IFRS Reporting Services: Complete Guide
IFRS standards are International Financial Reporting Standards (IFRS) that usually involve a collection of accounting regulations that specify the manner in which transactions and other accounting processes must be recorded in the financial reports. The International Accounting Standards Board is responsible for issuing and maintaining IFRS standards. Numerous companies use accounting-based International Financial Reporting Standards (IFRS) as well as parallel reports. The main benefits of IFRS reporting services include improved comparability and transparency in financial reporting.
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
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.
Significance of IFRS
IFRS promotes openness and faith in the international finance marketplaces and the corporations that register their shares there. In the event of not having such a standard, the investor’s faith in the financial reports and data offered to them by corporations would be decreased.
By making it simpler to compare basically similar items between various businesses and to conduct fundamental analyses of the performance of a business, IFRS also aids investors in their examination of corporate behavior.
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
A wide range of accounting processes are covered by IFRS. For some elements of business practice, IFRS has established regulations that must be followed.
Statement of Financial Condition
This is the balance sheet. IFRS affects the methods in which the elements of a balance sheet are presented.
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 1||First-time adoption of IFRS|
|IFRS 2||Share-based income|
|IFRS 3||Corporation Combinations|
|IFRS 4||Security Contracts|
|IFRS 5||Non-current Assets held purchasable and also the Discontinue Operations|
|IFRS 6||Investigation and Mineral Resources|
|IFRS 7||Financial Instruments: Disclosures|
|IFRS 8||Governing Segments|
|IFRS 9||Monetary Instruments|
|IFRS 10||Consolidated Financial Statements|
|IFRS 11||Union Arrangements|
|IFRS 12||Disclosure of interests in other entities|
|IFRS 13||Fair Value Measurement|
|IFRS 14||Regulatory Deferral Accounts|
|IFRS 15||Revenue from contracts with customers|
|IFRS 17||Insurance Contracts|
|IAS 1||Presentation of Financial Statements|
|IAS 7||A Statement of Cash Flows|
|IAS 8||Accountancy Policies and Changes to Accounting Estimates, and Errors|
|IAS 10||Event After the Reporting Period|
|IAS 11||Construction Contracts|
|IAS 12||Income Taxes|
|IAS 16||Property Plant and Equipment|
|IAS 19||Employee Benefits|
|IAS 20||The accounting of Presidency Grants and disclosure of State Assistance|
|IAS 21||The Effect of Changes in Foreign Exchange rates|
|IAS 23||Borrowing Costs|
|IAS 24||Related Party Disclosures|
|IAS 26||Accounting and Reporting for Retirement Check Plans|
|IAS 27||Separate Financial Statements|
|IAS 28||Shares in Associates and Joint Ventures|
|IAS 29||Financials Reporting in hyperinflationary Economies|
|IAS 32||Economic Instruments: Presentation|
|IAS 33||Income per Share|
|IAS 34||Provisional Financial Reporting|
|IAS 36||Wound help|
|IAS 37||Prerequisites, Liability and Contingent Assets|
|IAS 38||Intangible Assets|
|IAS 39||Economic Instruments: Recognizing and Measuring|
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.
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 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.
IFRS versus GAAP
IFRS determines the manner in which corporate have to keep their statement updated and disclose their expenses and income. The generally accepted accounting principles (GAAP), a competing structure, are mandated for use by public firms in the United States.
GAAP is based on rules, whereas IFRS is based on principles. When compared to principle-based structures that provide more flexibility, rule-based structures are more constraining and leave less space for interpretation.
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 traditional accounting methods.
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.
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.