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Fundamentals of international financial reporting (How regulation evolved,…
Fundamentals of international financial reporting
How regulation evolved
The simplest form of financial reporting has been around for 1,000's of years
Over time, financial reporting has mainly evolved in repose to economic evolution
Over the past decade there has been a big focus on designing common reporting standards for businesses so that company accounts are understandable and comparable across international boundaries
These common reporting standards have been designed by the International Financial Reporting Standards Foundation (IFRS).
The accounting conventions and standards set out in the IFRS Standards can be applied in organisations globally
See separate mind map
Why jurisdictions have different rules
Over the centuries different societies have built up different ways of working with the law, and this tends to impact on the way in which their financial reporting regulation has developed.
See separate mind map
IFRS Standards
International Accounting Standards Board (IASB)
Operates under the oversight of the IFRS Foundation
Established in 2001 to develop IFRS Standards
In 2002, European Union (EU) member states committed to requiring IFRS Standards for all listed corporations in their jurisdictions
Effective as of 2005
The first IFRS Standard was issued in 2003
By which time at least 19 countries required compliance with the international standards
As of 2016, most of the world’s capital markets now require IFRS Standards, or some form thereof, for financial statements of public-interest entities.
The remaining major capital markets without an IFRS Standards mandate are
USA
Japan
Voluntary adoption is allowed, and while there is a Japanese government agenda item to expand use of IFRS Standards in Japan, currently no mandatory transition date has been established
India
Announced in January 2015 its final roadmap requiring the use over the next several years of Indian accounting standards that are significantly converged with IFRS Standards
China
Intends to fully converge at some undefined future date
Can help imrpove the infromation via their
Quality
Comparibility
Transparency
Helps improve business through
Credibility
Credit opportunities
Investment opportunities
Simplifies reporting
See seperate mind map