IAS/IFRS in Estonia and IAS/IFRS and SMEs

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					         IAS/IFRS in Estonia
                and
         IAS/IFRS and SMEs


Rita Ilisson
Member, IASBs Standards Advisory Council 2001-2005
Chairman, Estonian Accounting Standards Board 1993-2001
ilisson@online.ee, 372 53323713


                   (c) Rita Ilisson Dec. 2005      1
      IAS/IFRS and Europe 2005

 listed companies & consolidated accounts
listed companies & separate accounts?
   to include mamma in the group accounts
    mamma restates mamma to IFRS ?
other companies & IAS/IFRS?
   to include baby in group accounts
    mamma restates baby to IFRS?
   ......
                (c) Rita Ilisson Dec. 2005   2
    IAS/IFRS and Europe 2005

Baltics - three different approaches to
 the EU directives and regulations !

Estonia – all entities may use IFRS - 2003?
  EAS - in compliance with IAS as of 1994
Latvia - if IFRS complies with Latvian law !
  LAS – few...
Lithuania – unlisted  only local GAAP
  NAS – in compliance with IAS as of 2003
                (c) Rita Ilisson Dec. 2005      3
     IAS/IFRS in Europe 2005

...IFRS as adopted by the EU?
   political posing or legal necessity?
...IAS adopted by the EU  or  IFRS?
…the fate of local GAAPs based on
 IAS/IFRS e.g. Est (1993), Lith (2003)...?
...how can countries aspiring to enter the
 EU incorporate IFRS into their legal
 framework?

              (c) Rita Ilisson Dec. 2005   4
          IAS/IFRS in Estonia
Estonian-American, living in Sweden
 appointed Chairman of the EASB on Feb
 12, 1993
  Strategy
     IAS = accounting platform
     mix of Common/Roman law traditions
     framework law/ independent standard-
      setter to issue IAS compliant standards
     mandatory application of standards
     enact company law via the accounting law

                 (c) Rita Ilisson Dec. 2005   5
       IAS/IFRS in Estonia
Framework Accounting Law - 06.94
  IAS basis for accounting by law
  EU formats
    balance sheet in order of liquidity
    Treasury stock (Own shares) in
     equity
  Conclusion: if right options picked
   from the directives  IAS in 1993


              (c) Rita Ilisson Dec. 2005   6
        IAS/IFRS in Estonia
EU expert opinion 4 Jan 1994 …
 would prefer or insist
   would prefer - unrealized gains in
   equity and unrealized losses in P&L
   insist on the true and fair override
   continental law  standard setter and
   mandatory standards
   cannot conform to IAS and directives
 1997 - IAS/directives mix considered
 feasible!
              (c) Rita Ilisson Dec. 2005    7
     The Accounting Reform Cookbook
 no mandatory chart of accounts
   think!
   if the accountant is not capable?…
 separate financial accounting and taxation
 set up an independent standard setter with
  the might to issue and enforce
   financed by the state or set up a trust
 framework law + mandatory standards


                 (c) Rita Ilisson Dec. 2005   8
     The Accounting Reform Cookbook
 encompass the regulation of all accounting
  entities under 1 hat
   banks, insurance, manufacturing, retail
 work across the board –
   privatization issued
   company registries
   address any and all accounting issues
      natural monopolies


                 (c) Rita Ilisson Dec. 2005    9
     The Accounting Reform Cookbook
 disclosure - carrot or the stick?
   examples – use the press!
   Flagship of …Accounting
 lead/times – 3-5 standards…wait two years
 address SMEs in two standards -need to
  know principle
 address impairment issues
 allow all group entities consolidated into
  IFRS group accounts to apply IFRS!

                 (c) Rita Ilisson Dec. 2005   10

				
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