. Keeping in view of these, on 1 April 2001, the new IASB took over from the International Accounting Standards Committee (IASC) the responsibility for setting International Accounting Standards.
During its first meeting the new Board adopted existing International Accounting Standards(IAS) and Standing Interpretations Committees (SICs). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC).
Adoption of IFRS:
IFRS are being used in many parts of the world, including the European Union, Hong Kong, Australia, Malaysia, Pakistan, Russia, South Africa, Singapore and Turkey etc. IFRS adoption worldwide will be beneficial to investors and other users of financial statements, as financial statements would speak the same language hence, interpretation of these would be more easy and reliable.
In India, the Institute of Chartered Accountants of India (ICAI) has announced that IFRS will be mandatory in India for financial statements for the periods beginning on or after 1 April 2011. This will be done by convergence of existing accounting standards to make them compatible with IFRS. In India these standards will be called IND-AS. The ICAI has also stated that IFRS will be applied to companies above Rs.1000 crore from April 2011.
Phase wise applicability details for different companies in India:
International Financial Reporting Standards comprise:
1. International Financial Reporting Standards (IFRS)—standards issued after 2001
2. International Accounting Standards (IAS)—standards issued before 2001
3. Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC)—issued after 2001
4. Standing Interpretations Committee (SIC)—issued before 2001
5. Framework for the Preparation and Presentation of Financial Statements (1989)
List of IFRS statements:
The following IFRS statements have currently been issued:
1. IFRS 1 First time Adoption of International Financial Reporting Standards
2. IFRS 2 Share-based Payment
3. IFRS 3 Business Combinations
4. IFRS 4 Insurance Contracts
5. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
6. IFRS 6 Exploration for and Evaluation of Mineral Resources
7. IFRS 7 Financial Instruments: Disclosures
8. IFRS 8 Operating Segments
9. IFRS 9 Financial Instruments
10. IAS 1: Presentation of Financial Statements.
11. IAS 2: Inventories
12. IAS 3: Consolidated Financial Statements Originally issued 1976, effective 1 Jan 1977. Superseded in 1989 by IAS 27 and IAS 28
13. IAS 4: Depreciation Accounting Withdrawn in 1999, replaced by IAS 16, 22, and 38, all of which were issued or revised in 1998
14. IAS 5: Information to Be Disclosed in Financial Statements Originally issued October 1976, effective 1 January 1997. Superseded by IAS 1 in 1997
15. IAS 6: Accounting Responses to Changing Prices Superseded by IAS 15, which was withdrawn December 2003
16. IAS 7: Cash Flow Statements
17. IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors
18. IAS 9: Accounting for Research and Development Activities – Superseded by IAS 38 effective 1.7.99
19. IAS 10: Events After the Balance Sheet Date
20. IAS 11: Construction Contracts
21. IAS 12: Income Taxes
22. IAS 13: Presentation of Current Assets and Current Liabilities – Superseded by IAS 1.
23. IAS 14: Segment Reporting (superseded by IFRS 8 on 1 January 2008)
24. IAS 15: Information Reflecting the Effects of Changing Prices – Withdrawn December 2003
25. IAS 16: Property, Plant and Equipment
26. IAS 17: Leases
27. IAS 18: Revenue
28. IAS 19: Employee Benefits
29. IAS 20: Accounting for Government Grants and Disclosure of Government Assistance
30. IAS 21: The Effects of Changes in Foreign Exchange Rates
31. IAS 22: Business Combinations – Superseded by IFRS 3 effective 31 March 2004
32. IAS 23: Borrowing Costs
33. IAS 24: Related Party Disclosures
34. IAS 25: Accounting for Investments – Superseded by IAS 39 and IAS 40 effective 2001
35. IAS 26: Accounting and Reporting by Retirement Benefit Plans
36. IAS 27: Consolidated Financial Statements
37. IAS 28: Investments in Associates
38. IAS 29: Financial Reporting in Hyperinflationary Economies
39. IAS 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutions – superseded by IFRS 7 effective 2007
40. IAS 31: Interests in Joint Ventures
41. IAS 32: Financial Instruments: Presentation (Financial instruments disclosures are in IFRS 7 Financial Instruments: Disclosures, and no longer in IAS 32)
42. IAS 33: Earnings per Share
43. IAS 34: Interim Financial Reporting
44. IAS 35: Discontinuing Operations – Superseded by IFRS 5 effective 2005
45. IAS 36: Impairment of Assets
46. IAS 37: Provisions, Contingent Liabilities and Contingent Assets
47. IAS 38: Intangible Assets
48. IAS 39: Financial Instruments: Recognition and Measurement
49. IAS 40: Investment Property
50. IAS 41: Agriculture