International Financial Reporting Standards and Accounting Standards

Topics: International Financial Reporting Standards, International Accounting Standards Board, Financial statements Pages: 6 (2123 words) Published: December 10, 2012
The International Financial Reporting Standards (IFRS) are an attempt to harmonise accounting practices on a global scale, with the ultimate aim of making it easier for companies to assess potential cross-border activities. Promoted by the International Accounting Standards Board (IASB), the IFRS are principles-based standards designed to increase accounting transparency and interoperability from country to country. The development of IFRS includes both the standards issued by the current International Accounting Standards Board (IASB) as the former international standards (IAS) issued by the predecessor entity (IASC). The IASB is developing SME standards by extracting the fundamental concepts from the IASB Framework and the principles and related mandatory guidance from IFRS’s (IASB, 2004b, and p.3). The IASB argues that it is better to have a single set of accounting standards for SME’s based on IFRS’s developed by the IASB rather than many different sets developed by individual countries (Price Waterhouse Coopers, 2005, p.12). This is more of an issue for developing economies like Fiji where predominantly entities are ‘small and medium’ in size. The primary objective of this study is to identify ways in which countries can distinguish between large entities and SMEs. Fiji has already adopted the IFRSs and has illustrated how it is faced with further complications by the issuance of SME IFRSs. Identification on the ways in which Fiji could embrace both the IFRSs and SME IFRSs together is being. The Fiji Institute of Accountants (FIA)] decided to develop a set of accounting standards that would be subject to quinquennial updating to benchmarks set by the IASB. At that time it was expected that this would require a considerable but not huge effort to move from the existing set of Fiji Accounting Standards to a new set. With the task being undertaken fairly infrequently, it was expected that the FIA would not be forever preoccupied with the need to update their practices. Users and producers of financial reports would have time to obtain and apply an authoritative understanding of the regulatory framework which governs financial reporting. Since adopting the IFRSs in 2002, the FIA has been most diligent in conducting professional education sessions on the new and refined standards produced by the IASB, particularly on those accounting standards, which pose the greatest challenges in application to the FIA members. With the adoption of IFRS the IASB has made numerous changes to its IASs and issued new IFRSs since establishing its ‘stable platform’ of standards in 2004. The Fiji Accounting Standards (FASs) almost matched their international equivalents at the beginning of 2002. However, by the end of 2006, this can only be said of IAS 26 equivalent of FAS 26 Accounting for Retirement Funds, a standard that applies to only one operating entity in Fiji. Additionally, FAS 26 only have a guidance status. The FIA draws back from the updating exercise in part owing to the sheer enormity of the task. The rate of change in regulation internationally can discourage continuing professional education (CPE) locally with respect to keeping abreast with accounting regulation. There are reservations over the direction in which change is taking. Even though according to the IASB Conceptual Framework (1989), financial reports are to be prepared for a variety of users. The IFRS’s are more inclined towards providing accounting information to the investors, rather than to other stakeholders. As of for the Adoption of IFRS the Fiji Institute of Accountants (FIA) and the Capital Market Development Authority (CMDA)expects all those companies listed on the Fiji Stock exchange to follow either the full version of IFRS or the ‘half version’ of IFRS been used by small medium enterprises (SME’s). SMEs are not merely smaller versions of large businesses (Wortman, 1987; Keats and Bracker, 1988; Ratnatunga and Romano, 1997; Cassar and Holmes, 2003; Altman...
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