International Financial Reporting Standards
The purpose of the standards of international accountancy IAS/IFRS ( International Accounting Standards/International Financial Standard Reporting or International standards of Financial information ) are to establish a countable corpus of standards of high-quality intended for the international large companies. These standards are worked out by IASB
They will require deep installations Informatique S, as well in the great groups as in SME. The countable change of reference frame that all the companies will know will transform the operation of the Financial markets, the Entreprise S and the economies, on the one hand, and the development of the accounts, on the other hand. Less mediatized in the general public than the passage to the Euro, this change with the international Norme S IAS /IFRS will however have much impact. The objective is indeed to restore the clearness of the Compte S of the companies, the Confiance of the investors on the stockmarkets, put at evil these five last years by scandals with repetition and the explosion of the debt of the companies. The work of the watchers will become simpler, faster and accessible to the neophyte.
Two new accounting policies are added:
- preeminence of economic on the legal one: the accounts must give a faithful image of the company and sound inheritance (thus, the Leasing returns to the active of the assessment)
- relative importance: information should appear in the appendix only if it can influence the future choices of the users.
Objective of the IFRS
After the accounting scandals of the beginning of the year 2000 in Europe and in the United States (Enron, WorldCom…), the public authorities attempted to reinforce the quality of the financial communication in order to restore the confidence of the public, of the savers and of the Investisseur S. This vast movement resulted in the adoption of a whole of texts whose common objective is the improvement of financial safety. The year 2005 thus saw the application of the standards IFRS ( International Financial Reporting Standards , named until in 2001 standards IAS for International Accounting Standards ) existing since 1973, intended for all the companies calling public upon the saving.
The adoption and the application of the international countable standards within the European Union are controls by payment (EC) 1606/2002 of July 19th 2002, which defines in particular the criteria of application of a Norme.
The European payment of July 19th, 2002, while imposing on the companies making public Call to the saving present their group accounts according to standards IFRS, mainly aims at guaranteeing better a countable Transparence. Indeed, the presentation of the accounts of these companies according to Norme S harmonized will facilitate of it the Compréhension and especially the comparison at the European level.
Principle of the IFRS
The accounting logic of the I.F.R.S. rests on some points (definitely divergent compared to the French countable right) in particular:
- the option of valorization to the right value of the credits and passive;
- primacy of the substance on the form;
- firstly bilancielle approach;
- principles privileging the vision of the investor;
- the principle of prudence subordinate to that of neutrality and relevance;
- the absence of texts specific to a branch of industry;
- least recognition of the accountancy of intention;
- the place which interpretation in the application of the standards occupies.
The financial statements and countable information are not in the same way defined in the international reference frame. these-last include/understand from now on the assessment, the income statement, the table of flow of treasury (optional in France), the appendix and “any other document useful for the comprehension of the accounts”. As for countable information, it must be:
“understandable” i.e that the reader of the states must be able to forge an opinion on the line of business with the simple reading of countable information;
- “relevant”: information must make it possible to the reader to make suitable economic decisions on the future of the company;
- “of relative importance”: countable information should be revealed only if and only if it brings elements useful for decision making. This threshold of significance (usual language of the financial listeners) depends on the judgment of the professional. For example, a fall of the economic activity of the perhaps important in volume but nonsignificant company compared to the sales turnover generated by the group;
- “reliable”: information is known as reliable as soon as it can be used without risk of error. Reliability rests on four basic principles: neutrality, legal appearance, the preeminence of economic reality on legal appearance and the respect of the faithful image.
Field of application of the IFRS
Standards IFRS apply in all the States which wish it. Nevertheless in 2007, the principal user of these standards remains the European Union since the payment THIS 1606/2002 of the U.E imposes on all the companies with dimensions publishing of the group accounts to establish financial statements as of on January 1st, 2005 in I.A.S./I.F.R.S. The application of the countable reference frame becomes obligatory then as of on January 1st, 2005 and on January 1st, 2007 for the companies having only marketable quoted securities others that actions. This adoption also could have domino effects because of many countries to the image of Arménie, of Egypt, or the Ukraine… use already (like the U.E.) entirely or partly the international reference frame. In France, the groups not - dimensioned also can, with the choice, to choose the standards or to preserve the French rules applicable to the group accounts (CRC99-02).
Calendar of the application of the IFRS
The passage to the I.A.S. was long and well defined and it was not done of only one blow. The companies had to respect the obligations appearing in standards I.F.R.S. by applying the following calendar:
- until 2004 the transmitters must communicate only in French standards;
- in 2005 they must prepare their group accounts according to standards I.F.R.S. but will publish them only in 2006;
- in 2006, the companies must obligatorily publish their financial statements to standards I.F.R.S.
- in 2007, the international reference frame is the reference frame automatically applying.
However, taking into account the obligation to present a comparative exercise in the same countable reference frame, the real date of transition to standards I.F.R.S. is on January 1st, 2004 which corresponds to the first day of the provided exercise as comparison.
Impacts of the IFRS
Many were the impacts of the IFRS on the companies. They vary especially according to the branch of industry. The finance companies were affected by the IAS 32 and the IAS 39 that the other companies for example.
Impact of the right value
Right value (I.A.S. 32) is it rising for which a credit could be exchanged, or an extinguished liability, between well informed parts, agreeing, and acting under conditions of normal competition. The right value represents the major impact for the finance companies but also for all the companies which have important financial participations. More than all the other standards, the IAS 32 and 39 breaks with the spirit of French accountancy in particular.
Five principal impacts of the right value:
- political impact
- called in question of the accounting policies basic and endangered of the prudential regulation on which is built the banking environment
- modification of the direction of certain concepts and the countable formalism
- creation or " légitimation" of concept of valorization resulting from private cabinets.
- modification of the behavior of the managers
Impact on the banks: modification of standards IAS 32 and 39
Standards 32 and 39 were not adapted to reality economic. The IAS 39 has even due being modified, and the discussions still continue on a point: In September 2003, the European commission adopted the international countable standards, except for standards 32 and 39 on the financial instruments. At the end of 2004, it adopts a bearing payment approval partial of standard 39. This one is coming into effect on January 1st, 2005, except - temporarily - parts concerning the accountancy of cover and the option right value. This adoption is accommodated with satisfaction by the finance companies because it gives an additional time to arrive to a standard adapted better to economic reality. In the state, standard 39 would have generated a strong volatility of the stockholders' equity and results, in particular in the field of the bank of detail. In June 2005, the IASB publishes the amendment to standard 39 for the part concerning the option right value. standard IAS 39 between then into force within the deadlines, but it is still partial, because the part macro cover is always under discussion. (to follow the advance of the file on fbf.fr
At less few weeks of the coming into effect of the Standard S IAS /IFRS, a company on two did not still start any building site. The adoption of standard EMS intended for SME will be carried out with means and long terms, under the impulse of the Banque S and the clients.
For this purpose, the adaptations of the Information system require the placement of tools Informatique S which allow the extraction of Donnée S more and often resulting from disparate Databases. Traditional countable flows do not comprise to date sufficient information to satisfy standards IFRS. The acquisition of these tools will have to be done with precaution to guarantee their compatibility with the existing systems and their evolutionarity at a rate of the countable standards which did not finish evolving/moving. It is not excluded that the To that the of existing leads the companies to completely call in question their information system and to re-examine the total architecture of it so as to privilege a harmonized overall project.
The placement of this sedentary shutter would be incomplete without a definition or precise redefinition of the procedures of access to the applications, plans of help, Archivage and protection of the personal Donnée S (see the function of CPD described in a precedent n° of LAUGHS).
On the contractual level, the definition of the reference frame of conformity, the respect of the deadlines or the coherence of the adaptations resulting from distinct sources will appear among the recurring concerns of the companies. Let us add that the fact that whole or part of the Information system is placed in Infogérance does not modify their obligation S. the Contrat of Infogérance will require in this case a grooming to integrate into it a clause of To that the adapted as well as a precise definition of the levels of safety and audit processes in conformity with the new normative texts.
The requirements of protected financial information will involve an important reorganization of the internal procedures of the companies and the correlative reinforcement of the safety of their information system. For those which call public upon the saving and which are installed in a Member State of the European Union, it is right now about a priority because of the European payment imposing starting from January 1st, 2005, to follow new the Référentiel in their group accounts.
List standards IFRS
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