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REQUIREMENTS AND PRINCIPLES OF FINANCIAL REPORTING IN
IFRS
S.S.Umaraliev
Master’s student of Tashkent State University of Economics
https://doi.org/10.5281/zenodo.14556868
According to the specified standard, separate financial statements are
statements prepared by the parent company (i.e. the investor having control
over the subsidiary) or the investor exercising joint control over the investee or
having significant influence over it, in which investments are accounted for at
cost or in accordance with IFRS (IFRS) 9 "Financial Instruments". Separate
financial statements must be prepared in accordance with all applicable IFRS.
It should be noted that at present, the majority of scientists and
practitioners in the field of harmonization of Russian accounting regulations
(RAS) and IFRS note an insufficient number of developments of an
organizational and practical nature, the absence of uniform methodological
approaches that allow the procedure for preparing financial statements in
accordance with IFRS.
There are various methods for generating separate financial statements in
accordance with IFRS requirements, for example, those proposed by N. M.
Zhirnaya, O. A. Zabbarova, P. V. Kolesnik, O. A. Mikhailova, S. V. Ponomareva, O.
Yu. Shulygina, S. V. Chesnokov, L. I. Shinkareva.
The table analyzes the methods for generating separate financial
statements in accordance with IFRS requirements for each of the reporting
methods: transformation of Russian reporting in accordance with IFRS, parallel
accounting in IFRS format, translation of Russian accounting data into separate
IFRS accounting registers with subsequent adjustments.
Based on the study of existing methods for generating separate financial
statements in accordance with IFRS requirements, discussed in scientific and
specialized literature, taking into account all the methods for obtaining financial
statements in accordance with IFRS, the author's approaches to generating
separate financial statements in accordance with IFRS requirements were
developed in the course of the study, as presented in the figure. The algorithm
for generating separate financial statements prepared in accordance with IFRS,
presented in the figure, includes strategic, methodological, applied and control
modules, which are closely interconnected and contain:
— proposed activities for preparing IFRS statements in accordance with the
set goals and objectives of the company (strategic module);
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— developed recommendations for generating a comprehensive accounting
policy, a structured working chart of accounts, accounting procedures in relation
to accounting objects for which Russian accounting standards differ from IFRS
(methodological module);
— developed methodology for preparing financial statements in accordance
with IFRS based on mapping accounting indicators under RAS to IFRS
(application module);
— proposed control activities that ensure the reliability of the prepared
separate IFRS statements (control module).
Secondly, it is necessary to approve the comprehensive accounting policy
developed for the company in accordance with RAS and IFRS and a structured
working chart of accounts. Thirdly, accounting procedures are developed in
relation to accounting objects for which Russian accounting standards differ
from IFRS in terms of requirements for the presentation of information for the
preparation of financial statements. The basis of this procedure of the
methodological module is the classification of accounting and reporting data
into groups depending on the possibility of their use in IFRS, carried out at the
previous stage.
In addition, it should be remembered that when preparing the first IFRS
statements, it is necessary to adhere to the specific requirements contained in
IFRS 1 "First-time Adoption of International Financial Reporting Standards".
Such statements are understood as the first annual financial statements in which
the organization adopts IFRS and makes a clear and unconditional statement of
compliance of the statements with IFRS. IFRS 1 specifies that the company must
prepare the opening balance sheet under IFRS on the date of transition to this
type of reporting. When preparing statements under international standards for
the first time, it is necessary to show how the transition to their preparation
affected the financial position of the company, financial performance and cash
flows. In cases of preparing separate statements of a member of a group of
related organizations under IFRS for the purposes of subsequent consolidation,
the model of the reporting process should be the same for all companies in the
group, which will reduce the cost of the procedures for its implementation. The
main difficulties in preparing a complete set of statements under IFRS are
related to the fact that accountants do not have experience in disclosing
information. In addition, the heads of organizations are not always ready for the
level of openness and transparency of reporting information specified by IFRS.
This is largely due to the tax focus of Russian accounting. Preparation of
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information requires the company to analyze internal and external data, and to
use the fair value accounting model more widely. For example, the new IFRS 7
Financial Instruments: Disclosure of Information standard requires extensive
disclosure of information in reporting, including the reflection of the degree of
exposure of enterprises to risks associated with the use of financial instruments,
a description of management objectives, policies and procedures in the field of
risk management. Very often, Russian companies do not have such information,
the practice of collecting and analyzing it.
