Implementation of IFRS

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					Implementation of IFRS

  Experience from Austria
      Robert Reiter
   President of AFRAC



        ASEM IFRSs Robert Reiter   1
              First experience
• Österreichische Elektrizitätswirtschafts-AG
   (Verbund)
In our opinion, the consolidated financial
statements present fairly, in all material
respects, the financial position of Verbund at
December 31, 1997 and 1996 and the
results of its operations and its cash flows
for the years then ended in accordance with
International Accounting Standards (IAS).
Vienna, 9 April 1998
Dr. Paul Hassler m.p. Dr. Robert Reiter m.p.
Certified Public Accountants

                    ASEM IFRSs Robert Reiter     2
                   Issues
•   Comparable Figures for prior year
•   Understanding the frame work of IAS/IFRS
•   Concentration on materiality
•   Notes




                 ASEM IFRSs Robert Reiter   3
           Specific Issues
• Cash generating units
• Impairment test for power plants because
  of strong competition and free market
• Deferred Tax Asset
• Pension accrual
• Derivatives


               ASEM IFRSs Robert Reiter      4
                   Notes
• Detail of Notes
•    transactions with related parties versus
•    bank secrecy per constitutional law
• Understandability for the reader
• Reconciliation with annual report
  (Lagebericht)


                ASEM IFRSs Robert Reiter        5
        Austrian Legislation
• IFRS mandatory for group accounts of
  listed companies
• Local GAAP for individual accounts
      basis for tax and dividend payment
      creditors protection (?)




                ASEM IFRSs Robert Reiter   6
Austrian National Standard Setting
• Competence
 Ministry of Justice
 Ministry of Finance (Banks, Insurances)

Advice by AFRAC




                ASEM IFRSs Robert Reiter   7
     Reaction by companies
• Understanding Objectives of IFRS by
  management
• Personnel ressources
• Education and Continuing Training
• Fast Close




               ASEM IFRSs Robert Reiter   8
                  Timing

• Fast Close
• Improvement of Organisation
• Earlier results
• More accurate results on a timely basis
• Better efficiency
• Audit opinion for 1997 in April 1998
• Audit opinion for 2005 in January 2006


               ASEM IFRSs Robert Reiter     9
          Timing/Work load
• Preparation work starts earlier
• Standardization of work flow




                ASEM IFRSs Robert Reiter   10
    IFRS for Austrian SME ?
• Definition of SME
• IFRS for Austrian SME
    Double accounts –tax requirement
    Materiality
    Annual Report (Lagebericht)
    Knowledge of IFRS


               ASEM IFRSs Robert Reiter   11
        Reaction of Auditors
• Use of audit principles
•   Local GAAS
•   ISA (in addition, no carve outs)
•   Art 26 of the 8. EU Directive
• Audit Opinion
• Reporting Requirements in Austria


                ASEM IFRSs Robert Reiter   12
            Audit Opinion
• ISA 700

  fully accepted by Company Amendment
  Act 2005 (GesRÄG 2005)




              ASEM IFRSs Robert Reiter   13
Reporting Requirements in Austria

• Report including the audit opinion
• Local GAAS require review of annual
  report
• History of long form report




               ASEM IFRSs Robert Reiter   14
          Auditor´s Issues
• Knowledge of IFRS and training
• Knowledge of ISA and training
• Current developments




               ASEM IFRSs Robert Reiter   15
               Auditor´s Issues
• Current developments of ISA
•   clarity project (ISA 200)
• Audit oversight bodies
•  Knowledge of local GAAS and ISA by Non-
•  Practioners
•     professional judgment
•     professional scepticism
•     responsibility in respect to fraud and error
•     working papers




                      ASEM IFRSs Robert Reiter       16
              Auditor´s Issues

• IFRS
•    „ as endorsed by the EU“ versus
       full IFRS
• in case of no differences
       wording of the audit opinion
• Liability issue: limited liability only for
  statutory audit

                  ASEM IFRSs Robert Reiter      17

				
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