Chapter 1

For Capital Providers: Comparability of Companies financial situation across countries

For companies: disburden from obligation to prepare different financ. statemants according to local acc. regulations

Developing countries:

• attract foreign capital by improved transparency

• Regain legitimacy after crisis

• national governments/ regulators: lack of willingness to loose authority over standard- setting

• questionable legitimacy of the IASB

• High cost of IFRS

  • first-time implemenation (IT, training etc.)

  • ongoing costs

• single set of accounting standards (set by single standard setting body

• consistency in application and interpretation

• common auditing standards and practies

• common approach to regulatory review and enforcment

• education and training of market participants

EU Commission:

• Harmonization of european acounting

  • 4th (indivudal accounts)

  • 7th ( cosolidated accounts)

• IAS Regualtion in 2002:

  • mnadatory application of IFRS for all publicly traded EU companies in consolidated accounts

IASB:

• private stabdart setter

• independet from national government

US SEC/ FASB:

• stets accounting standards for US capital market

• Cnvergence agreement with IASB in 2002

• Since 2008 acceptance of IFRS financial reports issued by foreign companies

Obligation: German GoB for legal matters

Option: IFRS for publication in de federal gazette

Obligation: for listed companies IFRS

Option: for non listed companies IFRS

• founded 1973

• private (NGO)

• Funding:

  • budget: 30 Mio Pound

  • contributions 60% (companies fundings)

  • sales of publication (39%)

  • other income (1%)

Board member diversity:

• Professional Background:

  • auditors

  • preparers

  • users

  • academics

• geographical:

  • 4 members of asia/ 1 of oceania

  • 4 members of europe

  • 4 members of america/ 1 south america

  • 1 meber of africa

• private

• democrization of standarts in order to seek accepance of IFRS

  • engagement with investors, regulators, buisness leaders, and the accountancy profession at every stage of the progress

  • collaborative efforts with the world wide standard settin community

• 7 years

• agenda consultation

  • request for information

  • 3-5 year plan

• research programme

  • research

  • discussion paper

  • agenda proposal

• standards development

  • exposure draft

  • final IFRS standard

• implementation

  • interpretation or narrow-scope amendment

  • post-implementation review

Companies need to apply:

• IFRS and IAS

• Interpetations originated by the IFRIC (after 2001) or SIC (before 2001)

In case of unregulated issues:

1. IFRS dealing with similar issues

2. Framework Concept

3. Guidance from other standard setters (optional) eg. US GAAP, UK GAAP

Conceptual Framework:

• not IFRS (does not define any particualr measurment or disclosure issue

• does not override any specific IFRS

IAS:

• IAS 2 (Inventories)

• IAS 16 (PPE)

• IAS 36 (Impairment)

• IAS (Intangible Assets)

• IAS 40 (Investment Property)

• IAS 41 (Agriculture)

IFRS:

• IFRS 3 Buisness Combination

• IFRS 9 Financial Instruments

• IFRS 13 Fair Value Measurment

• IFRS 15 Revenue from Contrats with Customers

  
  

IFRIC and SIC:

• SIC-32 Web Site Costs

• IFRIC 1 Changes in existing Decommissioning Resoration

• IFRIC 21 Levies