• All information present
• Each key section briefly summarized.
• Specifically answers:
• What business are you in?
• Who is on the team?
• Where will you locate and why?
• What is your product/service?
• How much capital will be needed?
• Why we should invest in your company?
• complete and accurate overview of Industry
• Mission statement/Goals
• Explanation for the business type, legal structure, name,
• Description of the product/service, why it is needed and what makes it unique.
• Describe the company's position and pricing strategy
• Who are the managers?
• What is their area of responsibility?
• Who are the owners?
• Legal Issues
• Identify Risks
• Identify potential expenses and capital requirements.
• Create financial statements - cash flow, income and balance sheet
• Break-Even analysis
• Ratio Analysis
• 3 Year Cash Projection.
• Check for spelling, capitalization, punctuation, and sentence structure.
• Evidence of Primary Research and Secondary Research
• Evidence of Supporting Material
• Evidence of Work undertaken
What is IFRS?
Place Order For A Top Grade Assignment Now
We have some amazing discount offers running for the studentsPlace Your Order
International Financial Reporting Standards are a set of quality global accounting techniques that helps companies in bringing transparency, efficiency and accountability in their reporting of financial statements. Reporting in such a manner often helps the users to build trust and confidence in such reports.
IFRS governing bodies
These standards are governed by a system of three-tier governing body. These bodies are International Accounting Standards Board, IFRS Foundation Trustee and IFRS Foundation Monitoring Board.
Accounting Standards Advisory Forum- This body is entitled with the task of developing quality accounting standards and supports IFRS Foundation to work for the benefit of the investors. Thus the standards set are in accordance to help the investors understand, analyse and compare financial reports of different companies across the countries (Chapple, 2017). This forum also looks after engagement with the global investment community and regional standard setting bodies. The rules for implementation and non-compliance is guided though this body.
IFRS Advisory Council- This body includes users of financial statements like analysts, investors, auditors, regulators, academic professionals, regional accounting bodies and accounting standards setters. This council is represented by 43 organizations from different parts of the world and 49 individuals. These members meet at least twice in a year to discuss matter like technical agenda of the changes required in a standard, priorities of the project undertaken for reviewing a standard, implementation of the standards of IFRS and the costs and benefits of the implementation of these standards.
Global Preparers Forum- This body works in independence of the International Accounting Standard Board but provide the information from the international investors, users and preparers of the financial statements. The members of this forum is from different countries and industries and are selected based on their expertise in this field. This forum meet thrice in a year in London along with the members of Capital Market Advisory Committee (Cheung, Evans & Wright, 2008). The main objective of these meetings is to provide concepts for development of standards for the investment committee worldwide and advice the standards making body on the implications of a change in particular standard.
Emerging Economies Group- This group was created in the year 2011 on the advice of IFRS Foundation Trustee with the motive to increase the participation of the developing economies in the standard setting. Thus the implementation of these standards in the emerging economies is guided and educational support is provided where required (Taiwan Kwak & Hyun-Sun Wang, 2015). They meet twice in a year in one of the countries of the member nations.
IFRS Taxonomy Consultative Group- this group helps in efficient processing, dissemination, and assessing the financial statement prepared according to IFRS. Though this group, members can help in development of IFRS Taxonomy and provide technical and advisory solution. This group also guides the data content and architectural perspective of the IFRS Taxonomy and provide strategic implementation guidance.
SME Implementation Group- This group helps in adoption of IFRS standards internationally for small and medium size enterprises. This group is responsible for addressing the questions raised on implementation by the users of IFRS. It provides them guidance and insight about the benefit of using this system.
A specific set of activities are followed in setting a standard which becomes applicable worldwide.
Consultation of Agenda- In a period of every five years, consultations and reviews are done to understand the priorities of these standards and project work plan is developed (Kim & Shi, 2016). Sometime only review of an issue might be suggested and in some cases development of new standards is required.
Researching the project- Each of the project identified in the above step is researched by a team to identify the issue and the possible solutions. At this stage, it is decided whether a new standard is required by seeking public comments. When the public opinion indicates that there is some problem in a particular standard, the changes in the standard is done.
Setting the standard
When the decision for changes in the standard or setting is new standard is taken, the research conducted is reviewed again and public comments is analysed. On the basis of these amended standards is suggested in a draft for consultation with the public. Stakeholders from all over the world is involved to comment on the suggested changes. Feedback received from them is analysed and a new standard is issued.
Maintaining the programme- Once the new standard is set or any changes is made to the previous standards, the implementation of these standards are guided (Paola Rossi & Thomas Hanni, 2016). This also includes dealing with any implementation problem and the IFRS Interpretation Committee provide recommendations.
Current Implementation of IFRS in Australia
Australian Accounting Standards Board recently conducted a research on, ‘Review of Adoption of International Financial Standards in Australia’ which showed that the adoption of IFRS has been smooth for most of the Australian business entities. It also showed that some extra support was required by the non-profit organizations.
The adoption of IFRS in Australia started in 2005 from 1st January. Currently the adoption situation indicates:
• Most of the sectors smoothly adopted IFRS standards
• For the non-profit organization and small business entities, some modification is needed to increase the quality and the cost efficiency of reporting.
• Implementation of IFRS has helped companies to easily move between sectors, among different countries with new markets to explore (Jackling, Howieson & Natoli, 2012).
• Implementation of IFRS has led to cost saving in preparation of these reports for multinational organization
The IFRS Interpretations Committee helps in implementation of these standards along with International Accounting Standards Board. Any business entity can submit a question regarding the standard and the committee helps to determine what approach is needed.
Main components of the IFRS and how it is different to Australian and other standards
The main components of IFRS under which the financial statements of a company is produced, include the following:
Fair presentation of the financial reports
IFRS emphasizes on the financial statements being presented fairly. In this methodology, all the transactions represented in its full effect. The definitions of the assets, liabilities, income and expenses should be presented accordingly in a framework indicated by IFRS Committee (IFRS 9 financial instruments, 2014). There should be a set of disclosures which support the method of presentations. These are presented in notes about the compliance status of the reports. In case when these reports have not be complied properly, the company cannot state in the notes about its compliance. These compliance should be in according to the standards laid down by International Financial Reporting Standards, International Accounting Standards, SIC Interpretations.
However in some rare cases it is allowed that the management of the company comment that the compliance with IFRS is not been done as it may create a conflict with the objectives of the financial statements (Gjerde, Knivsflå & Saettem, 2008). These cases are only allowed when the company disclose the reasons, and impact of such departure.
Going Concern Basis
The main characteristic of IFRS is that it assumes an organization on a going concern basis and the reporting of the financial statement is done as the operations would continue for the future. An assessment under IFRS is done about the ability of the organization to continue its operations forever. In cases when the management of the organization feels doubtful about the continuity of the business in the long run, it need to disclose the uncertainties and risks associated with it (Bragg, 2013). For such cases, IFRS requires a different set of reporting standard to be followed for the financial statements.
IFRS requires consistency in reporting of the financial statements. Every quarter and year on year basis, the companies need to follow the guidelines about the reporting methodology of the financial statements. This also includes maintaining the format and elements of the financial statements for the next year except in cases when there is some uncertain circumstances (Antill & Lee, 2008). These circumstances must be justifiable and must be reported at the end of the financial statements.
IFRS requires companies to follow the accrual basis of accounting. All the elements in the income statement and the balance sheet must be valued on the accrual basis. However this does not applies to the cash flow statement.
Aggregation and Materialization
IFRS requires the companies to follow aggregation of all the similar items of the balance sheet and all the non-similar items need to be reported separately. However the non-similar items can also be aggregate if they are immaterial individually.
At the same time, IFRS also requires materialization of the items which provide important information to the users (Malone, Tarca & Wee, 2015). Thus proper disclosures need to be made at the end of the financial statements.
IFRS requires companies to report their financial statements in such a way that it promotes comparison with the previous periods and with other companies in the sector. This need to be followed in all the statements including income statement, balance sheet, cash flow statement and the additional notes presented at the end of the reports. This is in accordance with the objective of IFRS to make these reports understandable to the users. Also in cases when the comparative amounts of any item is changes, proper disclosures are required by the company.
Another statement required by IFRS include a statement which shows the retrospective effect of the any accounting policy, revaluation, reclassifications and other adjustments done to the item.
IFRS requires that all the companies complying with the rules must at least present their financial reports annually (Subramani, 2011). For companies whose reporting period change and the financial statement has been presented for different period, proper disclosure need to be made for such changes and statement is required saying that the amount of the items in the financial statement is not comparable.
Difference in IFRS with other accounting standards
Some of the difference relate to the method of reporting and valuating the items of the financial statements. These differences are:
Deferred Tax – In some of the GAAP standards do not recognize the deferred tax assets or liabilities. Whereas IFRS requires recognition of the same.
Payment related to Shares- Under IFRS, it requires to recognize the expenses related to the agreements with the third parties for receiving shares or share options. These expenses are reported in income statement. However, GAAP do not recognize these expenses.
Any accounting standard work is shaped by the economic and political situation of that country. When they work in harmonization of one another, it leads to integration of markets of the world. In many part of the world, the adoption of IFRS has become mandatory, which has helped increase the scope of these standards (Bru?ggemann, 2011). This has led to significant economic transformation as the empirical studies show a positive effect on the capital market of different countries.
Some of the proponents of the market appreciate the adoption due to following reason:
1) This adoption of IFRS worldwide has led to increase in the analysing power of the investors, thus eliminating confusions. The risk involved in investment has also reduced significantly as the companies in Australia now use more transparent methodology as suggested by IFRS.
2) The reduction of cost as only one methodology need to be followed.
However there are some bodies, which debate on the benefits of the implementation of IFRS. They argue that these accounting standards does not guarantee an increase in the quality of information provided by the companies (Okuda, 2010). Many other factors of reporting and investment plays a vital role in establishing the trust and confidence in the financial reports of the company. A research conducted by Nicholas Pawsey on perception towards quality and complexity of IFRS shows the users of the IFRS indicate that some of the efficiency of the IFRS has reduced
The business enterprises and corporates indicate the following benefits of implementation:
A) Previously the companies needed to follow multiple rules related to GAAP of different nations in which it wanted to expand its operations. Now have the implementation of IFRS in the company wide financial system, the cost of formulation of reports according to these different GAAP rules has reduced significantly.
B) Corporates also got access to international capital markets for investment and sourcing of funds as their financials are reports in worldwide applicable IFRS (Brown, 2013).
C) Corporates can easily compare their results with any other company in different nationals.
International Financial Reporting Standards works with the motive of safeguarding the interest of the users of the financial statements like investors, analysts, market watchers, etc. The characteristics of the standards is such that it requires company to report its financial statements which are easy to be understood and comparable for different years and across sectors. Adoption of IFRS globally helps investors to compare different companies and analyse them for investments.
Empirical evidence has also shown that as the adoption of IFRS is increasing the size of the investment in capital and equity market is also increasing.
Chapple, S. (2017). IFRS adoption in Australia: A strong structuration perspective. Accounting History, 103237321774114. http://dx.doi.org/10.1177/1032373217741142
Cheung, E., Evans, E., & Wright, S. (2008). The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) Intangible Assets. Australian Accounting Review, 18(3), 248-256. http://dx.doi.org/10.1111/j.1835-2561.2008.0029.x