We often hear about financial reporting standards such as US GAAP and IFRS and that companies need to abide by these standards while preparing their financial reports. One may ask why we need these financial reporting standards. Each business is unique with its own business needs, financial requirements, and style of operations. Then what’s the […]
Financial Reporting Standards
Financial Reporting Standard-setting Bodies and Regulatory Authorities
Before we delve into the details, it’s important to understand the difference between the Standards-setting bodies and the regulatory bodies. The standard-setting bodies are private sector organizations, consisting of experienced accountants, auditors, and academicians, who are responsible for setting the financial reporting standards. However, they don’t have the power to enforce these standards. It’s the […]
SEC Filings: Forms Providing Key Information for Analysts
To comply with the various reporting requirements, companies are required to file (complete and submit) various standardized forms issued by SEC. There are more than 50 such forms for satisfying different requirements. In this article we will list and discuss the forms that provide the most useful information to financial analysts. Form S-1: Initial Registration […]
Global Convergence of Accounting Standards
In the recent past, there has been a lot of discussion and activity towards to goal of moving towards a global standard for financial reporting. This is an important topic as businesses are becoming more and more global and complex. Both International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have expressed their […]
IASB Conceptual Framework for Financial Reporting
The IASB bases its financial reporting standards on the conceptual framework that it adopted in 2010. The conceptual framework was developed by IASB and it lays down the basic concepts and principles that act as the foundation for preparation and presentation of the financial statements. The framework is also used as guide to develop / […]
Conceptual Framework – Recognition of Elements of Financial Statements
To be recognized, an item must meet the definition of an element provided in the conceptual framework, and satisfy the following criteria: It is probable that any future economic benefit associated with the item will flow to or from the entity; and The item’s cost or value can be measured with reliability. The general criteria […]
Differences in IFRS and US GAAP Frameworks
The FASB establishes the Generally Accepted Accounting Standards in the United States (US GAAP), while the IASB establishes International Financial Reporting Standards (IFRS) outside the US. Both the standards are working towards convergence and have a common worldwide standard. However, it’s a slow process and at present there are many differences between the two frameworks: […]
Characteristics of an Effective Financial Reporting Framework and the Barriers
For a financial reporting framework to be effective, the first requirement is that it must be coherent, i.e., all components should work together logically. Such a framework will have several characteristics: Transparent: The framework should increase the transparency of the financial aspects of a business, i.e., the users of the financial statements should be able […]
Financial Reporting Standards – Video
This video by Arif Irfanullah provides a very clear understanding of the Financial Reporting Standards as a part of the CFA Level 1 syllabus. This first video talks about: Objective of Financial Statements Importance of Reporting Standards Standard Setting Bodies IASB – Stated Goals International Organization of Securities COmmissions (IOSCO) Barriers to Developing One Standard […]