FINANCIAL REPORTING

Financial reporting

Financial reporting

Introduction

International Financial Reporting Standards is the combination of accounting standard. It states that how different types of the transaction and other accounting events should be reported in the financial statement. It is declared by the International Accounting Standards Board. International Financial Reporting Standards (IFRS) aspires to bring the entire nations in the world under a similar set of global accounting standards that presents consistency, transparency, and compatibility in financial reporting system. According to a fact financial regulators in several countries have generated high demand for IFRS compliant financial statement (David, Christopher, 2008). The International Financial Reporting Standard (IFRS) for Small and Medium size corporations published as an introductory plan by the IASB in 2007.

The impact on financial accounting reporting by implementing IFRS

Implementing IFRS will have a persuasive impact on the projects under accounting systems. It may have an impact on the non-financial companies. IFRS will have an impact on how companies track their leasing information. The audit committees and senior management will see the great impact of the IFRS implementation.

1.Relevance- the standard produced by them can able to meet the identified need of the capital market (Barry, Eva, 2008).

2.Leadership- they have developed and improved standard not just that they modify the status quo.

3.Objectivity- they have acted in the public interest the results generated from their standards were unbiased (Barry, Eva, 2008).

4.Responsiveness- they have responded the capital market for the development.

5.Transparency and Due Process- their standards process and procedures provided visibilities into standard processed procedures.

6.Comparability -the benefits of the IFRS implementation include improvement of comparability to other organizations in the same sector. It gives additional and better quality financial information for supervisory authorities and shareholders. Switching to IFRS would allow people to see several organizations from different part of the globe on the same plane.

7.Transitional impacts on bottom line- While the theoretical structure upon which present US GAAP and IFRS created both are values based and are commonly measured to be broadly parallel, they will stay at the conversion date a number of important variations and several minor variations between the two sets of standards that have the probability to create material impacts on reported result. Companies will expect a change in financial position and earnings.

IFRS vs. GAAP

IFRS is more conceptual (i.e., principle-based) than current U.S.GAAP, with little application guidance. U.S. GAAP is great rules-based, with specific application guidance. Consequently, the use of IFRS requires relatively more reliance on judgment, and less reliance on detailed rules. IFRS requires management to disclose more information about estimated amounts used in the preparation of financial statements than U.S. GAAP does.

IFRS 4 provides specific guidance to the insurance industry. For example, reserves will not be allowed for possible claims under contracts that are not in existence at the date of reporting. This prohibition will be especially important with regard to catastrophe and equalization reserves; however, IFRS will not change the way that Incurred but Not Reported (IBNR) losses are accounted for.

For many companies, the full retrospective application of IFRS is ...