Chapter-01

An Introduction to International Financial Reporting Standards

2. International Accounting Standards

International Accounting Standards (IAS) are older accounting standards which were
replaced in 2001 by International Financial Reporting Standards (IFRS), issued by the
International Accounting Standards Board (IASB), an independent international standard
setting body based in London.
International Accounting Standards (IAS) were the first international accounting standards
that were issued by the International Accounting Standards Committee (IASC), formed in
1973. The International Accounting Standards (IAS) constitute a single set of high-quality
accounting standards, which help in the preparation of consolidated financial statements,
including the balance sheet, income statement, statement of changes in the financial position,
cash flow statement and explanatory notes.
The goal then, as it remains today, was to make it easier to compare businesses around the
world, increase transparency and trust in financial reporting and foster global trade and
investment.

3. Steps for setting International Accounting Standards.

A high-level overview of the standards-setting process as established by the Rules of

Procedure follows. The nature and extent of the Board's specific research and outreach
activities will vary from project to project, depending on the nature and scope of the reporting
issues involved. In developing international accounting standards, the board follows the
following procedures:
 1. The Board identifies financial reporting issues based on requests/recommendations
from stakeholders or through other means.
2. The FASB decides whether to add a project to the technical agenda based on a
staffprepared analysis of the issues.
3. The Board deliberates at one or more public meetings the various reporting issues
identified and analyzed by the staff.
4. The Board issues an Exposure Draft to solicit broad stakeholder input. (In some
projects, the Board may issue a Discussion Paper to obtain input in the early stages of
a project.)
5. The Board holds a public roundtable meeting on the Exposure Draft, if necessary.
6. The staff analyzes comment letters, public roundtable discussion, and all other
information obtained through due process activities. The Board re deliberates the
proposed provisions, carefully considering the stakeholder input received, at one or
more public meetings.
7. The Board issues an Accounting Standards Update describing amendments to the
Accounting Standards Codification.
8. Issuance of final standard as per requests/recommendations from stakeholders or
through other means.
9. Educating the stakeholders about the issued standard.
10. Implementation of Standard.

3. Need for International Accounting Standards

Accounting standard is a method or an approach established and issued by recognized expert

accountancy body. It is used in preparing financial statement viz., Profit & Loss Account and
Balance Sheet of various concerns operating different fields identically. So that the users of
aforesaid statements don’t get confused while evaluating the results to take various decisions
viz., to subscribe in equality shares, or subscribe in debenture of that concern. Need for
Accounting Standards are as follows:
1. It helps in dissemination of timely and useful financial information to all Stakeholders
and users.

2. It helps to provide a set of standard accounting policies, valuation norms and

disclosure requirement.

3. It ensures disclosures of accounting principles and treatments, where important

information is not otherwise statutorily required to be disclosed.

4. It helps to reduce or totally eliminate, accounting alternatives, thereby it leads to

better interfirm and intra-firm comparison of Financial Statements.

5. It reduces scope of creative accounting, i.e. twisting of accounting policies to produce

Financial Statement favorable to a particular interest group.

7. International Financial Reporting Standards (IFRS)

Definition of 'International Financial Reporting Standards - IFRS' A set of international

accounting standards stating how particular types of transactions and other events should be
reported in financial statements. IFRS are issued by the International Accounting Standards
Board. IFRS are sometimes confused with International Accounting Standards (IAS), which
are the older standards that IFRS replaced. (IAS were issued from 1973 to 2000.)
Investopedia explains 'International Financial Reporting Standards - IFRS' the goal with IFRS
is to make international comparisons as easy as possible. This is difficult because, to a large
extent, each country has its own set of rules. For example, U.S. GAAP are different from
Canadian GAAP. Synchronizing accounting standards across the globe is an ongoing process
in the international accounting community.

9. Steps in the IFRS standard-setting process.

IFRS committee follows a thorough, transparent and participatory due process when we issue
an IFRS Standard. Standard-setting entails are as follows:

i) Agenda Consultation: Every five years, the Board conducts a comprehensive review
and consultation to define international standard-setting priorities and develop its project
work plan. The Board can also add topics to its work plan if necessary between agenda
consultations. This can include topics following Post-implementation Reviews of Standards;
the IFRS Interpretations Committee may also request the Board review an issue.

ii) Research Program: We begin most projects with research—explore the issues,
identify possible solutions and decide whether standard-setting is required. Often, we set out
our ideas in a discussion paper and seek public comment. If we find sufficient evidence that
an accounting problem exists, the problem is sufficiently important to warrant changing a
Standard or issuing a new one and a practical solution can be found, we begin standard-
setting.

iii) Standard Setting Program: If the Board decides to amend a Standard or issue a new
one, we generally review the research, including comments on the discussion paper, and
propose amendments or Standards to resolve issues identified through research and
consultation. Proposals for a new Standard or an amendment to a Standard are published in
an exposure draft for public consultation. To gather additional evidence, members of the
Board and IFRS Foundation technical staff consult with a range of stakeholders from all over
the world. The Board analyses feedback and refines proposals before the new Standard, or an
amendment to a Standard, is issued.

iv) Maintenance Program: The work doesn’t stop once a Standard is issued. We also
support implementation of the Standards and we make sure we maintain them. This process
includes consulting on the implementation of a new or amended Standard to identify any
implementation problems that may need to be addressed. If issues arise, the IFRS
Interpretations Committee may decide to create an IFRIC Interpretation of the Standard or
recommend a narrow-scope amendment. Such amendments follow the Board's normal due
process.

v) Post-implementation Reviews: After a new Standard has been in use for a few years,
the Board carries out research through a Post-implementation Review to assess whether the
Standard is achieving its objective and, if not, whether any amendments should be
considered. As a result of the Post-implementation Review, the Board may start a new
research project.

10. IAS VS IFRS

Technically they are the same. IFRS is the current set of standards that is reflective of the
changes in the accounting and business practices over the last two decades. IAS is what used
to be prior to the introduction of IFRS. However, not all of the IAS are outdated. In fact, to
date there are only 9 IFRS issued and the IAS that were not superseded by the IFRS are still
in use. The IASB no longer issues IAS. Any future standards will now be called IFRS, and if
they are contradictory to existing IAS, the IFRS will be followed. The key different points of
IAS and IFRS as follows:

• IAS stands for International Accounting Standards, while IFRS refers to International
Financial Reporting Standards.
• IAS standards were published between 1973 and 2001, while IFRS standards were
published from 2001 onwards.
• IAS standards were issued by the IASC, while the IFRS are issued by the IASB,
which succeeded the IASC.

Principles of the IFRS take precedence if there’s contradiction with those of the IAS, and this
result in the IAS principles being dropped.
 12. Steps of IASB Due process

Outlined below, in overview terms, are the due process steps followed in the IASB's
standardlevel projects, i.e. proposed new standards, and amendments to existing standards,
and Interpretations developed by the IFRS Interpretations Committee (and ratified by the
IASB). These steps are:

i) Research program: The IASB's research program involves the analysis of possible
financial reporting problems by collecting evidence on the nature and extent of the perceived
shortcoming and assessing potential ways to improve financial reporting or to remedy a
deficiency. Also includes the consideration of broader financial reporting issues, such as how
financial reporting is evolving, to encourage international debate on financial reporting
matters.

ii) Developing a proposal for publication: Once the IASB has formally decided to add
a project to its agenda, it proceeds to the development of an exposure draft. The exposure
draft is issued for public consultation and the IASB may also undertake additional outreach
activities such as meetings, discussion forums, webcasts and podcasts and roundtable
meetings.

iii) Re-deliberations and finalization: After the publication of an exposure draft, the
IASB proceed to consider constituent feedback from the consultative process. In some cases,
the IASB may decide to re-expose proposals before proceeding to a finalized pronouncement.
Once deliberations have been finalized, the IASB's technical staff will prepare the final
standard for balloting and voting on by the Board. The process may also include the issue of
a 'review draft' of the final pronouncement prior to it being finalized. These documents are
not part of formal due process but have the purpose of allowing a 'fatal flaw' review.

iv) Post-implementation reviews: The IASB must conduct a post-implementation

review of each new Standard or major amendment, usually after they have been applied for
around two years. This means that the post-implementation review process will commence
around 2.5-3 years after the effective date of the pronouncement, but may be deferred in
some cases. The post-implementation review process can also be initiated in other
circumstances such as regulatory changes or concerns raised by other parties.

14. Role of the IFRS Interpretations Committee

Under the IFRS Foundation Constitution, the IFRS Interpretations Committee (the
'Committee'), formerly called the International Financial Reporting Interpretations Committee
(IFRIC), has the following roles:
i) Composition: The Committee comprises fourteen voting members, appointed by the
IFRS Foundation Trustees for renewable terms of three years. The Trustees select members
of the Committee so that it comprises a group of people representing, within that group, the
best available combination of technical expertise and diversity of international business and
market experience in the practical application of IFRSs and analysis of financial statements
prepared in accordance with IFRSs.
ii) Development and approval of Interpretations: Interpretations are developed by the
Committee, exposed for public comment (these are called Draft Interpretations and numbered
D1, D2, etc.), approved by IFRIC, and then sent to the IASB Board for review and approval
as Final Interpretations. At the IFRIC level, consensus is reached if not more than three of the
14 Interpretations Committee members object to a draft Interpretation or final Interpretation.
At the Board level, the same vote is required as for a Standard, which is 9 of the 14 Board
members.
iii) Authority of Interpretations: Interpretations are part of IASB's authoritative
literature (see IAS 1 Presentation of Financial Statements). Therefore, financial statements
may not be described as complying with International Financial Reporting Standards unless
they comply with all the requirements of each applicable Standard and each applicable
Interpretation.
iv) Annual improvements: In 2009 the International Accounting Standards Board
(IASB) asked the (then) IFRIC to assume responsibility for the annual process for making
relatively minor improvements to IFRSs. The IASB must approve both the Exposure Draft of
proposed improvements and the final improvements (which are amendments to IFRSs).

15. Standard Advisory Council (SAC)

A body of experts who advise the International Accounting Standards Board (IASB) on
priorities in setting accounting standards. The members also inform the IASB of the
implications of proposed standards for users and preparers of financial statements and may
give other advice to the IASB or the trustees of the International Accounting Standards
Committee Foundation (IASC Foundation). The IASB is required to consult the SAC in
advance of decisions on major projects and the trustees of the IASC Foundation must consult
the SAC in advance of making any changes to its constitution. See feature International
Standard Setters.

17. Status of International Accounting Standards (IAS)

IAS IAS title Status of Effective date as BAS
No. adoption BAS No.
by ICAB
1 Presentation of Financial Statements Adopted 1 January 2010 1
2 Inventories Adopted 1 January 2007 2
7 Cash Flow Statements Adopted 1 January 1999 7
Accounting Policies, Changes in 8
8 Adopted 1 January 2007
Accounting Estimates and Errors
10 Events after the Balance Sheet Date Adopted 1 January 2007 10
11 Construction Contracts Adopted I January 1999 11
12 Income Taxes Adopted. 1 January 1999 12
Presentation of Current Assets and - -
Current Liabilities (Superseded by IAS 1
13 N/A
effective 1 July 1998)

Information Reflecting the Effects of - -

15 Changing Prices (Withdrawn December N/A
2003)
16 Property, Plant and Equipment Adopted 1 January 2007 16
17 Leases Adopted I January 2007 17
18 Revenue Adopted 1 January 2007 18
19 Employee Benefits Adopted 1 January 2004 19
Accounting for Government Grants and 20
20 Adopted 1 January 1999
Disclosure of Government Assistance
The Effects of Changes in Foreign 21
21 Adopted 1 January 2007
Exchange Rates
23 Borrowing Costs Adopted 1 January 2010 23
24 Related Party Disclosures Adopted 1 January 2007 24
Accounting and Reporting by Retirement 26
26 Adopted 1 January 2007
Benefit Plans
Consolidated and Separate Financial 27
27 Adopted 1 January 2010
Statements
28 Investments in Associates Adopted 1 January 2007 28
Financial Reporting in Hyperinflationary 29
29 Adopted 1 January 2015
Economies
31 Interests in Joint Ventures Adopted 1 January 2007 31
32 Financial Instruments: Presentation Adopted 1 January 2010 32
33 Earnings per Share Adopted 1 January 2007 33
34 Interim Financial Reporting Adopted 1 January 1999 34
36 Impairment of Assets Adopted 1 January 2005 36
Provisions, Contingent Liabilities and 37
37 Adopted 1 January 2007
Contingent Assets
38 Intangible Assets Adopted 1 January 2005 38
Financial Instruments: Recognition and 39
39 Adopted 1 January 2010
Measurement
40 Investment Property Adopted 1 January 2007 40
41 Agriculture Adopted 1 January 2007 41
 18. Status of International Financial Reporting Standards (IFRS)
IFRS IFRS title Status of adoption Effective Date as BFRS No.
No. by ICAB BFRS
First-time Adoption of 1
1 International Financial Adopted 1 January 2009
Reporting Standards
2 Share Based Payment Adopted 1 January 2007 2
3 Business Combinations Adopted 1 January 2010 3
4 Insurance Contracts Adopted 1 January 2010 4
Non-Current Assets held for 5
5 Sale and Discontinued Adopted 1 January 2007
Operations
Exploration for and 6
6 Evaluation of Mineral Adopted 1 January 2007
Resources
Financial Instruments: 7
7 Adopted 1 January 2010
Disclosures
8 Operating Segments Adopted 1 January 2010 8
Adopted 9
9 Financial Instruments (Replaced by 1 December 2011
IAS39)
Consolidated Financial 10
10 Adopted 1 January 2013
Statements
11 Joint Arrangements Adopted 1 January 2013 11
Disclosure of Interests in 12
12 Adopted 1 January 2013
Other Entities
13 Fair Value Measurement Adopted 1 January 2013 13
Regulatory Deferral 14
14 Adopted 1 January 2014
Accounts IRFS
Revenue from Contracts with 15
15 Customers Adopted 1 January 2018

Adopted(IFRS 16 16
16 Lease 1 January 2016
replaces IAS-17)
Adopted 17
(Mandatory
17 Insurance Contracts 18 May 2017
effective date of
annual periods
beginning on or
after 1 January
2021).
Reference:

Alam., M. S. (2018). Adoption and Implementation of International Financial Reporting Standards

(IFRS) in Banking Sector of Bangladesh: A Comparative Study . UGC Projcet-(2018-2019)
IFRS Standards. (2018)-ICAB Publication Web-site.