International Financial Reporting standards – IFRS –Many entities in the world edit their reports for a wide variety of users. In many cases editing the financial reports is done while considering regulatory requirements. The international financial reporting standards are accounting rules determined by the international accounting standards committee, in order to develop high quality accounting standards and to resolve and issues most financial repot users might have.
The international financial reporting standards is based mainly on the system of the accounting principles, accounting reporting standards specifying the needs to recognize, measure and disclosure relevant to the events described in the financial reports. As such the financial accounting standards are based on the Conceptual Framework that reflect the perception in disclosing information in the financial reports and to apply discretion in solving accounting issues. The international accounting standard applies for the financial reports of entities operation for profit, but some non profit entities are entitle to apply the international standards if found fit for them.
The purpose of the international accounting standards is to create accounting rules that apply for many entities from many countries and as such to improve the quality of the reports, the ability to compare (between companies from different countries) and to reflect reliably the business conducted by the entity.
The purpose of the financial reports is to provide information regarding the financial status of the entity, the performance and the cash flow of the entity to be useful to the general public of decision makers. In Israel, the requirement to edit the financial reports according to the international rules is mandatory as of 2008 (and in early validation from 2006) for entities subject to the securities law. As such all entities are permitted to report according to the international financial standard voluntarily.
Adopting the international standards was considered at the time revolutionary in the financial reporting field, seeing that at the time the common method for calculating assets and liabilities was the historical cost value, implementing the international accounting standards as led to a measuring of assets and liabilities according to their fair value.
After examining the reporting standards, the tax authorities published a temporary IRS directive stating that due to the fact that the international standards aren’t aligned
With the Israeli tax method principles leading to that of entities reporting according to the international standards need to neutralize the international standards implementation in their tax reports.
The Yanai Amir accounting office will be glad to advise you regarding international standards.