Table of Contents
This post will give you some guidelines to learn IFRS quickly.
Learning IFRS can be quite a headache for accountants and, generally, for people who handle financial information.
First step to learn IFRS - substance over form.
To understand the subject of international accounting standards, we must first understand the principle of substance over form.
This principle establishes that an entity must show the economic facts, prioritizing its economic reality rather than its legal form.
For example, in many jurisdictions, buildings have a useful life limit for calculating tax-type depreciation.
That is, the depreciation to calculate the income tax.
In some countries, this useful life can be up to 45 years, in others 50 years, and perhaps in others a little less.
However, if we analyze the economic reality, the useful life of a building can exceed 100 years or more.
So, the first step to understanding IFRS is to think about the economic reality of a financial operation, regardless of the tax regulationsapplied to this type of accounting event.
Second step to learn IFRS—structure of the rules
The next step is to understand the structure of the standards.
IFRS standards are divided as follows:
International Financial Reporting Standards (IFRS)
International Accounting Standards (IAS)
IFRS Interpretations Committee (IFRIC)
..
Standing Interpretations Committee (SIC)
The difference between IFRS and IAS standards is that the latter were issued by a body known as IASC.
The last standard issued by this body was IAS 41.
On the other hand, we find the interpretations of some of the NIC standards contemplated in the SIC interpretations.
After 2001, the IASC disappeared and created the IASB body; this body created the IFRS standards and their IFRIC interpretations.
The preceding does not indicate that the IAS standards and their interpretations have disappeared.
However, some IFRS standards have superseded some IAS standards.
An example of this is the lease standard.
In other words, the IFRS 16 standard replaced IAS 17.
The same thing happened with IFRS 15, which replaced IAS 18.
If you want to know the complete list, you can read the following post.
List of IFRS standards (updated)
March 2, 2021No Comments
Here you can find the complete list of international accounting standards and financial reporting standards updated to 2022 IFRS Standards IFRS 1First-time Adoption of International Financial Reporting Standards IFRS 2Share-based Payment IFRS 3Business Combinations IFRS 4Insurance Contracts IFRS 5Non-current Assets
Read More »
Third step to learn IFRS—Understand part A, B, and C of the standards
The next step is understanding how parts A – B, and C of the IFRS standards.
IFRS standards require an approval process that consists of the following:
Draft Standards: A draft standard is developed in public meetings.
The technical staff prepares the documents for the Council to consider the issues to be discussed.
Consideration of Comments Received and Inquiries: Following the conclusion of the comment period, the Board reviews the comment letters received and the results of other inquiries, such as investor inquiries, for example.
End of deliberations: When the Board has reached a general agreement on the technical issues of the project and has considered the likely effects of the new IFRS Standards.
Completion of an IFRS Standard
Full document at the following link:
So, in part A, we’re going to find the board-approved standard.
In part B, we find illustrative examples; these are essential to understand many topics detailed in part A.
And finally, we found part C.
This part refers to the basis of conclusions.
That is, the considerations of the International Accounting Standards Council to reach the conclusions of each Standard.
I recommend that you read part C especially carefully, as it is of great help in understanding the logic of many topics covered in part A.
Fourth step to learn IFRS - The use of artificial intelligence in accounting
The adoption of artificial intelligence in accounting has generated debates in the industry about whether accountants and other financial information professionals could be replaced by this emerging technology.
Some professions have even been listed as potentially at risk of disappearing due to the advancement of AI.
Although AI will not entirely replace the role of financial information preparers, individuals who acquire expertise in AI-based tools will have an edge in the job market.
Companies are increasingly looking for professionals with skills in advanced technologies rather than those who only work with traditional tools.
The key to leveraging AI in accounting is recognizing in which areas this technology can improve our processes, reduce errors, and provide more accurate and timely information for those making decisions based on financial data.
A practical example of how AI in accounting can be useful is in the valuation of assets in a business combination.
Suppose Company A acquires all the shares of Company B, and Company B has 500 buildings registered at historical cost.
According to IFRS 3, Company A must recognize all of Company B’s assets at fair value.
Determining the fair value of these buildings would require significant time, effort, and resources for Entity A.
This is where AI in accounting shines, as it can quickly process large volumes of data and evaluate multiple factors that affect the value of real estate, such as location, age, construction quality, and market demand.
In addition, AI can analyze recent sales data and market trends to accurately predict the future value of a real estate asset, eliminating human bias and subjectivity in valuation.
In other words, we can use the artificial intelligence to create an algorithm to calculate the fair value of a large volume of assets.
This means that in the example we are analyzing, the business combination process would be carried out more quickly and efficiently.
Another example of how AI in accounting can improve processes is by creating Visual Basic-based codes to automate accounting tasks using macros.
These macros allow for quick data input and processing, as well as the creation of custom reports and automation of complex tasks, saving time and reducing human errors.
While accountants excel in financial information analysis, programming is often a less developed skill in the profession.
This is where AI in accounting can be of great help, providing the necessary code to automate tasks and achieve specific goals.
For example, if we have an Excel file with 100 bank loans and need to create amortization all amortization tables for each of these contracts, AI can generate a Visual Basic-based code that completes this task in minutes.
In our IFRS course, we explore how AI in accounting can be useful in various situations and tasks.
If you are keen to learn how to master artificial intelligence and establish how this tool can be useful for optimizing accounting processes, we invite you to review our IFRS course.
Leave us your email for more information.
In summary, as artificial intelligence continues to advance, it will become an indispensable tool across all fields of knowledge.
This means in the near future, AI is expected to solidify its position as an essential tool in various sectors, including the accounting profession.
Therefore, being a pioneer in the adoption and application of this technology in accounting will provide a significant competitive advantage over other professionals in the sector.
Fifth step to learn IFRS - study tools
IASB training material
The training material is a resource published by the IASB Foundation to encourage learning and understanding each standard.
I leave you the link where you can download each module.
The only disadvantage is that this material is only available for small and medium-sized companies, in other words IFRS for SMEs.
IFRS learning.
IFRS learning is a great tool for learning IFRS.
You can download each module of the standards on your computer and interact with the application as if you were a consultant for a big company.
