Introduction To IFRS: Accounting

Introduction to IFRS
What do you expect from this introductory training?
Accounting is the information system

that:
 Measures business activities
 Processes the information into reports
 communicates the results to decision
makers
Decision Makers: The Users of
Accounting Information
Financial accounting provides
information for external decision makers,
such as:
 Investors who own a portion of the
business
 Creditors to whom the business owes
money
 Taxing authorities, to whom the
business owes taxes
Managerial accounting provides
information to internal decision makers.
Input
Economic
Activities
Process
Accounting
Output
Financial
Information
Types of Accounting Information

Financial
Managerial
Tax
What Are the Organizations and
Rules That Govern Accounting?
International Financial Reporting
Standards (IFRS)
 Principles-based standards
 Used or required by more than 130 nations
 Published by the IFRSB (IASB)
Why IFRS?
Investors are acting on a global
market!!
National standards don’t work on a
global market
Cross boarder business is hindered by
national standards
10
Benefits of IFRS
Reliability of local market to foreign
investors
More cross-border investment
Comparability across political
boundaries
Facilitates global education and
training
Facilitates raising capital abroad
Better understanding of financial
statements from business partners
abroad
12
Adoption
International support to have global
accounting standards
G20
WB
IMF
Basel Committee,
International Organization of
Securities Commissions
International Federation of
Accountants
 Financial Reporting
Proclamation
847/2014
• Art 5 Applicable Financial
Reporting Standards:
1 The financial reporting standards to be used
when preparing financial statements shall be:
(a) International financial reporting
standards, or
(b) International financial reporting standards for
small and medium enterprises,
(c) International public sector accounting
standards applicable to charities and societies
Adoption of IFRS
Phase 1: Significant Public Interest
Entities – Financial Institutions and
public enterprises owned by Federal or
Regional Governments
July 8, 2016 is recommended as the
date for adoption of IFRS for all
financial institutions and large public
enterprises.
Phase 2: Other Public Interest
Entities (ECX member companies and
reporting entities that meet
PIE) and Charities and Societies
required to issue IFRS and IPSAs based
financial statements respectively for the
year ending July 7, 2018.
Phase 3: Small and Medium-sized
Entities
IFRS for SMEs shall mandatorily be
adopted as at July 8,
2018.
This means that all Small and
Medium-sized Entities in
Ethiopia will be required to issue IFRS
based financial statements for the year
ending July 7, 2019.
Overview of IFRS
Its mission is to develop International
Financial Reporting Standards (IFRSs)
that bring financial markets around the
world:
 Transparency
 Accountability
 Efficiency
They work to achieve this goal through
a standard setting body, the International
Accounting Standards
Board (IASB).
Overview of IFRS
The IASB has 14 full-time members.
Meetings of the IASB are held in public and
by webcast.
IASB engages with stakeholders around the
world, including:
 Investors
 Analysts
 Regulators
 Business leaders
 accounting standard-setters
 Accountancy profession
Overview of IFRS
In determining standards, the board’s
members understand:
 Diversity of businesses and cultures.
 Economic conditions.
 Political and legal structures.
 Infrastructures around the world.
What is IFRS?
IFRS is a globally recognized set of standards
for the preparation of financial statements by
business entities.
IFRS Standards prescribe:
• The items that should be recognized as assets,
liabilities, income and expense;
• How to measure those items;
• How to present them in a set of financial
statements; and
• Related disclosures about those items.
International Financial Reporting

Standards
IFRS 1: First-time Adoption of
International Financial
Reporting Standards
IFRS 2: Share-based Payment
IFRS 3: Business Combinations
IFRS 4: Insurance Contracts (will be
superseded by IFRS
17 as of 1 January 2021)
IFRS 5: Non-current Assets Held for
Sale and Discontinued Operations
IFRS 6: Exploration for and Evaluation
of Mineral Resources
IFRS 7: Financial Instruments:
Disclosures
IFRS 8: Operating Segments
IFRS 9: Financial Instruments (is
replaced IAS 39 as of 1 January 2018)
IFRS 10: Consolidated Financial
Statements
IFRS 11: Joint Arrangements
IFRS 12: Disclosure of Interests in
Other Entities
IFRS 13: Fair Value Measurement
IFRS 14: Regulatory Deferral Accounts
IFRS 15: Revenue from Contracts with
Customers (is replaced IAS 11 and IAS 18
as of 1 January 2018)
IFRS 16: Leases (replaces IAS 17 as of
January 1, 2019)
IFRS - Summary
 IFRS 1 First-time Adoption of
International Financial Reporting Standards
 IFRS 2 Share-based Payment
 IFRS 3 Business Combinations
 IFRS 4 Insurance Contracts
 IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations
 IFRS 6 Exploration for and Evaluation of
Mineral Resources
 IFRS 7 Financial Instruments: Disclosures
 IFRS 8 Operating Segments
 IFRS 9 Financial Instruments
 IFRS 10 Consolidated Financial Statements
 IFRS 11 Joint Arrangements
 IFRS 12 Disclosure of Interests in Other
Entities
 IFRS 13 Fair Value Measurement
 IFRS 14 Regulatory Deferral Accounts
 IFRS 15 Revenue from Contracts with
Customers
 IFRS 16 Leases
 IFRS 17 Insurance contracts
IAS - Summary
 IAS 1 Presentation of Financial
Statements
 IAS 2 Inventories
IAS 7 Statement of Cash Flows
 IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
 IAS 10 Events after the Reporting Period
 IAS 12 Income Taxes
 IAS 16 Property, Plant and Equipment
 IAS 19 Employee Benefits
 IAS 20 Accounting for Government Grants
and Disclosure
 IAS 21 the Effects of Changes in Foreign
Exchange Rates
 IAS 23 Borrowing Costs
 IAS 24 Related Party Disclosures
 IAS 26 Accounting and Reporting by
Retirement Benefit
Plans
 IAS 27 Separate Financial Statements
 IAS 28 Investments in Associates and Joint
Ventures
 IAS 29 Financial Reporting in
Hyperinflationary Economies
 IAS 32 Financial Instruments: Presentation
 IAS 33 Earnings per Share
 IAS 34 Interim Financial Reporting
 IAS 36 Impairment of Assets
 IAS 37 Provisions, Contingent Liabilities
and Contingent
Assets
 IAS 38 Intangible Assets
 IAS 39 Financial Instruments: Recognition
and Measurement
 IAS 40 Investment Property
 IAS 41 Agriculture

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Introduction To IFRS: Accounting

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Introduction to IFRS

What do you expect from this introductory training?

Accounting is the information system

Types of Accounting Information

International Financial Reporting

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