International Financial Reporting Standards (IFRS) are a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements. The goal of IFRS is to provide a global framework for how public companies prepare and disclose their financial statements. IFRS provides general guidance for the preparation of financial statements, rather than setting rules for industry-specific reporting. Having an international standard is especially important for large companies that have subsidiaries in different countries. Adopting a single set of world-wide standards will simplify accounting procedures by allowing a company to use one reporting language throughout. A single standard will also provide investors and auditors with a cohesive view of finances. (source: http://searchsecurity.techtarget.co.uk/definition/IFRS-International-Financial-Reporting-Standards) The Accounting and Auditing Standards Committee (AASC) sets the Fiji Accounting Standards (FAS) and established the first broad set of standards in 1971 and continued setting these standards until 1998 based on International Accounting Standards (IAS) and the Australian and New Zealand accounting standards. In January 1999, the Institute’s Council decided to base the new Fijian Accounting and Auditing Standards on IAS’s and ISA’s. The comparative review process of IAS and FAS was completed “between” 1999 to 2001. (Reid, 2002, P56) In 2001, the Fiji Institute of Accountants (FIA) Council approved the adoption of a new set of FAS’s. It had been intended that the new FASs would be effective for reporting periods beginning on or after 1 January 2001. However, in the face of events—including printing delays- implementation was deferred until 1 July 2001. Furthermore, although some standards do not come into effect until 1 January 2005, FIA encourages their earlier adoption. The AASC intends to realign FASs with IASs every three years. (Reid, 2002, P57) The Fiji Institute of Accountants in 2002 adopted the IASs and the IFRSs which led to the modification of some of the previous standards and the introduction of additional accounting standards. From 1 July 2002 the Fiji Institute of Accountants is applying all extant IFRSs numbered 1–34 with the exception of IFRS 12 i.e. Stage IV of the adoption process (Parmod Chand, 2005, P4). Moreover, although some standards would not come into effect until 1 January 2006, FIA encouraged their earlier adoption. The AASC intends to realign FASs with IFRSs every five years. The relevant IFRSs are adopted either outright or with a few minor modifications to be in line with the other regulations, such as the company law. The IFRSs that are not mandated are issued as guidance standards—Fiji Guidance Standards. One of the most important aspects by adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide. Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. Companies may also benefit by using IFRS if they wish to raise capital abroad. The adoption of the IFRSs will immediately make accountability in Fiji recognized to an international benchmark. If the institute has to develop its own standards then it will have trouble making these standards compatible and acceptable internationally. So that is one of the major aspects of the alignment towards the IFRSs. As a profession, [the FIA] has a statutory responsibility under the Act to maintain certain professional standards. (Source: http://benefitof.net/benefits-of-ifrs/)
To attract international investment Fiji has to look seriously at the standards it follows,...
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