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Frequently asked questions (FAQ) on IFRS!
Introduction
Accounting is the backbone of the business financial world. The aim of financial reporting is to understand the business through the numbers and facts. Worldwide accounting practice was highly diverse and meaningfully comparing financial statements of entities located in different countries was very difficult. Considering the increasing trend of globalisation across the world, harmonisation in the accounting was necessary.
International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board. In simple words IFRS are a set of accounting rules for how information should be gathered and presented in financial reports.
They constitute a standardised way of describing the company’s financial performance and position so that company financial statements are understandable and comparable across international boundaries. They are particularly relevant for companies with shares or securities publicly listed.
Why (IFRS) International Financial Reporting Standards
- Accounting & financial reporting is vital for economies to grow and prosper.
- With the globalisation, difficulty in undertaking cross border transactions, due to difficulty in understanding financial statements of other entity.
- To bring harmony in the accounting language, there was need of reliable, transparent and can be comparable reporting framework.
- Considering this need. IASB and its predecessor organisation IASB introduced a set of high-quality reporting standards which are comparable across the globe, called IFRS.
For more details, watch the video at the provided link: https://youtu.be/vV_Ga6DpJBc
How are IFRS standards developed?
IFRS Accounting Standards are developed through a formal system of due process and broad international consultation involving accountants, financial analysts and other users and regulatory bodies from around the world.
The overall agenda of the IASB will initially be set by discussion with the IFRS Advisory Council. The process for developing an individual standard would involve the following steps:
01.
During the early stages of a project, the IASB may establish an Advisory Committee to give advice on issues arising in the project. Consultation with the Advisory Committee and the IFRS Advisory Council occurs throughout the project.
02.
IASB may develop and publish Discussion Papers for the public comment.
03.
Following the receipt and review of comments, the IASB would develop and publish an Exposure Draft for public comment.
04.
Following the receipt and review of comments, the IASB would issue a final IFRS Accounting Standard.
The period of exposure for public comment is normally 120 days. However, in exceptional circumstances, proposals may be issued with a comment period of 30 days. Draft IFRS interpretations are normally exposed for a 90-day comment period.
Is IFRS mandatory for financial reporting in India?
India made a commitment to G20 nations in their summit in 2009 towards convergence to IFRS. Accordingly, India decided to adopt a reporting framework similar to IFRS i.e., Ind AS, Indian Accounting Standards Converged with IFRS (conversion approach). Ind AS to be adopted in a phased manner from the financial year 2016-17 with comparatives for the year financial year 2015-16 for certain class of companies. Currently all publicly listed companies (including NBFCs) and companies in the process of listing along with their subsidiaries, JV and associates are covered within the ambit of Ind AS. Further, private limited companies with net worth of 250 crores or more along with their subsidiaries, JVs and associates are also required to comply with Ind AS.
Can private companies or small companies use IFRS?
Yes, private companies can choose to use IFRS in many jurisdictions. Small companies may also use IFRS depending on the jurisdictional requirements. Some countries may have separate guidelines or simplified standards for smaller entities, such as IFRS for SMEs (Small and Medium-sized Entities) as issued by IASB.
What is the salary range for professionals with IFRS expertise?
Salaries vary by country, experience, and role, but typically:
- Entry-level positions (1-3 years of experience): INR 3 lakhs to 6 lakhs per year.
- Mid-level positions (4-8 years of experience): INR 7 lakhs to 15 lakhs per year.
- Senior positions (8+ years of experience, such as CFOs or IFRS consultants): INR 15 lakhs onwards.
Note: This is merely an indicative range, and actual salaries may differ depending on the skillset of a candidate.
At FinPro Consulting, we specialise in delivering training, GAAP Conversion Services and other consulting services related to financial reporting under IFRS, Ind AS and US GAAP. FinPro is also a Registered Learning Partner (RLP) with ACCA, UK and has conducted 31+ retail training batches for Diploma IFRS course.
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