ADVANCED ACCOUNTING

Advanced Accounting Theory & Practice



IAS 1 Presentation of Financial Statements

Introduction

The objective of IAS 1 (2007) is to prescribe the basis for presentation of general purpose financial statements to ensure comparability both with the company's own financial statements of previous periods and with the financial statements of other companies. IAS 1 defines the general framework and requirements for the presentation of financial statements, guidelines are for their structure and minimum requirements for the content of financial statements (IAS 1.1). Standards for the recognition, measurement and disclosure of certain transactions are in other standards and interpretations (IAS 1.3).

Discussion

Objective of IAS (IFRS)

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. The International Financial Reporting Standard (IFRS) for Small and Medium size corporations published as an introductory plan by the IASB in 2007. This system introduced and designed for companies that have no public accountability. If the company's shares or debts listed and floated in the public exchange or financial institution company only then there would be Public Accountability. The IFRS for SME (IFSME) have capabilities to apply in the large range of private organizations (it.toolbox.com).

In 113 countries, more than 12,000 companies have implemented IFRS in some degree, and many other countries are enduring to implement the standards each year with the expectation of increased comparability of financial statement.

The importance of IFRS

There are many reasons why companies are choosing to migrate from US GAAP and adopting IFRS. One of the most important reasons is due to globalization, as most countries have already made the switch over to IFRS. If companies in the US switched over to IFRS it would make transactions and deals with companies who operate under IFRS much easier. It would also give companies and stockholders in other countries a better economic indicator as to how companies in the US are doing (Kaplan R., 1984, pp. 41).

Another advantage with IFRS is clarity and productivity. Under IFRS, financial makers use their own professional judgment as to how to handle a specific transaction. This will lead to less time being spent trying to follow all the rules/complications that are coupled with rules-based accounting. It will also allow prepares financial information to keep statement in a simplistic and understandable forms for investors and other companies interested in saying company's financial statements.

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 (Epstein, B. and Jermakowicz, 2008, pp. 95).

Relevance- the standard produced by them can able to meet the identified need of the capital ...