Trouble-free and effortless transition to IFRS
IFRS or the International Financial Reporting Standards represent a package of special documents. It establishes rules and norms for generation of financial statements which external users will require when implementing any economic decision concerning the company. In English this package of documents is referred to as IFRS, or “International Financial Reporting Standards”. IFRS contains the following important elements:
- IAS, or international accounting standards.
- IFRS, or international financial reporting standards themselves.
- interpretation created by IFRIC (the IFRS Interpretation Committee) or SIC (Standing Interpretations Committee which worked prior to the establishment of the IFRIC).
In practical terms, IFRS are needed to provide reports to the various physical persons and legal entities wishing to obtain an objective information about the financial state of your company. In other words, in the market economy countries IFRC are applied for the following purposes:
- As a basis for the national accounting standards or basic international approach to its development.
- As rules of reporting that foreign issuers are required to provide to the supervisory authorities and stock exchange in Ukraine.
- As a format reflecting financial activities of the company when working with supernational bodies (for example, the European Commission) and the World Bank.
What businesses need introduction of IFRS?
Transition to accounting in accordance with IFRS is a natural process of development and joining common globalization – mainstreaming this trend is only a matter of time.
It is worth noting that for small businesses where operations do not exceed a certain level of complexity, it makes no sense to rebuild the whole system of accounting under IFRS rules, since the conceptual framework of accounting is negligible given the low degree of complexity.
For larger companies transition to international standards is much more justified, despite the fact that system rebuilding and retraining of personnel will need certain period of time. IFRS are particularly important for financial companies and banks, many of which have been already successfully practicing these standards. In addition, many foreign-invested companies are in transition to IFRS since their parent companies set the relevant accounting requirements for them.
If you decide on this crucial point or face with the need of its implementation, we will be happy to do it for you as quick and painless as possible. A high level of professionalism and long-term experience help us successfully convert accounting in Ukrainian companies to achieve the full compliance with IFRS.
Major stages of IFRS implementation
- Check current status of accounting to find non-compliances with the current accounting standards and correct them.
- Determine how the distinction between the concepts of current accounting standards and IFRS will affect your company-specific accounting information.
- Make changes in accordance with identified differences.
- Draft a provisional format of reporting under IFRS and a table of transition rules from current accounting standards to IFRS, with relevant notes and description of introduced changes.
Notes to the provisional reporting shall necessarily contain the following reservation: the resulting reports may be adjusted during the first period upon transition, and complete and error-free statements will be first formulated in the next period.
In addition to the reporting, new rules on accounting policy, which are based on the IFRS concept, shall be created and approved. These rules will help your company as a whole and each of its employee to flawlessly apply correct accounting methods of liabilities, assets and equity.
What regulations govern the implementation of IFRS in Ukraine?
Major regulation in this area among the currently effective documents is Article 12 of the Law of Ukraine №996. This Article obliges banks, public joint stock companies, insurance companies and enterprises engaged in business activities as listed by the Cabinet of Ministers of Ukraine to adopt international accounting standards. Other companies are given opportunity to decide whether they want to introduce the concept of IFRS or not.
Key differences between IFRS and current accounting standards
- As has already been noted, transition to IFRS is a voluntary solution for many domestic companies, whereas the current accounting standards have mandatory effect.
- Certain accounting items are reflected in IFRS system more freely than in current accounting standards. For example, in current accounting standards profit and loss arising from the difference in currency exchange rates cannot be represented in minimized outline. They have to appear under “other operating income” and “other expenses” cost items, which leads to “overinflated” indicators. There is no such restriction in IFRS.
- IFRS and current accounting standards have different requirements for the accounting of the fixed assets, exchange rate differences, stock inventory, financial obligations and assets and a number of other indicators.
Advantages and disadvantages of IFRS
Summing up the above, there are following advantages from introduction of IFRS in your company:
- You will be able to provide supervisory authorities, partners, investors and other bodies with the maximum objective information on financial standing of the company.
- An accountant will be able to freely interpret available data for optimization of management accounts.
- Your accounting will be organized on the principle that is being increasingly used by the entire world.
Negative effects of IFRS implementation could include:
- Relatively high level of complexity of such a transition and transparency restoration of accounting information.
- Need in training of accountants and managers how to work within the new conceptual framework of accounting.
Major challenges of IFRS implementation
- Rebuilding of financial statements prepared according to the current accounting standards.
- Lack of professionals with sufficient qualification trained in according to international standards.
- Need to reconfigure reporting software in line with the new concept.
But after you contact us, all those difficulties just disappear. We will deal with all specific details of your company’s effective transition to IFRS and will help you at all stages of the procedure.
Advantages of cooperation with us:
- Huge experience. To an inexperienced person International Accounting Standards may seem extremely complex and incomprehensible, but we have been working in this area so long that we can easily ‘slice and dice’ it.
- Reliability. We provide such services for years, and value our reputation. You can rely on the fact that we will make every effort to meet your needs.
- A wide range of services. Implementation of IFRS is not the only area in which we specialize. So, if you need any related services or, for example, just a professional advice, we will be happy to assist you.
- Flexibility. We offer you different ways of cooperation: it may be assistance on a regular basis, temporary work or even one-time service.
- Benefit. We do not claim that our services are the cheapest in the country, maybe someone offers you more attractive price for transition to IFRS. But we can guarantee that our services are 100% good value for money, and the result of our work will bring you much more profit than saving due to lower quality and professionalism of others’ services.
If you see real prospects in development of your business, if you dream to become on a par with the successful foreign companies someday and find a reliable partner among them, contact us – and we will help you switch to international standards as quickly and seamlessly as possible!