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In the previous article, we dealt with the composition of IFRS financial statements, the requirements, differences from national standards, and presentation features. This article is dedicated to more detailed consideration composition of the complete set financial reporting, which includes:
According to paragraphs 44-48 of IAS (IAS) 1, regardless of the content of financial statements, disclosure of items or notes, it must contain definitions of the form of financial statements and each of its components. It should also contain information about:
The main component of financial statements is the balance sheet. The elements of the statement of financial position (balance sheet) include assets, liabilities, equity.
By IFRS balance can be composed in two ways:
The Statement of Financial Position must include line items that represent the following amounts (paragraph 54 of IAS 1 Presentation of Financial Statements):
The next form of IFRS financial statements is the profit and loss statement. This report reflects the income of the company and the costs that it made to receive it for reporting period.
It is the first of two parts of the Statement of Comprehensive Income.
Items in the income statement include:
IFRS provides for two forms of cost presentation: by nature of costs or by cost function (cost of sales method).
This report is only partially included in a set of IFRS financial statements. The statement of comprehensive income is a document that reflects the amount of profit and loss, as well as changes in other comprehensive income for a certain reporting period. Its preparation is also governed by IFRS 1.
The report consists of two sections:
Expenses are classified in the statement of comprehensive income according to their nature and function. In either option, profit and comprehensive income are allocated separately to the parent and separately to non-controlling shareholders. IAS 1 contains the minimum list of items of income and expense that must be recognized in the statement of comprehensive income. The enterprise is obliged to decipher these articles, if it is necessary for understanding financial results. IFRS allows the above information to be presented in one form, as well as in two documents: “Profit and Loss Statement” and a document with data on retained earnings / losses, as well as with lines of other comprehensive income.
Sample Statement of Comprehensive Income
| PJSC "LYE" Statement of comprehensive income for the year ended 31 December 2016 |
||
| (in rubles) | ||
| 2011 | 2010 | |
| Revenues from sales | 89 795 229 | 79 306 979 |
| Cost of sales | (42 115 606) | (34 161 877) |
| Gross profit(lesion) | 47 679 623 | 45 145 102 |
| Other income | 163 622 | 75 551 |
| Marketing expenses | (23 752 001) | (18 551 647) |
| Administrative expenses | (2 439 445) | (2 429 000) |
| other expenses | (10 709) | (551 231) |
| Profit (loss) from operating activities | 21 641 090 | 23 688 775 |
| financial income | 1 319 017 | 1 269 192 |
| Financial expenses | (788 173) | (712 991) |
| Net financial profit (loss) | 530 844 | 556 201 |
| Share of profit (loss) from investments accounted for using the equity method | 29 193 | (57 629) |
| Profit (loss) before taxes | 22 201 127 | 24 187 347 |
| income tax | (4 487 947) | (5 016 165) |
| Net income (loss) | 17 713 180 | 19 171 182 |
| Other comprehensive income | ||
| Exchange differences related to recalculation foreign operations in reporting currency | 268 023 | 62 340 |
| Total comprehensive income for the year | 17 981 203 | 19 233 522 |
The statement of changes in equity reflects the amount of each component of equity for reporting dates, as well as changing these components.
Statement of changes in equity structure comprises:
The entity must also present the amount of dividends recognized as distributions to owners during the period and the corresponding amount of dividends per share.
The document reflects the receipt and disposal Money, as well as their equivalents for the reporting period. The preparation and presentation of this report is governed by IAS 7. The report is required for submission by all entities.
Cash is money and bank deposits poste restante. Short-term highly liquid investments are cash equivalents.
In the report, cash flows are classified into three types of activities:
Cash flow from operating activities can be represented by the direct method and indirectly. The first option discloses the main types of cash receipts and cash payments. In the second, profit is adjusted for non-cash transactions. A report compiled by this method does not disclose information on the types of cash receipts and cash payments.
The notes to the cash flow statement disclose:
The notes to the financial statements are an integral part of them. They contain information that supplements the information on amounts disclosed in separate reporting forms. They also include a description accounting policy, significant estimated values and judgments, disclosures about equity and financial instruments with a repurchase obligation classified as equity.
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2017-01-16 34
International Financial Reporting Standards (IFRS) is a system of rules and explanations that determine the procedure for the formation of unified financial statements. IFRS allow companies to effectively conduct business in the international arena, as well as make the right economic and management decisions.
The reason for creating a unified reporting system is the active development of global economic relations and, as a result, the need for a universal financial “language of communication”. In the 70s of the last century, the International Accounting Standards Committee was established in the UK (since 2001 it was reorganized into the IFRS Council), whose members were organizations that are part of the International Federation of Accountants.
The fundamental difference between international standards and national ones lies in the prioritization: for IFRS, the economic content prevails over the form. The international reporting format does not contain primary documents, accounting registers, accounting entries and chart of accounts; it establishes only the principles for the formation of financial statements. While national standards, on the contrary, strictly regulate the technical side of accounting and documenting all accounting transactions.
They allow domestic companies to enter the international market and enlist the support of foreign partners. In addition, IFRS reporting allows banks to obtain reliable information about the borrower. For financial professionals, expert knowledge of international standards opens the door to serious career growth, up to the position of financial director or work in international companies.
Countries and companies using IFRS should take into account that these standards are advisory in nature and are based on the generalized accounting practice of the most developed accounting systems. Therefore, straightforward adherence to them may reflect badly on national accounting practices. For the transition to IFRS recognized and formulated in a separate document Principles of preparation and reporting. This document is not mandatory for use, and if standards contradict its provisions, then the latter are taken for use.
According to the Principles, “the purpose of financial reporting is to provide information about the financial position, results of operations and changes in the financial position of an entity. This information is needed by a wide range of users when making economic decisions.”
The general principles of international standards are divided into 2 groups:
International Standards are based on 2 main assumptions:
To use information at the international level, it must meet a number of qualitative characteristics:
The main body that develops international financial reporting standards is the Board of the IFRS Committee. The Board consists of 14 representatives. Of these, 12 work on a permanent basis. All representatives are subject to stringent requirements that they must meet. Among them, the following criteria can be noted: high qualification in the field accounting, commitment to the objectives of the IASB and its public purposes, high level orientation in the general economic environment and so on. Among the members of the Management Board, at least 3 specialists must be professionals in the field of audit, 3 - in the field of preparing financial statements, 3 - experienced users of financial statements. Work in the Committee is designed for 5 years, then all its members are re-elected.
The main functions of the Committee:
The International Accounting Standards Committee itself appeared thanks to the joint work of 10 countries (Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, Great Britain, Ireland and the USA) in 1973. The IASB is supported by contributions from professional associations of accountants and financiers, as well as by profits from the publication of standards.
Compilation of reports in accordance with international regulations enables Russian companies to enter the global capital market
In Russia and in the world for registration financial information, in addition to national accounting rules, legally defined organizations apply the norms of international standards - they prepare reports in accordance with IFRS. What it is? Let's consider in detail.
IFRS - international standards financial statements is a list of rules and explanations, guided by which large companies must draw up accounting information and make these indicators publicly available to third-party users.
Such reports are used in many countries of the world (more than 100 countries) by credit organizations (banks); Insurance companies; companies placing shares on national or international stock markets and others.
Documents governing IFRS consist of:
It regulates such indicators as: rent, revenue from contracts with buyers, valuation fair value, joint venture and others.
They regulate, among other things: stocks, cash flow statement (ODDS); construction contracts; income taxes and others.
The website of the Ministry of Finance of the Russian Federation contains the full version of all standards in Russian, explanations and study guides. Compiled in a consolidated manner. In Russia, more than 140 organizations prepare financial statements in accordance with IFRS, publish them on their websites or post information on the website about the place of publication of reports.
Why is IFRS reporting required? The need for uniform standards is due to the following factors:
For example, if the issue of choosing a credit institution for cooperation is being decided, then you need to analyze the results financial activities. So, for example, Sberbank, in its IFRS reports for the third quarter of 2016, showed a record growth net profit, which amounted to 110%, in physical terms it is 137 billion rubles.
Currently, relations in the field of providing financial data in accordance with IFRS are regulated by Law No. 208-FZ “On Consolidated Financial Statements”, adopted in Russia in 2010. The law applies to organizations:
In addition, a number of orders of the Ministry of Finance, a government decree and other documents have been issued.
Russian companies information on the results of financial activity is published in Russian, but the law does not prohibit posting data in foreign languages along with this. Annual (it is mandatory to conduct an audit) is drawn up no later than four months after the end of the year, intermediate no later than two months from the reporting period for which it was drawn up. Oversight function for provision and disclosure consolidated reporting performs Central bank Russian Federation.
The main difference between consolidated financial statements international rules from national accounting in that the first is aimed at investors, entering the international market, and the second is more needed for statistics and inspection bodies.
The preparation of such information requires accountants to constantly monitor legislative innovations and study existing standards. Moscow hosts annual conferences dedicated to the practice of applying IFRS. For example, on January 27, 2017, the seventh such conference will be held, prepared by the CFO portal jointly with the CFO Club.
According to official data, in 2015 the introduction of such regulations as special categories will become mandatory. The most common abbreviation for this concept is IFRS.
It makes sense to start with the question: "IFRS - what is it?". This concept stands for a set of specialized documents, or rather standards, through which the regulation of the procedure for creating financial statements that are freely available to external users is carried out.
First of all, there is a difference in the end users of information, which includes the relevant accounting indicators, grouped according to the above standards. In particular, the Russian model was aimed at organs government controlled and statistics, and international - on investors, enterprises and financial institutions. As a result, in the associated differences regarding interests and needs for financial information, there are also different principles on which the procedure for generating these reports is based.
So, binding rule IFRS favors the priority of content with regards to the form of presentation of previously specified information. Speaking of Russian system accounting, this moment is most often omitted.
A practical example would be a situation in which PBU is considered part of the capital of the enterprise, although with respect to their economic nature there are very few distinguishing features from bonds. In accordance with IFRS, these features are significant in order not to be reflected in equity.
In order to form an adequately perceived and understood by users of various countries, international standards were introduced. Their purpose is to unify the compilation of the complex of documents under consideration and provide data on the activities of a company.
It is worth highlighting the list of documents defining IFRS aimed at their unification with respect to the order of creation, namely:
Along with the above reports, enterprises can also generate certain reviews for the management team, which display the profit indicators of this company.
This accounting system looks like a specific set of documents, including the following elements:
Each of the above documents has its own significance, but is used exclusively in combination with other elements. Thus, from the list indicated earlier, it means that IFRS are standards, each of which has a specifically established structure.
They establish rules that determine the procedure for deciphering individual transactions performed in the course of the core activities of the enterprise and reflected in the financial statements.
It is important to note that the standards adopted by the relevant body before 2001 are referred to as International Accounting Standards or IAS for short, and then, since 2001, International Financial Reporting Standards, the abbreviation of which has such a spelling - IFRS.
The main IFRSs developed prior to 2001 include:
The list of standards of the accounting system under consideration, adopted since 2001, is as follows:
From official sources it became known about the readiness of the last volume of IFRS 2014, which has the name "Red Book". It contains the rules for international accounting, including those that will come into force after January 01 of the current year. An example is the included amendments to the ninth standard, called " Financial instruments adopted since 2001. There are also two sets of annual changes regarding IFRS 2011-2013 and IFRS 2010-2012, one interpretation on fees, the constitution of the IFRS Foundation, a detailed work plan.
In order to form a financial report that is correct by international standards, IFRS will be indispensable in helping.
It is worth highlighting a number of advantages of this accounting system, which may be associated with the activities of the following entities:
All of the above helps once again to get an answer to the question: "IFRS - what is it?"
The objectives of the reform include the following:
The importance of the transition is due to the fact that IFRS are standards that are a compromise between the main global accounting systems.
The IFRS financial statements in question can make it easier for companies to different countries access to world-class capital markets, and will also increase the comparability of information, make it more transparent for external users.
Specifically Russian enterprises will be able to speak the same language with their foreign counterparts and strengthen their business positions in foreign markets in terms of equality of their opportunities, as a result of which numerous prospects for international capital markets will become available.
The introduction of IFRS will have a positive impact on quality, in particular, on its improvement, and will also contribute to updating information systems and staff motivation.
In addition, attracting foreign capital without reporting prepared in accordance with IFRS is currently largely difficult. And it does not matter whether this will be done either with the help of Western banks, or by entering stock market located abroad, or by attracting private investment from abroad. Most likely, a potential foreign investor will not understand reporting prepared in accordance with PBU. Therefore, it is worth taking care of the formation of reporting regulated by IFRS.
Companies are aware of the fact that in the near future international standards will become national ones. For many firms, IFRS reports are required today to provide significant competitive advantage by attracting resources for such international markets borrowings like bonds, loans or IPOs.
Thus, all of the above helps to understand the question in more detail: "IFRS - what is it?"
IFRS 1 establishes uniform rules for the preparation of financial statements to ensure their comparability both with the data of previous periods and with the statements of other organizations. Consider the main provisions of this standard.
The statement of changes in equity includes information on changes for the period of all constituent parts this indicator, both normal for the period and those associated with retrospective data adjustments.
Rules for compiling important enough to assess trends in available cash flows A separate document is devoted to the cash flow statement: IFRS 7.
Special meaning IFRS 1 gives explanations to the reporting, which are recommended to be drawn up in the following order:
The standard under consideration establishes the fundamental rules for the preparation of publicly available financial statements prepared in accordance with the requirements of IFRS. Despite a fairly free approach to the forms of this reporting, there are a number of strict requirements for the data set that falls into it, and the need to detail them.
