Most emerging economies adopting IFRS Standards see a reduction in their cost of capital. IFRS Standards provide companies with a passport to gain access to almost every capital market in the world, including those in Europe and the United States; and when a company adopts IFRS Standards, it is making a public commitment to the highest standards of financial information and investor protection.
However, the introduction and implementation of major new standards brings with it its own set of challenges. Companies converting to new accounting standards tend to underestimate what is involved, particularly in terms of time and resources.
AA is committed to working with you to provide practical application guidance in implementing these standards. Our continued conversations with regulators and industry experts allow us to bring the right insight and experience to help you stay up-to-date with the changes.
IFRS 9: Accounting advisory related to financial instruments
IFRS 9 Financial Instruments brings fundamental change to financial instrument accounting as it replaces IAS 39 and introduces new method of classifications and the expected credit loss model. Our specialists explain the new expected credit loss model for financial asset impairment, the impact of the business model on accounting and the consequences of fewer categories for assets. There are a number of decisions and choices to be made at transition to the new standard but some good news: hedge accounting rules have been eased. Banks and financial institutions are most affected but corporates need to consider the new requirements as well.
IFRS 15: New revenue standard
The new standard’s core principle requires entities to recognise revenue to depict the transfer of promised goods or services to customers in amounts that reflect the consideration (payment) to which the entity expects to be entitled in exchange for those goods or services. This new standard significantly increases complexity around the recognition of revenue, meaning that in a significant number of industries the invoiced amount will not correspond to the pattern of revenue recognition
FRS 16: New leases standard
The new Leases standard will affect almost all organisations as practically all organisations are involved in leasing arrangements. Applying the new standard is expected to result in a gross up of the balance sheet, and possibly change the timing of when rent and other lease related expenses must be accounted for and where in the profit and loss statement they must be presented. The new standard will affect almost all performance indicators used in practice, such as gearing ratio, liquidity ratio, interest coverage ratio, EBITDA, operating profit/loss, net profit/loss, EPS, ROCE, ROE and the operating cash flow.
IFRS 3: Accounting advisory related to corporate acquisitions
In today’s dynamically changing economic environment, the number of corporate and shareholding acquisitions and transformations of multinational companies are constantly on the rise. Companies that prepare their consolidated financial statements according to the IFRS standards and are concerned by any group level acquisition or transformation often find it challenging to recognise these transactions appropriately under IFRS. Accounting calculations and disclosures related to the allocation of the purchase price require wide experience and an accurate knowledge of related IFRS rules.
IFRS 17: New Insurance standard
The IASB finished its long-standing project on insurance contracts accounting and published IFRS 17, ‘Insurance contracts’ on 18 May 2017 to replace IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. The issuers of insurance contracts will need to use consistent measurement models based on current assumptions at a more granular level. Both the income statement and balance sheet will change. Both the income statement and balance sheet will change.
Financial market players (banks, credit institutions and insurers) are under constant pressure to comply with various reporting obligations in due time. Our experts can help solve issues that typically concern the financial sector such as hedge accounting, determination of expected credit losses, the amortization of transaction costs, or other complex calculations related to financial instruments.
Subsequence to an M&A transaction, a synergy strategy is always an important step to realize the potentials in a business combination. Our team is experienced in providing insights on accounting considerations in those synergy strategies.
We provide a seamless support to IFRS conversion process, in particular:
Preparing reporting packages in line with the group accounting standards may present additional burden for companies due to tight deadlines and scarce resource capacities. Our experts have wide practical experience in preparing group level reporting packages and adopting the best practices known in the field.
We compile the learning material for our practically oriented trainings based on several years’ experience and according to the client’s actual and particular needs in order to pass on knowledge that is most appropriate and most suitable for implementation in day-to-day practice. The topics of the training may either cover all IFRS standards, so giving a full and general picture of currently effective regulations, or—on request—concentrate on particular standards or areas if that better suits clients’ actual needs.
Our experts have wide practical experience in implementing IFRS in to accounting system, supervising of IFRS implementation, IFRS modelling, ect.
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