The IAS's international standards are fully compatible with the United States's "GAAP". GAAP provides a more detailed calculation methodology on many issues. IAS and GAAP standards are based on the principles of accounting and financial reporting. For various reasons, international standards are heavily influenced by accounting practices in the United States. There are currently more than 30 accounting standards for accounting purposes.
The decisive factor in using International Financial Reporting Standards is the company's ambition to improve its ability to attract foreign funding, establish long-term trade relationships with foreign clients, attract foreign investors, joint ventures, and issue securities in the international market.
IAS specifies requirements for financial statements such as forms, dates of recording, content, and so on. These are aimed at improving and harmonizing legislation, on current accounting standards and on financial reporting procedures. The application of IAS in the accounting system also makes it simpler and more realistic in terms of company performance compared to the company's financial situation with the financial position of foreign companies.
Principles of IAS
The concept of accrual accounting in the IAS (income and expense). Revenues and expenditures from transactions are recognized, recorded in the accounting records and recorded in the financial statements at the time of their release (not at the time of receipt or payment of the money). The financial statement prepared in accordance with the contractual principles notifies users as future funds not only about past transactions in payment and money transfer, but also future obligations and resources.
Guidelines for the preparation of financial statements based on IAS:
1. Diligence. Efforts to secure assets and earnings do not go far beyond the scope of obligations or expenses. According to this Principle of IAS, it is necessary to be ready to reduce potential losses and damages and refrain from stabilizing revenue and revenue before actual receipt.
2nd Material on the form. It is necessary for information on operations to first agree on point and economic reality, not just with the legal form established.
3rd Fullness of information. According to the IAS, the information must be complete. But it must take into account its importance and value.
4th Compare Authority. IAS users should be able to compare the company's financial statements at different times to identify common trends and identify the financial statements of different businesses. Accounting policies can not be implemented arbitrarily.
International standards are developed and approved by the International Financial Reporting Standards Committee. The committee was set up on 29 June 1973 by the adoption of an agreement concluded by the audit bodies in Austria, Canada, France, Germany, Japan, Mexico, the Netherlands, Ireland, the United Kingdom and the United States.
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