IFRS Requirements Research Articles

ПРОБЛЕМЫ ПОДГОТОВКИ УПРАВЛЕНЧЕСКОЙ ОТЧЕТНОСТИ ЗАСТРОЙЩИКАМИ НА ОСНОВЕ ТРЕБОВАНИЙ МСФО

The article considers the main problems of the process of preparing management reports by developers based on the requirements of IFRS in terms of shortening the time of its preparation, changes during the implementation of the housing construction project. The key reporting of the main activity of the developer for the construction of construction facilities is the project documentation. Management reporting based on IFRS requirements is an important reporting of a developer, containing the results of its activities both for an individual developer and for a group of companies to which this developer belongs. Due to the growth of the housing construction industry and increased competition, developers, in order to increase their investment attractiveness, publish various information on the results of their main activities for the construction of housing construction facilities on a quarterly basis, including for the purpose of increasing transparency of its results. The requirements for the placement of project documentation are established at the legislative level, and regarding the placement of additional information in the form of management reports based on the requirements of IFRS as a whole for the group of companies to which the developer belongs, there is no obligation at the legislative level, therefore, the form, scope, methodological approaches and requirements for the posted information are decided by the developer himself. The preparation of the developer’s management reports covers several processes of the developer, which may have their own hidden risks and problems. According to the results of the study, the author identifies a list of problems that cause the greatest difficulties and hinder the preparation of management reports of the developer based on the requirements of IFRS in a short time, provides a classification of these problems for the subsequent search for solutions to them.

ОРГАНІЗАЦІЯ ОБЛІКУ І ЗВІТНОСТІ В ДЕРЖАВНИХ КОРПОРАЦІЯХ

The article examines the essence and role of state corporations in the national economy. It is multifaceted and varies depending on the economic, political and social conditions that have developed in the country. State corporations are a powerful tool for ensuring economic development, social stability and protection of national interests by stimulating economic development in strategically important industries, controlling the use of resources, investing in research and development, creating jobs and providing social services. The work examines the normative principles and defines the principles on which state corporations function. The effectiveness of public corporations largely depends on their governance, transparency and accountability to the public. Informational support for the efficiency and transparency of management is mainly formed in the accounting and reporting system. The organization of accounting and financial reporting in state corporations is carried out in accordance with the requirements of IFRS, which requires significant additional preparatory costs from the enterprise for the transitional transformational preparation of the accounting policy, revaluation and reclassification of assets and liabilities in accordance with IFRS, retraining of accounting personnel, software adaptation, etc. The article summarizes the accounting and methodological prerequisites for the rationalization of the process of drawing up financial statements according to international standards based on taxonomy. Special attention is paid to the organization of accounting procedures for both financial and non-financial reporting. The importance of the quality of information in reporting forms and the peculiarity of information in non-financial reporting are determined. The main regulatory and legal requirements regarding the forms of financial reporting and the grouping of information of integrated reporting are indicated. The importance of the taxonomy of financial statements and the main requirements for XBRL reporting are given. The interaction between interested parties and the quality of accounting information, which contribute to increasing trust in state corporations and the efficiency of their activities, are indicated.

Assessment of the Quality of Transformation of Financial Reporting of Entities According to IFRS

Background: Mandatory application of IFRS for a specified list of entities brings about additional costs in terms of material, financial and labour resources. Consequently, this encourages the search for ways to minimise costs related to the transition to IFRS adoption, that is, its formalisation. Under such conditions, the need to improve the methodological toolkit for evaluating the process of transformation of financial statements in accordance with the requirements of the IFRS is actualised. This article aims to develop a methodological toolkit for assessing the quality of the financial reporting transformation process per IFRS requirements, using Ukrainian dairy industry enterprises as a case study. Methods: The assessment of the impact of the transition to IFRS reporting on changes in the financial status of entities was carried out using statistical methods of comparison, generalisation, grouping, and coefficients. Conclusions were drawn based on the research findings employing the method of logical generalisation. Results and Conclusions: The method of assessing the impact of the application of IFRS on the financial condition of enterprises in the dairy industry of Ukraine has been improved, particularly in terms of accounting for changes in financial statements as a result of transformational adjustments before and after the date of transition to IFRS. This refinement involves employing financial coefficients as a means of assessment, facilitating the determination of the quality assessment of the process of drawing up the first financial statements of enterprises in accordance with IFRS. New methodological aspects and recommendations for assessing the quality of the transformation process in the context of the application of IFRS will ensure effective management of enterprises in the dairy industry of Ukraine, leading to an increase in the attraction of foreign investments amidst the conditions of European integration processes and the post-war period.

International Accounting Convergence and Divergence: Towards a Framework for Understanding De Jure Adoption of IFRS

By bridging the two main approaches examining de jure adoption of IFRS, namely, convergence and divergence studies, we provide a framework that more fully captures the totality, dynamics, and complexity of voluntary adoption of IFRS by country. The framework offers an understanding of accounting regulators’ efforts to balance between pressure to adopt IFRS and national specific conditions that may conflict with IFRS requirements. The suggested framework depicts four propositions which are built on four institutional dimensions: the degree of IFRS diffusion, national accounting system compatibility with IFRS, country dependence on external financing, and accounting regulator’s international networking. These four propositions jointly predict national adoption level of IFRS, ranging from non-adoption to partial adoption, and to full adoption. The framework assumes that the current IFRS adoption status by country is not static and may change over time. The voluntary adoption of IFRS standards by country is understood as the result of tradeoffs among multiple factors. In doing so, the developed framework solves a theoretical dichotomy in IFRS studies: the tendency of using institutional isomorphism to examine convergence versus accounting classification to understand divergence.

The Impact of IFRS 17 on the Development of Accounting Measurement and Disclosure, in Addition to Improving the Quality of Financial Reports, Considering Compliance with the Requirements of IFRS 4—Jordanian Insurance Companies-Field Study

The research examines the impact of applying the IFRS 17 International Financial Reporting Standard on the development of accounting measurement and disclosure to improve the quality of financial reports when considering compliance with the requirements of applying the IFRS 4 International Financial Reporting Standard for Jordanian insurance companies. Achieving the objective, previous studies were examined which related to the impact of applying the IFRS 17 Financial Reporting Standard on the development of accounting measurement and disclosure for improving the quality of financial reports when considering compliance with the requirements of applying the IFRS 4 International Financial Reporting Standard for Jordanian insurance companies. Moreover, the researcher linked the theoretical aspect to the practical aspect. Therefore, the researcher designed a questioner, distributed, and then analyzed the results obtained from the relevant parties. The study found the need to conduct increased research related to the impact of adopting the IFRS 17 International Financial Reporting Standard in improving the quality of reports and overcoming obstacles such as current laws, professional qualifications of those preparing reports for insurance companies, and the situation of auditors. Including the IFRS 4 and IFRS 17 standards in the content of accounting courses can be beneficial for linking academic study with practical practice in several ways: Real-world application, Industry relevance, Compliance and regulation, Career opportunities, Evolving nature of accounting. The need to adjust accounting practices of the International Financial Reporting Standard IFRS 17 is an important step in the field of insurance activity to improve the quality of financial reporting. Owing to the fact that the standard has been allocated only to insurance activity and not to all economic operations, means the application of the standard is limited to all insurance contracts for the duration of contracts, regardless of the nature of the activity of the entity issuing those contracts. Therefore, the study recommends increasing attention on disclosure and improving accounting methods in relation to IFRS 17; this is considered a major step in the insurance business in order to improve the quality of financial reports. Additionally, relevant information is provided for financial reports and similar; this helps improve the level of transparency and quality of the information presented in the core of the reports. Thus, it enables companies to assess the impact of contracts about the current financial position, financial performance, and cash flow.

Capital investments acquired under a barter agreement

The article discusses the features of the evaluation of capital investment objects in the case when the acquisition, creation, improvement and restoration of such objects occurs under a barter agreement. The peculiarity is that the costs forming the object of capital investments should be assessed at fair value, depending on the situation — transferred or received property, property rights, works and services. Despite the declaration of convergence of Russian federal accounting standards with International Financial Reporting Standards on the valuation of capital investment objects under a barter agreement, there are discrepancies between the requirements of IFRS (IAS) 16 “Fixed Assets” and FSB 26/2020 “Capital Investments”. The article uses examples to reveal discrepancies in the estimates of capital investments in future fixed assets. The article uses examples to reveal discrepancies in the estimates of capital investments in future fixed assets. During the research, such methods as analysis and synthesis, comparison, grouping, analogy, logical and systematic approaches were used. The research results obtained in this article can be applied in the practical work of accounting departments of modern organizations, in the educational process of higher educational institutions and in the development and reform of regulatory documents on accounting and reporting. The results presented in this paper will also be useful to a wide range of readers interested in modern problems of accounting and reporting at the domestic and international level (including accounting problems in healthcare organizations).

Compliance Level with Ifrs 7 by Deposit Money Banks: Whither Nigeria

Purpose: The study examines the compliance level with IFRS 7 by deposit money banks in Nigeria for the period between 2017-2020.
 Design/Methodology/Approach: The study adopts an un-weighted disclosure index method to test the two hypotheses and using Qualitative Grading System (QGS) to rank the level of compliance with the aid of explorative research design.
 Findings: The study found that in average, the over-all compliance by DMBs at commencement year stood at 51.04% and this implies that as at the commencement year DMBs weakly complied with the requirements of IFRS 7.
 Implications/Originality/Value: The study concluded that though DMBs in Nigeria do not totally comply with the provisions of IFRS 7 throughout the study period yet, there have been significant improvements in the level of compliance with the standard disclosure in the annual reports of DMBs in Nigeria. It’s therefore recommending that banks should strive to ensure full compliance with the standards as this will add more confidence in the economy. This must be done with the enforcement of regulatory bodies. The FRCN should intensify its mandate to ensure banks strictly comply with the provisions of IFRS.

Methods of Forecasting Credit Losses in A Sample of Iraqi Banks - A Comparative Analysis

The general trend in Iraqi banks is focused towards the application of international financial reporting standards, especially the international financial reporting standard IFRS 9 “Financial Instruments”, in addition to the directives issued on the Central Bank of Iraq’s instructions for the year 2018 regarding the development of expected credit losses models, and not to adhere to a specific method for calculating these losses and authorizing the banks’ departments to adopt the method of calculating losses that suits the nature of the bank’s activity and to be consistent in its use from time to time. The research problem revolves around the different methodologies for calculating expected credit losses according to the instructions of the Central Bank of Iraq compared to the requirements for calculating those losses according to IFRS 9, as well as the difference between the banks listed in the Iraq Stock Exchange among themselves. The research aims to present methods of forecasting expected credit losses in a sample of Iraqi banks and compare them with the requirements of IFRS 9 and the instructions of the Central Bank of Iraq in this regard. The research reaches a set of conclusions, the most important of which is that the International Financial Reporting Standard IFRS 9 has not been fully applied in Iraqi banks so far. There is also a difference between banks in the methods of calculating expected credit losses according to the mentioned criterion. And based on the conclusions that come, the research presents a set of recommendations, the most important of which is the necessity of preparing the infrastructure in the Iraqi environment first so that the standard can be applied correctly by subjecting the employees to training courses to familiarize them with the IFRS 9 standard, its application methods and requirements.

Some Issues of Preparation and Submission of Financial Statements in the Conditions of COVID - 19

The coronavirus pandemic has created uncertainties of an unprecedented scale in the global economy. Businesses experience disruptions of supply chain and significant losses. As a result of the decline in business activities, many enterprises around the world have been affected and millions of people have lost their jobs. Significant changes have taken place in the financial and commodity markets as well. Many governments have taken various measures to provide financial and non-financial assistance to the affected sectors of the economy, businesses and individual enterprises. All this has somewhat complicated the preparation of financial statements in accordance with the international standards (IFRS). Against the background of the current uncertainty caused by COVID 19, enterprises need to ensure the preparation of high quality financial statements, which play an important role in the proper functioning of the capital market. Changes in economic activity have led to the need of revision of the terms of existing contracts and agreements of the enterprises. For example, terms of contracts, leases, and various financial assets and liabilities with customers, as well as asset impairment and changes in the impairment testing assumptions, estimates of expected credit losses for loans and other financial assets, etc. Changes and uncertainties caused by the pandemics have a significant impact on the estimates of the elements of financial reporting. Nevertheless, each entity must ensure the application of the relevant requirements of IFRS in all of these matters. The present article highlights some of the challenges posed by pandemic uncertainties in the course of preparation of financial statements. Keywords: Financial reporting; cash flows; non-financial assets; lease; expenses; inventories. JEL Codes: E60, E62, P34

ОСОБЕННОСТИ ОТРАЖЕНИЯ В ОТЧЕТНОСТИ НАЛОГА НА ПРИБЫЛЬ СОГЛАСНО ТРЕБОВАНИЯМ МЕЖДУНАРОДНЫХ И РОССИЙСКИХ СТАНДАРТОВ ФИНАНСОВОЙ ОТЧЕТНОСТИ

The article applies a methodology for comparing the rules for recording temporary differences and deferred taxes in Russian financial statements, as well as in accordance with the requirements of IFRS. The study revealed the convergence of Russian norms for determining temporary differences and deferred taxes, and at the same time pointed out the still remaining differences, and also assessed the existing differences. The author substantiated the expediency of refining the Russian principles for calculating deferred income taxes. The results of the study can be applied in the transformation of reporting, as well as in the construction of consolidated financial statements generated in the Russian Federation in accordance with international requirements, since the latest changes in PBU 18/02 include the calculation of tax for members of a consolidated group of taxpayers. The article systematizes new principles for calculating deferred income taxes, which will greatly simplify the procedure for transforming reporting into the IFRS format. Keywords

The Ability of The Economic Units’ Commitment to Disclose Operational Sectoral Information According to The International Standard (IFRS 8) And Its Implications for Investors’ Decisions

The main objective of the research is: examining the compliance (or non-compliance) of the companies listed in the Iraq Stock Exchange with the requirements of the International Financial Reporting Standard (8) IFRS, with regard to sectoral numbers and the resulting disclosures, and after discussing the theoretical dimensions of the international standard, it came The practical side, which included taking a sample of the companies listed on the Stock Exchange, the subject of the research, and the sample companies were distributed among the various sectors (industrial, commercial, agricultural, and service). After preparing the tables and examining and analyzing the results, it was found that: The companies (the study sample) disclose the bases of sectoral positions related to their operating data, in accordance with the requirements of IFRS (8). At the same time, these companies do not comply with the required sector-wide disclosures.

ПОКРИТТЯ ІНФОРМАЦІЇ У ФІНАНСОВІЙ ЗВІТНОСТІ: ПРАКТИЧНИЙ ДОСВІД ЗАСТОСУВАННЯ МСБО І МСФЗ

Анотація. Інформаційні запити глобалізованого суспільства змушують суб’єктів господарювання формувати фінансову звітність, здатну задовольними вимоги всіх зацікавлених сторін. Мета статті — оцінити, яку інформацію суб’єкти господарювання розкривають у фінансовій звітності, складеній за МСБО і МСФЗ, та які колізії при цьому виникають. Теоретико-методологічні аспекти результатів діяльності вчених доводять значущість розкриття інформації у фінансовій звітності, складеній за МСФЗ. Разом з тим відкритим залишається питання розкриття інформації у фінансовій звітності, з урахуванням потреб поточної діяльності підприємств. З огляду на це постає потреба: дослідження забезпечення користувачів фінансової звітності інформацією, розкриття якої передбачають міжнародні стандарти; перевірка гіпотез щодо існування необхідності дослідження відмінностей видів фінансової звітності, формування і подання якої передбачають МСФЗ і МСБО, та перегляду довгострокового зобов’язання в разі його дострокового погашення. На основі аналізу встановлено, що інформацію, обов’язкову до розкриття у фінансовій звітності, обумовлює вид фінансової звітності. Проведене дослідження свідчить про наявності в МСФЗ прогалин у порядку складання та інформаційного наповнення комбінованої звітності. Запропоновано комбіновану фінансову звітність складати суб’єктам господарювання, які з тих чи інших причин не відповідають вимогам МСФЗ 10. Установлено, що важливою умовою достовірного відображення у Звіті про фінансовий стан інформації щодо довгострокового кредиту є необхідність проведення аналізу здатності підприємства його дострокового погашення, зокрема протягом року. Запропоновано розглядати частину довгострокового кредиту у формі платежів, які слід погасити протягом дванадцяти місяцівз дати складання звітності як поточне зобов’язання. Такий підхід потребує перекласифікувати наявний кредит із довгострокового в поточні зобов’язання, що призведе до подальних змін оцінок грошових потоків, коригування балансової вартості зобов’язань. Результати дослідження можуть бути використані практиками в різних галузях економіки при формуванні фінансової звітності за МСФЗ. Ключові слова: фінансова звітність, звітність за МСФЗ, фінансові результати, підприємство, стандарти, облік, МСФЗ, МСБО. Формул: 0; рис.: 1; табл.: 1; бібл.: 19.

Do Oil and Gas Companies Comply with Requirements of IFRS 6?: Evidence from India and Global Companies

Do Oil and Gas Companies Comply with Requirements of IFRS 6?: Evidence from India and Global Companies

Подходы к построению EAD-моделей на длинных временных горизонтах

This paper is devoted to developing an optimal model for assessing the default requirement (EAD) of assets over the entire life of a financial instrument in accordance with the requirements of IFRS 9 “Financial instruments”. The EAD for the whole life of a financial instrument is a set of estimates of EAD values from the first to the last year during the life of the asset. Two models are used for evaluating EAD under agreements with a set limit (for example, a credit line, overdraft) and under guarantees and letters of credit: the EAD model for balance sheet financial instruments (applied to the balance sheet part) and the credit conversion factor (CCF) model (applied to the off-balance sheet part). The approach to CCF modeling is described in the second part of the study. This model was developed based on a real bank portfolio of assets, using data which were collected at the beginning of the 2017. These days the topic of the paper is highly acute for both commercial banks that has experienced the problem of improving credit risk assessment models due to the requirements that have appeared to them owing to the introduction of IFRS 9 since January 1, 2018, and regulatory authorities as well, etc.

ВЛИЯНИЕ ЦИФРОВИЗАЦИИ ЭКОНОМИЧЕСКИХ СУБЪЕКТОВ НА РАЗВИТИЕ УЧЕТНО-АНАЛИТИЧЕСКОГО ПРОЦЕССА ФОРМИРОВАНИЯ УПРАВЛЕНЧЕСКОЙ ОТЧЕТНОСТИ НА ОСНОВАНИИ ТРЕБОВАНИЙ МСФО

The article examines the need for digitalization of economic entities, the main directions of digitalization of an economic entity, the main pros and cons of digitalization of these areas of activity of an economic entity, the impact of digitalization of an economic entity on the accounting and analytical process of forming management reporting taking into account the requirements of IFRS. A comparative analysis of infor-mation products on accounting under IFRS has been carried out to achieve the level of sufficiency of digitali-zation of the directions of economic entities for the formation of management reporting based on the require-ments of IFRS in a shortened time without deterioration in the quality of reporting.

АКТУАЛЬНЫЕ ВОПРОСЫ РЕФОРМИРОВАНИЯ БУХГАЛТЕРСКОГО УЧЕТА

Currently, one of the tasks of accounting is to bring the domestic accounting rules closer to the international ones. During the reform, which has been going on for more than twenty years, a number of new Russian standards that meet the requirements of IFRS have been put into effect, but basically for ten years only the forms of documents for supervisory authorities and deadlines have changed, and only now there has been a real revolution in accounting: instead of the usual PBU 5/01 and PBU 6/01, two new standards will be applied from 01.01.2022: FSB 6/2020, FSB 26/2020, and FSB 5/2019 has been in effect since 01.01.2021. The article discusses the questions arising from accountants on the application of new standards in accounting and ways to solve them.

Financial instruments for the development of the transport industry

The article analyzes the principles of using financial instruments established by International Financial Reporting Standards. It is shown that financial instruments have common approaches to the preparation of accounting financial statements according to both Russian and international standards. The features of using derivative financial instruments, which can be both instruments and objects of accounting in transport organizations, are disclosed. The main method that takes into account compensation for losses on existing assets and liabilities and income from concluded transactions with derivative financial instruments is analyzed. We consider hedge transactions in which the cash flows of hedging instruments and hedge operations are accounted for simultaneously and reflect the principle of accounting for hedging relationships. The conditions for performing operations with derivative financial instruments and accounting options for hedge transactions are analyzed. The rules for accounting for derivative financial instruments when hedging fair value and cash flows are disclosed. Examples of fair value hedging and future cash flows are provided. The article describes the indicators of asset recognition and criteria for derecognition of an asset. The new requirements of IFRS 9 for derecognition of an asset are analyzed and examples of their use are provided

Repo and Reverse Repo Activity of European Banks – Market Activity, Accounting and Disclosure

Repurchase agreements are money market instruments that are used widely and for various purposes due to their simplicity and flexibility. The European repo market is quite concentrated, as 80% of the transactions is conducted be-tween the top 20 banks and 61.9% of the collaterals used in the European repo market are originated in the Eurozone. Especially, for Europe the repo market is more important than ever, as it reached an all-time high of EUR 7,351 billion in June 2018. Even though the repo market is quite extensive and important, with respect to repos, there has no literature been found, which deals with the disclosure requirements of IFRS 7 in the European banking industry so far. How disproportionate the attention paid to repos is, becomes apparent by examining the financial statement of one German bank. It was noticed, that the information provided on repos was not too extensive, even though repos ac-counted for approximately 39% of the bank’s total assets. The example of Lehman Brothers shows how important it is to formulate appropriate accounting standards that actually reflect the true nature of transactions. The extent of the financial crisis of 2007-2008 may have been reduced, if their troubled situation would have been disclosed honestly in the first place. As the mandatory requirements of IFRS 7 should ensure, that sufficient and decision-useful information to enable users of financial statements to under-stand the risks arising from repos is disclosed, the first step is to review, if the mandatory requirements are fulfilled. 38 IFRS 7 criteria were derived from these mandatory requirements. Besides these mandatory criteria, some supplementary information was gathered. The sample which was examined within this empirical analysis consists of 66 banks from 19 European countries. It will be shown from the 5-year averages that European banks only complied on average with 54%, i.e. only slightly more than half of the mandatory disclosure requirements of IFRS 7, which apply to repos.

Хеджування грошових потоків із використанням процентних свопів: облік за МСФЗ

The paper discloses the accounting treatment for cash flow hedge of exposure to risks arising from the changes in cash flows of financial instruments, in which interest rate swaps are used as hedging instruments. The author considers the economic meaning of hedge relationship as an instrument of reducing financial risks being inherent to financial assets and financial liabilities of the bank. The paper represents the purpose of the cash flow hedge as well as the mechanics of the interest rate swap as the most efficient instrument of the cash flow hedge relationship. The author analyzes the statements of IFRS 9 on the cash flow hedge accounting: recognizing the cash flow hedge reserve, assessing the portion of gain or loss on the swap that is either effective or ineffective hedge. The paper explains the procedures of the cash flow hedge accounting to reduce interest rate risks that arises from the changes in the cash flows of floating-rate financial liabilities. In particular, the paper covers the procedures of the fair value measurement of a hedging instrument as the present value of the difference between cash inflows and outflows discounted at spot rates for each period. The author discloses the accounting for the cash flow hedge: the accrual of interests on the financial liability, the change in the fair value of swap, the net settlement of the interest on swap, the reclassification of the interest on swap and settlement of interests on the financial liability. The article suggests the accounting procedures comply with the requirements of IFRS 9 on the cash flow hedge accounting and recommends the implementation to Ukrainian banks.

ENVIRONMENTAL ACCOUNTING AS A FACTOR OF LOCAL BUSINESS COMPETITIVENESS STIMULATION (THE CASE OF THAILAND)

Today’s system of accounting does not contain sufficient volumes of information about environmental incomes and losses of organizations, therefore, it is nearly impossible to evaluate precisely the efficiency of environmental actions taken and environmental protection systems being implemented in order to maintain and/or increase the environmental balance. One of the key elements in the mechanism increasing the quality of economic performance is the system of environmental accounting.
 This study explains both theory and methodology of environmental accounting and also determines its role and place within the system of existing types of accounting and reporting in accordance with the IFRS requirements and also Kyoto Protocol. The presented here organizational economic mechanism of environmental accounting allows implementing the latter at concrete enterprises so that to promote and support more efficient managerial decision-making.