International Financial Reporting Standards

From Academic Kids

International Financial Reporting Standards (IFRS), often known by the older name of International Accounting Standards (IAS) are a set of accounting standards. They are issued by the International Accounting Standards Board (IASB).

IASs were issued between 1973 and 2001 by Board of the International Accounting Standards Committee (IASC). In April 2001 the IASB adopted all IASs and continued the development, calling new standards IFRSs [1] (http://www.iasb.org/standards/index.asp).

Contents

Adaptation and convergence

IFRS is used in many countries in the world, including Hong Kong and Russia, certain European countries, and recently Australia.

European Union

IFRS was given a boost in 2002, when the European Commission issued a regulation that all listed companies in Europe must adopt IFRS by 2005 for their consolidated accounts (as opposed to the firm's individual accounts). Many member countries within the European Union have made the accounting regulation more restrictive by requiring private companies to comply with IFRS.

United States

The accounting standard in United States has been US Generally Accepted Accounting Principles created by the US Financial Accounting Standards Board. In late 2002, IASB and US FASB issued a joint statement that they will work toward the eventual convergence of two standards. Securities and Exchange Commission is in the process of analyzing differences between IFRS and US GAAP.

Hong Kong

In Hong Kong, HK GAAP is more restrictive than IFRS due to regulatory laws. HK GAAP only deviates from IFRS in minor instances. Therefore, many companies complying with HK GAAP are already IFRS compliant. HK GAAP is moving towards full convergence with IFRS in 2005.

People's Republic of China

In People's Republic of China, the standard used for accounting is PRC GAAP, which is required by law. The accounting requirements for publicly-traded companies in China differ based on the type of company:

  • A-share companies are companies trade in Renminbi and inaccessible to foreigners.
  • B-share companies are companies trade in a foreign currency and accessible to foreigners.

Because foreign investors have access to B-share companies, all B-share companies are required to file also in IFRS. This requirement is also extended to A-share financial companies.

Australia

The Australian Accounting standards, previous to 1 January 2005, were based around accounting standards developed by the Australian Accounting Standards Board (AASB). As a result of pressure towards international harmonisation, the AASB had been working towards a convergence between the Australian Standards and the IFRS. From 1 January 2005, the Australian equivalent of IFRS have been fully implemented as AASB 101 - 141. It is a requirement that all reporting entities adopt the standards as they have replaced the previous Australian generally accepted accounting principles. Due to the accounting standards operating halfway through the year, the requirements can be summarised as follows:

  • Year ended 30 June 2004 - Prepare under pre IFRS standards and state in notes the expected effect of the adoption of IFRS
  • Year ended 30 June 2005 - Prepare under pre IFRS standards and prepare a reconcilliation to IFRS standards
  • Year ended 30 June 2005 - Prepare under Australian Equivalents to IFRS standards

Russia

Government of Russia implements a program to harmonize its national accounting standards with IFRS since 1998. As of 2004, only financial institutions are required to prepare IFRS reports.

Details

IFRSs are considered a "principles-based" set of standards, in that they establish broad rules rather than dictating specific treatments. As of 2002 a number of IFRSs offer the preparer choices of treatments; the IASB's Improvements Project is seeking to reduce these choices.

International accounting standards currently in use are as follows:


External Links

de:International Financial Reporting Standards fr:IAS/IFRS nl:International Financial Reporting Standards zh:国际财务报告准则

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