IFRS Reporting Services: Applications & Advantages Discussed

The presentation of financial statements for an organization in line with the reporting requirements of each country can be quite challenging.

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    ifrs reporting

    IFRS Reporting Services: Complete Guide

    Numerous companies use accounting-based International Financial Reporting Standards (IFRS) as well as parallel reports. As a result of regulations, the reports are provided on an as-needed basis. The main benefits of IFRS reporting include improved comparability and transparency in financial reporting. 

    The presentation of financial statements for an organization in line with the reporting requirements of each country can be quite challenging. Internationally operating companies are faced with a variety of issues. ODINT Consulting has years of experience in IFRS. They include banks, insurance companies telecom firms, and investment funds as well as oil and gas company’s real estate, as well as other industries.

    International Financial Reporting Standards (IFRS)

    It provides a standard accounting language that is employed by companies to create balance Sheets and Financial Statements across the world. Due to the growing internationalization of business and the cross-border relationships that it is now required to create financial accounts as well as balance sheets in the same manner. At present, IFRS reporting is in force in over 120 countries.

    • IFRS reporting allows for comparison easily since it assists in understanding the financial statements of firms across International borders with the aid of the common accounting standard.
    • The IFRS principles provide more options to invest in trading on the public market, since the firms will be transparent and clear regarding their market data for the world.
    • IFRS accounting demands a lot of transparency regarding how the company manages its business and financial transactions within the company. This way, firms could be accountable for any kind of mistake or poor judgment.

    Therefore, that the IFRS system provides the highest level of accountability in the financial disclosure and reporting system

    Purpose Of IFRS Reporting

    purpose of ifrs reporting

    The main motives behind the setting up of IFRS reporting are as presented.

    • It will lower the capital cost.
    • It will open up new opportunities.
    • IFRS reporting will also increase the value of the brand.
    • IFRS reporting will allow for benchmarking against peers around the globe
    • Through IFRS reporting the fair value of the transaction can be assessed to determine if it’s possible or not.

    It is believed that the Indian government has taken measures to cover all aspects of the IFRS for the remarkable growth and further improvement of standards.

    International Accounting Standards Board (IASB)

     The IASB has accomplished its objective by becoming a member of the International Accounting Standards Committee (IASC), the body in charge of setting international accounting standards The IASB is headquartered in London at its headquarters.

    IFRS Reporting Component

    Inclusive Income Statement

    It could be a single statement, or it could be divided into the Profit and Loss Statement as well as an Income Statement which includes the property as well as equipment.

    Statement of Changes to Equity

    It can also be referred to as a report of retained profits. This document, the company’s changes in profits or revenues during the specific financial period.

    Statement of Cash Transfer

    The financial transactions of the business. The report divides cash flow into investments, operations, and financing.  In addition to these reports, a company should also provide an overview of its accounting procedures.  The entire report is usually reviewed with the previous report to highlight the change in your profit and loss accounts.  A parent company with a subsidiary must prepare separate reports for each account.

    International Financial Reporting Standard (IFRS)

    Some of the standards set up by IFRS are mentioned below:

    Standard No. Title of the Standard
    IFRS 1First-time adoption of IFRS
    IFRS 2Share-based income
    IFRS 3Corporation Combinations
    IFRS 4Security Contracts
    IFRS 5Non-current Assets held purchasable and also the Discontinue Operations
    IFRS 6Investigation and Mineral Resources
    IFRS 7Financial Instruments: Disclosures
    IFRS 8Governing Segments
    IFRS 9Monetary Instruments
    IFRS 10Consolidated Financial Statements
    IFRS 11Union Arrangements
    IFRS 12Disclosure of interests in other entities
    IFRS 13Fair Value Measurement
    IFRS 14Regulatory Deferral Accounts
    IFRS 15Revenue from contracts with customers
    IFRS 16Leases
    IFRS 17Insurance Contracts
    IAS 1Presentation of Financial Statements
    IAS 2Inventories
    IAS 7A Statement of Cash Flows
    IAS 8Accountancy Policies and Changes to Accounting Estimates, and Errors
    IAS 10Event After the Reporting Period
    IAS 11Construction Contracts
    IAS 12Income Taxes
    IAS 16Property Plant and Equipment
    IAS 17Leases
    IAS 18Revenue
    IAS 19Employee Benefits
    IAS 20The accounting of Presidency Grants and disclosure of State Assistance
    IAS 21The Effect of Changes in Foreign Exchange rates
    IAS 23Borrowing Costs
    IAS 24Related Party Disclosures
    IAS 26Accounting and Reporting for Retirement Check Plans
    IAS 27Separate Financial Statements
    IAS 28Shares in Associates and Joint Ventures
    IAS 29Financials Reporting in hyperinflationary Economies
    IAS 32Economic Instruments: Presentation
    IAS 33Income per Share
    IAS 34Provisional Financial Reporting
    IAS 36Wound  help
    IAS 37Prerequisites,  Liability and Contingent Assets
    IAS 38Intangible Assets
    IAS 39Economic Instruments: Recognizing and Measuring
    IAS 40Bargain

    Application of IFRS Reporting

    application of ifrs reporting

    All countries around the world may choose to adopt the same IFRS reporting standards or may be adopted them after IFRS convergence.  Something like this has been discussed.

    Adoption of IFRS

    As the name suggests, the adoption of IFRS means that the country will be able to adopt IFRS in its original form.

    Convergence of IFRS

    The countries may deviate from IFRS published by IASB in a small degree. This could be due to an alteration in the terminology used or a change in the principles used to recognize assets and liabilities, income or expense, the addition or removal of information (considering the laws of the country that is applying IFRS) as well as the and the removal or addition of certain instances.

    The principal reason for applying IFRS following the application of converging is the regulations in one country could be in conflict with the principles above. This can cause confusion regarding corporate reporting. Thus, Indian Accounting Standards are significantly similar to IFRS however, there are some differences to ensure that the standards are appropriate for use in the specific environment of the country that chooses for convergence.

    What are the Advantages of IFRS?

    There are numerous advantages to using IFRS reporting. Some of these are here :

    • Compatibility of Finances Since IFRS reporting is performed in accordance with global standards, the businesses of different countries that follow IFRS are easily and easily compared.
    • Extensive Guideline: IFRS reporting provides detailed guidance on how to apply the principles outlined in the standards to various situations.
    • Standards are modified in response to economic circumstances The principles of IFRS reporting are reviewed or altered if there’s any significant shift in the economic situation.

    Applicability

    India has opted to pertain to IFRS revealing after putting together some departures from the recent IFRS In India. IFRS reporting in its converged form is popularly learned as Ind AS.

    Category of reporting are:

     Companies’ cases

    • Companies that are not listed have an estimated net worth of the equivalent of o250 crore or more.
    • Holding subsidiaries, joint ventures as well as associate corporations of the companies are included in points (1) (2) and (2) in the preceding paragraphs.

    Applicability on a voluntary basis: Companies can choose to apply for the Indian standard of accounting (Ind AS).

    Companies for that Ind AS does not seem to be applicable will continue to adhere to the current Accounting Standards (AS), which will be revised by ICAI.

    Banks or Insurance Companies:

    However, in the interest of consolidation the insurance company must prepare financial statements that are in conformity with Ind AS for the purposes of preparing consolidated financial statements to its investor, parent, or parent in order for the parent or investor to be in compliance with these rules.

    Impact of IFRS reporting in India

    Its impact of IFRS in India is discussed in the following paragraphs:

    • On India, the Indian marketplace, in which activities are usually performed by small and medium-sized firms, the process of determining a fair value is a challenge.
    • India is a developing economy. Therefore, it doesn’t have the necessary resources to satisfy the requirements of advanced technology, and the right trainers are essential to ensure the success of IFRS reporting.
    • The cost of conforming to the IFRS reporting requirements is more expensive than the benefits accrued from it.
    • Understanding IFRS reporting can be difficult as it is heavily dependent on models and analytics.
    • By using IFRS reporting, businesses in India are able to present themselves in foreign markets, which were extremely difficult using the traditional accounting methods.

    Conclusion

    As you can see While work on convergence is ongoing, however, the actual application of the converged IFRS standards has yet to be determined.  Therefore, issues cannot be resolved in the post-application period, and, more importantly, at this point, the types of problems are not anticipated in advance so preparation of IFRS compliant standards is a problem for Indian as well as foreign preparers.

    If you still have questions about IFRS Reporting or any other queries, we are ODINT Consultancy.  We are here to help you in every step of the way.

    FAQ’s

    ICAI creates an exposure draft Ind AS using IFRS standards.  After comments are scrutinized, Ind As are formally approved.  The Ind AS gets the approval of the ICAI Council and is then approved by the Ministry of Corporate Affairs through a public announcement.

    There is no need to say that Indian Accounting Standards are based upon and are based and have a significant degree of convergence in a significant way with IFRS Standards as issued by the Board. India has not yet adopted r, IFRS is a brand new accounting standard, for instance, IFRS 16 Leases.

    Where financial statements are to be published together, and International Financial Reporting Standards (“IFRS”), together can have a significant impact on the financial statements.

    The main difference in this is that of IAS and IFRS is that IAS is represent old accounting standards like 17 Leases while IFRS represents new accounting standards like 16 leases.