Disclosure of new accounting standards ifrs

Here is a comprehensive overview of the disclosure requirements for new accounting standards under IFRS (International Financial Reporting Standards):

What are IFRS?

IFRS is a set of accounting standards developed by the International Accounting Standards Board (IASB) to provide a common language for financial reporting across the globe. IFRS aims to improve the transparency, consistency, and comparability of financial statements.

Disclosure Requirements for New Accounting Standards under IFRS

When a new accounting standard is issued, companies must disclose certain information to provide transparency and clarity to stakeholders. The disclosure requirements vary depending on the specific standard and the company's circumstances. Here are some general disclosure requirements:

1. Summary of the new standard: Provide a brief summary of the new standard, including its effective date, scope, and main provisions.
2. Impact on the financial statements: Describe the impact of the new standard on the company's financial statements, including any changes to accounting policies, estimates, or judgments.
3. Transition requirements: Disclose the transition requirements for the new standard, including the date of transition, the method of transition, and any adjustments made to the financial statements.
4. Key assumptions and estimates: Provide information on the key assumptions and estimates used in applying the new standard, including any changes to these assumptions and estimates.
5. Sensitivity analysis: Perform sensitivity analysis to assess the potential impact of changes in assumptions and estimates on the financial statements.
6. Comparison with previous periods: Compare the financial statements prepared under the new standard with those prepared under the previous standard, highlighting any significant changes.
7. Impact on specific line items: Disclose the impact of the new standard on specific line items in the financial statements, such as revenue, expenses, assets, and liabilities.
8. Impact on cash flows: Describe the impact of the new standard on the company's cash flows, including any changes to cash inflows and outflows.
9. Impact on financial ratios: Provide information on the impact of the new standard on financial ratios, such as the debt-to-equity ratio, return on equity, and earnings per share.
10. Future developments: Disclose any future developments related to the new standard, including any planned changes or updates.

Example of Disclosure

Here is an example of disclosure for a company that has adopted a new accounting standard:

New Accounting Standard: IFRS 16 Leases

Summary: The company has adopted IFRS 16 Leases, which requires lessees to recognize assets and liabilities for all leases with a term of more than 12 months. The standard is effective for annual periods beginning on or after January 1, 2020.

Impact on Financial Statements: The adoption of IFRS 16 has resulted in the recognition of new assets and liabilities on the balance sheet, including a significant increase in property, plant, and equipment. The company has also changed its accounting policy for lease expenses, which is now recognized on a straight-line basis over the lease term.

Transition Requirements: The company has adopted the modified retrospective transition approach, which requires the recognition of the cumulative effect of the adoption of IFRS 16 as of the date of transition.

Key Assumptions and Estimates: The company has made certain assumptions and estimates in applying IFRS 16, including the determination of the lease term and the discount rate used to calculate the present value of lease payments.

Sensitivity Analysis: The company has performed sensitivity analysis to assess the potential impact of changes in assumptions and estimates on the financial statements.

Comparison with Previous Periods: The company has compared its financial statements prepared under IFRS 16 with those prepared under the previous standard, highlighting any significant changes.

Impact on Specific Line Items: The adoption of IFRS 16 has resulted in a significant increase in property, plant, and equipment and a corresponding increase in depreciation expense.

Impact on Cash Flows: The adoption of IFRS 16 has resulted in a significant increase in cash outflows for lease payments.

Impact on Financial Ratios: The adoption of IFRS 16 has resulted in a significant increase in the debt-to-equity ratio and a decrease in the return on equity.

Future Developments: The company plans to continue to monitor developments related to IFRS 16 and to update its accounting policies and procedures as necessary.

This example provides a general outline of the disclosure requirements for a company that has adopted a new accounting standard under IFRS. The specific disclosure requirements may vary depending on the company's circumstances and the specific standard being adopted.