What is IFRS? What are the objectives of IFRS?
IFRS or International Financial Reporting Standards aims to set common rules so that financial statements can be consistent, transparent, and comparable around the world to simplify decision-making.
IFRS are designed to bring consistency to accounting language, practices and statements, and to help businesses and investors make educated financial analyses and decisions.
Among other resources to optimize the application of these standards, we would like to highlight the IFRS Foundation’s online updates on Standards, Interpretations, Taxonomy and translations, and its annotated publications.
For European companies, the European Financial Reporting Advisory Group’s IFRS Approval Status Report will be useful. Listed companies will also be guided by the ESMA annual report’s EEFF supervisory priorities. For 2020 there are the presentation of COVID-19 and Brexit impacts on financial and non-financial management and the new ESEF requirements.
Adapting the Finance Department to the evolution of IFRS
The present and future of IFRS are being developed in various projects of the IFRS Foundation, which guide the CFO to efficiently and strategically apply these standards. Here we highlight some of them:
Draft regulations, modifications, amendments and interpretations
- Draft regulations:
- Review of specific disclosure requirements at the Standards level.
- Reduced voluntary disclosures applicable to subsidiaries that are SMEs.
- Regulatory Assets and Liabilities. Seeks to improve information on the financial performance of companies subject to tariff regulation. It would replace IFRS 14.
2. Draft Practice Statement on Management’s Commentary on IFRS Practice Statement 1. To expand the financial information that complements the EEFF.
- Improvements and interpretations of IFRS 9, 15 and 16.
- Proposal to extend by one year the period of application of the amendment to IFRS 16 Leases, issued in 2020, to support the lessees’ accounting for rental concessions related to COVID-19.
- Amendments to IAS 1 and IFRS 2 Practice Statement to improve the information to be disclosed on accounting policies. Also, amendments to IAS 8 to clarify the distinction between accounting policies and accounting estimates.
- Second comprehensive revision of the IFRS standard for SMEs.
- Business combinations under common control. Consultation on possible new accounting requirements for intra-group mergers and acquisitions.
Strategic or transversal projects
- Improved communication in financial reporting.
- Consultation on sustainability reporting. Seeks to respond to the widespread demand for global sustainability standards. In addition, the Foundation will possibly support its creation.
Indeed, regulators insist on transparent and relevant disclosures to improve understanding of financial performance, financial position and cash flows.
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