International Accounting Standards (IAS)

International Accounting
Standards (IAS)
What Are International Accounting Standards (IAS)?
• international Accounting Standards (IAS) are older accounting standards

issued by the International Accounting Standards Board (IASB), an
independent international standard-setting body based in London. The
IAS were replaced in 2001 by International Financial Reporting
Standards (IFRS).
• international Accounting Standards (IAS) were the first international
accounting standards that were issued by the International Accounting
Standards Committee (IASC), formed in 1973. The goal then, as it
remains today, was to make it easier to compare businesses around the
world, increase transparency and trust in financial reporting, and foster
global trade and investment.
Examples of IAS
• # Name Issued
• IAS 1 Presentation of Financial Statements 2007*
• IAS 2 Inventories 2005*
• IAS 3 Consolidated Financial Statements
• Superseded in 1989 by IAS 27 and IAS 28 1976
• IAS 4 Depreciation Accounting
• Withdrawn in 1999
• IAS 5 Information to Be Disclosed in Financial Statements
• Superseded by IAS 1 effective 1 July 1998 1976
• IAS 6 Accounting Responses to Changing Prices
• Superseded by IAS 15, which was withdrawn December 2003
• IAS 7 Statement of Cash Flows 1992
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 2003
• IAS 9 Accounting for Research and Development Activities
• Superseded by IAS 38 effective 1 July 1999
• IAS 10Events After the Reporting Period 2003
• IAS 11Construction Contracts
• Will be superseded by IFRS 15 as of 1 January 2017 1993
• IAS 12Income Taxes 1996*
• IAS 13Presentation of Current Assets and Current Liabilities
• Superseded by IAS 1 effective 1 July 1998
• IAS 14Segment Reporting
• Superseded by IFRS 8 effective 1 January 2009 1997
• IAS 15Information Reflecting the Effects of Changing Prices
• Withdrawn December 2003 2003
• IAS 16Property, Plant and Equipment 2003*
• IAS 17Leases 2003*
• IAS 18Revenue
• Will be superseded by IFRS 15 as of 1 January 2017 1993*
International Financial Reporting Standards
• International Financial Reporting Standards, commonly called IFRS, are
accounting standards issued by the IFRS Foundation and the International
Accounting Standards Board (IASB). They constitute a standardised way
of describing the company’s financial performance so that company
financial statements are understandable and comparable across
international boundaries.
• The International Accounting Standards Committee (IASC) was
established in June 1973 by accountancy bodies representing ten countries.
It devised and published International Accounting Standards (IAS),
interpretations and a conceptual framework. These were looked to by many
national accounting standard-setters in developing national standards.
• FRS Standards are required in more than 140 jurisdictions and
permitted in many parts of the world, including South Korea, Brazil,
the European Union, India, Hong Kong, Australia, Malaysia, Pakistan,
GCC countries, Russia, Chile, Philippines, South Africa, Singapore
and Turkey.
Objective of financial statements
• The Conceptual Framework states that the primary purpose of

financial information is to be useful to existing and potential investors,
lenders and other creditors when making decisions about the financing
of the entity and exercising rights to vote on, or otherwise influence,
management's actions that affect the use of the entity's economic
resources.
• Users base their expectations of returns on their assessment of:
• The amount, timing and uncertainty of future net cash inflows to the
entity;
• Management's stewardship of the entity’s resources.
Qualitative characteristics of financial information
• The Conceptual Framework for Financial Reporting defines the

fundamental qualitative characteristics of financial information to be:
• Relevance; and
• Faithful representation
• The Framework also describes enhancing qualitative characteristics:
• Comparability
• Verifiability
• Timeliness
• Understand ability
Elements of financial statements
• The Conceptual Framework defines the elements of financial statements to be:-

• Asset: A present economic resource controlled by the entity as a result of past events which are
expected to generate future economic benefits
• Liability: A present obligation of the entity to transfer an economic resource as a result of past events
• Equity: The residual interest in the assets of the entity after deducting all its liabilities
• Income: increases in economic benefit during an accounting period in the form of inflows or
enhancements of assets, or decrease of liabilities that result in increases in equity. However, it does
not include the contributions made by the equity participants (for example owners, partners or
shareholders).
• Expenses: decreases in assets, or increases in liabilities, that result in decreases in equity. However,
these do not include the distributions made to the equity participants.
• Other changes in economic resources and claims: Contributions from holders of equity and
distributions to them
Consequences of adopting IFRS
• Many researchers have studied the effects of IFRS adoption, and there
are debates on whether the effects can be attributed solely to IFRS
mandate adoption. For example, one study. uses data from 26 countries
to study the economic consequences of mandatory IFRS adoption. It
shows that, on average, even though market liquidity increases around
the time of the introduction of IFRS, it is unclear whether IFRS
mandate adoption is the sole reason of observed market effects. Firms’
reporting incentives, law enforcement, and increased comparability of
financial reports can also explain the effects.

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International Accounting

• international Accounting Standards (IAS) are older accounting standards

• The Conceptual Framework states that the primary purpose of

• The Conceptual Framework for Financial Reporting defines the

• The Conceptual Framework defines the elements of financial statements to be:-

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