PRESENTED TO
MAM SEHAR MUNIR
PRESENTED BY
RAZIA HAMEED
2015-AG-194

 International Accounting Standards (IAS) were issued
between 1973 and 2001 by the Board of the International
Accounting Standards Committee(IASC).
 On 1 April 2001, the new International Accounting
Standards Board (IASC) took over from the IASC the
responsibility for setting International Accounting
Standards.
 The IASB has continued to develop standards calling the
new standards International Financial Reporting
Standards (IFRS).

 International Financial Reporting Standards
(IFRS) are designed as a common global language
for business affairs so that company accounts are
understandable and comparable across international
boundaries.
 The rules to be followed by accountants to maintain
books of accounts which is comparable,
understandable, reliable and relevant as per the
users internal or external.

• International Financial Reporting Standards is
shooting down the competition as it has been
accepted in more than 120 countries like
Finland , France , Germany , Australia , China ,
Pakistan , India and many more .
• A survey was done and it showed that more than
25,000 international and approximately 48,000
domestic listed companies in the world use IFRS
Standards.

• Expanding world trade
• Proliferation of multinational
corporations
• Increasing role of global capital
markets
• Increased FDI
• Growth of organizations

 Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital Maintenance Adjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materiality is an aspect of relevance.

• At the core of the Conceptual
Framework is the objective to
provide financial information
that is useful to current and
potential providers of
resources in making decisions.
• All other aspects of the
framework flow from that
central objective. Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital MaintenanceAdjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materialityis an aspect of relevance.

• Two fundamental qualitative
characteristics that make
financial information useful:
– Relevance: Information that
could potentially make a
difference in users’
decisions.
– Faithful Representation:
Information that faithfully
represents an economic
phenomenon that it purports
to represent. It is ideally
• complete,
• neutral, and
• free from error.
 Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital MaintenanceAdjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materialityis an aspect of relevance.

• Four enhancing qualitative
characteristics that make financial
information useful:
– Comparability: Companies record
and report information in a similar
manner.
– Verifiability: Independent people
using the same methods arrive at
similar conclusions.
– Timeliness: Information is available
before it loses its relevance.
– Understandability: Reasonably
informed users should be able to
comprehend the information.
 Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital MaintenanceAdjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materialityis an aspect of relevance.

• Elements directly related to the
measurement of performance:
– Income: Increases in
economic benefits in the
form of inflows or
enhancements of assets or
decreases of liabilities that
result in an increase in
equity
– Expenses: Decreases in
economic benefits in the
form of outflows or
depletions of assets or
increases in liabilities that
result in decreases in
equity
 Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital MaintenanceAdjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materialityis an aspect of relevance.

• Elements directly related to the
measurement of financial position:
– Assets: Resources controlled by
the enterprise as a result of past
events and from which future
economic benefits are expected to
flow to the enterprise.
– Liabilities: Present obligations of
an enterprise arising from past
events, the settlement of which is
expected to result in an outflow of
resources embodying economic
benefits.
– Equity: Residual interest in the
assets after subtracting the
liabilities.
 Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital MaintenanceAdjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materialityis an aspect of relevance.

• Constraint: The benefits of
information should exceed the
costs of providing it.
• Underlying Assumptions:
– Accrual Basis: Financial
statements should reflect
transactions in the period
when they actually occur, not
necessarily when cash
movements occur.
– Going Concern: Assumption
that the company will continue
in business for the foreseeable
future.
 Financial Position
o Assets
o Liabilities
o Equity
 Performance
o Income
o Expenses
o Capital MaintenanceAdjustments
o Past Cash Flows
o Reporting Ele
Reporting Elements
 Relevance*
 Faithful Representation
 Comparability, Verifiability,
Timeliness,
Understandability
Qualitative Characteristics
To Provide Financial Information
Useful in Making Decisions about
Providing Resources to the Entity
Objective
Constraint
 Cost (cost/benefit considerations)
Underlying Assumption
 Accrual Basis
 Going Concern
*Materialityis an aspect of relevance.

• Focus on Investors
• Loss recognition timeliness
• Comparability
• Standardization of accounting and financial reporting
• Improved consistency and transparency of financial
reporting.
• Better access to foreign capital markets and investments
• Improved comparability of financial information with
global competitors
• Relevance

• IFRS is quite complex and costly in case of
small or medium sized business.
• Initial cost of converting to IFRS is large
• Every country interpret IFRS on his own way.
• IFRS is effected by the country culture, language
and legal system.
• Investors has to understand the culture of the
country in which he wants to invests.
• Converting to IFRS makes the IASB the
monopolist in the terms setting the standards.

• Overall, there are more advantages to IFRS than the
disadvantages.
• The worlds economies are becoming more integrated
and having one accounting system will make life a little
less complicated for both the investors and company.
• As multinational businesses continue to grow and
expand, a thorough knowledge of IFRS is now essential
for internationally active, growing businesses.
• There seems to be worldwide consensus surrounding
the need of one global set of high quality accounting
standards and the IFRS is currently best positioned to
fulfill that need.