IFRS Requirements Research Articles

The level of compliance with International Financial Reporting Standards (IFRS 7)

Purpose– The purpose of this paper is to examine the level of compliance with International Financial Reporting Standards (IFRS 7) by listed companies in Bahrain Bourse (BB).Design/methodology/approach– First, the authors design disclosure compliance checklist of ten requirements of IFRS 7. Second, a score of 3 is assigned if high level of compliance, 2 is assigned if medium level of compliance, 1 is assigned if low level of compliance. The sample of the study comprises of (21) companies listed in BB for year 2013.Findings– The main findings are, the level of compliance varied by industry and the highest level of compliance reported for the investment sector whereas the lowest for the insurance industry. This result indicates that all listed companies are complying with IFRS 7 in terms of the standard disclosure requirements.Practical implications– In this paper attempt has been made to support the argument of previous studies. The paper attempts to test and answer the research question; does the financial sector in Bahrain comply with IFRS 7? These results could lead to high level of awareness about the financial instruments. Adoption of the IFRS 7 could lead to high level of compliance and play a significant role in attracting global investors’ interest to the local markets, especially in a developing country like Bahrain.Originality/value– This paper provides an insight from the reality of the financial market in Bahrain as a result of answering this question; does the financial sector in Bahrain comply with IFRS 7?

Corporate governance and initial compliance with IFRS in emerging markets: The case of income tax accounting in Egypt

The paper examines the corporate governance factors and the independent audit quality as determinants of compliance with IFRS recognition and disclosure requirements of income tax accounting in Egypt. Using the initial IFRS adoption in Egypt, the results show evidence that corporate governance factors that indicate the sophistication level of both company's management and owners (i.e., institutional ownership and foreign representation on the board) and the perceived quality of the engaged auditor improve compliance with IFRS requirements. Companies with higher levels of institutional ownership and foreign representation on the board are more likely to engage an audit firm with international affiliation and comply with IFRS recognition and disclosure requirements. The results underline the significance of professional development and regulations of local audit industries in emerging countries for actual compliance with IFRS requirements when they are officially adopted in these countries.

Přechod z poměrné metody konsolidace na metodu ekvivalence podle IFRS

Přispěvek se zabýva přechodem vykazovani konsolidovaných ucetnich výkazů pomoci poměrne metody na metodu ekvivalence. Pro ucetni zavěrky, jejichž obdobi zacina dnem 1. 1. 2013 a později, vesel v ucinnost IFRS 11 Spolecna uspořadani, který plně nahradil IAS 31 Ucasti na spolecných podnikanich. IFRS 11 již nedovoluje výběr ze dvou variant a povoluje i pro zobrazeni spolecneho rozhodujiciho vlivu již jen metodu ekvivalence. Spoluovladajici jednotky, ktere do te doby sestavovaly výkazy za skupinu pomoci poměrne konsolidacni metody, jsou nuceny přejit na vykazovani pomoci metody ekvivalence. Cilem přispěvku bylo na ilustrativnim přikladu poskytnout praktický navod transformace těchto výkazů z poměrne metody na metodu ekvivalence v souladu s požadavky IFRS 11 a upozornit na vybrane problemy, ktere se v souvislosti s přechodem mohou objevit.

Compliance of Non-current Assets with IFRS Requirements Concerning the Information Disclosure – Case Study

Companies from the European Union listed on the stock exchange are required to prepare financial statements in accordance with International Financial Reporting Standards since 2005. Thus, the aim of this research is to investigate the degree of compliance of financial statement of listed companies on the stock exchange with International Financial Reporting Standards. The purpose of this paper is to analyze the information disclosed by entities that are applying International Financial Reporting Standards, in this case information on the tangible, intangible assets and impairment of assets. The study provides an empirical research of reporting financial statements in accordance with IFRS. Therefore, the current research is a quantitative one, using Disclosure Index to measure the level of exposure of information regarding the assets. The results demonstrate both the applicability, but also the validity of the model Disclosure Index; thus there is a link between the variables analyzed and disclosures in accordance with IAS 16, IAS 36 and IAS 38.

US GAAP Conversion To IFRS: A Case Study Of The Cash Flow Statement

International Reporting Standards (IFRS) has become the required framework for most of the world financial market economies as of January 1, 2011. This includes, in a non-comprehensive listing, the many European Union countries - Canada, Australia and New Zealand. In the United States, US Generally Accepted Accounting Principles (GAAP) is still required. However, plans are presently in place by the SEC to abandon US GAAP and to adhere to IFRS requirements by as early as for the period ending December 31, 2014. As such, it is important to introduce IFRS accounting rules in the college curriculum and make it a major component of accounting classes. This case study takes a US GAAP Prepared Cash Flow Statement and, based on the facts of the case, requires students to prepare an IFRS-based Cash Flow Statement. The need to understand both US GAAP and IFRS rules is required to adequately address this case study, which is most suitable for an Intermediary Accounting, Accounting Theory and a Financial Statement Analysis class, as well as an Investment Finance course, at the graduate level.

The Dynamics of the Romanian Financial Reporting

Abstract Accounting is the social science that developed and constantly improved in order to meet the information needed for each stage of the society evolution. In its turn, the financial reporting system was frequently reconsidered in order to harmonize the supply and demand for accounting information. The main objective of this study is to create a fresco of the financial reporting system in Romania, during the last two decades, which is intended to highlight the advantages and limitations of different accounting rules with direct impact on the financial communication process. The present situation demonstrates that the National strategy for improving the financial reporting of private economic entities, mostly based on drafting the individual annual financial statements of public interest entities in accordance with IFRS requirements, encountered certain difficulties in the implementation process.

IFRS 7 and Risk Disclosure Policies: A Cross-Sectional Analysis of Italian Listed Banks

This paper has a double aim, to give a theoretical evaluation of the disclosure model chosen by IASB referring to market risks of financial instruments and to analyze the practical solutions adopted in the case of a sample of listed banks and compliance of the information referring to risk in the “Notes” with the requirements of IFRS 7. In order to investigate the effectiveness of “IFRS 7, Financial Instruments”, the research has been conducted considering Annual Report of a sample of 17 banking companies, all listed in the three-year period (2008-2010) in Italian financial markets. Studying a three-year period should reveal the performance of IFRS 7 in fostering market discipline by pressing banks to disclose more information regarding risk profile elements, mainly considering market risks such as interest rate risk, currency risk, and price risk, and then making financial disclosure more transparent. A content analysis has been adopted through a cross-sectional and time series study. The results underline that IFRS 7 improves the disclosure of market risks in financial statements compared with previous years even if a better equilibrium between qualitative and quantitative information could be found. In the sample analysed, substantial compliance with IFRS 7 requirements has been found, except for some particularly sensitive information. In some cases quantitative information cannot be considered sufficient to inform on potential impact of changes in risks exposure on the actual and expected value of income and equity of entities.

Role and Function of the Public Company Audit Committee

A review and discussion concerning the role and function of the public company audit committee is presented in this paper. The discussion includes the pertinent promulgations, composition and responsibilities of the audit committee. Additionally, the effects of an IFRS adoption by the United States, as it relates to the audit committee’s role is presented and discussed. The conclusion is drawn that it will become necessary for the audit committee to become educated in IFRS requirements in order to fulfill their role and function in corporate governance.

Revaluasi Inventory dengan Menu Standard pada SAP-B1 Sesuaikah dengan IFRS

Some available standard modules in SAP-B1 can be adapted for changes in accounting rules and regulations. One is the Inventory Revaluation menu of Inventory module. Users can use the menu to make Inventory value adjustments of value in SAP-B1, to be consistent with the values that must be presented in the financial statements. Based on the flexibility provided by SAP-B1menu, should not be too difficult for users of SAP-B1 to manage accounting transactions based on accounting rules that apply today, IFRS. IFRS requirements on inventory adjustment transactions with a value of SAP-B1 could be done more easily.

Are IFRS Income Statements Comparable?

One objective of IFRS is to have comparable financial statements, including their presentations, between companies and over time. However, IFRS do not prescribe a particular format for the presentation of the income statement. Some empirical studies show some variety relating to income statement disclosures. Since various models for the income statement presentation exist and since there are (cultural) differences in the application of IFRS, we can reasonably doubt the comparability of IFRS income statements. For a sample of 30 companies from 3 countries we manually analyze income statement comparability. We do so by applying a financial analyst approach by breaking net income down into subtotals and, then, investigate comparability on different income levels. We also consider where particular income statement information is disclosed. We find that on the levels where IFRS requirements exist (level 1 and 2) comparability is (nearly) perfect. But as soon as the required levels are left, comparability deteriorates from level to level. On the individual line item level 6 only 74% of income statements with a functional presentation are comparable. A more detailed IFRS income statement format as currently required and definitions of certain intermediate results (operating profit, for example) would certainly improve comparability.

An empirical investigation of Greek firms' compliance to IFRS disclosure requirements

This study investigates the compliance of Greek firms to IFRS disclosure requirements. Using a checklist based on the disclosure requirements contained on the proposed standard for SMEs, a compliance score was calculated for a sample of 32 listed and non-listed Greek firms. Subsequently, univariate tests and a multivariate regression model were run to investigate what firm characteristics (listing status, sector, size, profitability) may be related to the extent of compliance. On average, firms comply with about two-thirds of the disclosure requirements. Compliance is positively and significantly influenced by listing status, while the univariate analysis indicated that the larger firms exhibit higher compliance rates. Results are of particular interest to accounting regulators who set disclosure requirements and capital market participants. However, the small size of the sample limits the power of the statistical analysis. The paper empirically investigates the compliance with IFRS requirements and ultimately on the quality of financial statements.

Do Czech listed companies satisfy the requirements on reporting under IFRS/IAS: application on financial instruments?

Although the derivatives have been traded since the middle of the 19th century, a derivative was an unknown term until lately in Czech. The situation changed in 1997 when interest rates increased significantly. From 2001 to 2004 moreover the exchange rate of the dollar against the crown dropped from over 40 CZK/USD to 20 CZK/USD. This paper focuses on the comparison of reporting of the derivatives using IFRS in comparison with the Czech accounting legislature by the companies listed on the Prague Stock Exchange (PSE). None of the companies followed all of the requirements of IFRS on reporting of the derivatives.