Unit 64 international Standards of financial reporting

International Financial Reporting Standards (IFRS) are principles-based standards, interpretations and the framework (1989)[1] adopted by the International Accounting Standards Board (IASB).

Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC).

Objective of financial statements

A financial statement should reflect true and fair view of the business affairs of the organization. As these statements are used by various constituents of the society / regulators, they need to reflect true view of the financial position of the organization. and it is very helpful to check the financial position of the business for a specific period.

Qualitative characteristics of financial statements include: Understandability, Reliability, Relevance, Comparability

Elements of financial statements:

* The financial position of an enterprise is primarily provided in the Statement of Financial Position. The elements include:

- Asset: An asset is a resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise.

- Liability: A liability is a present obligation of the enterprise arising from the past events, the settlement of which is expected to result in an outflow from the enterprise' resources, i.e., assets.

- Equity: Equity is the residual interest in the assets of the enterprise after deducting all the liabilities under the Historical Cost Accounting model. Equity is also known as owner's equity. Under the units of constant purchasing power model equity is the constant real value of shareholders´ equity.

* The financial performance of an enterprise is primarily provided in the Statement of Comprehensive Income (income statement or profit and loss account). The elements of an income statement or the elements that measure the financial performance are as follows:

- Revenues: increases in economic benefit during an accounting period in the form of inflows or enhancements of assets, or decrease of liabilities that result in increases in equity. However, it does not include the contributions made by the equity participants, i.e., proprietor, partners and shareholders.

- Expenses: decreases in economic benefits during an accounting period in the form of outflows, or depletions of assets or incurrences of liabilities that result in decreases in equity.

The list of International Financial Reporting Standards (IFRS):

- International Financial Reporting Standards (IFRS) issued after 2001

- International Accounting Standards (IAS) issued before 2001

- Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) issued after 2001

- Standing Interpretations Committee (SIC) issued before 2001

- Conceptual Framework for the Preparation and Presentation of Financial Statements (2010)