An Executive Guide to IFRS Content, Costs and Benefits to Business

by Walton, Peter

• ISBN13: 9780470664902
• ISBN10: 0470664908
• Edition: 1st
• Format: Paperback
• Copyright: 2011-05-23
• Publisher: Wiley

Summary

Globalisation of financial reporting is proceeding very fast, and managers need to understand the world of IFRS and the main technical issues. In a concise, accessible style, this book explains the movement towards a worldwide standard of financial reporting for listed companies as an aid to efficient investment. It presents the main technical features of IFRS including their content, and chapters on business combinations, consolidation, pensions and share-based payment, financial instruments, provisions and impairment, and it discuss how international standards are formulated. As a whole, the book gives invaluable guidance to the manager on the role of financial reporting, and an understanding of why IFRS are useful. It clearly demonstrates what a company and a country gains from using them, what the costs will be, what the main technical features of IFRS are, how IFRS are formulated, how to participate in the standard-setting process and how to lobby effectively.

Author Biography

Peter Walton, PhD, FCCA, is a preparer turned academic and writer. He is now a professor at ESSEC Business School, Paris, and IFRS Director of the ESSEC-KPMG Financial Reporting Centre there. He is the publisher of IFRS Monitor which provides a detailed monthly report of IASB proceedings. He has attended virtually all the meetings of the IASB since it was formed in 2001.

Table of Contents

Preface	p. ix
Acknowledgements	p. x
About the author	p. xi
Worldwide convergence on IFRS	p. 1
Convergence	p. 3
Large company advantages	p. 5
Why governments support IFRS	p. 7
The use of IAS/IFRS in the world	p. 8
Problems with convergence	p. 10
Modified convergence	p. 13
Small and medium-sized business	p. 13
Conclusion	p. 14
Content of financial statements	p. 15
IAS 1 presentation of financial statements	p. 18
Statement of Comprehensive Income	p. 19
Statement of Financial Position	p. 23
Statement of Cash Flows	p. 26
Statement of Changes in Equity	p. 30
Accounting policies and changes	p. 30
Fair presentation	p. 33
Conventions	p. 34
Interim financial statements	p. 34
Conclusion	p. 36
Appendix: The IASB Conceptual Framework	p. 37
Qualitative characteristics	p. 39
Assets and liabilities	p. 41
Investments in other companies	p. 45
Consolidation	p. 46
Translation of foreign subsidiaries	p. 48
Business combinations	p. 51
Investments in associates	p. 54
Joint ventures	p. 55
Assets held for disposal	p. 56
Equity investments	p. 57
Conclusion	p. 58
Appendix: Fair value measurement	p. 59
The market	p. 60
Measurement hierarchy	p. 61
Highest and best use	p. 62
Liabilities	p. 63
Conclusion	p. 64
Income statement items	p. 65
Revenue recognition	p. 66
Agriculture	p. 70
Government grants	p. 71
Pensions	p. 72
Stock options	p. 75
Inventories	p. 78
Income taxes	p. 79
Interest expense	p. 80
Foreign exchange differences	p. 82
Accounting in hyperinflationary economies	p. 83
Conclusion	p. 84
Balance sheet items	p. 85
Property, plant and equipment	p. 86
Investment property	p. 89
Leased assets	p. 90
Intangible assets	p. 92
Mineral rights	p. 94
Impairment	p. 95
Assets held for sale	p. 99
Financial instruments	p. 100
Disclosures about financial instruments	p. 105
Defining equity	p. 106
Liabilities	p. 109
Contingent liabilities	p. 112
Conclusion	p. 113
Other significant standards	p. 115
First time adoption	p. 115
Related party transactions	p. 118
Segment reporting	p. 120
Concessions	p. 122
Events after balance sheet date	p. 123
Insurance	p. 124
Conclusion	p. 126
The IFRS for SMEs	p. 127
Development of the standard	p. 128
Content	p. 131
Conclusion	p. 134
Comparison with US GAAP	p. 137
Conceptual Framework	p. 140
Consolidation	p. 142
Financial instruments	p. 143
Offsetting	p. 146
Non-financial assets	p. 147
Impairment	p. 149
Miscellaneous	p. 150
Conclusion	p. 153
The IASB's standard-setting process	p. 155
Due process	p. 157
Discussion paper	p. 159
Exposure draft	p. 160
New standard	p. 163
Interpretations	p. 165
Structure	p. 168
Finance	p. 170
Lobbying the IASB	p. 171
Monitoring the IASB	p. 173
Conclusion	p. 174
History of the IASB	p. 175
The start-up phase	p. 176
Steady progress	p. 177
The enhancement phase	p. 180
Transition	p. 185
Global convergence	p. 189
Relations with the US	p. 191
Relations with Europe	p. 192
The financial crisis	p. 195
Conclusion	p. 197
Observer notes	p. 199
Standard-setters are people	p. 200
What sort of people?	p. 201
What do they think?	p. 205
Fair value controversies	p. 209
Executory contracts	p. 211
True and fair view	p. 213
Anti-abuse measures	p. 213
Conclusions	p. 216
Further reading	p. 217
Index	p. 221
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