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    SUMMARY OF PREFACE TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

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    IT Admin
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    Posts : 15
    Join date : 2010-07-01

    SUMMARY OF PREFACE TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

    Post by IT Admin on Fri Jul 02, 2010 6:42 pm

    Objective of the Preface to IFRS

    Sets out IASB's mission and objectives, the scope of International Financial Reporting Standards (IFRS), due process for developing IFRS and Interpretations, and policies on effective dates, format, and language for IFRS.

    IASB's Objectives

    * Under the IASCF Constitution, the objectives of the IASB are:

    o (a) to develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world's capital markets and other users make economic decisions;

    o (b) to promote the use and rigorous application of those standards; and

    o (c) in fulfilling the objectives associated with (a) and (b), to take account of, as appropriate, the special needs of small and medium-sized entities and emerging economies; and

    o (d) to bring about convergence of national accounting standards and International Accounting Standards and International Financial Reporting Standards to high quality solutions.

    Scope of IFRSs

    * IASB Standards are known as International Financial Reporting Standards (IFRSs).
    * All International Accounting Standards (IASs) and Interpretations issued by the former IASC and SIC continue to be applicable unless and until they are amended or withdrawn.
    * IFRSs apply to the general purpose financial statements and other financial reporting by profit-oriented entities – those engaged in commercial, industrial, financial, and similar activities, regardless of their legal form.
    * Entities other than profit-oriented business entities may also find IFRSs appropriate.
    * General purpose financial statements are intended to meet the common needs of shareholders, creditors, employees, and the public at large for information about an entity's financial position, performance, and cash flows.
    * Other financial reporting includes information provided outside financial statements that assists in the interpretation of a complete set of financial statements or improves users' ability to make efficient economic decisions.
    * IFRS apply to individual company and consolidated financial statements.
    * A complete set of financial statements includes a statement of financial position, a statement of comprehensive income, a statement of cash flows, a statement of changes in equity, a summary of accounting policies, and explanatory notes. When a separate income statement is presented in accordance with IAS 1(2007), it is part of that complete set.
    * In developing Standards, IASB intends not to permit choices in accounting treatment. Further, IASB intends to reconsider the choices in existing IASs with a view to reducing the number of those choices.
    * IFRS will present fundamental principles in bold face type and other guidance in non-bold type (the 'black-letter'/'grey-letter' distinction). Paragraphs of both types have equal authority.
    * The provision of IAS 1 that conformity with IAS requires compliance with every applicable IAS and Interpretation requires compliance with all IFRSs as well.

    Due Process for IFRS

    * Due process steps for a Standard will normally include the following (* below means required by IASB Constitution):
    o staff work to identify and study the issues
    o study of existing national standards and practices
    o IASB consults with SAC about the advisability of adding the project to the IASB's agenda*
    o IASB normally forms an advisory group
    o IASB publishes a discussion document for comment
    o IASB considers comments received on the discussion document
    o IASB publishes an exposure draft with at least 9 affirmative votes* (the exposure draft will include dissenting opinions and basis for conclusions)
    o IASB considers comments received on the exposure draft*
    o IASB considers the desirability of holding a public hearing and of conducting field tests*
    o IASB approves the final Standard with at least 9 affirmative votes* (the Standard will include dissenting opinions and basis for conclusions)
    * IASB deliberates in meetings open to public observation.

    Due Process for Interpretations

    * Interpretations of IFRS will be developed by the International Financial Reporting Interpretations Committee (IFRIC) for approval by IASB
    * Due process steps for an Interpretation will normally include (* below means required by IASB Constitution):
    o staff work to identify and study the issues and existing national standards and practices
    o IFRIC studies national standards and practices
    o IFRIC publishes a draft Interpretation for comment if no more than 4 IFRIC Members have voted against the proposal*
    o IFRIC considers comments received on the draft Interpretation within a reasonable period of time
    o IFRIC approves the final Interpretation if no more than 4 IFRIC Members have voted against the proposal and submits it to IASB*
    o IASB approves the final Interpretation by at least 9 affirmative votes of IASB*
    * IFRIC deliberates in meetings open to public observation

    Effective Dates

    * Each IFRS and Interpretation will set out its own effective date and transition provisions

    Language

    * English is the official language of IASB discussion documents, exposure drafts, IFRS, and Interpretations. IASB may approve translations if the process assures the quality of the translation, and IASB may license other translations.


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