The common perception that auditors are only useful “after the fact,” is pervasive yet outdated.
Increasingly, with international compliance a new reality for most corporations, the accounting profession is an indispensable partner in improving the business.
We asked Marco Ng, who has a depth of experience in audit, accounting, finance and risk management, to define some terms which may be unfamiliar to many, and share some ways these standards can help companies.
The International Financial Reporting Standards (IFRS) is a set of accounting standards that are recognized by at least 120 countries (including the Philippines) that provide a guide on how particular types of transactions and other events should be reported in financial statements.
The IFRS are adopted in the Philippines by the Financial Reporting Standard Council, under the oversight of the Board of Accountancy, and are issued as the Philippines Financial Reporting Standards (PFRS).
1. Ensure informed for decision-making
The very essence of using the IFRS/PFRS is to ensure consistency in recording, recognizing, measuring financial transactions, which if followed properly will ensure stability and transparency throughout the financial reporting process of the company.
With this, it will allow businesses and individual investors to make informed financial decisions, as they can see exactly what has been happening with a company in which they wish to invest.
With the free flowing information provided by IFRS reporting (IFRS focuses on transparency), users of the financial statements may now see clearly what is happening within the company and they may be able to prepare individual projections or forecasts using IFRS.
2. Globalization through comparability with other IFRS/PFRS users
The goal with IFRS/PFRS is to make financial statements (international or local level) comparisons as easy as possible.
IFRS is being used by at least 120 countries, such as the European Union and many countries in Asia and South America.
Although synchronizing accounting standards across the globe is an ongoing process in the international accounting community, it helps that majority of the countries use IFRS. With regular and consistent application of IFRS by most companies, they may be able to present in the international market their financial statements without the hassle of reconciling differences of other accounting standards.
Comparisons will be easier and faster.
3. Increase reliability over the financial statements
Using IFRS promotes accuracy in preparing the financial statements of a business. For this to be achieved, the preparers of the IFRS financial statement must be honest and competent.
IFRS promotes following the code of ethics by the professional accountant and asking the preparer to be objective and truthful in their interpretation of the financial transactions, which will result in less inaccuracies or fraudulent financial statements.
Using IFRS as a guide in the financial reporting objective of any company will increase the internal control over their financial statement reporting, and ensure that users could rely more on the figures being presented by the company’s financial reporting.
Ng will be conducting a course titled “Understanding and Applying Full IFRS/ PFRS on Sept. 8- 9 at the Inquirer Academy.
Attendance in the course will allow CPAs to earn CPD units. Inquirer Academy’s Continuing Professional Development program will offer courses for CPAs to develop their technical and professional skills, such as “Exploring and Applying the Philippine Auditing Standards,” “Everyday Communication for Accountants” and “Professional Presence for Accountants.”
The Inquirer Academy is at 4168 Don Chino Roces Ave. corner Ponte St., Makati City. For more information about the workshop or if you would like to add your input on the article, you may email cpd@inquireracademy.com, call (632) 834-1557 or 771-2715 and look for Jerald Miguel or Judy Bondoc, or visit the website at www.inquireracademy.com.