PRINCES FRELYN MAE S.

LRIBA
ACCY3

THE GROWING IMPORTANCE OF INTERNATIONAL FINANCIAL REPORTING

STANDARDS

 An effective tool for establishing a secure and stable global regulatory

environment is the International Financial Reporting Standards (IFRS). A
unified and harmonized accounting system assists in enhancing valuation and
decision-making transparency, fairness, and predictability. For businesses
considering listing their shares on overseas markets, the adoption of IFRS
can be quite beneficial.
 Accounting can be described as the process of identifying, measuring, and
communicating financial information. The area of accounting known as
financial accounting is targeted toward users outside the business world. The
principal users of financial reporting are current and potential investors, as
well as creditors, according to the IASB's Conceptual Framework for Financial
Reporting 2010. In addition to the IASC's formation in 1973, the International
Accounting Standards Board (IASB) was also founded in that year. Over 140
member organizations from over 100 nations were part of the organization by
the 2000s. Since Anglo-American tradition-influenced nations are most
experienced in establishing accounting standards, they are most likely to do
so. As a result, most standards closely match those of the US and UK.
 The International Accounting Standards Board (IASB) created IFRS in 1989.
The major objective of IFRS was to establish it as a universal financial
reporting standard that would be accepted on all stock exchanges. The
European Union passed laws in 2002 requiring listed companies in Europe to
compile their consolidated financial statements in accordance with IFRS. The
IASB's primary goal is to create standards that support the efficiency,
accountability, and transparency of international financial markets.
Transparency in terms of IFRS entails improving the caliber and comparability
of financial data on a global scale. Increasing trust, growth, and enduring
financial stability serve the public interest.
 The objective of and the principles for financial reporting are described in the
IASB's Conceptual Framework for Financial Reporting 2010. The phrase
"price that would be received to sell an asset or paid to transfer an obligation
in an orderly transaction" is used to define fair value (IFRS Foundation, 2011).
The 2010 IASB Framework merely includes a few metrics that are used in
standards without providing any context. The Draft defines the ideas behind
financial reporting to give standard-setters a foundation on which to decide.
However, it is impossible without conceptual direction on how to assess
measurement bases in various contexts.
 The international regulation of financial reporting is effectively supported by
the IFRS Foundation and ongoing standard-setting improvement. Discussions
on the implementation of various corporate governance and reporting issues
can also be viewed as beginning points using the various valuation aims and
methodologies stated by Kiss (2015) and Choi et al. (2013).
FINANCIAL IMPLICATIONS OF THE IAS/IFRS ADOPTION ON THE
CIRCULATING ELEMENTS OF THE LIQUID ASSETS TYPE

 Exchange rates between the euro and national participant currencies have
been set irrevocably, and the euro has become a currency with its own
rights. IAS 21 prerequisites, in general, the variations in exchange rates
that emerged during the conversion of the monetary parts must be
reported as incomes or expenses. The state of the treasury flows provides
data that enables users to assess an entity's net assets, financial
structure, including its liquidity and solvability, as well as the capacity of
the business. This data increases the results reporting form's ability to
compare data points. The difference in value is referred to as the "cash
equivalent" since they eliminate the effects of employing various
accounting treatments for the dsmr transactions and occurrences, among
various entities. Only investments with a short maturity, say three months
or less from the date of purchase, qualify as cash equivalents.
 An entity displays the cash flows from operations, investments, and
financing. The categorization of activities offers data that enables users to
determine how each activity affects the entity's financial status. The
relations that arise between these activities can also be evaluated using
this information. The functional currency of an entity will be used to record
the treasury flows resulting from currency-based transactions. Treasury
flows do not include unrealized gains and losses caused by changes in
foreign exchange rates. Treasury transfers to foreign branches will be
converted based on the functional currency's exchange rate against the
local currency on the transfer date.
 Financial institutions classify the paid interest, interest that has been
cashed, and dividends as "treasury flows from operations." Alternately, the
paid dividends might be categorized as a part of the treasury flow from
activities of operations to assist users in determining an entity's capacity to
pay dividends from operating treasury flows. In a hyperinflationary
economy, it is useless to declare operational results and financial situation
in local currency without also converting them. Money loses so much of its
purchasing power that it is inaccurate to compare the sums that arise from
transactions and other events that happened within the same accounting
period.
 The only way that financial circumstances in a hyperinflationary country
can be usefully represented is as the unity of current measure as of the
balance sheet date. In accordance with the contract for determining their
worth, the assets and liabilities bound by a contract of price modification,
such as bonds and loans, are modified. The market value and some non-
financial components, including the net achievable value, are recorded at
their current levels on the date of the balance sheet. All types of assets are
discussed, including physical immobilizations, monetary investments, raw
material and product inventories, commercial funds, patents, trademarks,
and similar property. The purchasing power of a business with more
financial assets than financial debts during an inflationary time is reduced.
The gain or loss of the net monetary position is used to compensate the
adjustment of the corresponding assets and obligations resulting from
price changes in contracts.
 THE ROLE AND CURRENT STATUS OF IFRS IN THE COMPLETION OF
NATIONAL ACCOUNTING RULES-EVIDENCE FROM BELGIUM

 The continental European accounting model can be seen in the financial

reporting and accounting procedures used in Belgium. Belgian accounting still
bears the traces of German and French influences. The Belgian national
environment does not really support the growth and development of the
International Financial Reporting Standards into a significant source of
influence.
 A system for establishing public accounting standards exists in Belgium. In
Belgium, there was hardly any laws governing corporate accounting prior to
the accounting law of 1975. The absence of financial transparency was a
significant problem in 1975. The objective of EU Directive 2013/34/EU on
financial reporting is to guarantee that all stakeholders can see the individual
accounts of any company. EU Directive 2013/34/EU was integrated into
Belgian law and anchored into an institutional setting where there is a
significant relationship between accounting income and taxable income.
Reading the Law of December 18, 2015, as well as the Royal Decree of
December 15, 2015, is required for a thorough understanding of the new legal
environment. First, it expresses opinions to the government and parliament in
response to requests or independently. By publishing viewpoints or
suggestions on accounting-related issues, it also creates a body of accounting
views.
 The draft bill to make Belgian law compliant with the EU Directive does not
include any reference of the IFRS. National Accounting Rules for Belgium
must be used while creating individual accounts. Legal authorities turn to
Belgian statutes and royal decrees when deciding legal disputes involving
certain accounts. In a statement published by the Central Economic Council,
the employers' groups and unions of Belgium expressed their shared view.
Securing existing levels of financial information transparency was a crucial
component. The argument for maintaining the connection between accounting
income and taxable income is made firmly in the document as well.
 The accounting regulations governing private or unlisted firms had their most
recent significant modification in 1975. Financial reporting is still influenced by
rules that economic actors unanimously agreed upon in 1975. Even though
individual accounts must be transparent, they tolerate a certain amount of
secrecy regarding group information.
THE PROS AND CONS OF FAIR VALUE ACCOUNTING IN A GLOBALIZED
ECONOMY: A NEVER-ENDING DEBATE

 In terms of the standards for financial reporting, fair value accounting is

nothing new. There is a possibility that the notes to the financial statements
will need to provide Fair Value information in relation to some items. The
worldwide economic information revolution of the last few decades has
hastened the adoption of fair value measures. The commitment of regulators,
standard-setters, and practitioners to provide all stakeholders in organizations
with financial information that may be used to make decisions considering
significant and quick changes in market values was hastened by the financial
crisis of 2008. Fair value is the sum for which an item could be traded, or a
liability resolved in an arm's length transaction between informed, willing
parties. The exit market price that would occur under almost ideal (efficient)
market circumstances is the fair value. If market prices effectively aggregate
information, they offer the most accurate assessment of fair value. For non-
financial items, fair value calculation is based on the present value approach.
 Using the fair value approach necessitates a continuous evaluation of both
financial and non-financial assets. One of the main concerns with fair value
measurement is not the first recognition of assets valued at fair market value.
Another prudential principle, known as accounting conservatism, directs
accounting standards. Even if fair value accounting is conceptually beneficial,
according to Penman (2007), it is not successfully applied. Because changes
in fair value are unpredictable, using fair value metrics diminishes the
informativeness of earnings. One of the few studies to come out of the
financial sector found no evidence of SFAS 107 disclosures having any
meaningful incremental value. Finally, CEOs can take private rents by using
the managerial discretion they have over valuation models (Shalev, Zhang, &
Zhang, 2013).
 Finding better alternative techniques that can satisfy the requirements of
relevance, reliability, comparability, and understandability that accounting
standards must achieve would be challenging. The idea of applied predictive
ability is closely related to the alleged relative superiority of fair value income
over transaction-based revenue. In their 2016 study, Kimbro and Xu compare
how goodwill expensing changed after SFAS 142. According to the paper, the
new norm decreased idiosyncratic stock volatility, indicating that model-based
estimates gave investors better information. Since it has been in use for more
than a century, fair value accounting is not a new concept to the corporate
world. For stocks traded on highly liquid marketplaces, the applicability of fair
value measurement is not in issue, but there are severe concerns when fair
values are used to non-tradable or illiquid assets like goodwill. The
development of an information-driven economy appears to be at least largely
responsible for the natural growth of fair value accounting as an accounting
standard.
THE IMPACT OF ACCOUNTING ESTIMATES ON FINANCIAL POSITION AND
BUSINESS PERFORMANCE – CASE OF NON-CURRENT INTANGIBLE AND
TANGIBLE ASSETS

 Financial statements show a company's financial situation and operational

efficiency. Applying international or national financial reporting standards
should be used to measure the items listed in financial statements. According
to the International Accounting Standards Board, financial reports "are mostly
dependent on estimates, judgments, and models rather than being accurate
descriptions." Accounting estimates can be seen from several parties'
perspectives. When creating accounting standards, standard setters should
consider accounting estimates. The perspective of an auditor on estimates is
another. Information about applied accounting estimates will be of interest to
many regulators and other users of financial statements.
 The primary source of accounting estimates is International Financial
Reporting Standards (IFRS). The degree of measurement uncertainty can
have an impact on how relevant financial information is. As a result, the notes
to the financial statements must demonstrate and disclose the type and
degree of uncertainty. The idea of estimates while applying the prudence
principle might serve as the standard for classifying accounting as
conservative or neutral. Financial reporting with a conservative bias benefit
from conservative accounting. The financial accounts of a corporation are
presented in a neutral and unbiased manner under neutral accounting.
 Accounting estimates are a result of the IFRS Framework, and they are
defined considering the identification and assessment of assets and liabilities
in an uncertain world. The specific ideas, grounds, conventions, regulations,
and practices that a company uses to prepare and display financial
statements are known as accounting policies, on the other hand. The
European Securities and Markets Authority (ESMA) acknowledges the need
for additional guidelines to address this issue. The IASB's Conceptual
Framework project will undoubtedly include a few of these issues.
Management should have the ability to approve the procedure to verify its
objectivity in producing estimates. Critical accounting policies and related
disclosures for the entity should be reviewed by management and the Audit
Committee. When intangible and tangible assets account for a sizable portion
of an entity's assets, the study model proved the volatility of that entity's
financial situation and performance as a result of differing accounting
assumptions.