Meaning of IFRS
IFRSanis a International Financial Reporting Standard issued by International Accounting Standard Board (IASB) which is applicable on certain specific companies or entities specified by IASB. The standards is not merely used for preparing Financial Statement or Financial Records but apart from preparing, it provides an opportunity to represent ourselves / our organization at International / global platform. Everybody knows IFRS is totally based on fair value concept and GAAP rather than historical coat concept, which shows the actual worth of our assets or values of our business.
With the IFRS you would be able to measure your growth, your financial and economical strengths, your real assets etc. The IFRS is not a complicated or difficult standards, but it’s provide a some specific recognition or measurements criteria to record the transaction in Financial Record/ Statement.
Now, how you learn IFRS easily ??
- First you learn the Accounting Standards or GAAP which is issued by the recognized body of country, and understand the Financial Reporting Framework. For take a small example of India if you prepare your Financial Statement in Indian Framework then first you understand the Accounting Standards which are issued by The Institute of Chartered Accountant of India (ICAI). When you learned all the standards issued by ICAI then you move towards IFRS.
- You tried to find out similarities and differences in standards issued by both the recognized body ie. IASB and ICAI. There are some standard which is issued only by either IASB or ICAI as the case may be, then no requirement to find out similarities or differences eg. “IAS 41 – AGRICULTURE” which is issued only by IASB. There is no specific accounting treatment/ standard prescribed in Accounting Standard issued by ICAI.
- Every time you should aware about the Fair value concept and tried to apply standards on basis of such concept. For better understanding take a another example that there is no life/ unlimited life of land in case of IFRS (subject to conditions), but simultaneously there is a restriction on life of land in accounting standards issued by ICAI, only due to reason of value of land never decrease hence the Fair Value concept applied.
- Make a practice to solve a practical issues which are arises during application of the IFRS. How to apply two or more standard on a single transaction. For making a practice you can refer the practice material issued by IASB or any other recognised body.
- First you focus on general or regular transactions which are happened on continuous basis, then you move towards specific transaction or non- recurring transaction. Again for a better understanding we take a great example of “IAS 18- REVENUE”, first you Measure and Recognise the Sale of Goods/ services then you move towards the special case like Franchise fees, Customer Loyalty Programmes or Barter transaction Involving Advertising Services as the case may be. During the application of standards you should remember about which standard is to be applied on the specific transaction. In the above example Customer Loyalty Programmes is governed by “IFRIC 13 Customer Loyalty Programmes” and Barter transaction Involving Advertising Services is governed by “SIC-31 Barter Transactions Involving Advertising Services”.
- For remembering all the standards you should try to make some notes or make some charts or diagram or you can prepare tabular format of all the standards. After that try to compile related standards in a same group. From the above example you can make group of following standards:
- IAS 18 – Revenue
- SIC-31 Barter Transactions Involving Advertising Services
- IFRIC 13 Customer Loyalty Programmes
Now at the end I think this is good approach to learn IFRS in easy and simple manner. For learning or better understanding it provides you a positive roadmap. There are so many alternatives are available for learn IFRS in easy and simple way.
Best of luck!!