REGULATORY FRAMEWORK FOR FINANCIAL REPORTING

 

REGULATORY FRAMEWORK FOR FINANCIAL REPORTING

CONTENT OUTLINE

• The regulatory system of accounting
• The International Accounting Standards Board Structure
• Accounting Standards Setting Process

REGULATORY SYSTEM OF ACCOUNTING

Regulatory system of accounting is the laws, principles, rules and regulations that govern the recording and reporting of business transactions. It includes

1. National legislations [Companies Act, Partnership Act, Banking Act, Insurance Act, etc]

2. Accounting Standards [International Financial Reporting Standards (IFRS), IFRS for SMEs, International Public Sector Accounting Standards (IPSASs)]

3. Accounting Concepts and Conventions

4. Generally Accepted Accounting Practices (GAAP)

 

As of June 2017, the following IFRS were in issue:

28 International Accounting Standards (IASs)

IAS 1  Presentation of Financial Statements

IAS 2 Inventories

IAS 7 Cash flow Statements

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10   Events after reporting date

IAS 11  Construction Contracts (replaced by IFRS 15 from 1 January 2018)

IAS 12   Income taxes

IAS 16  Property, Plant and Equipment

IAS 17  Leases (replaced by IFRS 16 from 1 January 2019)

IAS 18 Revenue (replaced by IFRS 15 from 1 January 2018)

IAS 19 Employee Benefits

IAS 20  Accounting for Government Grant and Disclosure of Government Assistance

IAS 21  The Effects of Changes in Foreign Exchange Rates

IAS 23  Borrowing Costs

IAS 24  Related Party Disclosures

IAS 26  Accounting and Reporting by Retirement Benefit Plans

IAS 27   Separate Financial Statements

IAS 28   Investments in Associates

IAS 29   Financial Reporting in Hyperinflationary Economics

IAS 32   Financial Instruments: Presentation

IAS 33 Earnings per share

IAS 34  Interim Financial Reporting

IAS 36  Impairment of Asset

IAS 37  Provisions, Contingent Liabilities and Contingent Assets

IAS 38  Intangible Assets

IAS 39  Financial Instruments: Recognition and Measurement (replaced by IFRS 9 from 1 January 2018)

IAS 40  Investment Property

IAS 41  Agriculture

 

17  International Financial Reporting Standards (IFRS)

IFRS 1   First time Adoption of IFRS

IFRS 2   Share based Payment

IFRS 3   Business Combination

IFRS 4   Insurance Contracts (replaced by IFRS 17 from 1 January 2021)

IFRS 5   Non-current Assets Held for Sale and Discontinued Operations

IFRS 6   Exploration for and Evaluation of Mineral Resources

IFRS 7   Financial Instruments: Disclosures

IFRS 8   Operating Segments

IFRS 9   Financial Instruments: Recognition and Measurement

IFRS 10  Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12   Disclosure of Interests in Other Entities

IFRS 13   Fair Value Measurement

IFRS 14   Regulatory Deferral Accounts

IFRS 15   Revenue from Contracts with Customers

IFRS 16   Leases

IFRS 17   Insurance Contracts (to replace IFRS 4)

 

INTERNATIONAL ACCOUNTING STANDARDS BOARD STRUCTURE

A. IFRS FOUNDATION

IFRS Foundation is responsible for funding and appointment of members of IASB, IFRS Foundation and IFRIC.

 The objectives of the IFRS Foundation are to

1. Develop a single set of high quality, understandable and enforceable global IFRS through the IASB

2. Promote the use and rigorous application of those standards

3. Take account of the financial reporting needs of emerging economies and SMEs.

4. Bring about convergence of national accounting standards and IFRSs to high quality solutions.

 

B. INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

International Accounting Standards Board (IASB) is responsible for all technical matters, preparation and insurance of IFRS and the approval of IFRIC proposals.

 Objectives of IASB

1.  To develop a single set of high quality, understandable and enforceable global accounting standards

2. To promote the use and rigorous application of those standards

3. To work actively with national standards setters to bring about convergence of national accounting standards and IFRS to high quality solutions.

 

C. INTERNATIONAL FINANCIAL REPORTING INTERPRETATION COUNCIL (IFRIC)

International Financial Reporting Interpretation Council (IFRIC) is responsible for the development of International Financial Reporting Interpretation Standards.

 The IFRS Interpretation Committee has two main responsibilities:

1. To review, on a timely basis, newly identified financial reporting issues not addressed in IFRSs.

2. To clarify issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop in the absence of authoritative guidance, with a view to reaching consensus on the appropriate treatment.

 

D. IFRS ADVISORY COUNCIL

The IFRS Advisory Council (formerly called the Standards Advisory Council [SAC]) is essentially a forum used by the IASB to consult with the outside world.

 It is responsible for

1. Input on IASB's Agenda

2. Input on IASB's project timetable and priorities

3. Supporting IASB in promotion of IFRS

 

THE ACCOUNTING STANDARD SETTING PROCESS

IFRSs are developed through a formal system of due process and broad international consultation.

New IFRS are developed by the IASB in accordance with a specific procedure known as due process.

 

Below is the Accounting Standard Setting Process: [SP. DESI]

1. Setting the agenda

2. Planning the project

3. Developing and publishing - Discussion Paper

4.                                              - Exposure draft

5.                                              - Standard

6. Procedures after a Standard is issued.

 

 REGULATORY FRAMEWORK FOR FINANCIAL REPORTING