Sometime back, I was talking to one of my accountant friend who pointed me some recent changes in IFRS ,and provided some link for the awareness and to understand the impact in EBS suite. I am not going to put the details, rather will walk through some information which is good to have with ERP consultant who is dealing with Financial products.
What is IFRS?
IFRS,International Financial Reporting Standards (IFRS), together with International Accounting Standards (IAS), are a "principles-based " set of standards that establish broad rules rather than dictating specific accounting treatments. From 1973 to 2001, IAS were issued by the International Accounting Standards Committee (IASC). In April 2001 the International Accounting Standards Board (IASB) adopted all IAS and began developing new standards called IFRS.
IFRS are used in many parts of the world, including the European Union, Hong Kong, Australia, Russia, South Africa, Singapore and Pakistan. Nearly 100 countries currently require or permit the use of, or have a policy of convergence with, IFRSs. Here is list of countries which adopted IFRS.
What is meant IFRS for Oracle eBusiness consultant/ERP Consultant?
As we are quite aware GAAP which is so called Generally Accepted Accounting P rinciples for Shareholder Reporting.The term is not drafted by a legislature.
and ,in term of Accounting Principles this can be best understood as:
IFRS = Financial Reporting standards = Balance Definitions < /FONT >
which internally means more in term of "disclosure Requirements" and "Balance Definitions " for finance controller.
IFRS - What it is for?
The Other things IFRS would do is:
Providing a bookkeeping rules rather many of us have impression that they have some rule set for accounting
- It will do Shareholder Reporting , and this is important when :
- A group of companies owned by a Public company
- Not the individual companies
- It will also do external reporting
- To your owners (investors, shareholders)
- Through their stock markets
- Management Reporting
- Maximize investors returns, measured only with IFRS
- Segment Reporting disclosure
IFRS - What it is not for?
And more important it should be understand that IFRS is not meant for:
- Tax Reporting
- Regulatory reporting
- Subsidiary reporting
IFRS â€“ How new is it?
IASB has been around since 1980â€™s
- IAS/IFRS pretty much converged with the Americans
- If your ERP supports US GAAP, it supports IAS/IFRS
- Key premises (recognition, measurement):
- Mark to Market when possible
- Reality of the Balance Sheet â€“ real assets, real liabilities
- Income Statement analyses the change in wealth
- Deep Disclosure: owners right to know
US GAAP vs. IFRS - A difference
While looking to some more information on internet ,I discovered a nice article from the site of Fulcrum Inquiry who pointed out the key differences(adopted) between the two standards in there one of the article .
Donâ€™t worry about your ERP Side
Maybe requires some reconfiguration, maybe requires some data analysis
We have notice there is some big change in R12 AR to meet revenue recognition, R12 is partially on track for IFRS fitness in suite.
The new R12 Global Architecture introduced the concept of ledgers which has capability of providing differing accounting representations; one ledger for example could conform to IFRS, another to local GAAP.
From the Currency area we have already noticed some big changes like:
Balance level Translation or Remeasurement in Ledgers â€“ within Ledger sets, run at one click
Balance & Activity level Translation or Remeasurement in Financial Consolidation Hub
Another is enhanced Revaluation [Functional Currency term dropped: conflicts with IAS 21 / FAS 52]
Those who are looking for some more insight about the changes suggested to refer white paper mention in the last.
Some more from Oracle blog
Keep watching this space for having some more thoughts and insight for IFRS from Oracle .