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What is IAS?
Md.Monowar Hossain FCA,CPA Page # 1
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
1
International Financial Reporting Standards (IFRS)
They specify how companies must maintain and report their accounts, defining types of
transactions and other events with financial impact. IFRS were established to create a
common accounting language, so that businesses and their financial statements can be
consistent and reliable from company to company and country to country.
IFRS are used in at least 120 countries, including those in the European Union (EU) and many
in Asia and South America, but the U.S. uses Generally Accepted Accounting Principles
(GAAP).
1 https://www.investopedia.com/terms/i/ifrs.asp
Md.Monowar Hossain FCA,CPA Page # 2
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Statement of Financial
Position: This is also known
as a balance sheet. IFRS
influences the ways in which
the components of a balance
sheet are reported.
Statement of
Comprehensive Income:
This can take the form of
one statement, or it can be
separated into a profit and
loss statement and a
statement of other income,
including property and
equipment.
Statement of Cash Flow: This report summarizes the company's financial transactions in
the given period, separating cash flow into Operations, Investing, and Financing.
In addition to these basic reports, a company must also give a summary of its accounting
policies. The full report is often seen side by side with the previous report, to show the changes
in profit and loss. A parent company must create separate account reports for each of its
subsidiary companies.
Md.Monowar Hossain FCA,CPA Page # 3
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Differences exist
between IFRS and other
countries' Generally
Accepted Accounting
Principles (GAAP) that
affect the way a financial
ratio is calculated. For
example, IFRS is not as
strict on defining
revenue and allow
companies to report
revenue sooner, so
consequently, a balance
sheet under this system
might show a higher
stream of revenue than
GAAP's.
IFRS also has different requirements for expenses; for example, if a company is spending
money on development or an investment for the future, it doesn't necessarily have to be
reported as an expense (it can be capitalized).
Another difference between IFRS and GAAP is the specification of the way inventory is
accounted for. There are two ways to keep track of this, first in first out (FIFO) and last in
first out (LIFO). FIFO means that the most recent inventory is left unsold until older inventory
is sold; LIFO means that the most recent inventory is the first to be sold. IFRS prohibits LIFO,
while American standards and others allow participants to freely use either.
KEY TAKEAWAYS
Md.Monowar Hossain FCA,CPA Page # 4
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
History of IFRS
IFRS originated
in the European
Union, with the
intention of
making business
affairs and
accounts
accessible
across the
continent. The
idea quickly
spread globally,
as a common
language
allowed greater
communication
worldwide.
Although the U.S. and some other countries don't use IFRS, most do, and they are spread
all over the world, making IFRS the most common global set of standards.
The IFRS website has more information on the rules and history of the IFRS.
2
Standards
Accounting Standards are the
combination of:
International Financial
Reporting Standards (IFRS)
International Accounting
Standards (IAS)
IFRIC Interpretations
SIC-Interpretations
Other pronouncements
2
https://www.iasplus.com/en/standards
Md.Monowar Hossain FCA,CPA Page # 5
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
# Name Issued
Insurance Contracts
IFRS 4 Will be superseded by IFRS 17 as of 1 January 2023 2004
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 2004
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eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Depreciation Accounting
IAS 4 Withdrawn in 1999
Construction Contracts
IAS 11 Will be superseded by IFRS 15 as of 1 January 2018 1993
Segment Reporting
IAS 14 Superseded by IFRS 8 effective 1 January 2009 1997
Leases
IAS 17 Will be superseded by IFRS 16 as of 1 January 2019 2003*
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eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
# Name Issued
Revenue
IAS 18 Will be superseded by IFRS 15 as of 1 January 2018 1993*
Business Combinations
IAS 22 Superseded by IFRS 3 effective 31 March 2004 1998*
Investments in Associates
IAS 28 Superseded by IAS 28 (2011) and IFRS 12 effective 1 January 2013 2003
Md.Monowar Hossain FCA,CPA Page # 8
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
# Name Issued
Discontinuing Operations
IAS 35 Superseded by IFRS 5 effective 1 January 2005 1998
IFRIC Interpretations
# Name Issued
Emission Rights
IFRIC 3 Withdrawn June 2005 2004
Md.Monowar Hossain FCA,CPA Page # 9
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
# Name Issued
Scope of IFRS 2
IFRIC 8 Withdrawn effective 1 January 2010 2006
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eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
SIC Interpretations
# Name Issued
Md.Monowar Hossain FCA,CPA Page # 11
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
# Name Issued
Md.Monowar Hossain FCA,CPA Page # 12
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
# Name Issued
Other pronouncements
Name Issued
3
IFRS are considered a principles-based set of standards in that they set up broad rules with
greater importance on interpretation and the use of judgment, rather than reliance on specific
bright-lines.
Due to growing international business among countries, there is strong support in favor of
IFRS. IFRS is a well-structured set of accounting standards which will increase transparency,
understandability and promote global acceptance on financial reporting (Edwards, 2009).2
There is a well-built and growing demand around the world for global, high-quality accounting
standards that deal clearness and comparability. This demand has been strengthened in
recent years by massive increases in cross-border trade and investment. Improved impetus
has come from the need for reliable financial information in developing and transitional
countries. Application of International Standards are also mandated / desired by the World
Bank (WB), Asian Development Bank (ADB), European Union (EU), United Nation (UN),
3
Research Journal of Finance and Accounting
Md.Monowar Hossain FCA,CPA Page # 13
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
agencies and other development associates on borrowers and recipients of foreign aid and
technical support.
Moreover, there are irresistible global pressures, affecting the Bangladesh economy, which
warrant the Accountancy Profession to execute standardization of accountancy practices
through implementation of IAS/IFRS. Therefore, Bangladesh has adopted IFRS in July 2006.
The Institute of Chartered Accountants of Bangladesh (ICAB), which is a supreme body for
the development of accounting profession in Bangladesh, has been functioning for the
adoption and improvement of accounting standards. The ICAB has adopt IAS/IFRS, most of
these carbon copies of original IASs/IFRSs. While processing has been done than Security
Exchange Commission of Bangladesh (SEC) hold the responsibilities and became delegated
of Government of Bangladesh to keep an eye on compliance all those standards by listed
company in Bangladesh (Mir & Rahman,2005).
The Bangladesh Parliament enacted Financial Reporting ACT (FRA), 2015 on September 9,
2015. FRA requires the establishment of the Financial Reporting Council (FRC) – an
independent oversight body to bring trust, credit worthiness, transparency and accountability
in the audited reports and accounting as financial reporting of the publicly listed companies.
The main purpose of the FRC will be to regulate the financial reporting process followed by
the public interest entities. It will also regulate auditing profession of the country.
The FRC is a 12-members body, comprising of representatives from the government, the
Bangladesh Bank, the BSEC, the FBCCI, the academia, and the professional accounting
bodies.
4
https://www.frcbd.org/
Md.Monowar Hossain FCA,CPA Page # 14
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Md.Monowar Hossain FCA,CPA Page # 15
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Md.Monowar Hossain FCA,CPA Page # 16
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Every standard should have
‐ Objectives/Scope
‐ Recognition
‐ Measurement
‐ Disclosure
5
IAS-1: Presentation of Financial Statements
Overview of IAS 1
5
https://www.ifrsbox.com/ifrs/ias‐1/
Md.Monowar Hossain FCA,CPA Page # 17
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
IAS-2: Inventories
Overview of IAS 2
Overview of IAS 7
Overview of IAS 8
Md.Monowar Hossain FCA,CPA Page # 18
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
The Standard IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors tells
us:
Accounting Policies
Accounting policies are anything from rules, guidelines, conventions, principles and
similar norms used by entities for the preparation of the financial statements.
Accounting Estimates
Accounting estimate is not defined by IAS 8 directly, just indirectly via changes in
accounting estimates.
When you change the accounting estimate, you change either some amount of an asset or a
liability, or pattern of its consumption in both current and future reporting periods.
If these changes result from some new information or new trend, or development,
then they are changes in accounting estimates.
If these changes result from some error, such as incorrect calculation or wrong
application of accounting policies – then they are NOT changes in accounting
estimates, but errors and they must be accounted for as for errors.
Md.Monowar Hossain FCA,CPA Page # 19
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Errors
Prior-period errors are some omissions from (that’s when you forget something) or
misstatements in the financial statements as a result of ignoring or misusing the information
that was available or could be reasonably obtained when preparing these financial
statements.
It does not really matter why the error happened – whether it was intentional (fraud) or
unintentional, you still need to correct it if it is material.
Do not forget that something can be material not only because of its size, but also due
to its nature: for example, bonuses paid to your management are always significant,
whether they amounted to a few dollars or to millions.
1. If the error is NOT material, then you can correct it in the current reporting
period. Remember, if the error is NOT material, then your financial statements still
might be reliable and relevant.
2. If the error IS MATERIAL, then you always correct it retrospectively, by going
back and restating your figures in the previous periods.
Md.Monowar Hossain FCA,CPA Page # 20
eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
For the specific example with correction of error, please read here about correcting wrongly
estimated useful lives of your assets.
Overview of IAS 10
Event after the reporting period is favorable or unfavorable event that occurs between :
1. Adjusting events
2. Non-adjusting events.
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eMail: md.monowar.hossain@gmail.com
June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Adjusting events
Adjusting event is the event that arose after the end of the reporting period, but provides
further evidence of conditions that existed at the end of the reporting period.
Accounting treatment: financial statements should be adjusted for adjusting events.
Going concern: If a management indicates after the end of the reporting period that it
intends to liquidate the business or cease trading or there is no other realistic alternative,
then the financial statements should NOT be prepared under going concern basis.
Non-adjusting event
Non-adjusting event is an event after the reporting period that indicates conditions
arising after the end of the reporting period.
Accounting treatment: do not adjust financial statements for non-adjusting events. The
following disclosure shall be made:
Accounting for dividends: If an entity declares dividends to shareholders after the end of
the reporting period, the entity shall not account for those dividends as for a liability at the
reporting date.
If dividends are declared after the end of the Reporting Period, but before the financial
statements are approved for issue, the dividends are disclosed in the notes to the financial
statements.
Overview of IAS 12
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June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
o It sets the recognition criteria of current and deferred tax liabilities and tax
assets:
In relation to deferred tax liabilities arising from taxable
temporary differences, IAS 12 requires recognition of deferred tax
for all of them with certain exceptions and provides examples and
further guidance.
In relation to deferred tax assets arising from deductible
temporary differences, unused tax losses and unused tax
credits, IAS 12 requires recognition of deferred tax only to the extent
that it is probable that taxable profit will be available against which the
deductible temporary differences, unused tax losses and unused tax
credits can be utilized, with certain exceptions.
o It prescribes rules on measurement of deferred tax assets and
liabilities, recognition of current and deferred tax income and expense
and presentation of current and deferred tax in the financial statements.
o It requires specific disclosures and brings illustrative examples in its
appendices.
6
Overview of IAS 16
Standard IAS 16 prescribes the accounting treatment for property, plant and
equipment and therefore it is one of the most important and commonly applied standards.
The main issues dealt in IAS 16 are recognition of property, plant and equipment,
measurement at and after recognition, impairment of property, plant and equipment
(although IAS 36 deals with impairment in more detail) and derecognition.
6
https://www.ifrsbox.com/ias‐16‐property‐plant‐and‐equipment/
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June 27, 2020
Financial Management eLearning
[By Md. Monowar Hossain FCA, CPA, IAS / IFRS Basic understanding
FCMA, FCS, CIFRS, CIPFA(UK), FIFC, CGA]
Property, plant and equipment are tangible items that are held for use in the production or
supply of goods or services, for rental to others, or for administrative purposes; and are
expected to be used during more than one period.
IAS 16 states that the cost of an item of property, plant and equipment shall be recognized
as an asset if, and only if:
it is probable that future economic benefits associated with the item will flow to the
entity; and
the cost of the item can be measured reliably.
This recognition principle shall be applied to all costs at the time they are incurred,
both incurred initially to acquire or construct an item of property, plant and equipment
and incurred subsequently after recognition to add to, replace part of or service it.
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