IFRS,International Financial Reporting Standards (IFRS),

                                                    What is  IFRS 

Sometime back, I was talking to one of my accountant friends who pointed me some recent changes in IFRS , and provided some link for awareness and to understand the impact in EBS suite. I am not going to put the details, rather will walk through some information that is good to have with ERP consultant who is dealing with Financial products.

What is IFRS?

IFRS, International Financial Reporting Standards (IFRS), together with International Accounting Standards (IAS), are a "principles-based " set of standards that establish broad rules rather than dictating specific accounting treatments. From 1973 to 2001, IAS was issued by the International Accounting Standards Committee (IASC). In April 2001 the International Accounting Standards Board (IASB) adopted all IAS and began developing new standards called IFRS.

IFRS are used in many parts of the world, including the European Union, Hong Kong, Australia, Russia, South Africa, Singapore and Pakistan. Nearly 100 countries currently require or permit the use of, or have a policy of convergence with, IFRSs. Here is list of countries that adopted IFRS.

What is meant IFRS for Oracle eBusiness consultant/ERP Consultant?

As we are quite aware GAAP which is so-called Generally Accepted Accounting Principles for Shareholder Reporting.The term is not drafted by a legislature.

and ,in term of Accounting Principles this can be best understood as:

IFRS = Financial Reporting standards = Balance Definitions < /FONT >

which internally means more in terms of "disclosure Requirements" and "Balance Definitions " for the finance controller.

IFRS - What it is for?

The Other things IFRS would do is:

• Providing bookkeeping rules rather many of us have the impression that they have some rule set for accounting
• It will do Shareholder Reporting, and this is important when :
  • A group of companies owned by a Public company
  • Not the individual companies
• It will also do external reporting
  • To your owners (investors, shareholders)
  • Through their stock markets
• Management Reporting
  • Maximize investors returns, measured only with IFRS
  • Segment Reporting disclosure

IFRS - What it is not for?

And more important it should be understood that IFRS is not meant for:

• Statutory Reporting
• Tax Reporting
• Regulatory reporting
• Subsidiary reporting

IFRS – How new is it?

• IASB has been around since 1980’s
• IAS/IFRS pretty much converged with the Americans
• If your ERP supports US GAAP, it supports IAS/IFRS
• Key premises (recognition, measurement):
  • Mark to Market when possible
  • The reality of the Balance Sheet – real assets, real liabilities
  • Income Statement analyses the change in wealth
  • Deep Disclosure: owners right to know

US GAAP vs. IFRS - A difference

While looking to some more information on internet ,I discovered a nice article from the site of Fulcrum Inquiry who pointed out the key differences(adopted) between the two standards in there one of the article .

Don’t worry about your ERP Side

• Maybe requires some reconfiguration, maybe requires some data analysis
• We have noticed there is some big change in R12 AR to meet revenue recognition, R12 is partially on track for IFRS fitness in the suite.
• The new R12 Global Architecture introduced the concept of ledgers which has the capability of providing differing accounting representations; one ledger for example could conform to IFRS, another to local GAAP.
• From the Currency area, we have already noticed some big changes like:
  • Balance level Translation or Remeasurement in Ledgers – within Ledger sets, run at one click
  • Balance & Activity level Translation or Remeasurement in Financial Consolidation Hub
  • Another is enhanced Revaluation [Functional Currency term dropped: conflicts with IAS 21 / FAS 52]