Question

Let's take a look at IFRS. Overall, how will the international standards impact you, businesses, investors, lenders, etc?

Answer 1

IFRS(International Financial Reporting Standards)

These standards are made and issues by IFRS( International Financial Reporting Standards) Foundation and IASB(International Accounting Standards Board). These standards are the common rules which are followed at world level. These are prepared for overcome the gap of different language used by different countries for financial purposes. By making accounting standards a common rules are made follwed at international level for financial purposes, dealings, trade and establish business in different countries.It describes the rules for record transactions are reported in accounts.These rules direct accountants for prepare daily,monthly, quarterly and annual reports.With this methods for prepare reports are described with those rules.

Requirements for preparing Financial Reports are

1. Daily transactions

2. Cash book

3.Cost accounting data

4. Profit and Loss Account

5. Balance Sheet

6. Adjustive or accrual income /accrual expenses and

7. Other financial data captured from trade and various departments of organization.

Difference between IFRS and GAAP(Generally Accepted Accounting Principles)

IFRS does not have hard rules for revenue recordings.So under balance sheet, process is slow for record revenues and problem for prepare short time financial reports. But GAAP revenues are considered when they are occured. process for recoding financial data and report preparation is fast than IFRS. Another difference is FIFO (First In First Out) operation is followed according to IFRS and LIFO(Last In First Out) is followed according to GAAP.  

International Standards impact me

1.International standards make me capable for business.

2. international standard provides me a language for finance which is globally understandable.

3. Helpful for enhance my experience about business followed by reporting rules

4. helpful for understand financial data.

International Standards impact businesses

1. Business internal relations - Without rules different countrues use their own languages for finance. The reports prepared by one country are not understandable by other. Need for learn other countries financial language taken a lot of time. It was the barrier in trade and foreign Partnerships. IFRS are the common rules which followed at world level, overcomes the gap of financial understanding. It increase business between different countries.

2. Methods for reduce costs- IFRS describes various methods for reduce cost. when cost is reduced, it will increase profits of organization.

3.Methods for prepare financial reports- Financial reports are prepared on daily, monthly,quarterly and annual basis by follwing IFRS rules or standards.

4. Increment in profits - a process of recording transactions and prepare reports can properly determine about cost, sales and working capital. Proper control on fianacial data prepared by following IFRS rules,will increase productivity of organization.Profits will also increase with increase in productivity.

5. Decision making- Decisions are made by management on the behalf of reports.

International Standards impact investors

1.Reports for investors -Separate reports are prepared for investors by following IFRS. Investors can check financial condition of the company for the data described in reports. these reports are helpful describe the true image of company at front of investors.

2. Increase Investments - IRFS rules are helpful prepare reports, control over financial data, increase productivity and profits. This is helpful for increase investments for business

3.Pull foreign investors - investors are capable for understand financial common language followed by different countries through IRFS. They can check reports. they can easily understand financial condition of companies establish in another countries. So, this will pull foreign investers for companies.

International Standards impact lenders

1.Revenue without Credit losses- accounting to IRFS9 when loans are taken, expected credit losses are measured for profit and loss for twelve months. Credit allowances are given on behalf of credit losses. Drawback of this rule is sometimes calculations are made on the behalf of imaginary and fake figures.

2. Credit loss increases continously- Credit loss increases continously for determine profit and loss. this will increase year by year whole life of credit.

3. Decrease creditibility- IFRS are helpful for increase revenues of firms. Company has good financial condition it need not money or less money on credit basis. So, creditibility will decrease on the behalf of IFRS.

4. Loans are secure - Loans are secured for return when company following IFRS. Productivity and profits are more, then company is able to refund loan amounts.