International Accounting Standards - IAS - 1

Objective

The IAS - 1 standard describes how to present the financial statements to ensure comparability among:

     1.   Entity’s Financial Statements

     2.    Financial Statements of Other Entities

International Accounting Standards Committee (IASC)

International Accounting Standards Committee is an independent body of the accounting profession. The purpose of this body is to oversee and guide the process of standard setting decision of IASB. In 1^st April, 2001, its authority was transferred to IASB.

Note: Auditor or Chartered Accountant is the person who oversees theses Standards in details.

International Accounting Standard Board (IASB)

This board is responsible for the issuance of new accounting standards. The purpose of this board is to guide the standards in order to ensure fair presentation of financial statements to users of financial statements.

Objective of IASB

   ü  To develop high quality, enforceable international accounting standards

   ü  To promote and applicability of those standards

   ü  To make a clear understanding between national and international accounting standards to ensure fair and use of accounting information.

   ü  Provide updates and guidelines about the accounting standards through newsletter.

Scope of International Standard Board’s Framework

Ø The purpose of Financial Statements

Ø The usefulness of Financial Statement to users of financial statements

Ø Definition, Recognition and Measurement of elements of Financial Statements

Ø Capital concepts and its maintenance

The Standing Committee on Interpretation (SCI)

Such Committee ensures the applicability of IASs in practical.

Users of Financial Statements

Users of financial statements are external users to the financial statements of the entity. They have interest in the accounting information provided to them in the form of financial statements.

Following are the main external users of financial statements

Investors

Investors are those who invest in the company shares for the probable profits. They are interested in the profitable conditions of the company.

Creditors

They provide credit purchases to entity only when the financial statements clearly show the information that the entity will pay the debts in time.

Employees

Employees are interested in the profitability of the entity that pay them high rewards for their service.

Customers

Customers are interested in the financial statements of entity because they will only purchase the products from them when these are provided at cheaper rates and all such information are available from their financial position.

Government and their Agencies

Government needs the profitability of the enterprise for the economic stability.

 Objective of Financial Statements

To provide useful information about financial performance, position and changes in financial position of the entity to external as well internal parties interested in the information for decision making purposes.

Generally Accepted Accounting principles (GAAP)

Generally accepted accounting principles are those which are accepted universally. These rules are followed by every country irrespective of the region. Separate Entity Concept, Matching Concept, Materiality and other important accounting principles are the examples of GAAP.

Accounting Principles consist of Accounting Concepts and Accounting Conventions.

So International Accounting Standard - 1 is helpful in the fair presentation of financial statements to parties interested in it for making economic decisions.