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IFRS - Highlights and Stories From Early Adopters
- The items that should be recognized as assets, liabilities, income and expense;
- How to measure those items;
- How to present them in a set of financial statements; and
- The related disclosures about those items.
- Are comparable, understandable and reliable and relevant to users
- Include increased transparency
- Foster increased efficiency of contracting between firms and lenders and more efficient capital markets.
- Phase 1:Significant Public Interest Entities: financial institutions and public enterprises owned by federal or regional governments, starting in 2018
- Phase 2:Other Public Interest Entities: ECX member companies and reporting entities that meet two of the below four criteria, starting in 2019:
Annual turnover exceeding 50,000,000
Total employees exceeding 100 employees
Total Asset exceeding 100,000,000
Total Liability exceeding 100,000,000
- Phase 3:Small and Medium Sized Entities: whose turnover exceeds 1,000,000, starting in 2020
- Dedicate an expert or team who will be leading IFRS research or engagement
- Determine if Ethiopia’s recent IFRS rulings apply to your company. If it applies, come up with an IFRS implementation plan including decision on in-house adoption or assistance through the help of an external party or consultant
- Identify the list of relevant IFRS and IAS applications for an effective transition to IFRS
- Develop the relevant accounting policy
- Choose the appropriate costing model: costing model or revaluation model
- Analyze the existing process and identify deviation with IFRS rulings
- Is the IFRS implementation a finance role only?Many believe so, but IFRS actually involves a number of processes and requires input from various teams including engineering, human resources, finance, legal, marketing, procurement and leadership to get input on estimates, valuation, severance, any legal claims, inventory impairment and others.
- Are your key finance team members well trained or informed in the IFRS rulings or codifications?It is noted that at times, collaborations become challenging due to lack of skills by the finance team on IFRS. It’s important to plan in advance and have teams involved in short-term training ahead of implementation.
- Do we need to re-evaluate all assets to be IFRS compliant?Many reports indicate that there is a tendency to have everything re-evaluated, but please consult the experts as this may vary on a case-by-case basis, depending on the circumstances.
- Is the tax office (ERCA) fully compliant with IFRS?Not fully at this point – which implies some of the assumptions used in the IFRS reporting might not be accepted by the tax authority. In that case, firms may be forced to prepare two sets of financials – one for AABE and one for the tax office.
- AABE - Accounting and Auditing Board of Ethiopia – for members only