IFRS is an international accounting standard published by the International Accounting Standard Board (IASB). International Accounting Standards (IAS) are prepared by four major world organizations, namely the International Accounting Standards Agency (IASB), the European Community Commission (EC), the International Capital Market Organization (IOSOC), and the International Accounting Federation (IFAC).
The International Accounting Standards Board (IASB), formerly known as the International Accounting Standards Commission (AISC), is an independent institution for compiling accounting standards. This organization has the goal of developing and encouraging the use of high quality, understandable and comparable global accounting standards (Choi et al., 1999 in Intan Immanuela, puslit2.petra.ac.id)
The structure of IFRS
International Financial Reporting Standards includes:
* International Financial Reporting Standards (IFRS) – standards published after 2001
* International Accounting Standards (IAS) – standards published before 2001
* Interpretations published by the International Financial Reporting Interpretations Committee (IFRIC) – after 2001
* Interpretations published by the Standing Interpretations Committee (SIC) – before 2001 (www.wikipedia.org)
Broadly speaking, there are four main things that are regulated in accounting standards. The first has to do with definitions of financial statement elements or other related information. Definitions are used in accounting standards to determine whether certain transactions should be recorded and classified into assets, liabilities, equity, income and expenses. The second is measurement and assessment. This guideline is used to determine the value of an element of financial statements both at the time of the financial transaction and at the time of the presentation of the financial statements (at the balance sheet date). The third thing contained in the standard is recognition, namely the criteria used to recognize elements of financial statements so that these elements can be presented in the financial statements. The last one is the presentation and disclosure of financial statements. This fourth component is used to determine the type of information and how that information is presented and disclosed in the financial statements. Information can be presented in the body of the report (Balance Sheet, Profit / Loss Report) or in the form of an explanation (notes) that accompany the financial statements (Chariri, 2009).
Conference to IFRS in Indonesia
Currently, Indonesia does not require companies in Indonesia to use IFRS but still refers to local financial accounting standards. The IAI National Governing Board together with the SAK Consultative Council and the SAK Council plan that in 2012 it will apply accounting standards that are close to full convergence to IFRS.
From the data above, Indonesia’s need to participate in a conference program seems to be a must if we don’t want to be left behind. Thus, in the development of accounting standards preparation in Indonesia by the Financial Accounting Standards Board (DSAK), it cannot be separated from the development of international accounting standards preparation carried out by the International Accounting Standards Board (IASB). The national financial accounting standards are currently in the process of gradually leading to full conference with the International Financial Reporting Standards issued by the IASB.
And for matters that are not regulated by international accounting standards, DSAK will continue to develop financial accounting standards to meet real needs in Indonesia, especially financial accounting standards for sharia transactions, with the development of sharia-based businesses in Indonesia. The conceptual basis for accounting for Islamic transactions has been prepared by DSAK in the form of a Basic Framework for the Preparation and Presentation of Islamic Financial Statements. This is necessary because Islamic transactions have different characteristics from business transactions in general so that there are several general accounting principles that cannot be applied and an addition of accounting principles is needed that can be used as a conceptual basis. Statement of Financial Accounting Standards for sharia transactions will start from number 101 to 200. (SY)
Indonesia must adopt international accounting standards (IAS) to make it easier for foreign companies to sell shares in this country or vice versa. However, adopting international standards is not an easy matter because it requires understanding and is expensive for socialization. Discussing the current IAS, the institutions that are active in harmonizing accounting standards include the IASC (International Accounting Standards Committee), the United Nations and the OECD (Organization for Economic Cooperation and Development). Several parties that have benefited from this harmonization are multinational companies, international accounting firms, trade organizations, and IOSCO (International Organization of Securities Commissions).
Iqbal, Melcher and Elmallah (1997: 18) define international accounting as accounting for transactions between countries, comparisons of accounting principles in different countries and harmonization of accounting standards around the world. A company starts to get involved with international accounting when it gets the opportunity to carry out export or import transactions. International accounting standards (IAS) are standards that can be used by multinational companies that can bridge differences between countries in multinational trade.
The IASC was founded in 1973 and has members from ten countries of professional accounting organizations. In 1999, IASC membership consisted of 134 professional accounting organizations from 104 countries, including Indonesia. The objectives of the IASC are (1) to formulate and publish accounting standards with respect to financial reporting and to promote them to be widely accepted worldwide, and (2) to work on the development and harmonization of accounting standards and procedures with respect to financial reporting.
The IASC has a consultative group called the IASC Consultative Group which consists of parties representing users of financial reports, financial report preparers, standard setting bodies, and observers from intergovernmental organizations. This group meets regularly to discuss policies, principles and matters relating to the role of the IASC. IFRS (International Financial Accounting Standard) is an effort to strengthen the global financial architecture and seek long-term solutions to the lack of transparency of financial information.
The objectives of IFRS are: to ensure that the company’s interim financial reports for the periods included in the annual financial statements contain high-quality information that:
1. transparency for users and comparability throughout the period presented
2. provides an adequate starting point for accounting based on IFRS
3. can be generated at a cost that does not exceed the benefits for users
Benefits of having a global standard:
1. Capital markets become global and investment capital can move around the world without significant obstacles. A high quality financial reporting standard used consistently around the world will improve the efficiency of local allocations
2. investors can make better decisions
3. companies can improve their decision-making processes about mergers and acquisitions
4. The best ideas arising from standard-making activities can be disseminated in developing global standards of the highest quality.
Hamonisasi has been running quickly and effectively, it is seen that a large number of companies voluntarily adopt international financial reporting standards (IFRS). Many countries have adopted IFRS as a whole and use IFRS as the basis for national standards. This is done to answer requests from institutional investors and other users of financial reports. These efforts to international standards are carried out voluntarily, when international standards do not differ from national standards, then there will be no problem, which becomes a problem, if international standards are different from national standards. If this happens, then the national standard (first reference) takes precedence.
There are many pros and cons in applying international standards, but over time, international standards have moved forward, and pressed countries that are contra. Example: the US capital markets commission, the SEC does not accept IFRS as the basis for financial reporting submitted by companies that list shares on the US stock exchanges, but the SEC is under increasing pressure to make US capital markets more accessible to non- reporters. US. The SEC has expressed support for the IASB’s goal of developing accounting standards for use in financial reporting for use in cross-border offerings.
Framework
The Financial Statement Preparation and Presentation Framework provides the basic principles of IFRS. The IASB and FASB frameworks are in the process of being updated and summarized. The Joint Conceptual Framework project aims to update and refine existing concepts to reflect changes in markets, business practices and the economic environment that have occurred in the two or more decades since the concept was first formed.
The overall objective is to create a basis for future accounting standards that are principles-based, internally consistent and internationally accepted. Because of this, the IASB (board) and the United States FASB carried out the project jointly.
The role of the
Deloitte Framework states:
In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgment in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgment, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. This elevation of the importance of the Framework was added in the 2003 revisions to IAS 8.
Objectives of financial statements A financial report must describe a true and fair view of the efforts of an organization. Because these reports are used by various parties, they must represent a true view of an organization’s financial situation.
Efforts to strengthen the global financial architecture and seek long-term solutions to the lack of transparency of financial information have led the International Accounting Standard Boards – IASB to accelerate the harmonization of international accounting standards, especially the International Financial Reporting Standards – IFRS made by the IASB and the Financial Accounting Standard Boards. Accounting in the United States).
The objective of IFRS is to ensure that the company’s financial statements and interim financial reports for the periods referred to in the annual financial statements contain high-quality information that is: 1. Transparent to users and comparable throughout the period presented.
2. Provide an adequate starting point for accounting based on IFRS.
3. Can be generated at a cost that does not exceed the benefits for users.
SCOPE OF THE STANDARD:
This standard applies when a company implements IFRS for the first time through an explicit, unconditional statement of IFRS compliance. Its purpose is to ensure that the company’s first financial statements based on IFRS (including interim financial reports for a given reporting period) provide users with an adequate and transparent starting point and are comparable throughout the entire period presented.
