Examine the Importance of the Context of the Financial Reporting Generally

Examine the importance of the context of the Financial Reporting generally and with particular reference to the adoption and application of the International Standards by the European Union, using, as appropriate, at least one of the IAS or IFRS to support your reasoning and support the contentions and assertions that you make.

DECLARATION

I hereby certify that this material, which I now submit for assessment is entirely my own work and has not been submitted for assessment for any academic purpose other than in partial fulfillment for that stated above.

Signed ................................ Date............................

TABLE OF CONTENT PAGES

Executive Summary 04

An Overview of IFRS 05

Importance/Benefits of Using IFRS 06

The Old Structure 07

Similarities and Differences 11

IAS 2 (Inventories) 11

IAS 11 (Construction & Contract) 12

IAS 16 (Property, Plant & Equipment) 12

Impact of Financial Crisis On Financial Reporting 13

Impact of Diversification to IFRS From GAAP In Us and Europe 15

Positive Impact Of Imposition Of IFRS 17

Conclusion 19

References 20

EXECUTIVE SUMMARY

Every person and their country are bound in the dilemma of Law. The significance of the laws can be examined with the fact that without the applicability and effectively comply over the law a person cannot do anything.

"There are numerous laws under which diversified operations are performed" (Vernimmen, P 2000). We are in an era of globalization and capitalization in which the stance of motley things is a common thing. Specifically there can be a number of laws which have been applicable to several different types of situations.

It is mandatory upon a registered organisation to issue their account (annual report) information before their shareholders and other interested persons. This is a comparative report on a listed company throughout the preceding year. These reports are intended to give their user information about the company's activities and financial performance. International Financial Reporting Standards (hereafter IFRS) are the laws, regulate by the accounting body to educate the companies to record every transaction has been occurred in the company during its fiscal year.

"By hook or by crook, every company has to comply over the doctrines made by the financial statements regulating authorities" (Bierman, H (2008). Usually there are two main accounting bodies, which intervene while finalizing the financial statements of the companies, one is IFRS and other one is General Accepted Accounting Principles (GAAP). GAAP has been used by the US firms but now, after the current credit crunch the Security and Exchange Commission (SEC) changed the rules of reporting completely. "Now every company has to follow the rules described by the IFRS" (Richard Wittsiepe, 2008). The main prospective of this study is to assemble a list of benefits and significance of IFRS. We will also compare both the accounting standards and some of the main International Accounting Standards (IAS), which will help us to cover the main topic comprehensively. I will also see why the companies have been directed to shift their accounting regulation to IFRS from GAAP, mainly for US companies but it has also been adopted by the European Accounting Standard Board (EASB), to follow IFRS. Let's first define the IFRS and its applicability to teach non technical readers in a professional manner.

AN OVERVIEW OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

The framework for the preparation and presentation of the financial statements adopted by the International accounting standard board (IASB) is known as International Financial Reporting Standard. IFRS provides procedure norms, rules and regulation that know how to prepare and present the financial statements, what data must be included and what should be omitted (IFRS, 2007). Most of the standards which come under the umbrella of IFRS are previously known as the International Accounting Standard (IAS). IAS was issued between 1973 and 2001 by the International Accounting Standard Committee. Financial reporting has been used in order to give a brief idea to the external users regarding the gauging of financial health of the organization. Management used this information for decision making, feel the disparity and reduce any kind of caveats, which the entity may envisage (IFRS, 2007). International Accounting Standard Board (IASB) is the regulator who regulates the countries and accounting bodies to implement the International Accounting Standards (IAS) in their financial statements and disclose things as per the yardstick. Albeit the IASB has a very clear and conceptual framework that underlies its financial reporting standards and interpretation that are known as the name of Preparation and Presentation of Financial Statements. The framework for the presentation and preparation which was known as International Accounting Standard (IAS) recently is known as International Financial Reporting Standard (IFRS). IAS was issued and being implemented between 1973 and 2001 (IFRS, 2007). IFRS provides rules & regulation, norms regarding the disclosure of financial information in the books of Accounts (IFRS, 2007). If factually speaking then one can say that IFRS made some standards which public listed as well as private limited companies have to follow in order to save them from being penalized. International Accounting Standard Committee (IASC) set out