Interpreting IFRS: Understanding the Role of the International Financial Reporting Interpretations Committee
2009; American Institute of Certified Public Accountants; Volume: 208; Issue: 4 Linguagem: Inglês
ISSN
0021-8448
AutoresSara York Kenny, Robert K. Larson,
Tópico(s)Auditing, Earnings Management, Governance
ResumoEXECUTIVE SUMMARY * IFRIC is the interpretative body of the International Accounting Standards Board (IASB) that reviews newly identified financial reporting issues not specifically addressed in IFRS or issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop, with a goal to reach a consensus on the appropriate treatment. * IFRIC differs from FASB's Emerging Issues Task Force (EITF) in that the EITF issues a large number of pronouncements addressing narrow interpretation, implementation and application questions. IFRIC deals only with interpretation questions and issues far fewer pronouncements. * IFRIC's 14 unpaid voting members serve three-year renewable terms. They have considerable accounting expertise and normally include accountants in industry and public practice and users of financial statements with a reasonably broad geographical representation. Nonvoting members include the IFRIC chair, who is generally an IASB member, and official observers from organizations such as the International Organization of Securities Commissions (IOSCO) and the European Commission. * IFRIC has set criteria for evaluating requested agenda items and publishes its agenda decisions. Any individual or organization may recommend agenda items for consideration by IFRIC. Agenda decisions are not IFRS. * IFRIC due process generally parallels that used by the IASB and FASB. Each step is deliberate, and public comment is solicited. The structure of IFRIC interpretations includes (1) the summary of the issue, (2) the most appropriate accounting method (IFRIC consensus), (3) the effective date, (4) any transitional provisions and (5) the basis for conclusions. ********** [ILLUSTRATION OMITTED] With the increasing acceptance of IFRS in the global economy and its possible adoption in the U.S., CPAs are keenly interested in developing a broader understanding of international standards. A major goal of both the International Accounting Standards Board (IASB) and the SEC is for IFRS to be consistently and appropriately interpreted and applied. However, for many in the U.S. it is unclear how consistent interpretation and application can be achieved in the principles-based environment of IFRS. The reality is that the IASB has a well-established process for developing official interpretations of IFRS. This article introduces the International Financial Reporting Interpretations Committee (IFRIC) and discusses its organization, process and role in the authoritative interpretation of IFRS. The article also explains how IFRIC differs from FASB's Emerging Issues Task Force (EITF). WHAT IS IFRIC AND WHY IS IT IMPORTANT? IFRIC is the interpretative body of the IASB, the entity that develops, maintains and issues IFRS. IFRIC is designed to help the IASB improve financial reporting through timely identification, discussion and resolution of financial reporting issues within the framework of IFRS. Following a process detailed in the Due Process Handbook/or the IFRIC, the committee develops authoritative interpretations of existing IFRS. IFRIC refers its interpretations to the IASB for discussion and approval, and once they are approved by the IASB, the IFRIC interpretations (IFRICs) become part of IFRS. To be in compliance with IFRS, an entity must comply with all aspects of IFRS, including IFRICs. In the IFRS hierarchy contained in IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, interpretations have the same weight as all other IFRS approved by the IASB. IFRS are supported and based upon the Conceptual Framework for IFRS, the second level in the IFRS hierarchy (IAS 8, paragraph 11). Finally, the third level of the IFRS hierarchy includes pronouncements of other accounting standard setters that use a similar conceptual framework, other accounting literature and accepted industry practices-to the extent they do not conflict with IFRS or the Conceptual Framework of IFRS (IAS 8, paragraph 12). …
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