week 3 - accounting policies, standards & ifrs

8/3/2019 Week 3 - Accounting Policies, Standards & IFRS

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WEEK 3

Distinguishing between principle, policies and standards:

Accounting principles are a set of rules that governs current accounting practice and that is used as a reference to determine the appropriatetreatment of complex transactions. They are the rules that govern good practice.

Accounting standards -principles that govern current accounting practice and that are used as a reference to determine the appropriatetreatment of complex transactions. They are a set of rules stating how particular types of transactions and other events should be reflected infinancial statements.

Accounting Policies are specific policies and procedures used by a company to prepare its financial statements. These include any methods,measurement systems and procedures for presenting disclosures. Accounting policies differ from accounting principles in that the principlesare the rules and thepolicies are a company's way of adhering to the rules.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

International Financial Reporting Standards (IFRS) are a set of accounting standards (principles-based standards, interpretations and the

framework) developed by the International Accounting Standards Board (IASB) that are becoming the global standard for the preparationof public company financial statements. They establish broad rules as well as dictating specific treatments.

Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issuedbetween 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took

over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existingIAS and SICs. The IASB has continued to develop standards calling the new standards IFRS.

The term International Financial Reporting Standards (IFRSs) has both a narrow and a broad meaning. Narrowly, IFRSs refers to the newnumbered series of pronouncements that the IASB is issuing, as distinct from the International Accounting Standards (IASs) series issued byits predecessor. More broadly, IFRSs refers to the entire body of IASB pronouncements, including standards and interpretations approved bythe IASB and IASs and SIC interpretations approved by the predecessor International Accounting Standards Committee.

STRUCTURE OF IFRS

The transformation of IASC to IASB started in September 1996 when IASC Board approved the formation of a 'Strategy Working Party'

(SWP) to consider what IASC's strategy and structure should be when it completes the 'Core Standards' work programme.

International Accounting Standards (IAS), 1973 to 2001 International Financial Reporting Standards (IFRS),

01/04/2001 to date IAS were issued by the Board of the International Accounting

Standards Committee (IASC)

IFRS are issued by the International Accounting Standards Board

(IASB)

Interpretations by Standing Interpretations Committee (SIC) Interpretations by the International Financial ReportingInterpretations Committee (IFRIC)

The International Accounting Standards Committee (IASC) was formed in 1973 through an agreement made by professionalaccountancy bodies from Australia, Canada, France, Germany,

Japan, Mexico, the Netherlands, the United Kingdom and Ireland,and the United States of America. Additional sponsoring members

were added in subsequent years, and in 1982 the sponsoring"members" of the IASC comprised all of the professional

accountancy bodies that were members of the InternationalFederation of Accountants (IFAC).

The IASB is organized under an independent Foundation namedthe IFRS Foundation. That Foundation is a not-for-profitcorporation created under the laws of the State of Delaware,

United States of America, on 8 March 2001

IASC Board described above.

Consultative Group an advisory body representing a wide rangeof international organizations with an interest in accounting.

International Accounting Standards Board (IASB) has sole

responsibility for establishing International Financial ReportingStandards (IFRSs).

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Standing Interpretations Committee (SIC) developed and

invited public comment on interpretations of IASC Standards,subject to final approval by the IASC Board.

Advisory Council oversight body (despite its name, the AdvisoryCouncil functioned more like the Board of Trustees of the new

IASC Foundation, described below).

Steering Committees expert task forces for individual agenda

projects.

IFRS Foundation (22 trustees) oversees the work of the IASB,

the structure, and strategy, and has fundraising responsibility.

Monitoring Board (16 members, part-time, max 3) oversees the

IFRS Foundation Trustees, participates in the Trustee nominationprocess, and approves appointments to the Trustees.

IFRS Interpretations Committee (14 members) developsinterpretations for approval by the IASB.

IFRS Advisory Council (approx 40) advises the IASB and theIASCF.

Working Groups expert task forces for individual agendaprojects.

INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

The IASB is an independent accounting standard-setting body consisting of 15 members from nine countries. The IASB began operations in

2001 when it succeeded the International Accounting Standards Committee. It is funded by contributions from major accounting firms,private financial institutions and industrial companies, central and development banks, national funding regimes, and other international and

professional organizations throughout the world.

The principal responsibilities of the IASB are to: Develop and issue International Financial Reporting Standards and Exposure Drafts, and Approve Interpretations developed by the IFRS Interpretations Committee.

The IASB has full discretion over developing and pursuing its technical agenda. The trustees' annual review of the strategy of the IFRSFoundation and the IASB and its effectiveness includes "consideration, but not determination, of the IASB's agenda

Effective 1 February 2009, the publication of a Standard, Exposure Draft, or final IFRIC Interpretation requires approval by 10 of the Board's16 members (9 if fewer than 16 members are sitting). All other decisions of the IASB require a simple majority vote.

The Board meets monthly (except August) for approximately one week. Board meetings are normally held at the IASB's office in London.Since 2010, the IASB and FASB also meet jointly on a monthly basis.

IFRS INTERPRETATIONS COMMITTEE

(At their meeting in January 2010, the IASCF Trustees voted to rename the International Financial Reporting Interpretations Committee

(IFRIC) to the IFRS Interpretations Committee)

The IFRS Interpretations Committee develops interpretations of IASs and IFRSs. The Interpretations Committee replaced the former

Standing Interpretations Committee (SIC) in March 2002. The Interpretations Committee's mission (from the IASCF Constitution) is:

"to interpret the application of International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) andprovide timely guidance on financial reporting issues not specifically addressed in IASs and IFRSs, in the context of the IASB Framework,and undertake other tasks at the request of the IASB".

Publish Draft Interpretations for public comment and consider comments made within a reasonable period before finalizing an

Interpretation.

Report to the Board and obtain Board approval for final Interpretations.

Diagram of the Current IASB Structure

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KEY IFRS PARTNERS

Certain groups have been closely involved with the development of IASC Standards during the 1990s as participating observers at everyIASC Board meeting and nearly all IASC steering committee meetings. Those groups continue to be closely involved with the work of the

IASB. They are:

1. European Commission2. European Financial Reporting Advisory Group (EFRAG)

3. International Organization of Securities Commissions (IOSCO)4. International Federation of Accountants (IFAC)5. US Financial Accounting Standards Board (FASB)6. United States Public Company Accounting Oversight Board (PCAOB)

7. United States Securities and Exchange Commission (SEC)

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MEMBERSHIP AND FUNCTIONS OF THE IASB STRUCTURES

Body / Structure Function Membership

International

Accounting StandardsBoard (IASB)

Has sole responsibility for establishing

International Financial Reporting Standards(IFRSs). Duties include:

Develop and issue InternationalFinancial Reporting Standards and

Exposure Drafts

Approve Interpretationsdeveloped by the InternationalFinancial Reporting Interpretations

Committee (IFRIC)

16 members, of whom at least 13 serve full-time and not more

than 3 part-time. The board is required to have an appropriate mixof recent practical experience among auditors, preparers, users and

academics.The Board will normally form Working Groups or other types of

specialist advisory groups to give advice on major projects.

IFRS Foundation (22

trustees)

Oversees the work of the IASB, the

structure, and strategy, and has fundraisingresponsibility.

Geographical balance of trustees. 6 from North America. 6 from Europe. 6 from the Asia/Oceania region 4 from any area, subject to establishing overall geographical

balance.

Monitoring Board (16members, part-time,max 3)

Oversees the IFRS Foundation Trustees, participates in the Trustee nominationprocess, and approves appointments to the

Trustees.

Comprises of the relevant leaders of the European Commission,the Japanese Financial Services Agency, the US SEC, theEmerging Markets Committee of IOSCO, and the Technical

Committee of IOSCO. The chairman of the Basel Committee onBanking Supervision is a non-voting observer.The constitution requires an appropriate balance of professional

backgrounds, including auditors, preparers, users, academics, and

other officials serving the public interest. Two will normally besenior partners of prominent international accounting firms.

IFRS InterpretationsCommittee a.k.a.

Financial ReportingInterpretationsCommittee) (14members)

Develops interpretations for approval by theIASB.

14 members* appointed by the Trustees for terms of three years(enlarged from 12 in Nov 2007)

IFRS AdvisoryCouncil (approx 40)

Advises the IASB and the IASCF. TheIFRS Advisory Council provides a forum

for participation by organisations andindividuals, with an interest in internationalfinancial reporting, having diversegeographical and functional backgrounds

Under the IFRS Foundation Constitution, the Advisory Councilhas 30 or more members. The number is currently around 40. The

Trustees appoint members for a renewable term of three years.They have diverse geographic and functional backgrounds

Working Groups Expert task forces for individual agendaprojects.

The IASCF Trustees' Procedures Committee reviews the proposedcomposition of each group to ensure that there is a satisfactory

balance of perspectives. The groups include: Capital Markets Advisory Committee (formerly Analyst

Representative Group) Global Preparers Forum (GPF) Financial Crisis Advisory Group (jointly with FASB) Emerging Economies Group (EEG) IFRS Advisory Council

Please Note!

(a) International Federation of Accountants (IFAC) is the global organization for the accountancy profession. It works with its 164members and associates (primarily national professional accountancy bodies) in 125 countries and jurisdictions to protect the public interest

by encouraging high quality practices by the world's accountants. IFAC members and associates represent 2.5 million accountants employed

in public practice, industry and commerce, government, and academia. IFAC structure and governance provide for the representation of itsdiverse constituencies and interaction with external groups that rely on or influence the work of professional accountants.

Through its independent standard-setting boards, IFAC develops international standards on ethics, auditing and assurance, education, andpublic sector accounting standards. It also issues guidance to support professional accountants in business, small and medium practices, and

developing nations. In addition, IFAC issues policy positions on topics of public interest and comment letters on matters relevant to theprofession.

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(b) International Public Sector Accounting Standards (IPSASs) these are accounting reporting guidelines developed specifically tooffer reporting guidance to general-purpose financial reporting officers in the public sector. IPSASs are developed and issued by theInternational Public Sector Accounting Standards Board (IPSASB), a specialty board of the International Federations of Accountants

(IFAC). IPSASB therefore, is an independent standard-setting board with special consideration to public sector financial reportingstandards on ethics and public sector accounting. As a board of IFAC, IPSASB also issues guidance to support professional accountantsworking for the public sector organizations. In addition, IPSASB issues policy positions on topics of public interest.

IPSAS are designed to apply to the general purpose financial statements of all public sector entities. Public sector entities

include national (central), regional and local governments, and their component entities such as departments, agencies, boards,commissions, etc. It is important to note that IPSAS do not apply to Government Business Enterprises (GBE).

IPSAS are developed and set out to recognize, measure, present and disclose requirements dealing with transactions andevents in general purpose financial statements.

There are two sets of IPSAS; one set that apply to accrual basis of accounting and another set that apply to the cash basis accountinghowever, there is a move towards adoption of IPSAS hinging on accrual basis of accounting.

IASB'S OBJECTIVES

(a) To develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that

require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in theworld's capital markets and other users make economic decisions;

(b) To promote the use and rigorous application of those standards; and

(c) In fulfilling the objectives associated with (a) and (b), to take account of, as appropriate, the special needs of small and medium-sizedentities and emerging economies; and

(d) To bring about convergence of national accounting standards and International Accounting Standards and International Financial

Reporting Standards to high quality solutions.

SCOPE OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

IASB Standards are known as International Financial Reporting Standards (IFRSs). All International Accounting Standards (IASs) and Interpretations issued by the former IASC and SIC continue to be applicable unless

and until they are amended or withdrawn. IFRSs apply to the general purpose financial statements and other financial reporting by profit-oriented entities those engaged in

commercial, industrial, financial, and similar activities, regardless of their legal form.

Entities other than profit-oriented business entities may also find IFRSs appropriate. General-purpose financial statements are intended to meet the common needs of shareholders, creditors, employees, and the public at

large for information about an entity's financial position, performance, and cash flows. Other financial reporting includes information provided outside financial statements that assists in the interpretation of a complete set of

financial statements or improves users' ability to make efficient economic decisions. IFRS apply to individual company and consolidated financial statements. A complete set of financial statements includes a statement of financial position, a statement of comprehensive income, a statement of

cash flows, a statement of changes in equity, a summary of accounting policies, and explanatory notes. When a separate incomestatement is presented in accordance with IAS 1(2007), it is part of that complete set.

In developing Standards, IASB intends not to permit choices in accounting treatment. Further, IASB intends to reconsider the choices inexisting IASs with a view to reducing the number of those choices.

IFRS will present fundamental principles in bold face type and other guidance in non-bold type (the 'black-letter'/'grey-letter'distinction). Paragraphs of both types have equal authority.

The provision of IAS 1 that conformity with IAS requires compliance with every applicable IAS and Interpretation requires compliancewith all IFRSs as well.

COMPLIANCE WITH IFRS

Financial statements may not be described as complying with IFRSs unless they comply with all of the requirements of each applicable

standard and each applicable interpretation.

GLOBAL ACCEPTANCE OF IFRS: CONVERGENCE, ADOPTION OR ENDORSEMENT?

Adoption means that the local accounting standards body has set a specific timetable when publicly listed companies would be required touse IFRS as issued by the IASB. ICPAK has already decided on the adoption option.

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Convergence means that local accounting standard setting bodies and the IASB would continue working together to develop high quality,compatible accounting standards over time. More convergence will make adoption easier and less costly and may even make adoption ofIFRS unnecessary.

Condorsement - under this approach (US mainly) the local account setters would continue to exist. These setters and IASB would workto finish joint converge projects and after completing those joint projects, convergence will follow over a period of time for standards that are

not on the IASBs work plan. The proponents of this approach argue that that only a handful of the largest jurisdictions use IFRS as issuedby the IASB with no mechanism for making changes to the standards

Supporters of adoption, however, believe that convergence alone will never eliminate all of the differences between the two sets of standards.

Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90

countries have fully conformed with IFRS as promulgated by the IASB and include a statement acknowledging such conformity in auditreports.

County Status

United States Allowed for foreign issuers in the US since 2007; target date for substantialconvergence with IFRSs is 2011 and decision about possible adoption for UScompanies expected in 2011.

EuropeanUnion

In March 2002, the European Parliament passed a resolution requiring all firms listed on stockexchanges of European member states to apply IFRS when preparing their financial statements for

fiscal years beginning on or after January 1, 2005

Japan Japan has introduced a roadmap for adoption that it will finally be decided on in 2012 (with aproposed adoption date of 2015 or 2016) but is permitting certain qualifying domestic companies

to apply IFRS from fiscal years ending on or after March 31, 2010.China Substantially converged national standardsCanada Required from 1 January 2011 for all listed entities and permitted for private

sector entities including not-for-profit organizationsIndia Converging with IFRSs, date to be determined

Australia Required for all private sector reporting entities and as the basis for publicsector reporting since 2005

Brazil Required for consolidated financial statements of banks and listed companiesfrom 31 December 2010 and for individual company accounts progressivelysince January 2008

Argentina Required for fiscal years beginning on or after 1 January 2012

Indonesia Convergence process ongoing; a decision about a target date for full

compliance with IFRSs is expected to be made in 2012Russia Required for banking institutions and some other securities issuers; permitted

for other companiesSaudi Arabia Not permitted for listed companiesMexico Mexico will require IFRS for all listed companies starting in 2012.Republic ofKorea

Required from 2011

South Africa All companies listed on the Johannesburg Stock Exchange have been required to comply with therequirements of International Financial Reporting Standards since 1 January 2005

Turkey Required for listed entities since 2005

FASB/IASB Memorandum of Understanding

After their joint meeting in September 2002, the U.S. Financial Accounting Standards Board (FASB) and the International Accounting

Standards Board (IASB) issued the Norwalk Agreement, in which they each acknowledged their commitment to the development of highquality, compatible accounting standards that could be used for both domestic and cross-border financial reporting. At that meeting, the

FASB and the IASB pledged to use their best efforts (a) to make their existing financial reporting standards fully compatible as soon as ispracticable and (b) to co-ordinate their future work programs to ensure that once achieved, compatibility is maintained.

In February 2006, the FASB and IASB issued a Memorandum of Understanding (MoU). The MoU set forth the relative priorities within theFASB-IASB joint work programs in the form of specific milestones to be reached by 2008.

From the IASB's perspective, MoU projects that will be completed by 2011 include:

Consolidations

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Derecognition Fair Value Measurements Financial Statement Presentation Income taxes Joint Ventures Leases Liabilities and Equity Distinction Post-employment Benefits, Including Pensions Revenue Recognition

Securities Exchange Commission US Adoption

The SEC (US) has made it clear that it envisions 2015 as the earliest possible date for the required use of IFRS by US public companies.However, the SEC has indicated that while it is not pursuing an early adoption option, it could reconsider this position later.

Still other countries have plans to either adopt or converge their national standards with IFRS.

Kenya Compliance Status Kenya had adopted International Accounting Standards (IASs), later renamed International Financial Reporting

Standards (IFRSs) in 1998, thereby "closing the gap" between national and international accounting standards. Reporting entities are requiredto comply with all IFRSs in force is required for all reporting entities (including unlisted companies); audit must state report statescompliance with IFRS

As of 2006, all IFRSs in effect were adopted (as drafted without any modifications except to rename the IFRS as a national standard and / orto translate it into another language"), states the 2006 ICPAK self-assessment. However, a 2006 survey by United Nations Conference onTrade and Development (UNCTAD) pointed out that in practice the levels of non-compliance with IFRSs in Kenya is quite high. In addition,

UNCTAD reported that some industry specific regulation in Kenya and IFRS-based requirements are not compatible and thus universaladherence to IFRSs has not been achieved. In response, the ICPAK stated in a 2008 Action Plan prepared for the IFAC that it is in the

process of reviewing the financial reporting environment to identify existing and potential hindrances to the adoption and implementation of

IFRSs. The Accountants Act Cap 531 does not specifically require the application of IFRS. Nor does the Central Bank of Kenya Act(regulator of financial institution) Banking Act (under which financial are registered), or the Insurance Act Cap 487 (under which insurance

companies are registered).

ADVANTAGES OF USING IFRS

By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier.Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-

wide. Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreigninvestor that must use IFRS. Companies may also benefit by using IFRS if they wish to raise capital abroad.

DISADVANTAGES OF USING IFRS

Despite a belief by some of the inevitability of the global acceptance of IFRS, others believe that U.S. GAAP is the gold standard, and that acertain level of quality will be lost with full acceptance of IFRS. Further, certain U.S. issuers without significant customers or operations

outside the United States may resist IFRS because they may not have a market incentive to prepare IFRS financial statements. They maybelieve that the significant costs associated with adopting IFRS outweigh the benefits.

Complex areas - There is a possibility that despite calls from world leaders to establish a single set of global standards, we could end up withtwo different sets of rules in the area of financial instrument recognition and measurement.

CONSEQUENCES OF CONVERSION

Conversion to IFRS is much more than an accounting exercise. It is a complex and costly undertaking.

Adjustments to operations, information technology systems, tax reporting requirements, internal reporting and key performance metricsand the tracking of stock-based compensation.

As IFRS grows in acceptance, most CPAs, financial statement preparers and auditors will have to become knowledgeable about the newrules.

Other participants, such as actuaries and valuation experts who are engaged by management to assist in measuring certain assets andliabilities, who are not currently taught IFRS will have to undertake comprehensive training.

Professional associations and industry groups will have to integrate IFRS into their training materials, publications, testing, andcertification programs, and many colleges and universities will have to include IFRS in their curricula.

New textbooks covering IFRS will have to be written.

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International Financial Reporting Standards

Preface to International Financial Reporting Standards Framework for the Preparation and Presentation of Financial Statements

DUE PROCESS STEPS IN GENERAL

The IASB develops IFRS in accordance with due process procedures outlined in its governing constitution (IASB 2006). The processinvolves public meetings and extensive input from interested parties around the world.

The preface to IFRS sets out IASB's mission and objectives IFRSs, due process for developing IFRSs and Interpretations, and policies oneffective dates, format, and language for IFRS.

Due process refers to the procedures and a safeguard used to develop standards in the public interest and is designed to facilitate timely,thorough, and open study and deliberation of the continuing development of standards. Such due process includes deliberations in meetings

open to the public and public exposure of working drafts

Formal due process for projects normally, but not necessarily, involves the following steps. The steps that are required by the IASCFoundation Constitution are indicated by (*):

1. Ask the staff to identify and review the issues associated with the topic and to consider the application of the Framework to the issues

2. Study national accounting requirements and practice and exchange views about the issues with national standard-setters3. Consult the Standards Advisory Council about the advisability of adding the topic to the IASB's agenda*

4. Form an advisory group (generally called a 'working group') to advise the IASB and its staff on the project5. Publish for public comment a discussion document6. Publish for public comment an exposure draft approved by vote of at least nine IASB members, including any dissenting opinions held

by IASB members (in exposure drafts, dissenting opinions are referred to as 'alternative views')*

7. Publish within an exposure draft a basis for conclusions;8. Consider all comments received within the comment period on discussion documents and exposure drafts*9. Consider the desirability of holding a public hearing and the desirability of conducting field tests and, if considered desirable, holding

such hearings and conducting such tests;

10. Approve a standard by at least votes of at least nine IASB members and include in the published standard any dissenting opinions* and11. Publish within a standard a basis for conclusions, explaining, among other things, the steps in the IASB's due process and how the IASB

dealt with public comments on the exposure draft.

Due Process for IFRS

Due process steps for a Standard will normally include the following (* below means required by IASB Constitution):

staff work to identify and study the issues study of existing national standards and practices IASB consults with SAC about the advisability of adding the project to the IASB's agenda* IASB normally forms an advisory group IASB publishes a discussion document for comment IASB considers comments received on the discussion document IASB publishes an exposure draft with at least 9 affirmative votes* (the exposure draft will include dissenting opinions and basis for

conclusions) IASB considers comments received on the exposure draft* IASB considers the desirability of holding a public hearing and of conducting field tests* IASB approves the final Standard with at least 9 affirmative votes* (the Standard will include dissenting opinions and basis for

conclusions)

IASB deliberates in meetings open to public observation.

Due Process for Interpretations

Interpretations of IFRS will be developed by the IFRS Interpretations Committee (IFRIC) for approval by IASB

Due process steps for an Interpretation will normally include (* below means required by IASB Constitution):

Staff work to identify and study the issues and existing national standards and practices IFRIC studies national standards and practices IFRIC publishes a draft Interpretation for comment if no more than 4 IFRIC Members have voted against the proposal*

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IFRIC considers comments received on the draft Interpretation within a reasonable period of time IFRIC approves the final Interpretation if no more than 4 IFRIC Members have voted against the proposal and submits it to IASB* IASB approves the final Interpretation by at least 9 affirmative votes of IASB*

IFRIC deliberates in meetings open to public observation

International Financial Reporting Standards

IFRS 1 First-time Adoption of International Financial Reporting StandardsIFRS 2 Share-based Payment

IFRS 3 Business CombinationsIFRS 4 Insurance ContractsIFRS 5 Non-current Assets Held for Sale and Discontinued OperationsIFRS 6 Exploration for and Evaluation of Mineral AssetsIFRS 7 Financial Instruments: Disclosures

IFRS 8 Operating SegmentsIFRS 9 Financial InstrumentsIFRS 10 Consolidated Financial StatementsIFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other EntitiesIFRS 13 Fair Value Measurement

International Accounting Standards

IAS 1 Presentation of Financial StatementsIAS 2 Inventories

IAS 3 Consolidated Financial Statements Originally issued 1976. Superseded in 1989 by IAS 27 and IAS 28IAS 4 Depreciation Accounting Withdrawn in 1999, replaced by IAS 16, 22, and 38, all of which were issued or revised in 1998IAS 5 Information to Be Disclosed in Financial Statements Originally issued October 1976. Superseded by IAS 1 in 1997IAS 6 Accounting Responses to Changing Prices Superseded by IAS 15, which was withdrawn December 2003

IAS 7 Statement of Cash FlowsIAS 8 Accounting Policies, Changes in Accounting Estimates and ErrorsIAS 9 Accounting for Research and Development Activities Superseded by IAS 38 effective 1.7.99IAS 10 Events After the Reporting Period

IAS 11 Construction ContractsIAS 12 Income TaxesIAS 13 Presentation of Current Assets and Current Liabilities Superseded by IAS 1IAS 14 Segment Reporting - IAS 14 is superseded by IFRS 8 Operating Segments effective for annual periods beginning 1 January 2009

IAS 15 Information Reflecting the Effects of Changing Prices Withdrawn December 2003IAS 16 Property, Plant and EquipmentIAS 17 LeasesIAS 18 Revenue

IAS 19 Employee BenefitsIAS 20 Accounting for Government Grants and Disclosure of Government Assistance

IAS 21 The Effects of Changes in Foreign Exchange RatesIAS 22 Business Combinations Superseded by IFRS 3 effective 31 March 2004

IAS 23 Borrowing CostsIAS 24 Related Party Disclosures

IAS 25 Accounting for Investments Superseded by IAS 39 and IAS 40 effective 2001IAS 26 Accounting and Reporting by Retirement Benefit Plans

IAS 27 Consolidated and Separate Financial Statements Superseded by IFRS 10, IFRS 12 and IAS 27 (rev. 2011) effective 2013IAS 28 Investments in Associates Superseded by IAS 28 (rev. 2011) and IFRS 12 effective 2013

IAS 29 Financial Reporting in Hyperinflationary EconomiesIAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions Superseded by IFRS 7 effective 2007IAS 31 Interests In Joint Ventures Superseded by IFRS 11 and IFRS 12 effective 2013

IAS 32 Financial Instruments: Presentation Disclosure provisions Superseded by IFRS 7 effective 2007IAS 33 Earnings Per ShareIAS 34 Interim Financial ReportingIAS 35 Discontinuing Operations Superseded by IFRS 5 effective 2005IAS 36 Impairment of Assets

IAS 37 Provisions, Contingent Liabilities and Contingent AssetsIAS 38 Intangible AssetsIAS 39 Financial Instruments: Recognition and Measurement Superseded by IFRS 9 effective 2013IAS 40 Investment Property

IAS 41 Agriculture

Final Interpretations Issued by the IFRS Interpretations Committee

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

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IFRIC 2 Members' Shares in Co-operative Entities and Similar InstrumentsIFRIC 3 Emission Rights - Withdrawn June 2005IFRIC 4 Determining Whether an Arrangement Contains a Lease

IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation FundsIFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic EquipmentIFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary EconomiesIFRIC 8 Scope of IFRS 2 - Withdrawn effective 1 January 2010

IFRIC 9 Reassessment of Embedded DerivativesIFRIC 10 Interim Financial Reporting and ImpairmentIFRIC 11 IFRS 2: Group and Treasury Share Transactions - Withdrawn effective 1 January 2010IFRIC 12 Service Concession Arrangements

IFRIC 13 Customer Loyalty ProgrammesIFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

IFRIC 15 Agreements for the Construction of Real EstateIFRIC 16 Hedges of a Net Investment in a Foreign Operation

IFRIC 17 Distributions of Non-cash Assets to OwnersIFRIC 18 Transfers of Assets from Customers

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

Final Interpretations Issued by the Standing Interpretations Committee

SIC 1 Consistency Different Cost Formulas for Inventories Superseded

SIC 2 Consistency Capitalisation of Borrowing Costs SupersededSIC 3 Elimination of Unrealised Profits and Losses on Transactions with Associates SupersededSIC 5 Classification of Financial Instruments - Contingent Settlement Provisions SupersededSIC 6 Costs of Modifying Existing Software Superseded

SIC 7 Introduction of the EuroSIC 8 First-Time Application of IASs as the Primary Basis of Accounting SupersededSIC 9 Business Combinations Classification either as Acquisitions or Unitings of Interests SupersededSIC 10 Government Assistance No Specific Relation to Operating Activities

SIC 11 Foreign Exchange Capitalisation of Losses Resulting from Severe Currency Devaluations SupersededSIC 12 Consolidation Special Purpose EntitiesSIC 13 Jointly Controlled Entities Non-Monetary Contributions by VenturersSIC 14 Property, Plant and Equipment Compensation for the Impairment or Loss of Items Superseded

SIC 15 Operating Leases IncentivesSIC 16 Share Capital Reacquired Own Equity Instruments (Treasury Shares) Superseded

SIC 17 Equity Costs of an Equity Transaction SupersededSIC 18 Consistency Alternative Methods Superseded

SIC 19 Reporting Currency Measurement and Presentation of Financial Statements under IAS 21 and IAS 29 SupersededSIC 20 Equity Accounting Method Recognition of Losses Superseded

SIC 21 Income Taxes Recovery of Revalued Non-Depreciable Assets

SIC 22 Business Combinations Subsequent Adjustment of Fair Values and Goodwill Initially Reported SupersededSIC 23 Property, Plant and Equipment Major Inspection or Overhaul Costs SupersededSIC 24 Earnings Per Share Financial Instruments and Other Contracts that May Be Settled in Shares Superseded

SIC 25 Income Taxes Changes in the Tax Status of an Enterprise or its ShareholdersSIC 27 Evaluating the Substance of Transactions in the Legal Form of a LeaseSIC 28 Business Combinations 'Date of Exchange' and Fair Value of Equity Instruments SupersededSIC 29 Disclosure Service Concession Arrangements

SIC 30 Reporting Currency Translation from Measurement Currency to Presentation Currency SupersededSIC 31 Revenue Barter Transactions Involving Advertising ServicesSIC 32 Intangible Assets Web Site CostsSIC 33 Consolidation and Equity Method Potential Voting Rights and Allocation of Ownership Interests Superseded

** IPSAS STANDARDS LISTING (FYI)

IPSAS1 Presentation of Financial Statements

IPSAS 2 Cash Flow StatementsIPSAS 3 Net Surpluses or Deficit for the Period - Fundamental Errors and Changing in Accounting Policies

IPSAS 4 The Effects of changes in Foreign Exchange RatesIPSAS 5 Borrowing Costs

IPSAS 6 Consolidated Financial Statements Accounting for Controlled EntitiesIPSAS 7 Accounting for Investments in Associates

IPSAS 8 Financial Reporting of Interests in Joint VenturesIPSAS 9 Revenue from Exchange TransactionsIPSAS10 Financial Reporting in Hyperinflationary EconomiesIPSAS 11 Construction Contracts

IPSAS 12 InventoriesIPSAS 13 LeasesIPSAS 14 Events after the Reporting Date

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IPSAS 15 Financial Instruments: Disclosure and PresentationIPSAS 16 Investment PropertyIPSAS 17 Properties, Plant and Equipment

IPSAS 18 Segment ReportingIPSAS 19 Provisions, Contingent Liabilities, Contingent AssetsIPSAS 20 Related Party DisclosuresIPSAS 21 Impairment of Non-cash-generating Assets

IPSAS 22 Disclosure of Financial Information About the General Government SectorIPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers)IPSAS 24 Presentation of Budget Information in Financial StatementsIPSAS 25 Employee Benefits

IPSAS 26 Impairment of Cash-Generating AssetsIPSAS 27 Agriculture

IPSAS 28 Financial Instruments - PresentationIPSAS 29 Financial Instruments

IPSAS 30 Financial Instruments - Disclosure

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IFRS COVERAGE IN HCBA 3201 (JKUAT MBA PROGRAMME):

SESSION / TOPIC /

LEARNINGACTIVITY IFRS/IAS/IFRC/SIC IFRS/IAS/IFRC/SIC OBJECTIVES

ISSUED / LASTREVISED EFFECTIVE DATE

Week 2: Accountingconcepts, and primaryfinancial terminology

IAS 1 Presentation ofFinancial Statements

To prescribe the basis for presentation ofgeneral purpose financial statements, to ensurecomparability both with the entity's financialstatements of previous periods and with the

financial statements of other entities.

16 June 2011 1 July 2012 - Effectivedate of June 2011amendments to IAS 1

IAS 7 Statement of CashFlows

To require the presentation of informationabout the historical changes in cash and cashequivalents of an entity by means of a

statement of cash flows, which classifies cashflows during the period according to operating,investing, and financing activities.

1 July 2009 1 January 2010 -Effective date of theApril 2009 revisions to

IAS 7

IAS 18 Revenue To prescribe the accounting treatment for revenue arising from certain types oftransactions and events.

16 April 2009 Appendix to IAS 18amended for AnnualImprovements to

IFRSs 2009

IAS 11 ConstructionContracts

To prescribe the accounting treatment ofrevenue and costs associated with constructioncontracts

December 1993 1 January 1995 -Effective date of IAS11 (1993)

IFRS 5 Non-currentAssets Held for Sale and

Discontinued Operations

To prescribe accounting for discontinuedoperations and the presentation of such

operations and long-lived assets that are beingdisposed of, and the impairment recognition

and measurement of such assets

16 April 2009 1 January 2010 -Effective date of the

April 2009 revisions toIFRS 5

IAS 8 Accounting

Policies, Changes inAccounting Estimates andErrors

To prescribe the criteria for selecting and

changing accounting policies, together with theaccounting treatment and disclosure of changesin accounting policies, changes in accountingestimates and corrections of errors. The

Standard is intended to enhance the relevanceand reliability of an entitys financialstatements, and the comparability of thosefinancial statements over time and with the

financial statements of other entities

18 December 2003 1 January 2005 -

Effective date of IAS8(2003)

IAS 37 Provisions,Contingent Liabilities and

Contingent Assets

To ensure that appropriate recognition criteriaand measurement bases are applied to

provisions, contingent liabilities and contingentassets and that sufficient information isdisclosed to enable users to understand theirnature, timing and amount. The key principleestablished by the Standard is that a provision

should be recognised only when there is aliability i.e. a present obligation resulting from

past events.

September 1998 1 July 1999 - Effectivedate of IAS 37 (1998)

IAS 10 Events After the

Reporting Period

To prescribe: (a) when an entity should adjust

its financial statements for events after thereporting period; and (b) the disclosures that anentity should give about the date when thefinancial statements were authorised for issue

and about events after the reporting period.

18 December 2003 1 January 2005

Effective date of IAS10 (Revised 2003) / 6September 2007Retitled Events after

the Reporting Periodas a consequentialamendment resultingfrom revisions to IAS

1

Management

Commentary (IFRSPractice Statements). The

Practice Statement is notan IFRS.

To assist management in presenting useful

management commentary that relates tofinancial statements that have been prepared in

accordance with International FinancialReporting Standards (IFRSs).

23 June 2009 8 December 2010 -

IFRS PracticeStatement

ManagementCommentary published

by the IASB

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Week 3: Accounting

policies and IFRS

Preface Sets out IASB's objectives, the scope of IFRSs,

due process, and policies on effective dates,format, and language for IFRSs

December 2007 December 2007 -

Amendments toPreface approved by

the IASB reflectingincrease in size of

IFRIC to 14 members

Framework The Conceptual Framework sets out theconcepts that underlie the preparation and

presentation of financial statements for external

users.

September 2010 September 2010 -ConceptualFramework for

Financial Reporting2010 (the IFRSFramework) approved

by the IASB

IFRS 1 First-timeAdoption of InternationalFinancial ReportingStandards

To ensure that an entitys first IFRS financialstatements, and its interim financial reports for

part of the period covered by those financialstatements, contain high quality information

that: (a) is transparent for users and comparableover all periods presented; (b) provides asuitable starting point for accounting inaccordance with International Financial

Reporting Standards (IFRSs); and (c) can begenerated at a cost that does not exceed the

benefits.

20 December 2010 1 July 2011 - Effectivedate of May 2010amendment to IFRS 1

Week 4: Company

Ratio Analysis

IAS 33 Earnings Per

Share

To prescribe principles for determining and

presenting earnings per share (EPS) amounts toimprove performance comparisons between

different entities in the same reporting periodand between different reporting periods for the

same entity.

7 August 2008 1 January 2009 -

Effective date ofconsequential

amendments arisingfrom IAS 1 (2007)

Week 5: Analysis of

Inventories

IAS 2 Inventories To prescribe the accounting treatment for

inventories. It provides guidance fordetermining the cost of inventories and forsubsequently recognising an expense, includingany write-down to net realisable value. It also

provides guidance on the cost formulas that areused to assign costs to inventories.

18 December 2003 1 January 2005 -

Effective date of IAS 2(Revised 2003)

Week 6 & 7: Analysisof Long-Lived Assets

IAS 16 Property, Plantand Equipment

To prescribe the accounting treatment forproperty, plant, and equipment. The principal

issues are the recognition of assets, the

determination of their carrying amounts, andthe depreciation charges and impairment lossesto be recognised in relation to them.

22 May 2008 1 January 2009 -Effective date of May

2008 amendment to

IAS 16

IAS 38 Intangible Assets To prescribe the accounting treatment forintangible assets that are not dealt with

specifically in another IFRS. The Standardrequires an entity to recognise an intangible

asset if, and only if, certain criteria are met.The Standard also specifies how to measure the

carrying amount of intangible assets andrequires certain disclosures regarding

intangible assets.

16 April 2009 1 July 2009 - Effectivedate of the April 2009

revisions to IAS 38

IAS 40 Investment

Property

To prescribe the accounting treatment for

investment property and related disclosurerequirements.

22 May 2008 1 January 2009

Effective date of theMay 2008 revisions toIAS 40

IAS 36 Impairment of

Assets

To ensure that assets are carried at no more

than their recoverable amount, and to definehow recoverable amount is determined.

16 April 2009 1 January 2010

Effective date of theApril 2009 revisions toIAS 36

IAS 23 Borrowing Costs To prescribe the accounting treatment for borrowing costs. Borrowing costs includeinterest on bank overdrafts and borrowings,

amortisation of discounts or premiums onborrowings, finance charges on finance leases

and exchange differences on foreign currency borrowings where they are regarded as an

22 May 2008 1 January 2009Effective date of May2008 amendment to

IAS 23

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adjustment to interest costs.

IFRS 13 Fair Value

Measurement

To define fair value, set out in a single IFRS a

framework for measuring fair value and requiredisclosures about fair value measurements.

12 May 2011 1 January 2013 -

Effective date of IFRS13

Week 8: Analysis ofIncome Taxes

IAS 12 Income Taxes To prescribe the accounting treatment forincome taxes.

20 December 2010 1 January 2012 -Effective date of theDecember 2010

revisionsWeek 9: Analysis ofFinancing Liabilities,Leases and Off-Balance Sheet Debt

IAS 17 Leases To prescribe, for lessees and lessors, theappropriate accounting policies and disclosuresto apply in relation to finance and operatingleases.

16 April 2009 1 January 2010 -Effective date of theApril 2009 revisions toIAS 17, with early

application permitted(with disclosure)

Week 10: Pensions andOther Employee

Benefits

IAS 26 Accounting andReporting by Retirement

Benefit Plans

To specify measurement and disclosureprinciples for the reports of retirement benefit

plans. All plans should include in their reportsa statement of changes in net assets available

for benefits, a summary of significantaccounting policies and a description of the

plan and the effect of any changes in the planduring the period.

1 January 1990 1994 IAS 26 wasreformatted

IAS 19 EmployeeBenefits

To prescribe the accounting and disclosure foremployee benefits (that is, all forms ofconsideration given by an entity in exchangefor service rendered by employees). The

principle underlying all of the detailedrequirements of the Standard is that the cost of

providing employee benefits should berecognised in the period in which the benefit is

earned by the employee, rather than when it ispaid or payable.

16 June 2011 1 January 2013 -Effective date of June2011 amendments toIAS 19

Week 11: Inter-corporate Investments,

BusinessCombinations and

MultinationalOperations

IAS 27 Consolidated andSeparate Financial

Statements Supersededby IFRS 10, IFRS 12 and

IAS 27 (rev. 2011)effective 2013

Has the twin objectives of setting standards tobe applied: (a) in the preparation and

presentation of consolidated financialstatements for a group of entities under the

control of a parent; and (b) in accounting forinvestments in subsidiaries, jointly controlled

entities, and associates when an entity elects, oris required by local regulations, to presentseparate (non-consolidated) financialstatements.

6 May 2010 1 July 2010 - Effectivedate of May 2010

amendment to IAS 27

IAS 28 Investments inAssociates Superseded

by IAS 28 (rev. 2011) andIFRS 12 effective 2013

IAS 28 applies to all investments in which aninvestor has significant influence but notcontrol or joint control except for investmentsheld by a venture capital organisation, mutual

fund, unit trust, and similar entity that aredesignated under IAS 39 to be at fair valuewith fair value changes recognised in profit orloss.

1 January 2009 1 July 2009 - Effectivedate of January 2008amendments to IAS 28

IFRS 10 Consolidated

Financial Statements

To to establish principles for the presentation

and preparation of consolidated financialstatements when an entity controls one or moreother entities.

12 May 2011 1 January 2013 -


IAS 31 Interests In JointVentures Superseded by

IFRS 11 and IFRS 12effective 2013

IAS 31 applies to accounting for all interests injoint ventures and the reporting of joint venture

assets, liabilities, income, and expenses in thefinancial statements of venturers and investors,regardless of the structures or forms underwhich the joint venture activities take place,

except for investments held by a venturecapital organisation, mutual fund, unit trust,and similar entity that (by election or

1 January 2009 1 July 2009 - Effectivedate of the January

2008 revisions to IAS31

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requirement) are accounted for as under IAS 39

at fair value with fair value changes recognisedin profit or loss.

IFRS 11 Joint

Arrangements

12 May 2011 1 January 2013 -


IFRS 12 Disclosure ofInterests in Other Entities

12 May 2011 1 January 2013 -Effective date of IFRS

12

IFRS 3 Business

Combinations

To improve the relevance, reliability and

comparability of the information that areporting entity provides in its financial

statements about a business combination andits effects

6 May 2010 1 July 2010 - Effective

date of May 2010amendment to IFRS 3

IFRS 8 OperatingSegments

To prescribe requirements for disclosure ofinformation about an entitys operatingsegments and also about the entitys productsand services, the geographical areas in which it

operates, and its major customers.

16 April 2009 1 January 2010 -Effective date of theApril 2009amendments to IFRS 8

IAS 21 The Effects of

Changes in ForeignExchange Rates

To prescribe how to include foreign currency

transactions and foreign operations in thefinancial statements of an entity and how to

translate financial statements into apresentation currency. The principal issues arewhich exchange rate(s) to use and how toreport the effects of changes in exchange rates

in the financial statements.

10 January 2008 1 July 2009 - Effective

date of the January2008 amendments

Week 13: Analysis of

Derivative andHedging Activities

IFRS 7 Financial

Instruments: Disclosures

To require entities to provide disclosures in

their financial statements that enable users toevaluate: (a) the significance of financialinstruments for the entitys financial positionand performance; and (b) the nature and extent

of risks arising from financial instruments towhich the entity is exposed during the period

and at the end of the reporting period, and how

the entity manages those risks.

1 January 2011 1 July 2011 - Effective

date of October 2010amendment to IFRS 7related to transfers offinancial assets

IAS 39 FinancialInstruments: Recognitionand Measurement Superseded by IFRS 9

effective 2013

To prescribe accounting financial assets andliabilities. Parts of IAS 39 are being supersededand will become obsolete for annual periods

beginning on or after 1 January 2013.

Proposals to replace the requirements onimpairment have been published and proposalson hedge accounting are expected to be

published in 2010

12 November 2009 12 November 2009 -Classification andmeasurement

provisions of IAS 39

replaced by IFRS 9effective 1 January2013, with earlierapplication permitted

IAS 32 FinancialInstruments: Presentation

Disclosure provisionsSuperseded by IFRS 7

effective 2007

To establish principles for presenting financialinstruments as liabilities or equity and foroffsetting financial assets and liabilities

14 February 2008 1 January 2009Effective date ofamendments ofFebruary 2008

IFRS 9 Financial

Instruments

To establish principles for the financial

reporting of financial assets and financialliabilities that will present relevant and useful

information to users of financial statements fortheir assessment of the amounts, timing and

uncertainty of an entitys future cash flows.

28 October 2010 1 January 2013 -

Effective date of IFRS9, with early adoption

permitted starting in2009

Other Standards in

Force (not mentioned,covered, or refered toin HBC 3210)

IFRS 2 Share-based

Payment

To specify the financial reporting by an entity

when it undertakes a share-based paymenttransaction. In particular, it requires an entity toreflect in its profit or loss and financial positionthe effects of share-based payment

transactions, including expenses associated

18 June 2009 1 January 2010 -

Effective date of theJune 2009 revisions toIFRS 2

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with transactions in which share options are

granted to employees

IFRS 4 Insurance

Contracts

To specify the financial reporting for insurance

contracts by any entity that issues suchcontracts (an insurer) until the Board completes

the second phase of its project on insurancecontracts.

18 August 2005 18 August 2005 -

Amendment to IFRS 4for financial guarantee

contracts

IFRS 6 Exploration forand Evaluation of MineralAssets

To specify the financial reporting for theexploration for and evaluation of mineralresources.

1 January 2006 1 January 2006

IAS 20 Accounting for

Government Grants andDisclosure of GovernmentAssistance

To prescribe the accounting for, and disclosure

of, government grants and other forms ofgovernment assistance

22 May 2008 1 January 2009 -

Effective date of May2008 amendment toIAS 20

IAS 24 Related Party

Disclosures

To ensure that an entity's financial statements

contain the disclosures necessary to drawattention to the possibility that its financial

position and profit or loss may have beenaffected by the existence of related parties and

by transactions and outstanding balances withsuch parties

4 November 2009 1 January 2011 -

Effective date of IAS24 (2009)

IAS 29 FinancialReporting inHyperinflationaryEconomies

To establish specific standards for entitiesreporting in the currency of a hyperinflationaryeconomy, so that the financial information

provided is meaningful

22 May 2008 1 January 2009 -Effective date of theMay 2008 revisions toIAS 29

IAS 34 Interim FinancialReporting

To prescribe the minimum content of aninterim financial report and to prescribe the

principles for recognition and measurement infinancial statements presented for an interim

period

30 June 2005 1 January 2011 -Effective date of May

2010 amendment toIAS 34

IAS 41 Agriculture To establish standards of accounting for

agricultural activity the management of thebiological transformation of biological assets(living plants and animals) into agricultural

produce (harvested product of the entity's

biological assets)

22 May 2008 1 January 2009 -

Effective date of theMay 2008 revisions toIAS 41

16

week 3 - accounting policies, standards & ifrs

Documents