IFRS (International Financial Reporting Standards) or International Accounting Standards plays a very crucial role in financial reporting as countries across the globe followed IFRS for the preparation and presentation of the financial statements.
IFRS is the globally accepted Accounting standard so that company accounts prepared based on IFRS are more understandable and comparable. The adoption of IFRS standards will help the entities to simplify the accounting processes and improve efficiency.
In order to cope up with the requirement of new challenges in the economy or to rectify the possible errors, or for a better presentation of the financial statements from time to time, the IASB
Such newly issued or reissued IFRS will always be specifying the date from which it will be effective be considered in the financial statements.
The effect of International Financial Reporting Standards (IFRSs) needs to be assessed to understand the impact on – recognition, measurement, and disclosure on revenue, expenses, assets, and liabilities to an entity when a new standard or revision in existing standards taken place.
The increasing complexity of financial reporting and the rapid pace of change has led to a significant increase in demand for high-level accounting advice from an expert in the field. Our efficient and expert advisory team will help the businesses for the easy adoption and implementation of IFRS standards.
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IFRS impact assessment is one of the IFRS advisory services provided by us. IFRS impact assessment is an assessment conducted when a new or revised accounting standard is implemented in any business from a specific date. Sometimes the value disclosed in the financial statements needs to be changed while comparing with those normally disclosed under existing practice, because of a change in measurement of the item. In some cases, the impact will be only on information disclosed in the financial statement and may not necessarily impact the financial figures. In certain situations, items that were not accounted to date or had a different treatment earlier may change by adopting a new or revised one. In some other cases, the impact could be on both; the financial figures and the disclosure requirements.
Anyways, whether the impact is on the amount to be recognized or the amount to be measured, or on the disclosure requirements, it is important to analyze the impact on the introduction of IFRS well before preparing the financial statement to report to the stakeholders and/or to the public. The management will then have a fair idea of the impact of such new or revised IFRS well before closing the financial year.
Some of the relevant IFRSs, recently issued/revised or are in the process of release, where the impact of such standards on the financial statements may be material for the entities are given below :
IFRS 15 focuses on the transfer of control of identifies performance obligations. Based on the nature, terms, and conditions of the contract entered with customers, we will assess how performance obligations meet as per the requirement of the IFRS 15 on revenue from different sources. The source includes but is not limited to Trading, Construction, Services, etc. IFRS 15 provides a single model of all goods and services all goods and services across all industries.
The IFRS 15 Impact assessment as part of our IFRS advisory services will cover broadly the following:
For IFRS 16 – Leases, our IFRS advisory services will broadly cover the following:
As per IFRS 9 – Financial Instruments, the impact assessment will cover broadly the following:
The need for an impairment allowance is one of the requirements under IFRS 9 – financial instruments. It has to be done on a periodic basis and the change in the impairment allowance has to be reported in the profit and loss account.
IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts and related interpretations and is effective for periods beginning on or after 1 January 2023, with earlier adoption permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial instruments have also been applied.
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People usually ask
Yes. Commercial Companies Law No 2 of 2015, which came into effect on 1 July 2015, requires all companies to apply international accounting standards and practices when preparing their accounts. As there are no national accounting standards in UAE, International Accounting Standards, or IFRS, are applicable.
The Generally Accepted Accounting Principles (GAAP) are generally accepted accounting standards for financial reporting. The US Securities and Exchange Commission (SEC) has adopted GAAP, which is a standard that defines concepts and principles as well as industry-specific rules. On the other hand, IFRS standards are globally accepted International Financial Reporting Standards issued by the International Accounting Standards Board. They were created to establish a common language for financial statements so that they can be understandably compared between companies and countries.
A profile of the application of IFRS Standards in individual jurisdictions is being developed by the IFRS Foundation in order to assess progress toward global accounting standards. Currently, profiles are completed for 166 jurisdictions, including all of the G20 jurisdictions. Out of this 144 jurisdictions require IFRS Standards for all or most domestic publicly accountable entities (listed companies and financial institutions) in their capital markets.12 jurisdictions permit, rather than require, IFRS Standards. One jurisdiction requires IFRS Standards for financial institutions but not listed companies. One jurisdiction is in process of adopting IFRS Standards in full. One jurisdiction is in process of converging its national standards substantially (but not entirely) with IFRS Standards. Seven jurisdictions use national or regional standards
The International Financial Reporting Standards (IFRS) are standards of accounting that determine how transactions and other accounting events should be reported in financial statements. The purpose of these standards is to ensure credibility and transparency in the financial world, so investors and business operators can make informed financial decisions.
Financial Reporting Standards facilitate transparency by enhancing international comparability and quality of financial information. Investors and other market participants can make informed economic decisions with this information.