tugas riset akuntansi tentang IFRS

Navigate the 2010 IFRS Certificate Program International Financial Reporting Standards Three Reasons Why You MUST Know IFRS : 1) IFRS is Approaching Companies will need to invest in staff training and implementation to support the transition. By becoming your organization’s IFRS expert, you will be well positioned as a leader in ensuring a smooth transition. 2) IFRS is Costly Education plays a vital role in controlling costs. Demand will grow for professionals with IFRS certification who can apply their knowledge more efficiently and effectively than those who are not certified. 3) IFRS is the Future Your ability to advance in your career depends on how well you identify and seize opportunities. Learning this new global reporting language will make you more valuable to your employer and more marketable to clients. SEC Leadership In International Effort The U.S. Securities and Exchange Commission has for many years been a strong leader in international efforts to develop a core set of accounting standards that could serve as a framework for financial reporting in cross-border offerings. It has repeatedly made the case that issuers wishing to raise capital in more than one country are faced with the increased compliance costs and inefficiencies of preparing multiple sets of financial statements to comply with different jurisdictional accounting requirements. In 2000, the International Organization of Securities Commissions (IOSCO), in which the SEC plays a leading role, recommended that its members allow multinational issuers to use 30 “core” standards issued by the IASB’s predecessor body in cross-border offerings and listings. A few years later, the SEC announced its support of a memorandum of understanding — the Norwalk Agreement — between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board. This agreement, concluded in Norwalk, Connecticut, established a joint commitment to develop compatible accounting standards that could be used for both domestic and cross-border financial reporting. In a subsequent memorandum of understanding, the FASB and the IASB agreed that a common set of high quality, global standards remained their long-term strategic priority and established a plan to align the financial reporting of U.S. issuers under U.S. GAAP with that of companies using IFRS. Between 2005 and 2006, the number of foreign private issuers filing with the SEC using IFRS jumped from a handful to 110, and the SEC expects the number to continue to increase. In February 2006, SEC Chairman Christopher Cox reaffirmed the SEC’s commitment to achieving one set of high quality, globally accepted accounting standards and opened the possibility that U.S. financial statements could be prepared using IFRS or U.S. GAAP. 3 ways in which IFRS is a change for the better The basic concepts underlying preparation of financial statements will undergo significant change upon implementation of International Financial Reporting Standards (IFRS) in India. There are three key aspects that run through each principle laid down in IFRS: substance over form, use of fair value, and recognizing time value or time cost of money. These three items need to be understood carefully. Indian GAAP (generally accepted accounting principles), like any other GAAP, also recognizes the importance of substance over form. Accounting Standard 1 (AS-1) on “Disclosure of Accounting Policies” states that substance rather than form should be the guiding principle in selection and application of accounting policies. However, the true application of this principle will happen only under IFRS. That’s because IFRS is more contemporary and has prescribed the treatment for evolving issues. Also, unlike Indian GAAP, it does not recognize the concept of a legal override. Thus, IFRS will always go by the core substance of the transaction. That will mean several changes. For instance, under Indian GAAP, redeemable preference capital (shares that do not come with voting rights but which have a higher priority over ordinary shares in terms of dividend payments, and which can be redeemed at the discretion of the issuer or shareholder) has to be treated as equity. IFRS, however, will require it to be treated as debt. Based on substance of terms, instruments such as convertible debentures are likely to be shown partly under debt and partly under equity, since the embedded warrant option in such instruments will be separately identified and presented at its fair value. Contracts for supply of goods and services may get concluded (wholly or partly) as leases (and it could be financial lease as well)! IFRS will bring with it the concept of functional currency. Indian entities may need to maintain their books in US dollars and report in the same currency to the National Stock Exchange and the Bombay Stock Exchange if the dollar is determined to be the currency for the primary economic environment in which it is operating, subject to regulatory approvals. In rare circumstances, IFRS even allows users to adopt a policy contrary to IFRS principles if the management believes the treatment prescribed under IFRS would be misleading and the policy proposed to be adopted better represents the substance of the underlying transactions. These concepts are unheard of in most other GAAP frameworks. The use of fair value in measuring assets and liabilities will increase considerably upon adoption of IFRS, which mandates the use of fair value in measurement of financial instruments, employee compensation, share-based payments, and assets and liabilities acquired in a business combination, to name a few. It will allow use of fair value, as opposed to cost, in relation to property, plant and equipment, intangible assets and investment properties. The application of these fair value principles would require a company’s management to use considerable judgment in making estimates about the future, and the role of valuation experts in the preparation of financial statements would increase significantly. Thus, IFRS will be far more complex and challenging in its application compared with the existing regime of accounting standards. In the case of derivatives, held-for-trading investments and investment properties, IFRS allows gains or losses on fair valuation to be recognized in profit or loss accounts for the period. Undoubtedly, this is quite a bold move to allow even unrealized gains to be captured in profit or loss accounts. In such a situation, there will be extra onus on the management to exercise better financial discipline; otherwise, the company may end up declaring dividends out of unrealized profits. IFRS recognizes that value of money changes with time. It will either be a cost or income, but there is a difference in Rs100 of today and Rs100 two years back or three years later. Hence, IFRS requires receivables and payables, that is, financial assets and liabilities or monetary items to be reflected at current value. Thus, the value of Rs100 payable in three months will be different from Rs100 payable after 36 months. Consequent to these aspects, IFRS will focus on reflecting the working results and state of affairs of a business more on a current state basis rather than on a holistic long-term or historical cost basis. It will not place undue premium on prudence but push for recording of market gains and reflection of market-related realities over the reporting period. IFRS will allow flexibility in choosing the right accounting policy, but will also lead to enhanced disclosure requirements. Therefore, estimation efforts, subjectivity and judgment will increase manifold in preparing IFRS financial statements. And timelines and costs will also go up accordingly. That said, the benefits of IFRS are expected to far outweigh the costs and hassles. It will integrate domestic businesses with the global investor and financial community so that there is no language gap and barrier. It will enhance the global competitiveness of Indian businesses as well as finance professionals. And IFRS-literate people will fuel the next wave of the knowledge processing outsourcing boom. The impact of IFRS on corporate governance IFRS requires valuations and future forecasts, which will involve use of estimates, assumptions and management’s judgements Come 2011, and audit committees and board members of Indian companies will have to deal with convergence of Indian GAAP (generally accepted accounting principles) with International Financial Reporting Standards (IFRS), which will have a key impact on their functioning, roles and responsibilities. The audit committees and board members will have to handle this challenge in an effective manner. One of the basic features of IFRS is that it is a principle-based standard, unlike US GAAP, which is rule based. IFRS involves extensive use of judgement in selection of appropriate accounting policies and alternative treatments, including at the time of adoption. Also, IFRS requires valuations and future forecasts, which will involve use of estimates, assumptions and management’s judgements. It has been observed that the combination of all these factors can have a significant impact on the reported earnings and financial position of an enterprise. So far, audit committees and board of directors largely had an oversight role on accounting matters. With IFRS, this role is set to get enhanced considerably. Therefore, in the next two years, audit committees and boards in India will have to specifically focus on how well companies are geared for the transition to IFRS. The members responsible for governance will have to spend considerable time in ensuring appropriate convergence of Indian GAAP with IFRS. They must be aware of the options available under IFRS, the choices made and the reasons for making these choices. Further, they must understand the impact of convergence on significant accounting matters and their likely effect on financial statements. IFRS will not merely be a technical accounting conversion. Convergence will impact most business aspects, including structuring of contracts with customers and vendors, performance appraisal parameters and reward plans, and managing external investor relations and communication. Therefore, it will be imperative for governing members to have a detailed knowledge of the impact of IFRS on a company’s business. How will it impact business processes, including the IT system? Is the core team leading the IFRS conversion process adequately trained or not? How will the company communicate the impact of IFRS to its investors and lenders? Will this result in any tax or regulatory issues? It will be most critical for boards to monitor the quality and robustness of the conversion process and the road map to IFRS. Essentially, IFRS will be a significant change that will need to be managed properly. Under IFRS, prior years’ errors and omissions will have to be effected through restatement of previously declared results, which will be a critical change from prevailing practices in India. With IFRS, the complexities involved in preparing financial statements will increase manifold, thereby increasing the risk of errors and omissions. There is a strong likelihood that Indian companies will start restating accounts soon, much like their peers in the US do. As many as 1,538 restatements were filed in 2006 by US companies. Usually, investors and regulators look at any restatement negatively, so audit committees and board members will need to manage and address this risk effectively. Moreover, restatements may be viewed with suspicion by tax authorities in India, who may not be able to understand the changes emanating from convergence with the IFRS reporting framework. A survey of audit committees and board members of at least 176 US corporations carried out by Ernst & Young in 2006 disclosed some interesting facts. Only 25% of the respondents indicated that they have a formal plan for dealing with financial errors and irregularities, and merely 40% had a formal continuing education process, with the time spent annually being around 10 hours for most members. The state of preparedness in India is unlikely to be any better, but with IFRS kicking in, all of this needs attention and needs to change. Board members will have to be prepared to commit significant time and resources to deal with business and accounting issues arising out of convergence with IFRS. The biggest challenge for members charged with governance will be to manage stakeholder expectations in terms of meeting targets and key performance indicators, declaring dividends and explaining variations and volatility in earnings on a quarterly basis. This is a challenging task even now, but with the arrival of IFRS, the challenge is set to assume a different dimension. Audit committees and board members should start preparing for this challenge now.