International Financial Reporting Standards

IFRS authorize two basic accounting models:
I. Financial capital maintenance in nominal monetary units, i.e., Historical cost accounting during low inflation and deflation (see the Framework, Par 104 (a)).
II. Financial capital maintenance in units of constant purchasing power, i.e., Constant Item Purchasing Power Accounting - CIPPA - during low inflation and deflation (see the Framework, Par 104 (a)) and Constant Purchasing Power Accounting (see IAS 29) - CPPA - during hyperinflation. Financial capital maintenance in units of constant purchasing power is not authorized under US GAAP.

Qualitative characteristics of financial statements
Qualitative characteristics of financial statements include:
* Understandability
* Reliability
* Comparability
* Relevance
* True and Fair View/Fair Presentation
Elements of financial statements
The financial position of an enterprise is primarily provided in the Statement of Financial Position. The elements include:
1. Asset: An asset is a resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise.
2. Liability: A liability is a present obligation of the enterprise arising from the past events, the settlement of which is expected to result in an outflow from the enterprise' resources, i.e., assets.
3. Equity: Equity is the residual interest in the assets of the enterprise after deducting all the liabilities under the Historical Cost Accounting model. Equity is also known as owner's equity. Under the units of constant purchasing power model equity is the constant real value of shareholders´ equity.
The financial performance of an enterprise is primarily provided in an income statement or profit and loss account. The elements of an income statement or the elements that measure the financial performance are as follows:
1. Revenues: increases in economic benefit during an accounting period in the form of inflows or enhancements of assets, or decrease of liabilities that result in increases in equity. However, it does not include the contributions made by the equity participants, i.e., proprietor, partners and shareholders.
2. Expenses: decreases in economic benefits during an accounting period in the form of outflows, or depletions of assets or incurrences of liabilities that result in decreases in equity.
Revenues and expenses are measured in nominal monetary units under the Historical Cost Accountimg model and in units of constant purchasing power (inflation-adjusted) under the Units of Constant Purchasing Power model.

Requirements of IFRS
IFRS financial statements consist of (IAS1.8)
a Statement of Financial Position
a Statement of Comprehensive Income or two separate statements comprising an Income Statement and separately a Statement of Comprehensive Income, which reconciles Profit or Loss on the Income statement to total comprehensive income
a Statement of Changes in Equity (SOCE)
a Cash Flow Statement or Statement of Cash Flows
notes, including a summary of the significant accounting policies
Comparative information is required for the prior reporting period (IAS 1.36). An entity preparing IFRS accounts for the first time must apply IFRS in full for the current and comparative period although there are transitional exemptions (IFRS1.7).
On 6 September 2007, the IASB issued a revised IAS 1 Presentation of Financial Statements. The main changes from the previous version are to require that an entity must:
present all non-owner changes in equity (that is, 'comprehensive income' ) either in one Statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income may not be presented in the Statement of changes in equity.
present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies the new standatd.
present a statement of cash flow.
make necessary disclosure by the way of a note.
The revised IAS 1 is effective for annual periods beginning on or after 1 January 2009. Early adoption is permitted.