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International Financial Reporting Standards (IFRS) are 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 (IASB) an independent organi!ation based in "ondon #$. %hey claim to be a set of rules that ideally would apply uniformly to financial reporting by public companies worldwide. IFRS are used in many parts of the world including the &uropean #nion India 'ong $ong Australia (alaysia )a*istan Russia South Africa Singapore and %ur*ey. As of +, August +--. more than //0 countries around the world including all of &urope currently re1uire or permit IFRS reporting. If IFRS are adopted worldwide a coherent international conceptual framewor* is necessary. %here2re at least three ma3or advantages of identical (applying e1ually to all public companies) standards. %he first advantage 4 scale economies 4 underlies all forms of uniform contracting5 uniform rules need only be invented once. %he second advantage of uniform standards is the protection they give to auditors against managers playing an 6opinion shopping7 game. If all auditors are re1uired to enforce the same rules managers cannot threaten to shop for an auditor who will give an un1ualified opinion on a more favorable rule. %he third advantage is eliminating 82informational e9ternalities22 arising from lac* of comparability. If firms and:or countries use different accounting techni1ues 4 even if unambiguously disclosed to all users 4 they can impose costs on others due to lac* of comparability. %o the e9tent that firms internali!e these effects it will be advantageous for them to use the same standards as others. Also there will be certain benefits to companies such as understanding financial statements of customers suppliers overseas and getting assisted in raising capital overseas etc. %here can also be certain comple9ities such as training or learning about IFRS technical accounting changes (adoption ; convergence to IFRS) updating accounting policy ; procedures changes to internal audit plans system modification for capturing ; reporting data and communication to capital mar*ets. %here may also be concerns during the period of change li*e managing impacts on other aspects of businesses maintaining or even heightening internal controls etc.

Internal Audit <ommittee must evaluate the overall pro3ect governance through a Ris* Assessment of the IFRS <onversion. %hey can potentially conduct current assurance reviews or drill down reviews to assess aspects of the convergence implementation. An IFRS pro3ect team must be there to organi!e all aspects of the conversion (people process technology) across business units ensure compliance of IFRS standards ; manage budget resources and timeliness. (anagement must implement and run the conversion:convergence process by active supervision and communication with the IFRS )ro3ect %eam. %he Audit committee must ensure that management is responsive to the issues:timelines and has the appropriate resources and s*ills to conduct an IFRS conversion has considered reporting implications and impacts on all areas of the business ongoing monitoring etc. Also e9ternal auditors should measure success from a financial reporting perspective so that a consistent ; conceptual framewor* can be build. )rimary ob3ective of worldwide adoption of IFRS is to bring businesses worldwide to follow globally acceptable common set of financial accounting reporting standards which can not only enable cross national business offerings but also bring much needed transparency in financial data disclosure. IFRS2 ob3ectives may also include developing a single set of high 1uality logical and enforceable global accounting standards that re1uire high e9cellence and comparable

information in financial statements and other financial reporting to help participants in the world=s capital mar*ets and other users ma*e economic decisions promoting the use and thorough application of those standards and bringing about convergence of national accounting standards and International Accounting Standards and International Financial Reporting Standards to high 1uality solutions. IASB has developed an entire set of standards that if followed would re1uire companies to report high 1uality crystal clear and comparable information. IFRS are developed through an international consultation process the >due process> which involves concerned individuals and organi!ations from around the world. %he due process comprises six stages with the %rustees having the opportunity to ensure compliance at various points throughout5 /. Setting the agenda +. )lanning the pro3ect 0. ?eveloping and publishing the discussion paper @. ?eveloping and publishing the e9posure draft A. ?eveloping and publishing the standard B. After the standard is issued

Cualitative characteristics are the attributes that ma*e the information provided in financial statements useful to users. %he four chief 1ualitative characteristics of IFRS are understandability, relevance, reliability and comparability. An essential 1uality of the information provided in financial statements is that it is readily understandable by users. For this reason users are assumed to have a realistic *nowledge of business and accounting and a willingness to study the information with reasonable diligence. 'owever information about comple9 matters that should be included in the financial statements because of its relevance to

the economic decisionDma*ing re1uirements of users should not be e9cluded simply on the basis that it may be too difficult for certain users to understand. %o be useful information must be relevant to the decisionDma*ing needs of users. Information has the 1uality of relevance when it influences the economic decisions of users by helping them evaluate past present or future events or confirming or correcting their past evaluations. %he relevance of information is affected by its nature and materiality. In some cases the nature of information alone is sufficient to determine its relevance. In other cases both the nature and materiality are important. %o be useful information must also be reliable. Information may be relevant but so unreliable in nature or representation that its recognition may be potentially misleading. %o be reliable information must be represented faithfully in the transactions and other events. Also in order to be reliable the information contained in financial statements must be neutral that is free from bias. Financial statements are not neutral if by the selection or presentation of information they influence the ma*ing of a decision in order to attain a predetermined result. %he preparers of financial statements do however have to contend with the uncertainties that inevitably surround many events and circumstances such as the collectability of doubtful receivables. Such uncertainties are recogni!ed by the disclosure of their nature and e9tent and by the e9ercise of prudence in the preparation of the financial statements. Prudence is the inclusion of a degree of caution in the e9ercise of the 3udgments needed in ma*ing the estimates re1uired under conditions of uncertainty. "astly the information in financial statements must be complete within the bounds of materiality and cost. An omission can cause information to be false or misleading and thus unreliable and deficient in terms of its relevance. #sers must be able to compare the financial statements of an entity through time in order to identify trends in its financial position and performance. #sers must also be able to compare the financial statements of different entities in order to evaluate their relative financial position performance and changes in financial position. 'ence the measurement and display of the financial effect of li*e transactions and other events must be carried out in a consistent way throughout an entity and over time for that entity and in a consistent way for different entities. <onvergence refers to the method of narrowing differences between IFRS and the accounting standards of countries that retain their own standards. <onvergence can offer advantages as it is

a modified version of adoption. Several countries that have not adopted IFRS at this point have established convergence pro3ects that most li*ely will lead to their acceptance of IFRS in one form or another in the not too distant future. (ost notably5

Since Ectober +--+ the IASB and the FASB have been wor*ing systematically toward
convergence of IFRS and #.S. FAA).

%he IASB commenced a comparable though seemingly less urgent and ambitious
convergence pro3ect with Gapan.