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Managing the Transition to IFRS-Based Financial Reporting: A Practical Guide to Planning and Implementing a Transition to IFRS or National GAAP by Lisa Weaver

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2 THE CONCEPTUAL FRAMEWORK OF IFRS, ACCOUNTING POLICIES AND THE PRESENTATION OF FINANCIAL STATEMENTS

This chapter introduces the fundamental concepts underpinning reporting under IFRS including the main principles of the conceptual framework, how accounting policies should be determined under IFRS, and the content and presentation of the financial statements. An understanding of the Framework for financial reporting is crucial for anyone wishing to understand the development and selection of IFRS-compliant accounting policies, as its concepts underpin many more specific IFRS requirements.

This chapter will also highlight the use of judgement that is needed when developing accounting policies and the use of estimates, which can play an important part in shaping the overall performance and position of the reporting entity as portrayed in the financial statements. In some jurisdictions there is no equivalent to the IASB's Conceptual Framework for Financial Reporting, in which case many of the principles explained in this chapter will be unfamiliar. Where transitions are being planned in such jurisdictions there will be a significant learning curve for management, especially if the previously applied GAAP was fairly prescriptive in nature.

The presentation of financial statements is also covered in this chapter, and again this may represent a big difference from the presentation requirements of the previously applied GAAP. Preparers of financial statements need to understand the ...

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