IFRS - what is it? IFRS: reporting, standards
According to official data, in 2015it will be mandatory to introduce such regulations as international standards for financial reporting of special categories. Most often you can find the abbreviation of this concept - IFRS.
Such categories will include:
- participants-professionals of the stock market;
- commodity exchanges;
- non-state pension funds;
- clearing companies;
- joint-stock investment funds;
- managing organizations of the above categories.
It makes sense to begin to determine the question: "IFRS - what is it?". This concept is deciphered as a set of specialized documents, more precisely standards, through which the procedure for creating financial statements that is freely available to external users is regulated.
IFRS v. Russian Accounting System
First of all, there is a difference in the finalusers with information that includes relevant accounting indicators grouped according to the above standards. In particular, the Russian model was aimed at the bodies of state management and statistics, and international - on investors, enterprises and financial institutions. As a consequence, in the differences with respect to interests and requirements for financial information, there are also different principles on which the procedure for the formation of this reporting is based.
Thus, the mandatory rule in IFRS is the priority of the content regarding the form of submission of the previously mentioned information. Speaking about the Russian accounting system, this moment is most often omitted.
A practical example is the situation,in which PBU considers preferred shares as part of the capital of the enterprise, although there are very few distinctive features from bonds regarding their economic nature. In accordance with IFRS, these features are significant in order not to reflect them as part of equity.
Purpose of implementing IFRS for Russian enterprises
In order to form adequatelyperceived and understandable to users of different countries financial statements, international standards were introduced. Their goal is to unify the compilation of the set of documents under consideration and to provide data on the activities of a company.
It is worth highlighting the list of documents that determine financial reporting. IFRS are aimed at their unification with respect to the order of creation, namely:
- balance sheet;
- a statement of cash flows;
- Profits and Losses Report;
- report on changes in capital or other transactions of this direction;
- accounting policy.
Along with the above-mentioned reports, enterprises can form certain managerial surveys, in which the company's profit indicators are displayed.
IFRS - what is it?
This accounting system looks like a certain set of documents, including the following elements:
- Preface to the provisions of the standards in question;
- clarification of the fundamental principles of preparation and the form of providing this type of reporting, in fact the concept of IFRS;
- standards and relevant interpretations to these documents.
Each of the above documents hasits own significance, but it is used exclusively in conjunction with other elements. Thus, from the above list, it means that IFRS are standards, each of which has a definite structure.
The semantic aspect of the standards of the accounting system under consideration
They establish rules that determine the procedure for deciphering individual transactions performed in the course of the core business of the enterprise and reflected in the financial statements.
It is important to note that the standards adoptedby the relevant authority until 2001, are called International Accounting Standards or IAS for short, and since 2001, the International Financial Reporting Standards, the abbreviation of which is IFRS.
The above-mentioned standards
The main IFRSs developed before 2001 include:
- "Presentation of financial statements" (IAS No. 1).
- "Reserves" (IAS No. 2).
- "Cash Flow Reports" (IAS No. 7).
- "Accounting Policies, Changes in Accounting Accounting Estimates and Errors" (IAS No. 8).
- "Events after the balance sheet date" (IAS No. 10).
- "Contracts for construction" (IAS No. 11).
- 7. "Income Taxes" (IAS No. 12).
- 8. "Segment reporting" (IAS No. 14).
- 9. "Fixed assets" (IAS No. 16).
- "Lease" (IAS No. 17).
- "Revenues" (AS No. 18).
- "Employee Benefits" (IAS No. 19).
- "Accounting for Government Grants and Disclosure of Information on Public Assistance" (IAS No. 20).
- "The Impact of Changes in Exchange Rates" (IAS No. 21).
- "Borrowing Costs" (IAS No. 23).
- "Disclosure of Information" (IAS No. 24).
- "Accounting and reporting on pension schemes (pension plans)" (IAS No. 26).
- "Consolidated and Separate Financial Statements" (IAS No. 27).
- "Investments in Associates" (IAS No. 28).
- "Financial Reporting in Hyperinflationary Economies" (IAS No. 29).
- "Disclosure of Information in the Financial Statements of Banks and Similar Financial Organizations" (IAS No. 30).
- "Participation in joint activities" (IAS No. 31).
- "Financial instruments - disclosure and presentation of information" (IAS No. 32).
- "Earnings per share" (IAS No. 33).
- "Interim Financial Reporting" (IAS No. 34).
- "Impairment of Assets" (IAS No. 36).
- "Estimated liabilities, contingent liabilities and contingent assets" (IAS No. 37).
- "Intangible Assets" (IAS No. 37).
- "Financial Instruments - Recognition and Measurement" (IAS No. 39).
- "Investment Property" (IAS No. 40).
- "Agriculture" (IAS No. 41).
International Financial Reporting Standards
The list of standards of the accounting system in question, adopted since 2001, is as follows:
What is the sign of the current year regarding the accounting system under consideration?
From official sources it became known aboutreadiness of the last volume of IAS 2014, called "Red Book". It contains rules on international accounting, including those that will enter into force after January 1 of the current year. An example can be included amendments to the ninth standard, called "Financial Instruments", adopted since 2001. There are also two sets of annual changes relating to IFRSs 2011-2013 and IFRS 2010-2012, one interpretation on fees, the constitution of the IFRS Foundation, a detailed work plan.
What is good about this accounting system?
In order to form a correct international financial report, IFRS will be indispensable in helping.
It is worth highlighting a number of advantages of this accounting system, which may be associated with the activities of the following subjects:
All of the above helps to get an answer to the question: "IFRS - what is it?"
How to smooth out the process of transition to IFRS?
The tasks of reforming include the following:
- Special training of accountants to the level of professional proficiency in the basics of the accounting system in question.
- Strengthening in the minds of managers of enterprises a real interest in providing truthful and objective information.
- Final distinction of accounting for tax, financial and managerial.
The importance of the transition is due to the fact that IFRS standards are a trade-off between the world's major accounting systems.
The attractiveness of accounting reform for businesses around the world
The financial statements of IFRSfacilitate companies from different countries access to world-class capital markets, and also increase the comparability of information, make it more transparent for external users.
Specifically, Russian enterprises will be able tospeak one language with their foreign colleagues and strengthen their business positions in foreign markets in terms of equality of opportunity, as a result of which numerous prospects for international capital markets will be available.
The introduction of IFRS will also have a positive impact on the quality of management accounting, in particular, on its improvement, and will also contribute to the updating of information systems and staff motivation.
In addition, attracting foreign capital withoutreporting, compiled in accordance with IFRS, is to a large extent difficult. And it does not matter whether this will be done either with the help of Western banks, or by accessing the stock market abroad, or by attracting private investments from abroad. Accounting, drawn up in accordance with the PBU, a potential foreign investor, most likely, will not understand. Therefore, it is worthwhile to take care of the formation of the reporting, regulated by IFRS.
Companies are aware of the fact that in the near futurefuture international standards will become national. For many firms, IFRS statements are required today to provide a significant competitive advantage by attracting resources in international borrowing markets such as bonds, loans or IPOs.