IFRS Implementation and Convergence
Quantum Auditing adopts International Financial Reporting Standards in conjunction with International Accounting Standards (IAS) for preparation and presentation of financial statements for its clients. Different countries have developed their own accounting principles over time, making international comparisons of companies difficult. To ensure uniformity and comparability between financial statements prepared by different companies, a set of guidelines and rules are used. Commonly referred to as Generally Accepted Accounting Principles (GAAP), these set of guidelines provide the basis in the preparation of financial statements.
Recently there has been a push towards standardizing accounting rules made by the International Accounting Standards Board (IASB). IASB develops International Financial Reporting Standards (IFRS) that have been adopted by many countries. Currently, over 100 countries permit or require IFRS for public companies, with more countries expected to transition to IFRS in the coming years.
IFRS are considered a principles based, internally consistent and internationally converged set of standards in that they establish broad rules as well as dictating specific treatments.
The underlying assumptions used in IFRS are:
Accrual Basis: the effect of transactions and other events are recognized when they occur, not as cash is gained or paid.
Going Concern: an entity will continue for the foreseeable future.
Stable Measuring Unit Assumption: financial capital maintenance in nominal monetary units or traditional Historical cost accounting; i.e., accountants consider changes in the purchasing power of the functional currency up to but excluding 26% per annum for three years in a row (which would be 100% cumulative inflation over three years or hyperinflation as defined in IFRS) as immaterial or not sufficiently important for them to choose financial capital maintenance in units of constant purchasing power during low inflation and deflation as authorized in IFRS.
For an effective IFRS convergence and implementation activity, Quantum Auditing has qualified and skilled people who have the experience to do things in the right way, following the International Standards.