What are IFRS?
International financial reporting standards (IFRS) are a number of standards that aim to standardize the presentation of the international exchange of accounting data.
The IFRS were edited by the International Accounting Standards Board, designated under its English initials IASB. Since 2005, these standards have replaced the International Accounting Standards (IAS).
However, there are still some standards labeled IAS (International Accounting standards). In the 2000s, certain financial scandals highlighted a lack of transparency regarding the information available to the private investor. The IASB was established in order to harmonize accounting reporting at the international level and enable investors to determine the financial position of a company.
Principles of International accounting standards
Accounting information must be “relevant, clear, reliable, and of relative importance”. IFRS set principles rather than rules, giving companies a wider scope of flexibility. Currently, the international accounting environment is characterized by four major trends:
- The application of the fair value model: The field of intervention in this method does not cease to overcome the further implications of normal international standards. The application of fair value is achieved by consolidating the dominance of market law over the international economy where prices and competition play the role of regulators that guide the choices of the economic actors.
- The predominance of the balance sheet approach: The declared trends of international standards give priority to the balance sheet in order to more closely track economic transactions. The accounting methods used do not allow achieving the same level of fair representation on the balance sheet and income statement. In fact, this second trend was a result of the first trend (fair value) that stimulates the balance sheet approach in dealing with financial reporting.
- Demonstrating performance rather than achieving results: The goal of a performance statement, which replaces results, is to measure performance as the discrepancy between two budgets. The new situation, which has not yet been precisely defined and which continues to generate controversy will briefly include the following elements:
- On the one hand, operational and financial results.
- On the other hand, in relation to assets measured at fair value, changes in the balance sheet value.
- Convergence between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB): A major project to bring international and American standards closer together to make accounting standards global. In view of the importance and dominance of the US economy on international transactions, the International Accounting Standards Board has installed itself a “subsidiary,” and it appears that the real international “legislator” now is the United Stat
CFR AUDIT’s role in supporting the implementation of IFRSs
Our approach to the IFRS adoption process as an accounting valuation framework involves the following steps:
- Delimitation of the prerequisites to the international standard.
- Creation of an ad hoc committee
- The end of the adoption process
- Diagnosis of deviations from the existing repository
- Adaptation of the organisational system
- Stop the conversion project
- Determination of the rules for taking into account and accounting
- Determination of the presentation rules
- Financial information of transition