International Accounting: Features, Standards and Requirements

What is international accounting? What are the requirements for it? What features exist in this field of activity? What standards should be guided by?

general information

International accounting in its modern form began to take shape in the sixties of the last century in the United States. What was the beginning? Then, the generally accepted principles of accounting began to be introduced into practice that are reasonable and reflect the real tasks. Using this approach at the legislative level has greatly facilitated the work of all US financial services. It is called GAAP. On the territory of modern Russia, the federal legislative act “On Accounting” is in force, which sets out the principles of the accounting system. It has basic concepts. Standards are in the provisions on accounting, which are briefly indicated by the letters PBU. Initially, only eleven principles were laid down in GAAP. At the moment, this international accounting system has more than fifty of them. GAAP is built not only on the American economy, but also on the many economic sectors of the countries of the so-called west. But this is not the only such system.

What else is there?

In 1973, the development of a committee on international financial reporting standards, known as IAS, began. It was conducted through 2001. And now, international accounting existed in a competition system. But if the committee released them only in 2001, what is now? The fact is that nothing has disappeared. In 2000, this committee was reformed and now its business is continued by the board on international financial reporting standards, the product of which is known as IFRS. Why did this rearrangement happen? The fact is that initially the title of the final document did not fully correspond to the content. Now IFRS literally stands for “international financial reporting standards”, whereas earlier the translation was a little distracted. And at the moment there are two accounting approaches. Not to be confused, they are both designated as International Financial Reporting Standards (IFRS).

What structural components can be distinguished in IFRS?

Speaking of international accounting and reporting standards, it should be indicated:

1. Interpretations By this is meant the clarification of certain provisions. They are periodically provided by a standing interpretations committee.
2. Section “Transparency of financial statements”. A number of points are considered here when information is made clear and accessible to all market participants. A number of restrictions have also been formed that are necessary to maintain the trade secrets of organizations.
3. The principles of preparation and disclosure of financial statements.
4. Actually the international standards themselves.

Put a word about principles

They determine the fundamentals themselves, as well as the ultimate goals in the preparation of financial statements, users of the prepared documentation and qualitative characteristics for the data obtained. These include:

1. Clearness.
2. Significance (relevance).
3. Reliability (reliability).
4. True view.
5. Content priority over form.
6. Discretion.
7. Neutrality
8. Completeness.
9. Comparability (comparability).

Also, regarding the reliability and relevance of the information, there are such requirements:

1. The ratio between costs and benefits.
2. Timeliness.
3. The relationship between quality characteristics.

Let's take a closer look at what the characteristics on which international accounting is based are.

Clearness. Significance. Credibility. True view. Content Priority over Form

Under the comprehensibility of information is understood such a presentation so that it can be understood by a user who has sufficient knowledge in the field of accounting. It should be noted that complex issues should not be ignored just because individuals will not be able to figure them out. The significance of information implies its influence on the economic decisions of users. This is determined by its materiality and character. Depending on its construction and value, its omission or distortion can significantly affect the final decisions of reporting users, and, as a rule, in a negative way. Credibility is necessary to avoid errors and distortions, as well as for impartiality. In this regard, a true role plays an important role. In other words, the information is required to provide accurate data on business transactions in the financial statements. To do this, it is important to keep the priority of content over the form. That is, the information should first of all give an idea of ​​the economic nature of the facts of ongoing business operations. While many, alas, rely on the legal form.

Neutrality Discretion. Completeness. Comparability

By neutrality is meant not the focus of information on the interests of specific groups of users, as well as the lack of influence on their part. Caution is an important requirement, the essence of which is a conservative assessment of assets and liabilities. So, the former should not be overestimated. Whereas liabilities should not be underestimated. Assets display at a minimum rating. Whereas obligations at the highest price. In other words, all potential losses must be taken into account. Completeness provides for reflection in the reporting of all material facts from the position of users for the period under consideration. Comparability refers to the comparability of data with previous information, as well as situations in other companies.

Limitations that establish international accounting and financial reporting standards

By the way, if you are interested in why IFRS is given such attention in the framework of the article, we inform you that by order of the Ministry of Finance of the Russian Federation No. 160n dated November 25, 2011, their use is strongly recommended to companies, and in cases with consolidated reporting their application is mandatory. And now for the limitations. First of all, you need to talk about timeliness. This is an important point for operating with reliable and relevant information. So, for reporting, it is necessary to collect information on all facts of economic activity. And obtaining all the necessary, complete and reliable data can lead to certain delays. And the relevance of the information gathered can be called into question. Therefore, it is necessary to seek the optimal combination between these two requirements. Regarding the relationship between costs and benefits, it should be noted that the amount of funds allocated for obtaining information should not exceed the amount of preferences. Otherwise, the appropriateness of their necessity is in question. In the case of a correlation with qualitative characteristics, all tasks to be performed must be professionally evaluated and subordinate to the task of meeting the stated goals of the financial statements.

What standards should be compliant?

Each system of international accounting standards has its own characteristics. Let's look at the main basic principles of their construction:

1. Monetary measurement.
2. The isolation of the enterprise.
3. Cost accounting.
4. The existing enterprise.
5. Duality of accounting.
6. Conservatism (caution assessment).
7. Accounting period.
8. Implementations.
9. Compliance of income and expenses.

It should be noted that international financial accounting standards are built quite competently. Therefore, the enterprises themselves are much interested in observing them. After all, if you adhere to the recommendations and do not reinvent the wheel, you can build a highly efficient workable structure that can serve any organization. Although, of course, invention is a useful thing, you can try your own strength. Moreover, universal standards for all have not yet been invented. And you have to independently bring the proposed options to the desired state.

Conclusion

Life goes on, the world changes, and international accounting organizations continue to improve their working methods. The work that five or six people did half a century ago can now be mastered by one. This is possible due to data structuring, selection of high-quality operating principles, standardization and significant automation of accounting. It is possible that someday we will achieve such perfection in this matter that we will not need accountants-people, and automation will do everything for them.