IFRS Introduction

for Accounting Professionals

IFRS Introduction

1 PREFACE

These workbooks are an update of those originally written by the project team of the European Union funded project Accounting Reform II, in the Russian Federation.

In 2006 and 2007, the workbooks were updated by the project team of the European Union funded project, Implementation of Accounting Reform in the Russian Federation, in cooperation with the Ministry of Finance and the Ministry of Agriculture.

The workbooks cover various concepts of IFRS based accounting. They are intended to be practical self-instruction aids that professional accountants can use to upgrade their knowledge, understanding and skills.

Each workbook is a self-standing short course of study is designed for a approximately of three hours of study.

The members of the project team were contributed by PwC Moscow and FBK Moscow, ACCA London and Agriconsult Rome. Although the workbooks are part of a series, each one is independent of the others.

A basic knowledge of accounting is assumed but if any additional knowledge is required this is mentioned at the beginning of the section.

Each workbook is a combination of, Information, and Self Test Questions and Answers.

Further Reading References and links to useful Web Sites are also included.

The IFRS series includes a workbook on transformation, covering the production of IFRS financial statements from RAS based data.

The volumes within each series are described in detail and available for download from the project web site.

The copyright of the material contained in each workbook belongs to the European Union and according to their policy may be used free of charge for any non-commercial purpose.

The project team would like to express thanks to those who have contributed their time and thoughts to the content of the workbooks. In particular:

The European Union Delegation, Moscow

The Ministry of Finance and Ministry of Agriculture, Russian Federation

Contact

e-mailweb

victoria.Stepanova.ru.pwc.comwww.accountingreform.ru

Tel.Fax.

+ 7 495 967 6047+ 7 495 967 6001

Moscow, Russia, April 2006

Contents

21PREFACE

2An Introduction to IFRS

21.1Scope

22Grouping of IFRS

22.1Introductory Standards

22.2Foundation Standards

22.3Property, Plant and Equipment Standards

22.4Special Case 1 Standards

22.5Remuneration Standards

22.6Listed Company Standards

22.7Special Case 2 Standards

22.8Disclosure Standards

22.9Banking Standards

22.10Industry Specific Standards

22.11Consolidation Standards

22.12Additional Publications from sources other than IASB

23Overview of the Standards

23.1Introductory Group

2IFRS Framework for the Preparation and Presentation of Financial Statements

2IAS 1: Presentation of Financial Statements

2IAS 7: Cash Flow Statements

2IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors

23.2Foundation Group

2IAS 18: Revenue

2IAS 2: Inventories

2IAS 37: Provisions, Contingent Liabilities and Contingent Assets

2IAS 12: Income Taxes

23.3Property, Plant and Equipment Group

2IAS 16: Property, Plant and Equipment

2IAS 36: Impairment of Assets

2IAS 40: Investment Property

2IAS 17: Leases

2IAS 38: Intangible Assets

2IAS 11: Construction Contracts

2IAS 23: Borrowing Costs

2IAS 20: Accounting for Government Grants and Disclosure of Government Assistance

24Special Case 1 Group

2IAS 21: The Effects of Changes in Foreign Exchange Rates

2IFRS 5: Non-current Assets Held for Sale and Discontinued Operations

25Remuneration Group

2IAS 19: Employee Benefits

2IAS 26: Accounting and Reporting by Retirement Benefit Plans

2IFRS 2: Share-based Payment

26Listed Company Group

2IAS 14: Segment Reporting

2IAS 34: Interim Financial Reporting

2IAS 33: Earnings per Share

27Special Case 2 Group

2IAS 29: Financial Reporting in Hyperinflationary Economies

2IFRS 1: First-time Adoption of International Financial Reporting Standards

28Disclosure Group

2IAS 24: Related Party Disclosure.

2IAS 10: Events after the Balance Sheet Date

29Banks Group

2IFRS 7: Disclosure in the Financial Statements of Banks and Similar Financial Institutions

2IAS 32: Financial Instruments: Disclosure and Presentation

2IAS 39: Financial Instruments: Recognition and Measurement

210Industry Specific Group

2IAS 41: Agriculture

2IFRS 4: Insurance Contracts

2IFRS 6. Exploration for and evaluation of mineral resources

211Consolidation Standards

2IFRS 3: Business Combinations

212Additional Publications

212.1Illustrative

2Illustrative Corporate Financial Statements

2IFRS Disclosure Checklist

212.2Transformation

2RAS to IFRS Transformation

212.3Case Studies

2IFRS Case Studies

2Issues and Solutions for the Pharmaceutical Industry

An Introduction to IFRS

1.1 Scope

These notes are an unofficial guide to IFRS and complement the series, IFRS Workbooks for Accounting Professionals. The main objective is to help you navigate the IFRS standards by grouping them by theme.

The secondary purpose is to highlight how our publications can assist in learning IFRS. For each Standard there is a workbook, comprising text, examples, multiple-choice questions and answers.

The architecture of IFRS must be taken as a whole. Financial statements prepared under IFRS must use all of the applicable standards to be IFRS compliant.

IFRS can be grouped by theme rather than date of publication as published by IASB.

The themes chosen recognise that some standards, such as Impairment interact with a range of other standards.

Our website www.accountingreform.ru contains workbooks and training materials on each standard. In accordance with EU policy, they are free for download and use for any non-commercial purpose.

2 Grouping of IFRS

The standards are grouped into twelve themes as follows:

2.1 Introductory Standards

IFRS Framework for the Preparation and Presentation of Financial StatementsMain Financial Statements and Accounting Policies

IAS 1: Presentation of Financial StatementsIAS 7: Cash Flow Statements IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors2.2 Foundation Standards

IAS 18: RevenueIAS 2: InventoriesIAS 37: Provisions, Contingent Liabilities and Contingent AssetsIAS 12: Income Taxes2.3 Property, Plant and Equipment Standards

IAS 16: Property, Plant and EquipmentIAS 36: Impairment of AssetsIAS 40: Investment PropertyIAS 17: LeasesIAS 38: Intangible AssetsIAS 11: Construction ContractsIAS 23: Borrowing CostsIAS 20: Accounting for Government Grants and Disclosure of Government Assistance2.4 Special Case 1 Standards

IAS 21: The Effects of Changes in Foreign Exchange RatesIFRS 5: Non-current Assets Held for Sale and Discontinued Operations2.5 Remuneration Standards

IAS 19: Employee BenefitsIAS 26: Accounting and Reporting by Retirement Benefit PlansIFRS 2: Share-based Payment2.6 Listed Company Standards

IAS 14: Segment ReportingIAS 34: Interim Financial ReportingIAS 33: Earnings per Share2.7 Special Case 2 Standards

IAS 29: Financial Reporting in Hyperinflationary EconomiesIFRS 1: First-time Adoption of International Financial Reporting Standards2.8 Disclosure Standards

IAS 24: Related Party Disclosure. IAS 10: Events after the Balance Sheet Date2.9 Banking Standards

IFRS 7: Disclosure in the Financial Statements of Banks and Similar Financial InstitutionsIAS 32: Financial Instruments: Disclosure and PresentationIAS 39: Financial Instruments: Recognition and Measurement2.10 Industry Specific Standards

IAS 41: AgricultureIFRS 4: Insurance ContractsIFRS 6. Exploration for and evaluation of mineral resourses2.11 Consolidation Standards

IFRS 3: Business CombinationsIAS 27: Consolidated and Separate Financial StatementsIAS 28: Investments in AssociatesIAS 31: Interests in Joint Ventures2.12 Additional Publications from sources other than IASB

Illustrative, Checklist

Illustrative Corporate Financial Statements 2004

IFRS Disclosure Checklist 2004

Transformation

RAS to IFRS Transformation

Case Studies

IFRS Case StudiesIssues and Solutions for the Pharmaceutical Industry3 Overview of the Standards

3.1 Introductory Group

IFRS Framework for the Preparation and Presentation of Financial Statements

This framework document deals with:

(i) the objective of financial statements;

(ii) the qualitative characteristics that determine the usefulness of information in financial statements;

(iii) the definition, recognition and measurement of the elements from which financial statements are constructed; and

(iv) concepts of capital and capital maintenance.

It identifies that IFRS accounts are prepared using the accrual concept and that financial statements are normally prepared on the assumption that an undertaking is a going concern, and will continue in operation for the foreseeable future.The Framework document is a comprehensive overview of the foundations of IFRS, and is referred to by the IASB in its deliberations on new standards and amendments to existing standards.

Main Financial Statements and Accounting Policies

IAS 1: Presentation of Financial StatementsIAS 7: Cash Flow Statements As well as financial performance, financial statements also show the results of managements stewardship of resources and must provide information on:

(i) assets;

(ii) liabilities;

(iii) equity;

(iv) income and expenses, including gains and losses;

(v) other changes in equity; and

(vi) cash flows.

A complete set of financial statements comprises:

(i) a balance sheet;

(ii) an income statement;

(iii) a statement of changes in equity showing either:

(iv) all changes in equity, or

(v) changes in equity (not normal buying and selling);

(vi) a cash flow statement; and

(vii) notes, comprising a summary of significant accounting policies, and other explanatory notes.

IAS 1 and IAS 7 cover the primary presentation issues of IFRS financial statements and specify the information that needs to be included in those statements.

IAS 7 requires the disclosure of information on changes in cash and cash equivalents by means of a cash flow statement.

This classifies cash flows into:

(i) operating,

(ii) investing and

(iii) financing activities.

Foreign currency cash flows are covered, as are Acquisitions and Disposals of Subsidiaries and Other Business Units.

IAS 8: Accounting Policies, Changes in Accounting Estimates and ErrorsAn undertaking shall disclose in the summary of significant policies:

(i) the measurement bases used in the financial statements; and

(ii) the other policies used, that are relevant to an understanding of the financial statements.

IAS 8 prescribes the criteria for selecting and changing accounting policies, and disclosing the effects of estimates and errors.

Accounting policies are rules and practices applied in presenting financial statements.

A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability or the consumption of an asset.

Changes in estimates result from new information, or new developments are not corrections of errors.

Prior-period errors are omissions or misstatements in the financial statements of prior-periods.

Information that was available, and should have been taken into account, is classified as an error.

Errors include

(i) calculation error;

(ii) incorrect application of accounting policies;

(iii) oversights or misinterpretations;

(iv) fraud.

Retrospective application, is applying a new policy as if that policy had always been applied.

Retrospective restatement is restating financial statements as if a prior-period error had never occurred.

Retrospective application and restatement may be new to some of our readers. Our workbook on IAS 8 provides guidance and examples.

3.2 Foundation Group

IAS 18: Revenue

Revenue is income that is derived from ordinary activities of the firm. (See also

IAS 17, 28, 39 & 41 which complement IAS 18 in respect of revenue.)

Income comprises revenue and gains.

The timing of recognition of revenue is a key issue of the standard.

Revenue will be recognised when it is probable that future economic benefits will flow to the undertaking, and the benefits can be measured.

IAS 2: InventoriesInventories are:

(i) assets that are held for sale, or being prepared for sale,

(ii) materials to be used in the production process or provision of services.

In the case of the provision of services, inventories include the cost of unbilled services, (similar to work in progress).

Valuation of inventory at cost, fair value and net realisable value are all discussed in the workbook.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets

IAS 37 sets out recognition criteria and measurement bases for provisions, contingent liabilities and contingent assets and specify the information to be disclosed in the notes to the financial statements.

Provisions are used to provide for future liabilities that are uncertain.

Contingent assets are uncertain cash inflows that may be received.

Contingent liabilities (e.g. guarantees and warranties) do not appear on balance sheets, but need to be noted in financial statements to enable users to have a complete picture of the undertakings financial position.IAS 12: Income TaxesIAS 12 prescribes the accounting treatment for income taxes, and the tax consequences of:

(i) Transactions of the current period;

(ii) The future liquidation of assets and liabilities.

If liquidation of those assets and liabilities will make future tax payments larger or smaller, IAS 12 generally requires recording of a deferred tax liability (or deferred tax asset).

IAS 12 also covers:

(i) Recognition of deferred tax assets arising from unused tax losses, or unused tax credits,

(ii) Presentation of income taxes, and

(iii) Disclosure of information relating to income taxes.

3.3 Property, Plant and Equipment Group

IAS 16: Property, Plant and Equipment

The main issues in accounting for property, plant and equipment are:

(i) the recognition of the assets;

(ii) the determination of their carrying amounts;

(iii) the depreciation charges; and

(iv) impairment losses to be recognised.

IAS 36: Impairment of Assets

The objective of IAS 36 is to prescribe the procedures to ensure that assets are carried at no more than their recoverable amount and the disclosures that must be made.

An asset is described as impaired when its carrying amount exceeds the recoverable amount (amount to be recovered through use, or sale).

IAS 36 requires the recording of an impairment loss.

IAS 40: Investment Property

Investment property can be:

(i) land, or

(i) a building, or

(ii) part of a building, or

(iii) both land and building.

It is held by the owner (or by the lessee, under a finance lease) to earn rent, or for capital appreciation, or both.

It does not include property:

(i) for use in the production, supply of goods, services,

(ii) or for administrative purposes; or

(iii) for sale in the ordinary course of business.

IAS 17: Leases

Leases involve the owner of an asset renting it to others for payment.

Short-term rental agreements are mostly accounted for as operating leases, in the same way as rental payments are booked.

Long-term rentals (finance leases) have seen dramatic growth over the last 50 years.

IAS 17 addresses this issue by accounting for finance leases in a similar manner to the purchase of an asset, matched by a loan for the same amount.

The asset appears on the balance sheet, even though the lessee does not own it.

Operating leases are treated as expense items in the income statement.

IAS 38: Intangible AssetsIAS 38 requires an undertaking to record an intangible asset only if:

(i) future benefits of the asset will flow to the undertaking and

(ii) the cost of the asset can be measured.

This requirement applies whether an intangible asset is acquired externally, or generated internally.

IAS 38 includes additional recognition criteria for internally-generated intangible assets.

After initial recognition, IAS 38 requires an intangible asset to be measured at:

(i) cost, less any accumulated amortisation and any accumulated impairment losses or

(ii) revalued amount, less any accumulated amortisation, and any accumulated impairment losses.

IAS 11: Construction ContractsThe start and finish of construction contracts often falls in to different accounting periods.

Thus, the timing of recognition of contract revenue and contract costs are key issues of the standard.

An effective internal financial budgeting and reporting system, which is kept up-to-date at all times, is required to control construction contracts.

Regular reviews of costs and revisions of estimates are necessary throughout the contract.

Construction contracts include:

(i) services related to the construction, such as project managers and architects;

(ii) contracts for demolition, or restoration, of assets and the restoration of the environment.

IAS 23: Borrowing CostsGenerally, borrowing costs are immediately expensed.

An alternate treatment is allowed: the capitalisation of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.

IAS 20: Accounting for Government Grants and Disclosure of Government AssistanceThe standard covers accounting and disclosure of government grants and similar assistance that transfers resources to qualifying firms. The firms qualify by past, or future, compliance with the grant conditions.

Grants exclude assistance that cannot be reasonably valued, and transactions with government which are in the normal course of trade.

Such incentives as free technical assistance, marketing advice and the provision of guarantees may not be easy to value.

4 Special Case 1 Group

IAS 21: The Effects of Changes in Foreign Exchange Rates

Transactions in foreign currencies, investments and liabilities in foreign currencies are covered, as are financial statements of foreign operations.

The standard sets out how to recognise and record income, expenditure, assets and liabilities denominated in a foreign currency and how gains and losses are recognised.

IFRS 5: Non-current Assets Held for Sale and Discontinued OperationsIFRS 5 sets out requirements for the classification, measurement and presentation of non-current assets held for sale.

IFRS 5 arises from the IASBs consideration of the U.S. based FASB Statement No. 144 and addresses two areas:

(i) the classification, measurement and presentation of assets held for sale;

(ii) the classification and presentation of discontinued operations.

5 Remuneration Group

Providing guidance on remuneration, these standards are of specific interest to those involved in private pension schemes and the use of shares and share options to pay staff and others.

IAS 19: Employee BenefitsIAS 19 identifies, and provides guidance on the accounting for, five categories of staff benefits:

(i) short-term staff benefits, such as salaries and social security contributions, paid annual leave and paid sick leave, profit-sharing and bonuses payable within twelve months and non-cash benefits such as medical care, housing, cars and free or subsidised goods or services for current staff.

(ii) post-employment benefits such as pensions, other retirement benefits, post-employment life insurance and post-employment medical care.

(iii) other long-term staff benefits, including long-service or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are payable twelve months or more after the end of the period, profit-sharing, bonuses and deferred compensation.

(iv) termination benefits.

(v) equity compensation benefits.

IAS 26: Accounting and Reporting by Retirement Benefit Plans

IAS 26 should be applied in the reports of private retirement benefit (pension) plans where such reports are prepared.

IFRS 2: Share-based Payment

IFRS 2 covers settlements made in an entitys own equity instruments or in cash, if the amount payable depends on the price of the entitys shares (or other equity instruments, such as options).

Estimates are required of the number of options, or other instruments, expected to be exercised.

Such estimates are complex to calculate where performance criteria, such as earnings targets, are involved. Specialist valuation skills are likely to be required in order to determine the amounts to be reported in the financial statements.

6 Listed Company Group

These three standards are compulsory only for companies listed on stock exchanges, or mandatory under national accounting regulations. For other companies these standards are recommended.

IAS 14: Segment Reporting

IAS 14 establishes principles for reporting financial information by segment. Segments are the different types of products, services, geographical areas of operation.

Many undertakings provide groups of products, and services, or operate in geographical areas that are subject to differing rates of profitability, opportunities for growth, future prospects, and risks.

Segment information is relevant to assessing the risks, and returns, of a diversified, or multinational, undertaking that may not be determinable from the aggregated data.

The principle of segment analysis e.g. by customer or customer industry is applicable to all businesses.

IAS 34: Interim Financial ReportingIAS 34:

(i) defines the minimum content of an interim financial report; and

(ii) identifies the recognition and measurement principles that should be applied in an interim financial report.

The notes to interim financial reports include primarily an explanation of the events, and changes, that are significant to an understanding of the changes in financial position, and performance, since the last annual reporting date.

Virtually none of the notes to the annual financial statements are repeated, or updated in the interim report.

IAS 33: Earnings per ShareThe objective of IAS 33 is to prescribe principles for the calculation and presentation of earnings per share. This is to improve comparisons between different undertakings in the same reporting period, and between different reporting periods for the same undertaking.

Earnings per share (earnings / number of shares) as a measure of performance has its limitations, as accounting policies for determining earnings may differ.

The focus of IAS 33 is on determining the number of shares used in the EPS calculation, which may not be immediately clear (e.g. where options exist).

7 Special Case 2 Group

IAS 29: Financial Reporting in Hyperinflationary EconomiesIAS 29 is based on current purchasing power principles and requires that financial statements, prepared in the currency of a hyperinflationary economy, be stated in terms of the value of money at the reporting balance sheet date.

This straightforward requirement needs an understanding of complex economic concepts, a thorough knowledge of the enterprises financial and operating patterns and a detailed series of procedures to implement.

IFRS 1: First-time Adoption of International Financial Reporting Standards

IFRS 1 sets out the requirements for first time adopters of IFRS. The standard allows companies to avoid some of the need for reconstructing old records, by providing exemptions from other standards.

8 Disclosure Group

IAS 24: Related Party Disclosure.

The standard will be applied in:

(i) Identifying related party relationships and transactions;

(ii) Identifying outstanding balances between an undertaking and related parties;

(iii) Identifying when the disclosures should be made; and

(iv) Determining what disclosures should be made.

Related party relationships are a normal feature of business throughout the world. The related party relationships can have an impact on the profit, or loss, of an undertaking.

Transactions with related may be made on different terms or prices, than would have been made with unrelated parties.

IAS 10: Events after the Balance Sheet Date

IFRS 10 details the post-balance-sheet events, when they should be recognised and how they should be recorded and disclosed.

Post-balance-sheet events happen in the period starting immediately after the balance sheet date and ending at the date of approval of the financial statements by the shareholders.

There are 4 main types of material post-balance-sheet event in this period:

(i) Dividends declared in the period should be noted, but not shown as a liability, at the balance sheet date.

(ii) If the company can no longer be considered a going-concern during this period, the financial statements should not be prepared on a going-concern basis.

(iii) Events that were unknown or unclear at the balance sheet date, will cause the financial statements to be adjusted.

(iv) Conditions that arose after the balance sheet date should not adjust the financial statements, but should be suitably noted.

9 Banks Group

Whilst IFRS 7 relates only to Banks and similar financial institutions, IAS 32 and IAS 39 must be applied to financial instruments in any company reporting under IFRS.

Financial instruments are used extensively in banking but only to a limited extent in enterprises.

IFRS 7: Disclosure in the Financial Statements of Banks and Similar Financial InstitutionsIFRS 7 requires banks to provide disclosures in their financial statements that enable users to evaluate:

(i) the significance of financial instruments for the banks financial position and performance; and

(ii) the nature and extent of risks arising from financial instruments to which the bank is exposed during the period and at the reporting date, and

(iii) how the entity manages those risks.

There are specified minimum disclosures on credit risk, liquidity risk and market risk.

IAS 32: Financial Instruments: Disclosure and PresentationIAS 39: Financial Instruments: Recognition and MeasurementThese two standards are primarily used by financial institutions and specify disclosure, presentation, recognition and measurement of financial instruments.

Our approach to these 2 complex, comprehensive standards is to provide

4 detailed workbooks on different stages of accounting for financial instruments:

Initial Recognition.

De-recognition.

Subsequent Recognition.

Hedge Accounting.

10 Industry Specific Group

IAS 41: Agriculture

IAS 41 should be applied to the following agricultural activities:

(i) biological assets;

(ii) agricultural produce at the point of harvest; and

(iii) certain government grants.

Agricultural activity includes:

(i) livestock,

(ii) forestry,

(iii) cropping,

(iv) cultivation,

(v) aquaculture (including fish farming).

In each case, living animals and plants perform a biological transformation that takes place in a managed environment. Management is the key issue that differentiates agricultural activity from other activities such as sea fishing or harvesting virgin forest neither of which are classified as agricultural activities.

The extent of change in the biological asset can be measured in a wide variety of ways, ripeness, dimensions, fat content etc.

Biological transformation results in:

(i) Change in the asset through an increase or decrease in quantity, or quality.

(ii) Additional assets may result from procreation or agricultural produce (cereals, legumes, beef, milk).

IFRS 4: Insurance ContractsIFRS 4 specifies the financial reporting for insurance contracts for issuers of such contracts.

In particular, IFRS 4 requires:

(i) certain improvements to accounting,

(ii) disclosure that identifies and explains the amounts in an insurers financial statements, Particularly in relation to:

a. amounts arising from insurance contracts and timing;

b. uncertainty of cash flows.

IFRS 6. Exploration for and evaluation of mineral resourcesIFRS 6 is an interim solution, pending development of a comprehensive solution to help companies deal with the IAS 16 and IAS 38 scope exclusions.

11 Consolidation Standards

IFRS 3: Business CombinationsIFRS 3 is the latest standard relating to consolidated accounts.

It made a number of important changes to previous practice, outlined below, but must be read in conjunction with IAS 27, 28 and 31.

Accounting

Business combinations within the scope of IFRS 3 are accounted for using the purchase method.

The acquirer records the acquirees identifiable assets, liabilities and contingent liabilities at their fair values at the acquisition date and also records goodwill, which is subsequently tested for impairment.

Assets acquired and assumed:

Recognition

If there is an existing restructuring liability per IAS37, it is included in the goodwill calculation.

If fair values can be measured reliably, the acquirer must record separately the acquirees contingent liabilities, at the acquisition date, as part of allocating the cost of a business combination.

If the contingent liabilities cannot be measured, they are not included in the allocation of cost.

Measurement

IFRS 3 requires the acquirees identifiable assets, liabilities and contingent liabilities to be measured initially at their fair values, at the acquisition date.

Any minority interest in the acquiree is the minoritys proportion of the net fair values.

Goodwill

IFRS 3 requires goodwill to be measured after initial recognition at cost, less any accumulated impairment losses.

Goodwill is not amortised, but must be tested for impairment annually, or more frequently.

Negative goodwill

IFRS 3 requires that negative goodwill must be expensed by the acquirer immediately.

IAS 27: Consolidated and Separate Financial StatementsIAS 28: Investments in AssociatesIAS 31: Interests in Joint Ventures

12 Additional Publications

12.1 Illustrative

Illustrative Corporate Financial Statements

This publication provides an illustrative set of consolidated financial statements, prepared in accordance with IFRS, for a fictional manufacturing, wholesale and retail entity (Footsy & Co Group). It provides a full set of financial statements, including notes, and references.

IFRS Disclosure Checklist

Structure of the publication:

Section A Disclosures for consideration by all entities

Section B Disclosures required by all entities but only in certain situations

Section C Industry-specific disclosures

Section D Additional disclosures required by listed companies

Section E Additional disclosures required by banks and similar financial institutions

Section F Additional disclosures required by entities that issue insurance contracts

Section G Additional disclosures required for retirement benefit plans

Section H Suggested disclosures for financial review outside the financial statements

Section I Disclosures for interim financial reports

Format of Disclosure Checklist

The Disclosure Checklist is presented in a format designed to facilitate the collection and review of disclosures for each component of the financial statements.

All disclosures have been grouped by subject, where appropriate.

Additional notes and explanations in the checklist are shown in italics.

12.2 Transformation

RAS to IFRS Transformation

The purpose of this workbook is to examine the process and adjustments necessary to transform a trial balance based on Russian Accounting Standards (RAS) into a set of IFRS financial statements comprising Income Statement and Balance Sheet.

The workbook has been designed around a series of the most common adjustments covering the main aspects of transformation.

These are presented in the form of 17 separate companies each of which requires 2/5 adjustments. Each company uses the same opening, unadjusted, RAS based trial balance which is then adjusted in accordance with the 2/5 entries required.

Adjustments from all of the seventeen companies are brought together in a summary that reflects all of the adjustment made in the individual companies.

12.3 Case Studies

IFRS Case Studies

The 20 case studies have been designed to cover a wide range of circumstances but at the same time recognise the conditions and problems specific to the type of industry and business.

They include examples of:

(i) Re-categorisation the Russian chart of accounts into an IFRS compatible format;

(ii) Identifying and outlining the reclassification and adjustments required to bring the Russian numbers into IFRS compatible values. This included the formalisation of detailed list of differences and practical application issues.

Case 20 reviews some of the problem issues identified and makes observations on the future direction of implementation of IFRS for Russian Companies.

Various types of case study were created including:

(i) Illustrative or Descriptive Case Studies The objective of these case studies is to make the IFRS concept familiar to those who not familiar with them, and to give the participants a common language.

(ii) Pilot Case Studies These case studies simulate all or parts of the implementation of IFRS. They assist in the real process of planning, timetabling and implementing itself, as well as identifying questions, problems and missing information.

(iii) Cumulative Case Studies. - These studies combine information or issues from various enterprises and past studies to allow general truths to be established.

(iv) Critical Incident Case Studies These case studies examine selected issues or procedures, which impact the implementation of IFRS. They help to identify and find solution for issues, which arise during the conversion or implementation process.

(v) Enterprise Specific Case Studies These studies examine IFRS issues in specific industries, for example mining or construction.

(vi) Implementation of Change Case Studies These case studies examine the management, of the implementation process.

Issues and Solutions for the Pharmaceutical Industry

This publication covers 35 IFRS issues met in the Pharmaceutical Industry, plus issues of business combinations. The presentation of each issue is the background of the issue, relevant guidance and the solution.

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