Introduction To IFRS PDF

Introduction to IFRS
20 July 2011
Outline
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Overview of IFRS Nigerias Transition to IFRS
2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Overview of IFRS
What is IFRS
What is IFRS? IFRS is a globally-accepted set of accounting standards and interpretations established by the International Accounting Standards Board (IASB) and its interpretative bodies the International Financial Reporting Interpretations Committee (IFRIC) and Standing Interpretations Committee (SIC). IFRS are a set of investor-oriented standards and are more principles based rather than prescriptive (rule based) IFRS is mainly designed for, and used by, listed, 'for-profit companies IFRS does not provide as much detailed and prescriptive implementation guidance as other GAAP e.g., U.S GAAP. As a result, there are more instances when judgment must be exercised.
2011 KPMG Professional Services, a partnership registered in Nigeria and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Nigeria.
Composition of IFRSs IFRS comprise the following:

International Financial Reporting Standards (IFRS) (13 in issue) International Accounting Standards (IAS) (29 in issue) Interpretations originated from the International Financial Reporting Standards Interpretations Committee (IFRIC) (15 in issue) Standing Interpretations Committee (SIC) (11 in issue)
IFRS 10, 11, 12 & 13 are new
Current individual IASs will remain they will not be renamed IFRSs IAS 18 IFRS 18!!
2011 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
The appeal of IFRS Comprehensiveness Comparability Competitiveness Dynamic & Responsive
The appeal of IFRS Comprehensiveness

IFRS is robust, comprising of standards and interpretations where divergent practices have been noticed IFRS covers many areas where local GAAPs do not provide specific guidance e.g., Revenue, Share-based Payments IFRS literature includes Basis for Conclusions (BC), Application Guidance (AG), Illustrative Examples (IE), Implementation Guidance (IG), Dissenting Opinion (DO). The additional literature provide insights and transparency about the standards
The appeal of IFRS Comparability

no industry/ country specific standards e.g., SAS 10, SAS 15, SAS 16, SAS 25 same accounting principles across industries/ sectors increased transparency in financial reporting providing investors with comparable and sufficient information to enable them understand the risk profiles of entities and make informed judgements and decisions
The appeal of IFRS Competitiveness

improved comparability of financial statements with peers and competitors improved access to global capital market and investment
The appeal of IFRS Dynamic & Responsive

continuous review and evaluation of the relevance of each standard amendments issued in response to global financial crises consideration of expected loss model for impairment of financial instruments continuous annual improvement project issue of IFRS for SMEs
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The appeal of IFRS
Conversion to IFRS is however not without its `birth pains: Significant one-time costs of converting to IFRS Complexity of the new requirements
Increased use of judgments which, coupled with the prevalence of options permitted by the standards have led to concerns about consistency of application
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Current state of IFRS adoption

IFRS is used around the world IFRS is used in many countries around the world, including China, Hong Kong and Russia, most European countries under the jurisdiction of the EU.
Countries in Africa include Kenya, Zimbabwe, South Africa, Zambia, Malawi, Tanzania, Ghana and Sierra Leone.
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IFRS is fast becoming the globally accepted accounting framework

Widespread IFRS adoptions began in 2005, and the standards are now in use in more than 100 countries.
IFRS Adoption Map
Countries that require or permit IFRS or have fixed dates to implement
Countries seeking convergence with the IASB or pursuing adoption of IFRS
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IFRS vs. SAS: Key principles compared

IFRS
SAS
Strictly Principles based Measurement based on concepts like Fair valuation Amortised cost Net present value calculations Effective Interest rate calculations Current exit value (for insurance contracts) Impairment based on principles and methodologies that are consistently applied
A mixture of principles and rules Measurement largely based on historical cost
Impairment largely based on rules
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IFRS vs. SAS: a high level comparison of major statements

IFRS
Statement of accounting policies Notes to the accounts Balance sheet Profit and loss account or income statement Statement of other comprehensive income Statement of cash flows N/A N/A Statement of changes in equity Statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of its financial statements Profit and loss account or Income statement Statement of cash flows Value added statements Five-year Financial Summary N/A N/A
SAS
Statement of accounting policies Notes to the accounts Balance sheet
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Nigerias Transition to IFRS
Transition timetable
Reporting Date: Reporting Date: (Listed & Significant public entities) Transition Date: SMEs Reporting Date: Other PIEs 2014 2013 2012 2011
Transition adjustments Prepare IFRS Opening Statement of Financial Position (SFP) Dry Runs for Listed & SPEs Prepare comparative figures IFRS/Quarterly reporting by listed & SPEs Audit procedures Investor communications PIEs prepare opening SFP & comparative figs Dry Runs for PIEs SMEs commerce transition planning IFRS/Quarterly reporting by PIEs Audit procedures PIE Investor communications Compliance monitoring for Listed & SPEs SMEs Prepare opening SFP & comparative figs PIE/SME investor communications Dry Runs for SMEs IFRS reporting by Other SMEs Audit procedures Investor communications Compliance monitoring
SMEs
IFRS Competence
Transition Date: Listed & Significant Public Entities (SPEs)
Transition Date: Other public Interest entities (PIEs)
2010
Awareness Assessment Legislative changes Training Planning/Impact analysis Transition adjustments/Openin g Statement of Fin Pos
Alignment with other initiatives and training for appropriate personnel realisation and standardisation of statutory reporting
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Conclusion
" There are no secrets to success. It is the result of preparation, hard work, and learning from failure. "
Colin Powell
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Introduction to IFRS

Overview of IFRS Nigerias Transition to IFRS

Composition of IFRSs IFRS comprise the following:

The appeal of IFRS Comprehensiveness Comparability Competitiveness Dynamic & Responsive

The appeal of IFRS Comprehensiveness

The appeal of IFRS Comparability

The appeal of IFRS Competitiveness

The appeal of IFRS Dynamic & Responsive

The appeal of IFRS

Current state of IFRS adoption

IFRS is fast becoming the globally accepted accounting framework

Countries that require or permit IFRS or have fixed dates to implement

Countries seeking convergence with the IASB or pursuing adoption of IFRS

IFRS vs. SAS: Key principles compared

A mixture of principles and rules Measurement largely based on historical cost

Impairment largely based on rules

IFRS vs. SAS: a high level comparison of major statements

Nigerias Transition to IFRS

Transition Date: Listed & Significant Public Entities (SPEs)

Transition Date: Other public Interest entities (PIEs)

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