International Financial Reporting Standards (IFRS) and Its Influence on Pakistan

Hafiz Abdur Rashid, Fatima Amin and Ayesha Farooqui

110 countries already adopted IFRS fully in their country all over the world. Why we adopt accounting standards? Investor confidence Comparison True picture Includes principles to Improved financial standards for treating of all sort of materials objects Legal shield Principles: financial there are several principles for each and every aspect of the regarding Assets liabilities, equity, cash flows,

statement

inventories, income taxes, interest expense , bonds stocks , depreciations, short and long term liabilities , accrued, differed and prepaid expenses and revenues and any financial event occurred in an accounting period Process: ICAP suggest to SECP, SECP analyze, compare and implement in

accordance with Companies ordinance 1984. Then follow up and monitor it and regulate and punish the violations and punish the violators.

CA 1984

ICAP SECP

Accounting standrds for Pakistan

Hurdles: IAS 39 is not executed presently because of non-availability of information and quality of data and also the predictions and decisions varies across the industries. The methods of forecasting the future cash flows also vary that leads to different techniques used for the Comparisons of the financial statements. Insurance regulations entail to take the investment at cost or market price whichever is less whereas the IAS39 requires taking the investment at its fair value.

Size matters
As SME contributes a large part to our economy it must be regulated and standardized but Size of the company matters a lot while applying standards and for SME the IAS may not work so ICAP come up with specialized SME Standards in order to fit the criteria and standards for even small and medium enterprises Consequences and Benefits:

 better quality reports and financial statements because of carefully selected international experts have designed and tested the validity of the standards It helps managers to manage their portfolio because now they know the true pictures of different businesses Increased foreign investments and increased investors confidence because of transparent asset valuations and expenses profits and losses and all other financial statements discourse Better comparison because all companies are using the same standards to evaluate and measure their firm performance end assets value True and fair picture of the company as standard will not allowed the company to hide losses or exaggerate profits, inventories and other asset By Following standards organizations pay its liability towards government, because its the legal responsibility of every organization to follow CA 1984 and SECP regulations