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IFRS Framework

IFRS Framework

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Published by: Naeem Ahmed on Mar 14, 2010
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for Accounting Professionals
IFRS Framework for the Preparation and Presentation of Financial Statements
IFRS Framework for the Preparation and Presentation of Financial Statements
This series of workbooks has been updated by the project team of the EuropeanUnion project
Implementation of the Accounting Reform
in the RussianFederation.The workbooks cover the concepts of International Financial Reporting Standards(‘IFRS’). They are intended to be practical self-instruction aidsthat practicing accountants can use to upgrade their knowledge, understanding andskills.Each workbook is designed for a maximum of three hours of study.Each workbook is a combination of:
Information with examples
Self Test Questions – Multiple choice and Exercises
Answers to Self Test QuestionsThe members of the project team were contributed byPricewaterhouseCoopers, ACCA, FBK and Agriconsulting.The Workbook Series consists of a range of titles listed on our website.The copyright of the material contained in each workbook belongs to theEuropean Union and, according to its policy, may be used free of charge for any non-commercial purpose.The project team would like to express thanks to those who have contributedtheir time and thoughts to the content of the workbooks.
Contacte-mailWebvictoria.stepanova@ru.pwc.comwww.accountingreform.ruTel. + 7 495- 967-6000Fax. + 7 495- 967-6001
Moscow, Russia, December 2006 (updated)
1. FRAMEWORK FOR THE PREPARATION ANDPRESENTATION OF FINANCIAL STATEMENTS .....................32. QUALITATIVE CHARACTERISTICS OF FINANCIALSTATEMENTS...............................................................................53. WHAT ARE FINANCIAL STATEMENTS................................74. EXPENSES.............................................................................125. ACCOUNTING MEASUREMENT .........................................156. CONCEPTS OF CAPITAL AND CAPITAL MAINTENANCE16
IFRS Framework for the Preparation and Presentation of Financial Statements
1. Framework for the Preparation and Presentation of Financial Statements
The aim of this first workbook is, by introducing the concepts on whichInternational Financial Reporting Standards is based, to help the understandthe nature, format and content international recognised Financial Statementsand reports.The International Accounting Standards Board (IASB) was formed to developand have agreed standards of good practice that can be applied thoughout theworld.Financial statements are presented to users, by many undertakings around theworld. Although such financial statements may appear similar from country tocountry, there are differences that have been caused by a variety of social,economic and legal circumstances, and by different countries serving theneeds of different users when setting national requirements.IASB is committed to narrowing these differences, by seeking to harmoniseregulations, accounting standards and procedures, relating to the preparationand presentation of financial statements.
This framework document deals with:(i)the objective of financial statements;(ii)the qualitative characteristics that determine the usefulness of information in financial statements;(iii)the definition, recognition and measurement of the elements fromwhich financial statements are constructed; and(iv)concepts of capital and capital maintenance.The framework is concerned with financial statements, including consolidatedfinancial statements. These are presented at least annually, and are directedtoward the needs of a wide range of users.Some users can obtain information in addition to the financial statements.Many users, however, have to rely on the financial statements as their major source of financial information.Financial statements form part of the process of financial reporting. A completeset of financial statements normally includes
a balance sheet,
an income statement,
a statement of changes in financial position and
notes, and other statements and explanatory material, that are anintegral part of the financial statements.The framework applies to the financial statements of all commercial, industrialand business reporting undertakings, in the public or the private sectors.
Users and Their Needs for Information.
The main users of financial statements are
The providers of risk capital, and their advisers, are concernedwith the risk in, and return provided by, their investments. They need toknow whether they should buy, hold or sell (and the ability of theundertaking to pay dividends).
Employees, and their representatives, are interested in thestability, and profitability, of their employers. They are also interested toassess the ability of the undertaking to provide remuneration, retirementbenefits and employment opportunities.
Lenders wish to know whether their loans, and interest, will bepaid, when due.
though various ministeries
 There are needs that are common to all users. As investors are providers of risk capital to the undertaking, financial statements that meet their needs willalso meet most of the needs of other users.The management of an undertaking has the primary responsibility for thepresentation of the financial statements.

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