Executive Summary
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Financial statements made according to International Financial Reporting Standards (IFRS) have to comply with 37 standards and 26 interpretations.
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The standards are principle-based.
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An important qualitative aim of IFRS is to achieve comparability.
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Under IFRS, a complete set of financial statements comprises statements of: financial position; comprehensive income; changes in equity for the period; and cash flows. Accompanying notes should summarize significant accounting policies and provide other explanatory information.
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IFRS guidelines are primarily oriented towards the statement of financial position (formerly called the balance sheet). Those preparing financial statements should start from the definitions of the elements of the statement of financial position and the statement of comprehensive income and check whether the elements meet the recognition criteria.
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A number of different measurement bases are used to determine the monetary thresholds at which the elements of financial statements must be disclosed and appear in the statement of financial position and the statement of other comprehensive income.
Introduction
International Financial Reporting Standards (IFRS), drawn up and published by the International Accounting Standards Board (IASB), are rapidly becoming the most globally applied set of accounting standards. Approximately 9,000 public companies in the European Union had transferred to IFRS reporting as of 2005. Russia, China, Canada, Japan, Australia, and many other countries, including those in the Middle East, are adopting IFRS or have plans to converge their national standards with IFRS. There is therefore a growing need for a better understanding of these standards.
Since its inception in 1973 as the International Accounting Standards Committee, the IASB, as it became in 2001, has issued almost 3,000 pages of standards (excluding superseded ones) along with their interpretations. These treat various topics from first-time application of IFRS to property, plant and equipment, financial instruments, mineral resources, income taxes, and so on. At this moment financial statements prepared under IFRS have to comply with 37 standards and 28 interpretations. Many topics have not yet been covered, so the IASB is continuously improving the current standards and publishing new standards. The Board’s current project timetable plans the publication of 24 new consultation documents and 23 final pronouncements between now and 2011. These will include six discussion papers, 18 exposure drafts, 22 final IFRS and one final guidance document. As a result, people involved with application of the standards will be obliged to invest considerable time in keeping their knowledge up to date.
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