Steve Collings FMAAT FCCA, Leavitt Walmsley Associates and author of Interpretation and Application of International Standards on Auditing
International Financial Reporting Standards have been mandatory in the EU since 2005 and are rapidly being adopted by countries throughout the world. In this environment it is increasingly important for managers, executives and CEOs to understand the background of the IFRS and their main requirements.
In An Executive Guide to IFRS: Content, Costs and Benefits to Business, Peter Walton provides a concise and accessible guide to the principal features of IFRS, explains why they are useful, looks at their impact on businesses, and provides some of the context to help define their global role.
The book is divided into three sections. Part one deals with the convergence process and its costs and benefits, and gives background on the story so far. Part two contains the main technical content of the book and provides an analysis of the main issues under IFRS reporting, including:
- The content of financial statements
- Investments in other companies
- Income Statement and Balance Sheet items
- IFRS for SMEs
- A comparison with US GAAP
Part three covers the creation of the IFRS, provides details of the IASB's standard-setting process, and describes how people outside the IASB can participate in the process and lobby effectively. It also examines the history of the IASB, and includes a chapter based on the author's observation of the standard setters in action.
An Executive Guide to IFRS is an invaluable resource for anyone seeking to understand the essentials of International Financial Reporting Standards.
Table of Contents
Preface ix
Acknowledgements x
About the author xi
1 Worldwide convergence on IFRS 1
Convergence 3
Large company advantages 5
Why governments support IFRS 7
The use of IAS/IFRS in the world 8
Problems with convergence 10
Modified convergence 13
Small and medium-sized business 13
Conclusion 14
2 Content of financial statements 15
IAS 1 presentation of financial statements 18
Statement of Comprehensive Income 19
Statement of Financial Position 23
Statement of Cash Flows 26
Statement of Changes in Equity 30
Accounting policies and changes 30
Fair presentation 33
Conventions 34
Interim financial statements 34
Conclusion 36
Appendix: The IASB Conceptual Framework 37
Qualitative characteristics 39
Assets and liabilities 41
3 Investments in other companies 45
Consolidation 46
Translation of foreign subsidiaries 48
Business combinations 51
Investments in associates 54
Joint ventures 55
Assets held for disposal 56
Equity investments 57
Conclusion 58
Appendix: Fair value measurement 59
The market 60
Measurement hierarchy 61
Highest and best use 62
Liabilities 63
Conclusion 64
4 Income statement items 65
Revenue recognition 66
Agriculture 70
Government grants 71
Pensions 72
Stock options 75
Inventories 78
Income taxes 79
Interest expense 80
Foreign exchange differences 82
Accounting in hyperinflationary economies 83
Conclusion 84
5 Balance sheet items 85
Property, plant and equipment 86
Investment property 89
Leased assets 90
Intangible assets 92
Mineral rights 94
Impairment 95
Assets held for sale 99
Financial instruments 100
Disclosures about financial instruments 105
Defining equity 106
Liabilities 109
Contingent liabilities 112
Conclusion 113
6 Other significant standards 115
First time adoption 115
Related party transactions 118
Segment reporting 120
Concessions 122
Events after balance sheet date 123
Insurance 124
Conclusion 126
7 The IFRS for SMEs 127
Development of the standard 128
Content 131
Conclusion 134
8 Comparison with US GAAP 137
Conceptual Framework 140
Consolidation 142
Financial instruments 143
Offsetting 146
Non-financial assets 147
Impairment 149
Miscellaneous 150
Conclusion 153
9 The IASB’s standard-setting process 155
Due process 157
Discussion paper 159
Exposure draft 160
New standard 163
Interpretations 165
Structure 168
Finance 170
Lobbying the IASB 171
Monitoring the IASB 173
Conclusion 174
10 History of the IASB 175
The start-up phase 176
Steady progress 177
The enhancement phase 180
Transition 185
Global convergence 189
Relations with the US 191
Relations with Europe 192
The financial crisis 195
Conclusion 197
11 Observer notes 199
Standard-setters are people 200
What sort of people? 201
What do they think? 205
Fair value controversies 209
Executory contracts 211
True and fair view 213
Anti-abuse measures 213
Conclusions 216
Further reading 217
Index 221
