IFRS Standards Research Articles

Evaluation of possibilities and risks in keeping bitcoins in the EU accounting records

Research background: Cryptocurrencies are a specific form of currency that has emerged with the rise of globalization and the Internet. At present, there are still no necessary guidelines to enable bitcoin to be accounted for uniformly, not even within the framework of the international accounting standards IFRS. Purpose of the article: That is to evaluate the possibilities of correct procedure in accounting for bitcoin according to applicable accounting regulations with identification of deficiencies and risks and overall impact on profit and loss statements and tax issues in reporting bitcoin, especially in income taxes and VAT. Methods: The evaluation will be performed using model examples that focus on the use of bitcoin in business. Four model examples: 1. bitcoin as a means of payment, 2. bitcoin extraction, 3. bitcoin speculation, 4. evaluation of bitcoin billing when paying salaries. For individual variants, income tax will be calculated according to valid regulations and any difference will be compared. Based on the synthesis of the obtained results of model examples, the reporting of bitcoin according to Czech accounting standards will be evaluated with subsequent recommendations for accounting entities and pointing out possible risks for reporting. Findings & Value added: If an entity wishes to use bitcoin in the course of its business, it may be advised to create appropriate analytical accounts or off-balance sheet records. This issue should be discussed and addressed in the legislation. This is a global issue, so it is necessary to pay sufficient attention to the uniform approach in accounting.

Earnings management and derivatives reporting: evidence from the adoption of IFRS standards in Europe

ABSTRACT Although the new IFRS standards are considered an improvement for financial transparency, derivatives reporting remains subject to criticism by professional observers due to its complexity. Indeed, derivatives reporting could easily be used for earnings management. In this article, we analyse half a dozen earnings management proxies before and after the mandatory adoption of a battery of IFRS standards in 2013 and 2014 by European firms. Among others, IFRS 13 and IFRS 11 featured impactful requirements for the financial reporting of listed companies. Our results show that following the adoption of these standards, earnings management has faded except for firms using derivatives. These results suggest that the 2013–2014 IFRS standards package has improved the accounting quality of European-listed firms but that the flexibility and lack of guidance in the new standards regarding derivatives reporting are used by managers to manage earnings.

Accounting for Intangible Assets: Suggested Solutions

Current accounting practice expenses many investments in intangible assets to the income statement, confusing earnings from current revenues with investments to gain future revenues. This has led to increasing calls to book those investments to the balance sheet. Drawing on the relevant research, this paper proposes solutions for the accounting for intangible assets that contrast with balance sheet recognition, and compares them to current practice and the IFRS standards that dictate practice. Key is the recognition that an accounting solution comes from a double-entry system which produces an income statement as well as a balance sheet, and that has features that both enable and limit the information that can be conveyed about the value in intangible assets. In this system, asset recognition in the balance sheet must consider the effect on measurement in the income statement, for the income statement conveys value added to investment on the balance sheet. A determining feature is uncertainty about investment outcome and how that affects the income statement, so our solutions centre on accounting under uncertainty. Two other accounting features are added: There has to be an investment expenditure for balance sheet recognition and that expenditure must be separately identifiable from transactions. These features rather than the tangible-intangible asset dichotomy lead to the prescribed solutions.

Comparison of FFR with iFR and QFR in assessment of intermediate coronary artery disease in patients with severe aortic stenosis

Abstract Background The functional assessment of coronary artery disease (CAD) in patients with severe aortic stenosis (AS) has been barely examined so far, and the best strategy to physiologically investigate the relevance of coronary stenosis in this specific setting of patients remains undetermined. The aim of the study is to compare the diagnostic performance of instantaneous wave-free ratio (iFR), quantitative flow ratio (QFR) and fractional flow reserve (FFR) in patients with severe AS. Methods The functional significance of 416 coronary lesions was investigated with iFR, FFR and QFR measurements in 221 AS patients. The iFR-FFR and QFR-FFR diagnostic agreement has been tested using the conventional 0.80 FFR cut-off. Results Mean value of FFR was 0.85±0.07; iFR – 0.90±0.04; QFR – 0.84±0.07. The correlation between iFR and FFR was good (r=0.83, p<0.001) and QFR and FFR was goot too (r=0.77, p<0.001), as well as the area under the curve at ROC curve analysis 0,995 (0,983 to 0,999, p<0.001) for iFR and 0,988 (0,972 to 0,996, p<0.001) for QFR. However, using the standard iFR 0.89 and QFR 0.8 threshold, the diagnostic accuracy of iFR was 100% sensitivity and 90.26% specificity and for QFR – 100% and 92.21%, respectively. According to ROC analysis, the best iFR cut-off in predicting FFR ≤0.8 was 0.88 (J=0.94), the best QFR cut-off value was 0.80 (J=0.92). Conclusions In the presence of severe AS, iFR and QFR had good agreement with FFR values for assessment of borderline coronary lesions. However, iFR threshold for predicting FFR below 0.8 may be different from a standard value of 0.89. Funding Acknowledgement Type of funding source: Public grant(s) – National budget only. Main funding source(s): National Science Centre

TFRS 15 Müşteri Sözleşmelerinden Hasılat Standardının Otel İşletmeleri Açısından Değerlendirilmesi (Evaluation of IFRS 15 Revenue Standard From Contracts with Customers in Terms of Hotel Operations)

Purpose – With this study, the revenue items of hotel enterprises are discussed with Turkey Financial Reporting Standards IFRS 15 .Because, Revenue is one of the factors in evaluating the performance of the company as well as the hotel companies. TRFS 15, The Concept of Revenue from Customer Contracts requires a five-stage performance process. In this study, the transfer of each performance process to the accounting records has been realized in accordance with the principles of TFRS 15.M Design/methodology/approach – In this study, income items of hotel establishments are classified into three categories as room, food and beverage and other income. According to these classifications room and food and beverage revenues, which are the items with the highest income from a hotel business, are accounted with examples for in accordance with TFRS 15 Revenue from Contracts with Customers. The study also contains accounting records made without taking into account TFRS 15 and the accounts also both records are compared. Findings – The current TFRS 15 Revenue standards from the Customer Agreements are used for the correct transfer of the income obtained from the ordinary operations of the hotel businesses to the financial statements needs to be considered. Accounting records must be followed before arrival, after the stay and after departure of the guest/guests and the transfer of income to the financial statements should only be realized after the performance of the goods and services especially after the guest / guests have left the hotel. Discussion – It is seen that income records are not kept in line with TFRS 15 principles within the scopeof five performance obligations in hotel businesses, reflecting the unearned income to the business records and this may cause false information transfer to financial circles,especially to business stakeholders.

Inventories Accounting under US-GAAP and IFRS Standards: The Differences That Hinder the Full Convergence

This study purposes of understanding the existing differences between US-GAAP and IFRS accounting treatments of inventory. Given the 2015 FASB update, aimed at simplifying and aligning inventory accounting with IFRS standards, the research explores the introduced innovations. More specifically, the study, starting from a literature review and standards analysis, designs a theoretical framework aimed at facilitating the understanding of the differences still existing between the two accounting principles. Different from the prior works, we focus on the complex determination of the net realizable value in the case of input (e.g., raw materials) write-down. In particular, we show how the net realizable value (NRV) changes according to the value taken as a reference. The results of this analysis suggest that, based on a prudential valuation logic, the replacement cost is the best estimate for NRV.

Lease: Problematic Aspects of Accounting and Reporting Information Formation

In the light of the recently adopted new Russian and international standards in accounting and tax accounting, significant changes in the regulation of lease accounting have been made. Unfortunately, the newly adopted rules are not always ideal in terms of their practical application. The article is devoted to a critical analysis of the regulations of the international standard IFRS (IFRS) 16 “Lease” and the Russian standard FSBU25/2018 “Lease Accounting.” The methodological basis of the study includes a critical analysis of the new requirements for accounting for lease transactions in the systems of Russian and international standards in terms of their validity, logic and completeness. The result of the study is the justification of the presence of both positive and problematic aspects in the innovations introduced in the regulation of accounting for leases in IFRS16 and in the Russian standard FSBU25/2018. Recommendations have been made to address the problematic issues of lease accounting and reporting information. The theoretical and practical significance of the study lies in the possibility of using its results in the preparation of new and improved existing accounting regulations in the process of its further development at the national and international levels.

Federal accounting standard for public finance “Intangible assets”: compliance with current legislation and IFRS OS

Starting from January 1, 2021, the Federal accounting standard for public finances “Intangible assets” is being introduced. The article focuses on the use of new approaches by public sector organizations to organize accounting (budget) accounting of intangible assets, as well as their correlation with the requirements of current legislation and the international public sector financial reporting standard IFRS OS 31 “Intangible assets”.

원칙중심 IFRS와 규정중심 일반기업회계기준 특성: 차입원가 기준서를 중심으로

원칙중심 IFRS와 규정중심 일반기업회계기준 특성: 차입원가 기준서를 중심으로

The Opportunity for Convergence of SYSCOHADA towards IFRS Standards: An Effect of Coercitive and Mimetic Isomorphism

The Opportunity for Convergence of SYSCOHADA towards IFRS Standards: An Effect of Coercitive and Mimetic Isomorphism

Taxonomy of financial reporting in compliance with international standards: practical aspects

Financial reporting is an important part of economic life. The order of preparation and submission of financial reporting is formed under the influence of various factors, including the following ones: the state of the economy, the level of information technology development, the needs of stakeholders, and others. Strengthening of the trends in digital transformation of economy resulted in the emergence of new trends in financial reporting or certain modification of existing ones. The place and role of electronic format for submitting the financial recording according to XBRL Taxonomy in compliance with International Financial Reporting Standards are investigated in this paper. Creation of digital, unambiguous, accurate, and multiple versions of financial reporting is one of the main features of XBRL standard. Theoretical and methodological statements of XBRL format application for reporting based on IFRS Taxonomy are determined, its defining features and advantages are investigated. The prospects of XBRL technology use are proved, since business reports in this format facilitate the search of data for financial reporting on the Internet and the possibility of their automatic analysis. IFRS Taxonomy improves communication between compliers and users of financial reporting that comply with IFRS Standards. The distinctive feature of financial reporting based on XBRL electronic format is its flexibility, and therefore XBRL reporting is becoming more popular. The transition of domestic companies that are required to report under IFRS to statutory report in the XBRL Taxonomy format requires the assessment of their technical and resource capacities. Problematic issues on the way of introduction the taxonomy of financial reporting UA XBRL IFRS are outlined. Particularly, the need to develop software products adapted to the Ukrainian taxonomy is highlighted. Therefore, in Ukraine there is the growing need to train specialists with sufficient level of knowledge in both XBRL and IFRS. Further maintaining the trend of priority of the electronic reporting format will contribute.

Credit risk management in bank: Impacts of IFRS 9 and Basel 3

The expected loss approach (ECL) defined by IFRS 9 replaced the old incurred loss approach (IAS 39) in the international accounting standard setter. In Europe, the IFRS 9 are accompanied by new regulatory frameworks (BCBS), opinion, technical standards (EBA) which do not always provide the same methodological and operational implications of the accounting standard setter. Many aspects of IFRS 9 have been studied, but this paper analyzes its interdependencies and overlaps with the credit risk framework for financial intermediaries (also Basel 3). Using a case study, the purpose of this paper is to investigate the ECL, its main impacts on coverage ratio of a loan’s portfolio. The main findings are: usually, the rules laid down for Stage 1 of IFRS 9 do not reduce the excess coverage produced on a portfolio in bonis; in the presence of impaired loans IAS 39 generates a lack of funds; the lifetime ECL (Stage 2 of IFRS 9) imposes excess of provisions because it does not consider the effect of coverage produced by expected premiums; for loan portfolios with short repayment times, the excess of provisions produced by IFRS 9 compensates the lack of coverage of the capital requirement. From the academic research perspective, this paper contributes to the literature on ECL model in several ways. First, it adds knowledge to the research on the relationship between Credit Risk Management framework and accounting standard IFRS 9. Second, it also links our findings related to ECL approach with potential implications for the financial sector, policymakers and regulators.

EU banking regulation on capital and liquidity ten years after the crisis: the Slovenian perspective

This paper is about the EU banking regulation, which was an important factor in many EU countries contributing to the 2007/2008 financial crisis. Its purpose and value added is to present regulatory weaknesses most relevant for Slovenia. Most notably regarding the absence of rules limiting short-term borrowing on wholesale markets, and procyclical accounting rules which impacted capital adequacy. In the last ten years, the EU banking regulation has been subject to extensive modification. We find the introduction of the Liquidity Coverage Ratio (LCR) was an important improvement. However, the Net Stable Funding Ratio (NSFR) which was designed to address borrowing on wholesale markets is not yet legally binding. Both ratios have a drawback that they may be subject to a cliff effect. Accounting rules were amended with the new accounting standard IFRS 9, but we find that the problem of procyclicality remained.

Methods of Calculation of Expected Credit Losses Under Requirements of IFRS 9

The most important area of work for financial market regulators including International Accounting Standards Board is to clarify the metrics of credit assessment. This problem became particularly relevant after the financial crisis of 2008, when the insolvency of approaches to the assessment of credit risks adopted under the then international financial reporting standard IFRS (IAS) 39 became apparent, since credit losses on financial instruments were taken into account by the “loss model”, and therefore, the asset was recognized as financially impaired due to the fact of credit quality deterioration and significant time lag. From 1 January 2018 of a new international financial reporting standard IFRS9 IFRS 9 is based on a different approach — the principle of “expected credit losses” (ECL). The transition to IFRS 9 is intended to strengthen the banking system by increasing reserves , the banking system’s stability can be increased also. The new business model radically changes the approach to the formation of reserves, including by taking into account the impact of macroeconomic indicators on their value. According to various estimates, the scale of increase in reserves ranges from 30% to 50%. The purpose of this article is to systematize the methodological principles and approaches that underlie the requirements of IFRS 9 (basic and simplified and POCI approaches), as well as a comparison of the main methods for assessing the probability of default and expected credit losses (Weibul distribution, migration matrix, generator matrix ) In the framework of this article, the authors formulated criteria for the transfer of assets between the stages of credit risk (stage), and also formulated the principles for calculating expected credit risks for each stage, taking into account macroeconomic factors. This article is of practical value, as it can be the basis for the development of methods for calculating the expected credit risks of corporate clients of commercial banks, and can also be used to improve credit risk management models.

Lease accounting

Both the IASB and the FASB have recently issued new lease accounting standards (IFRS 16/Topic 842) that have been applied by entities since the beginning of fiscal year 2019. The new standards introduce an important change in the lessee’s accounting model, impacting entities’ accounting ratios, systems, internal controls, etc. Lessees will have to apply a capitalization model for almost all lease operations. In other words, nearly all lease operations will be shown on the lessee’s balance sheet, and there will be very few off-balance sheet leases.
 The aim of this paper is to explain the evolution of lease accounting standards from the beginning of the 20th century up until the present day, i.e. to analyze how this accounting area has evolved driven both by one of the basic accounting principles: “substance over form” (nowadays universally admitted), and also by the “utility paradigm”. While initially no leases were capitalized (following the legal form of the operations), subsequently (in the second stage) some of them did start to be capitalized (“finance leases”) under the assumption that they were very similar to financed purchases. Nowadays (under IFRS 16/Topic 842 – the third stage) almost all leases are capitalized for comparability and other reasons.
 This is the accounting area in which the “substance over form” principle has been most widely applied in modern accounting history. We fundamentally use historical information from primary sources (historical accounting standards, pronouncements of accounting standards issuers, historical research works, etc.) and we focus on US GAAP and IFRS standards.

Componentes para analizar los resultados de una contabilidad ambiental

La tenaz amenaza a la salud, la calidad de vida y el deseo porque el medioambiente se proteja a largo plazo, hace constante la acción social colectiva, que exige a los gobiernos a actuar frente a los flagelos con prontitud. Sectores productivos, industriales y comerciales, equipos multidisciplinarios entre científicos y técnicos trabajan en función de una progresiva toma de conciencia para conjuntar ecología, biología, economía, contaduría, sociología, arquitectura, derecho y muchas otras disciplinas y así involucrarse en la protección y estabilidad del medioambiente del planeta.
 Es un deseo apremiante en el que todos requerimos respuestas a tantas exigencias ambientales, para disminuir la fricción y la tensión que genera la preocupación, por lo que, de manera especial auditores, contadores y, revisores de la información social, financiera y ambiental, utilizan cualquier medio metodológico para captar, evaluar e interpretar y luego difundir de manera profesional la información socioeconómica ambiental adecuada.
 Con base en lo expuesto, en este documento se estudian tres componentes para analizar los resultados de una Contabilidad Ambiental: El Sistema de Información Financiera REA (Recursos, Eventos y Agentes) porque maneja los datos contables en forma vinculante, por eventos; las Directrices GRI implementadas por la Global Reporting Iniciative y las Normas Internacionales de Información Financiera NIIF. Es un estudio a seguir para conformar una metodología, para que, en lo inmediato, sobre la base de los hallazgos, se definan las políticas y estrategias para que las organizaciones reorienten y/o definan sus cuestiones medioambientales y los interesados tomen las decisiones pertinentes a mejor convenir.
 Se elabora una metodología para la investigación y presentación de informe al estudiarse el componente ambiental de cualquier entidad, se realiza un desarrollo metodológico, se brindan conclusiones y propuestas. Se concluye que si bien la información estudiada deviene del Sistema de Información Financiero REA, estudiar las Directrices GRI de la Global Reporting Initiative ayuda al profesional, al investigador, auditor, revisor medioambiental a adquirir y a complementar sus conocimientos junto con el tercer componente de este trabajo como lo son las Normas Internacionales de Información Financiera cuyo Marco Conceptual despeja la viabilidad para la materia ambiental.

Dialogue with standard setters

The new accounting standard IFRS 16 Leases is the result of a long process of review of the criteria for recognizing and evaluating the lease on the financial statements. The need to promote a revision of the accounting criteria on leasing has been felt by many players of the financial system. IASB, FASB, EFRAG, financial institutions, auditors and preparers have supported a debate on leasing over the years, which has underlined the im-portance of representing and assessing the operating leases in the financial statements with criteria similar to the criteria utilised for the financial leasing in order to improve the quality and comparability of the financial information. The new standard IFRS 16 Leases will be effective for annual reporting periods begin-ning on or after 1 January 2019 and it will bring significant changes in accounting require-ments for lease accounting, primarily for lessees, replacing the existing suite of standards and interpretations on leases as per follows: - IAS 17 Leases (IAS 17) - IFRIC 4 Determining whether an Arrangement contains a Lease (IFRIC 4) - SIC 15 Operating Leases - Incentives (SIC 15) - SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease (SIC 27). The purpose of the following review is to analyse some of the main issues arising from the adoption of IFRS 16 Leases supported by the results of a recent effect analysis.

P6179Correlation of computed tomography-based fractional flow reserve with instantaneous wave free ratio to detect hemodynamically significant coronary stenoses

Abstract Background Based on coronary computed tomography angiography (cCTA), stenoses can be detected but provides anatomical assessment solely. Fractional flow reserve based on coronary CT angiography (ML-cFFR) is gaining in importance for non-invasive hemodynamic assessment of obstructive coronary artery disease (CAD), as several large trials demonstrated significantly improvements in diagnostic accuracy to cCTA. Comparably instantaneous wave free ratio (iFR) is a novel resting index for the invasive determination of haemodynamic relevant stenoses, finds consideration in the ESC guideline on myocardial revascularization and is now of equal standing with FFR as a class IA recommendation. Purpose The aim of our study was to evaluate the on-site ML-cFFR in terms of diagnostic accuracy and clinical practicability in comparison to the iFR as the current invasive gold standard to detect hemodynamically significant coronary artery stenoses. Methods In our prospective, multi-center study, patients with CAD who had a clinically indicated cCTA and subsequent invasive coronary angiography with iFR-measurement were included. To analyse the acquired cCTA dataset we used a third-generation dual-source CT with on-site prototype ML-cFFR software that is based on a machine-learning algorithm, to determine the hemodynamic relevance of coronary stenoses. Results Between July 2017 and December 2018, in 40 of 42 cases (95%), the on-site ML-cFFR calculation was successful. Finally we enrolled 40 patients (72.5% males, mean age 66.7±11.9 years) with ML-cFFR calculation based on cCTA and iFR-measurement during ICA. The mean calculation time of the ML-cFFR values was 10.6±1.9minutes. 57 vessel specific lesions were analysed, of which 15 (26%) were determined as hemodynamically relevant stenoses by iFR (iFR≤0.89) whereas ML-cFFR classified only 14 (24.5%) as hemodynamic significant coronary stenoses (ML-cFFR≤0.80). We observed that cCTA overestimated the severity of stenoses in 27 of 40 cases, which might lead to unnecessary coronary angiographies. However, ML-cFFR detected no obstructive CAD in 26 of 40 patients (65%) and this would have resulted in a reduction of initially performed pure diagnostic coronary angiography. Estimated values sensitivity, specificity, PPV and NPV were 86.7%, 97.4%, 92.9% and 95.0%. The diagnostic accuracy of ML-cFFR in terms of iFR on a per-patient and per-lesion level was 95.0% and 96.5%. The area under the curve (AUC) on a per-lesion and per-patient basis by ML-cFFR to detect lesion specific ischemia was 0.97 and 0.96. The analysis of the correlation (Pearson's product-moment) on a per-lesion level was r=0.82 (p<0.0001) between the ML-cFFR algorithm and iFR. Conclusion(s) On-site ML-cFFR correlates excellently with the novel gold standard iFR to non-invasively detect hemodynamic significant coronary stenoses in routine clinical practice. Acknowledgement/Funding Doctor S. Baumann receives research support from Siemens and Philips Volcano. All other authors declare that they have no financial disclosure.

CUMPLIMIENTO NORMATIVO SOBRE IMPUESTO A LAS GANANCIAS REPORTADOS POR EMPRESAS BURSÁTILES BAJO NIIF (Normative Compliance on Taxes on Profits Reported by Stock Market Companies Under Ifrsnormative Compliance on Taxes on Profits Reported by Stock Market Companies Under International Financial Reporting Standards IFRS)

CUMPLIMIENTO NORMATIVO SOBRE IMPUESTO A LAS GANANCIAS REPORTADOS POR EMPRESAS BURSÁTILES BAJO NIIF (Normative Compliance on Taxes on Profits Reported by Stock Market Companies Under Ifrsnormative Compliance on Taxes on Profits Reported by Stock Market Companies Under International Financial Reporting Standards IFRS)

Fraud Detection and Internal Control Measures in Deposit Money Banks Listed on the NSE

This study examine the internal control measures for fraud prevention and detection in Deposit Money Banks (DMBs) listed on the Nigerian Stock Exchange (NSE). Data collected were from both primary and secondary sources using annual financial reports and questionnaire for the respondents of all listed DMBs in Nigeria. Analysis was mainly done by regression of the internal control measures and fraud in DMBs. Internal control measures proxies are control environment, risk assessment and control activities. On the other hand, fraud prevention and detection proxy is discretional accruals. The analysis found out that the internal control measures of control environment, risk assessment, and control activities have negative influence on fraud detection and prevention (discretional accruals). However, the influence of risk assessment is not significant. It was therefore recommended that an overhaul of the management and internal control systems currently being operated by DMBs in Nigeria be done to make it strictly in line with IFRS standards and guidelines. Furthermore, this should be backed by the introduction of forensic auditing and assurance to make offenders not only liable for their actions; but also subject to legal prosecution as well.