The effect of International Financial Reporting Standards (IFRSs) needs to be assessed to understand the impact on – recognition, measurement and disclosure on revenue, expenses, assets and liabilities to an entity, when a new standard or revision in existing standards taken place.
In order to cope up with the requirement of new challenges in the economy or to rectify the possible errors or for better presentation of the financial statements time to time, the IASB
Such newly issued or reissued IFRS will be always specifying the date from which it will be effective be considered in the financial statements.
IFRS impact assessment is an assessment conducted when new or revised accounting standard is implemented in any business from a specific date. Sometimes the value disclosed in the financial statements needs to be changed while comparing with those normally disclosed under existing practice, because of change in measurement of the item. In some cases, the impact will be only on information disclosed in the financial statement and may not necessarily an impact on the financial figures. In certain situations, items which were not accounted till date or had a different treatment earlier may change by the adoption of new or revised one. In some other cases, the impact could be on both; on the financial figures as well as on the disclosure requirements.
Why it is important to commence IFRS impact assessment?
Anyways, whether the impact is on the amount to be recognized or the amount to be measured or on the disclosure requirements, it is important to do an analysis of impact on introduction of IFRS well before preparing the financial statement to report to the stakeholders and/or to the public. Then the management will have a fair idea on the impact of such new or revised IFRS well before closing the financial year.
What are the information required to conduct IFRS Impact Assessment?
Some of the relevant IFRS, recently issued, where we do the impact assessment for the year 2018 are given below.
IFRS 15 Impact assessment
Based on the nature, terms and conditions of contract entered with customers, we will assess how performance obligations are meeting as per requirement of the IFRS 15 on revenue from different sources. The source includes; but not limited to Trading, Construction, Services etc.
The IFRS 15 Impact assessment will cover broadly the following:
Disclosure requirement as per new standard will suggested.
IFRS 16 Impact assessment
The IFRS 16 impact assessment of – Leases will broadly cover the following:
IFRS 9 Impact Assessment
As per IFRS 9 – Financial Instruments, the impact assessment will cover broadly the following:
Need of an impairment allowance is one of the requirements under IFRS 9 – financial instruments. It has to be done on periodic basis and the change in the impairment allowance has to be reported in the profit and loss account.
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