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Implementation of IFRS

Implementation of IFRS. Experience from Austria Robert Reiter President of AFRAC. 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

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Implementation of IFRS

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  1. Implementation of IFRS Experience from Austria Robert Reiter President of AFRAC ASEM IFRSs Robert Reiter

  2. 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

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

  4. 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

  5. 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

  6. 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

  7. Austrian National Standard Setting • Competence Ministry of Justice Ministry of Finance (Banks, Insurances) Advice by AFRAC ASEM IFRSs Robert Reiter

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

  9. 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

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

  11. 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

  12. 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

  13. Audit Opinion • ISA 700 fully accepted by Company Amendment Act 2005 (GesRÄG 2005) ASEM IFRSs Robert Reiter

  14. 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

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

  16. 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

  17. 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

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